HomeMy WebLinkAboutO-2933 - Bond issuance (Special)Execution Version
CITY OF MARYSVILLE, WASHINGTON
ORDINANCE NOd:if33
AN ORDINANCE of the City of Marysville, Washington, relating to the
waterworks utility of the City; providing for the issuance, sale and delivery of not
to exceed $45,500,000 aggregate principal amount of water and sewer revenue
refunding bonds for the purpose of providing funds to pay the cost of advance
refunding all or a portion of the City's callable Water and Sewer Revenue Bonds,
2005, and the cost of issuing such bonds; fixing or setting parameters with respect
to certain terms and covenants of the bonds; providing for and authorizing the
purchase of certain obligations out of the proceeds of the sale of the bonds and for
the use and application of the money derived from those investments; authorizing
the execution of one or more agreements with an escrow agent or trustee;
providing for the call, payment and redemption of the outstanding bonds to be
refunded; appointing the City's designated representative to approve the final
terms of the sale of the bonds and to take certain other actions with respect to
carrying out the refunding and issuance of the bonds; and providing for other
related matters.
Passed July 22, 2013
This document prepared by:
Foster Pepper PLLe
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
51298893.3
TABLE OF CONTENTS*
Section 1 .
Section 2.
Section 3 .
Section 4.
Section 5 .
Section 6.
Section 7 .
Section 8 .
Section 9.
Section 10.
Section 11 .
Section 12 .
Section 13 .
Section 14.
Section 15 .
Section 16.
Section 17 .
Section 18 .
Section 19.
Section 20.
Section 21 .
Section 22.
Section 23 .
Section 24 .
Section 25 .
Exhibit A
Exhibit B
Exhibit C
Definitions 1
Findings and Detenninations 8
Authorization of Bonds 9
Description of Bonds; Appointment of Designated Representative 9
Bond Registrar; Registration and Transfer of Bonds 10
Fonn and Execution of Bonds 11
Payment of Bonds 11
Redemption Provisions and Purchase of Bonds 11
Failure To Pay Bonds 13
Bond Fund 13
Rate Stabilization Account , 15
Separate Utility Systems 15
Pledge of Net Revenue and Lien Position 16
Covenants 16
Flow of Funds 18
Provisions for Future Parity Bonds 19
Tax Covenants 19
Amendatory and Supplemental Ordinances 20
Refunding or Defeasance of the Bonds 22
Deposit of Bond Proceeds; Refunding of the Refunded Bonds 22
Sale and Delivery of the Bonds 25
Official Statement; Continuing Disclosure 26
General Authorization and Ratification 26
Severability 26
Effective Date of Ordinance 26
Parameters for Final Tenns
Fonn of Undertaking to Provide Continuing Disclosure
Parity Conditions for Issuance of Future Parity Bonds
*The cover page, table of contents and section headings of this ordinance are for convenience of reference only,
and shall not be used to resolve any question ofinterpretation ofthis ordinance.
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512988933
CITY OF MARYSVILLE, WASHINGTON
ORDINANCE NO)..q33>
AN ORDINANCE of the City of Marysville, Washington, relating to the
waterworks utility of the City; providing for the issuance, sale and delivery of not
to exceed $45,500,000 aggregate principal amount of water and sewer revenue
refunding bonds for the purpose of providing funds to pay the cost of advance
refunding all or a portion of the City'S callable Water and Sewer Revenue Bonds,
2005, and the cost of issuing such bonds; fixing or setting parameters with respect
to certain terms and covenants of the bonds; providing for and authorizing the
purchase of certain obligations out of the proceeds of the sale of the bonds and for
the use and application of the money derived from those investments; authorizing
the execution of one or more agreements with a refunding escrow agent or trustee;
providing for the call, payment and redemption of the outstanding bonds to be
refunded; appointing the City's designated representative to approve the final
terms of the sale of the bonds and to take certain other actions with respect to
carrying out the refunding and issuance of the bonds; and providing for other
related matters.
THE CITY COUNCIL OF THE CITY OF MARYSVILLE, WASHINGTON, DO
ORDAIN AS FOLLOWS:
Section 1. Definitions. As used 10 this ordinance, the following capitalized terms
shall have the following meanings:
(a) "2005 Bond Ordinance" means Ordinance No. 2583 authorizing the issuance of
the 2005 Bonds.
(b) "2005 Bonds" means the Water and Sewer Revenue Bonds, 2005 issued by the
City pursuant to the 2005 Bond Ordinance.
(c) "Acquired Obligations" means the Government Obligations used to accomplish
the Refunding Plan.
(d) "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.
(e) "Annual Debt Service" for the applicable series of Parity Bonds for any calendar
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.
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(f) "Authorized Denomination" means $5,000 or any integral multiple thereof within
a maturity of a Series.
(g) "Average Annual Debt Service" means the sum of the Annual Debt Service for
the remaining calendar years to the last scheduled maturity of the applicable issue or issues of
bonds divided by the number of those years.
(h) "Beneficial Owner" means, with respect to a Bond, the owner of any beneficial
interest in that Bond.
(i) "Bond" means each bond issued pursuant to and for the purposes provided in this
ordinance.
(j) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any
other attorney or firm of attorneys selected by the City with a nationally recognized standing as
bond counsel in the field of municipal finance.
(k) "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.
(I) "Bond Insurer" means any provider of bond insurance for a series of Parity Bonds,
which insurance is purchased by the City.
(m) "Bond Purchase Agreement" means an offer to purchase a Series of the Bonds,
setting forth certain terms and conditions of the issuance, sale and delivery of those Bonds,
which offer is authorized to be accepted by the Designated Representative on behalf of the City,
if consistent with this ordinance. In the case of a competitive sale, the official notice of sale, the
Purchaser's bid and the award by the City shall constitute the Bond Purchase Agreement for
purposes of this ordinance.
(n) "Bond Register" means the books or records maintained by the Bond Registrar for
the purpose of identifying ownership of the each Bond.
(0) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar
selected by the City.
(P) "City" means the City of Marysville, Washington, a code city duly organized and
existing under the laws of the State.
(q) "City Contribution" means legally available money of the City, in addition to
proceeds of the Bonds, necessary or advisable to accomplish the Refunding Plan, as determined
by the Designated Representative.
(r) "City Council" means the legislative authority of the City, as duly and regularly
constituted from time to time.
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(s) "Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
(t) "Coverage Requirement" in any calendar 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. For purposes of calculating the Coverage Requirement,
UUD Assessments due in that year and not delinquent shall be subtracted from Annual Debt
Service.
(u) "Designated Representative" means the officer of the City appointed in Section 4
of this ordinance to serve as the City's designated representative in accordance with RCW
39.46.040(2).
(v) "DTC' means The Depository Trust Company, New York, New York, or its
nommee.
(w) "Final Terms" means the tenns and conditions for the sale of a Series of the
Bonds including the amount, date or dates, denominations, interest rate or rates (or mechanism
for detennining interest rate or rates), payment dates, final maturity, redemption rights, price, and
other tenns or covenants, including minimum savings for refunding bonds (if the refunding
bonds are issued for savings purposes).
(x) "Finance Officer" means the Finance Director or such other officer of the City
who succeeds to substantially all of the responsibilities of that office.
(y) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated
by the State from time to time.
(z) "Future Parity Bond Authorizing Ordinance" means an ordinance of the City
authorizing the issuance and sale and establishing the tenns of Future Parity Bonds.
(aa) "Future Parity Bonds" means any and all Waterworks Utility 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.
(bb) "Government Obligations" has the meaning given in RCW 39.53.010, as now in
effect or as may hereafter be amended and which are otherwise Legal Investments of the City at
the time of such investment.
(cc) "Gross Revenue ofthe 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, including any Tax Credit Subsidy
Payment received in respect of Parity Bonds, and connection and capital improvement charges
collected for the purpose of defraying the cost of capital facilities of the Waterworks Utility.
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Gross Revenues excludes UUD Assessments and other improvement district assessments,
deposits to the Rate Stabilization Account, revenue from any Separate Utility System,
government grants, proceeds from the sale of Waterworks Utility property, City taxes 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.
(dd) "Issue Date" means, with respect to a Bond, the date of initial issuance and
delivery of that Bond to the Purchaser in exchange for the purchase price of that Bond.
(ee) "Legal Investments" means any investments now or hereafter authorized for the
City under the laws of the State.
(ft) "Leiter of Representations" means the Blanket Issuer Letter of Representations
between the City and DTC, dated November 14, 1997, as it may be amended from time to time,
and any successor or substitute letter relating to the operational procedures of the Securities
Depository.
(gg) "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 supply or 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.
(hh) "Maximum Annual Debt Service" means the maximum amount of Annual Debt
Service that will mature or come due in the current calendar year or any future calendar year on
the Parity Bonds then outstanding.
(ii) "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.
OJ) "Net Revenue of the Waterworks Utility" or "Net Revenue" means the Gross
Revenue less Maintenance and Operation Expense.
(kk) "MSRB" means the Municipal Securities Rulemaking Board.
(11) "Outstanding Parity Bonds" means any Refunding Candidates that are not
Refunded Bonds.
(mm) "Owner" means, without distinction, the Registered Owner and the Beneficial
Owner.
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(nn) "Parity Bond Authorizing Ordinance(s)" means, as applicable to each series of
Parity Bonds, the 2005 Bond Ordinance, this ordinance and any Future Parity Bond Authorizing
Ordinance.
(00) "Parity Bonds" means the Outstanding Parity Bonds, the Bonds and any Future
Parity Bonds.
(pp) "Parity Conditions" means the conditions precedent to the issuance of Future
Parity Bonds collectively set forth in Section 16 of the 2005 Bond Ordinance, and set forth in
Exhibit C of this ordinance, which is incorporated by this reference.
(gg) "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.
(rr) "Purchaser" means the corporation, firm, association, partnership, trust, or other
legal entity or group of entities selected by the Designated Representative to serve as underwriter
for a negotiated sale or awarded as the successful bidder in a competitive sale of any Series of
the Bonds.
(ss) "Rate Stabilization Account" means the account of that name created within the
Waterworks Utility Fund pursuant to Section 11 of this ordinance.
(tt) "Rating Agency" means any nationally recognized rating agency then maintaining
a rating on the Bonds at the request of the City.
(uu) "Record Date" means the Bond Registrar's close of business on the 15th day of
the month preceding an interest payment date. With respect to redemption of a Bond prior to its
maturity, the Record Date shall mean the Bond Registrar's close of business on the date on
which the Bond Registrar sends the notice of redemption in accordance with Section 9.
(vv) "Refunded Bonds" means all or a portion of the Refunding Candidates selected by
the Designated Representative to be refunded with the proceeds of a Series of the Bonds.
(ww) "Refunding Candidates" means the 2005 Bonds maturing in the years 2014
through 2028, inclusive.
(xx) "Refunding Plan" means (as further described in the applicable Refunding Trust
Agreement):
(1) the deposit with the Refunding Trustee of an amount of proceeds of a Series of
the Bonds sufficient (together with the City Contribution, if necessary) to acquire
the Acquired Obligations to be held by the Refunding Trustee with cash, if
necessary;
(2) the application of the principal of and interest on the Acquired Obligations (and
any other cash balance) to the payment of interest on the Refunded Bonds when
due up to and including April 1, 2015, and the call, payment and redemption of
the specified Refunded Bonds on April 1,2015 at a price ofpar; and
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(3) the payment of costs of issuing the Series of the Bonds and the costs of carrying
out the foregoing elements of the Refunding Plan.
(yy) "Refunding Trust Agreement" means a refunding trust or escrow agreement
between the City and the Refunding Trustee, dated as of the Issue Date of each Series of the
Bonds, providing for the carrying out of the Refunding Plan.
(zz) "Refunding Trustee" means the trustee or escrow agent, or any successor trustee
or escrow agent, designated by the Designated Representative to serve as refunding trustee to
carry out the Refunding Plan.
(aaa) "Registered Owner" means, with respect to a Bond, the person in whose name
that Bond is registered on the Bond Register. For so long as the City utilizes the book-entry only
system for the Bonds under the Letter of Representations, Registered Owner shall mean the
Securities Depository.
(bbb) "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.
(ccc) "Reserve Requiremenf' means for any Series of 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 Bonds or the Future
Parity Bonds proposed to be issued, (b) Maximum Annual Debt Service on the Parity Bonds then
outstanding and the Bonds or the Future Parity Bonds proposed to be issued; and (c) 1.25 times
Average Annual Debt Service on the Parity Bonds then outstanding and the Bonds or 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 Bonds or 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. When the Outstanding Parity Bonds are no longer outstanding, the above
paragraph shall be deleted and the Reserve Requirement shall mean,for all Parity Bonds, an
amount equal to the lesser of(i) Maximum Annual Debt Service, (ii) 125% ofAverage Annual
Debt Service, or (iii) 10% of the proceeds of the then-outstanding Parity Bonds. When
calculating the Reserve Requirement, the City shall exclude from Annual Debt Service, an
amount equal to the Tax Credit Subsidy Payments the City is scheduled to receive in respect of
any Parity Bonds issued as Tax Credit Subsidy Bonds.
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.
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(ddd) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the
Securities Exchange Act of 1934, as amended.
(eee) "SEC' means the United States Securities and Exchange Commission.
(fff) "Securities Depository" means DTC, any successor thereto, any substitute
securities depository selected by the City that is qualified under applicable laws and regulations
to provide the services proposed to be provided by it, or the nominee of any of the foregoing.
(ggg) "Separate Utility System" means any water supply, sewage collection or
treatment, stormwater or other utility service or facilities that may be created, acquired or
constructed by the City as provided in Section 16 of this ordinance.
(hhh) "Series of the Bonds" or "Series" means a series of Bonds issued pursuant to this
ordinance.
(iii) "State" means the State of Washington.
Gjj) "System ofRegistration" means the system of registration for the City's bonds and
other obligations set forth in Ordinance No. 1405 of the City.
(kkk) "Tax Credit Subsidy Bonet' means any bond that is designated by the City as a
"build America bond" or other type of tax credit bond, pursuant to the Code, and which is further
designated as a "qualified bond" under Section 6431 of the Code (or under similar provisions of
the Code providing for "direct-pay" tax credit bonds), and with respect to which the City expects
to receive a Tax Credit Subsidy Payment.
(lll) "Tax Credit Subsidy Payment" means the amounts which the City expects to
receive as a tax credit payable by the United States Treasury to the City under Section 6431 of
the Code (or under similar provisions of the Code providing for "direct-pay" tax credit bonds), in
respect of any bonds issued as Tax Credit Subsidy Bonds.
(mmm) "Term Bon(/' means each Bond designated as a Term Bond and subject to
mandatory redemption in the years and amounts set forth in the Bond Purchase Agreement or
each Outstanding Parity Bond or Future Parity Bond designated as a Tenn Bond in the
applicable Parity Bond Authorizing Ordinance.
(nnn) "Term Bond Maturity Year" means any last calendar year in which Term Bonds
are scheduled to mature (regardless of any reservation of prior redemption rights or mandatory
redemption requirements).
(000) "ULID" means Utility Local Improvement District.
(Ppp) "ULID Assessments" means all assessments levied and collected in any ULID of
the City created for the acquisition or construction of additions to and extensions and bettennents
of the Waterworks Utility if such assessments are pledged to be paid into the Bond Fund (less
any prepaid assessments pennitted by law to be paid into a construction fund or account). ULID
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Assessments shall include all installment payments plus all interest and penalties that may be due
thereon.
(qqq) "Undertaking" means the undertaking to provide continuing disclosure entered
into pursuant to Section 22 of this ordinance.
(m) "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.
(sss) "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.
(ttt) "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. Findings and Determinations. The City takes note of the following facts
and makes the following findings and determinations:
(a) Waterworks Utility. By Ordinance No. 385, passed on September 2, 1952, the
then Town of Marysville, Washington, combined its water distribution system with its sewerage
systems to create a combined water and sewer utility of the Town. By Ordinance No. 2245,
passed on AprilS, 1999, the City created and provided for the operation of a surface water utility
and by Ordinance No. 2509, passed on March 22, 2004, the City combined its surface water
utility with the water and sewer utility to create the Waterworks Utility of the City.
(b) Issuance of the 2005 Bonds. Pursuant to the 2005 Bond Ordinance, the City
issued the 2005 Bonds for the purpose of paying costs of constructing 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. The City reserved the right to redeem the 2005
Bonds maturing on or after April 1, 2016, prior to their maturity on or after April 1, 2015, at a
price of par plus accrued interest to the date fixed for redemption. There are presently
outstanding $41,910,000 principal amount of 2005 Bonds maturing on April 1 of each of the
years 2016 through 2028, inclusive, and bearing various interest rates from 4.00% to 5.125%.
(c) The Refunding. After due consideration, it appears to the City Council that all or
a portion of the Refunding Candidates may be refunded by the issuance and sale of the water and
sewer revenue refunding bonds authorized herein so that a savings will be effected by the
difference between the principal and interest cost over the life of the applicable Series of the
Bonds and the principal and interest cost over the life of the applicable Refunded Bonds but for
such refunding, which refunding will be effected by carrying out the Refunding Plan.
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(d) Authority to Issue Future Parity Bonds. Other than the Outstanding Parity Bonds,
there are no other Parity Bonds outstanding. By the 2005 Bond Ordinance, the City provided for
the issuance of Future Parity Bonds on a parity of lien with the 2005 Bonds if certain Parity
Conditions are met at the time those Future Parity Bonds are issued. The City Council finds and
declares that the amounts required to have been paid into the Bond Fund for the 2005 Bonds
have been paid and maintained as required therein, and that all other Parity Conditions for the
issuance of the Bonds as Future Parity Bonds will have been met and satisfied before the Bonds
are delivered to the Purchaser.
(e) Sufficiency of Gross Revenue. The City Council finds and determines that the
Gross Revenue and benefits to be derived from the operation and maintenance of the
Waterworks Utility at the rates to be charged for services from the Waterworks Utility will be
more than sufficient to meet all Operating and Maintenance 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 Parity Bonds and the Bonds when due. The City Council
declares that in fixing the amounts to be paid into the Bond Fund under this ordinance it has
exercised due regard for Operating and Maintenance Expense and has not obligated the City to
set aside and pay into the Bond Fund a greater amount of Gross Revenue of the Waterworks
Utility than in its judgment will be available over and above such Operating and Maintenance
Expense.
(f) The Bonds. For the purpose of providing the funds necessary to carry out the
Refunding Plan and to pay the costs of issuance and sale of the Bonds, the City Council finds
that it is in the best interests of the City and its ratepayers to issue and sell the Bonds to the
Purchaser, pursuant to the terms set forth in the Bond Purchase Agreement as approved by the
City's Designated Representative consistent with this ordinance.
Section 3. Authorization of Bonds. The City is authorized to borrow money on the
credit of the City and issue water and sewer revenue bonds in the amount of not to exceed
$45,500,000 to provide the funds necessary to carry out the Refunding Plan and to pay the costs
of issuance and sale of the Bonds.
Section 4. Description of Bonds; Appointment of Designated Representative. The
Finance Officer and the City's Financial Planning Manager are each appointed as the Designated
Representative of the City, both with the individual authority to conduct the sale of the Bonds in
the manner and upon the terms deemed most advantageous to the City, and to approve the Final
Terms of the Bonds, with such additional terms and covenants as the Designated Representative
deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance
and incorporated by this reference.
The Designated Representative is hereby authorized and directed on or prior to the Issue
Date to take any action necessary to (1) ensure there is no deficiency in the Bond Fund on the
Issue Date, (2) fully satisfy the Reserve Requirement for all Parity Bonds, including the Bonds,
and (3) obtain a certificate of coverage described under the Parity Conditions, but only in the
event the Designated Representative determines that such certificate is required in order to issue
the Bonds as Future Parity Bonds.
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Section 5. Bond Registrar; Registration and Transfer of Bonds.
(a) Registration of Bonds. Each Bond shall be issued only in registered form as to
both principal and interest and the ownership of each Bond shall be recorded on the Bond
Register.
(b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond Registrar.
The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and
transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond
Registrar is authorized, 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 the System of Registration. The Bond Registrar shall be responsible for
its representations contained in the Bond Registrar's Certificate of Authentication on each Bond.
The Bond Registrar may become an Owner 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 Owners.
(c) Bond Register; Transfer and Exchange. The Bond Register shall contain the name
and mailing address of each Registered Owner and the principal amount and number of each
Bond held by each Registered Owner. A Bond surrendered to the Bond Registrar may be
exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal
amount and of the same Series; interest rate and maturity. A Bond 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 any Bond or transfer registered ownership during the period between the
applicable Record Date and the next upcoming interest payment or redemption date.
(d) Securities Depository; Book-Entry Only Form. DTC is appointed as initial
Securities Depository. Each Bond initially shall be registered in the name of Cede & Co., as the
nominee of DTe. Each Bond registered in the name of the Securities Depository shall be held
fully immobilized in book-entry only form by the Securities Depository in accordance with the
provisions of the Letter of Representations. Registered ownership of any Bond registered in the
name of the Securities Depository may not be transferred except: (i) to any successor Securities
Depository; (ii) to any substitute Securities Depository appointed by the City; or (iii) to any
person if the Bond is no longer to be held in book-entry only form. Upon the resignation of the
Securities Depository, or upon a termination of the services of the Securities Depository by the
City, the City may appoint a substitute Securities Depository. If (i) the Securities Depository
resigns and the City does not appoint a substitute Securities Depository, or (ii) the City
terminates the services of the Securities Depository, the Bonds no longer shall be held in book
entry only form and the registered ownership of each Bond may be transferred to any person as
provided in this ordinance.
Neither the City nor the Bond Registrar shall have any obligation to participants of any
Securities Depository or the persons for whom they act as nominees regarding accuracy of any
records maintained by the Securities Depository or its participants. Neither the City nor the Bond
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5 J 298893.3
Registrar shall be responsible for any notice that is permitted or required to be given to a
Registered Owner except such notice as is required to be given by the Bond Registrar to the
Securities Depository.
Section 6. Form and Execution of Bonds.
(a) Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form
consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the
Mayor and the 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. If
any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the
City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is
authenticated by the Bond Registrar, or issued or delivered by the City, that Bond nevertheless
may be authenticated, issued and delivered 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 its Issue Date.
(b) Authentication. Only a Bond bearing a Certificate of Authentication In
substantially the following fonn, 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 Refunding Bonds, 2013." The authorized signing of a Certificate of
Authentication shall be conclusive evidence that the Bond so authenticated has been duly
executed, authenticated and delivered and is entitled to the benefits of this ordinance.
Section 7. Payment of Bonds. Principal of and interest on each Bond shall be payable
in lawful money of the United States of America. Principal of and interest on each Bond
registered in the name of the Securities Depository is payable in the manner set forth in the
Letter of Representations. Interest on each Bond not registered in the name of the Securities
Depository is payable by electronic transfer on the interest payment date, or by check or draft of
the Bond Registrar mailed on the interest payment date to the Registered Owner at the address
appearing on the Bond Register on the Record Date. However, the City is not required to make
electronic transfers except pursuant to a request by a Registered Owner in writing received on or
prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond
not registered in the name of the Securities Depository is payable upon presentation and
surrender of the Bond by the Registered Owner to the Bond Registrar. The Bonds are not subject
to acceleration under any circumstances.
Section 8. Redemption Provisions and Purchase of Bonds.
(a) Optional Redemption. The Bonds shall be subject to redemption at the option of
the City on tenns acceptable to the Designated Representative, as set forth in the Bond Purchase
Agreement, consistent with the parameters set forth in Exhibit A.
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S129&&933
(b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the
Bond Purchase Agreement, consistent with the parameters set forth in Exhibit A, if not
previously redeemed under any optional redemption provisions or purchased and surrendered for
cancellation under the provisions set forth below, shall be called for redemption at a price equal
to the stated principal amount to be redeemed, plus accrued interest, on the dates and in the
amounts as set forth in the Bond Purchase Agreement. If a Term Bond is redeemed under the
optional redemption provisions, defeased or purchased by the City and surrendered for
cancellation, the principal amount of the Term Bond so redeemed, defeased or purchased
(irrespective of its actual redemption or purchase prices) shall be credited against one or more
scheduled mandatory redemption installments for that Term Bond. The City shall determine the
manner in which the credit is to be allocated and shall notify the Bond Registrar in writing of its
allocation prior to the earliest mandatory redemption date for that Term Bond for which notice of
redemption has not already been given.
(c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the
outstanding Bonds are to be redeemed at the option of the City, the City shall select the Series
and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a
Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of
the Securities Depository to be redeemed in accordance with the Letter of Representations, and
the Bond Registrar shall select all other Bonds to be redeemed randomly in such manner as the
Bond Registrar shall determine. All or a portion of the principal amount of any Bond that is to be
redeemed may be redeemed in any Authorized Denomination. If less than all of the outstanding
principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar,
there shall be issued to the Registered Owner, without charge, a new Bond (or Bonds, at the
option of the Registered Owner) of the same Series, maturity and interest rate in any Authorized
Denomination in the aggregate principal amount to remain outstanding.
(d) Notice of Redemption. Notice of redemption of each Bond registered in the name
of the Securities Depository shall be given in accordance with the Letter of Representations.
Notice of redemption of each other Bond, unless waived by the Registered Owner, shall be given
by the Bond Registrar not less than 20 nor more than 60 days prior to the date fixed for
redemption by first-class mail, postage prepaid, to the Registered Owner at the address appearing
on the Bond Register on the Record Date. The requirements of the preceding sentence shall be
satisfied when notice has been mailed as so provided, whether or not it is actually received by an
Owner. In addition, the redemption notice shall be mailed or sent electronically within the same
period to the MSRB (if required under the Undertaking), to each Rating Agency, and to such
other persons and with such additional information as the Finance Officer shall determine, but
these additional mailings shall not be a condition precedent to the redemption of any Bond.
(e) Rescission ofOptional Redemption Notice. In the case of an optional redemption,
the notice of redemption may state that the City retains the right to rescind the redemption notice
and the redemption by giving a notice of rescission to the affected Registered Owners at any time
on or prior to the date fixed for redemption. Any notice of optional redemption that is so
rescinded shall be of no effect, and each Bond for which a notice of redemption has been
rescinded shall remain outstanding.
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51298893.3
(f) Effect of Redemption. Interest on each Bond called for redemption shall cease to
accrue on the date fixed for redemption, unless either the notice of optional redemption is
rescinded as set forth above, or money sufficient to effect such redemption is not on deposit in
the Bond Fund or in a trust account established to refund or defease the Bond.
(g) Purchase ofBonds. The City reserves the right to purchase any or all of the Bonds
offered to the City at any time at any price acceptable to the City plus accrued interest to the date
of purchase.
Section 9. Failure To Pay Bonds. If the principal of any Bond is not paid when the
Bond is properly presented at its maturity date or date fixed for redemption, 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 date fixed for redemption 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, or in a trust
account established to refund or defease the Bond, and the Bond has been called for payment by
giving notice of that call to the Registered Owner.
Section 10. Bond Fund. The Bond Fund previously has been created in the office of
the Finance Officer 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 ULID Assessments on their collection and, out of
the Net Revenue of the Waterworks Utility, certain fixed amounts without regard to any fixed
proportion, namely:
(a) Into the Principal and Interest Account, monthly, on or before the 20th day of each
month:
(1) begirming after the Issue Date, an amount, together with other money on deposit
therein, that if multiplied by the number of remaining monthly payments to be
made before the next interest payment date equals the next ensuing interest
payment on the Parity Bonds, and begirming with the month after such interest
payment date, an amount, together with other money on deposit therein, sufficient
to pay 1/6 of the next ensuing interest payment on the Parity Bonds; and
(2) beginning after the Issue Date, an amount, together with other money on deposit
therein, that if multiplied by the number of remaining monthly payments to be
made before the next principal payment date (including any mandatory
redemption payment date) equals the next ensuing principal payment of the Parity
Bonds (including any mandatory redemption requirement), and beginning with
the month after such principal payment date (including any mandatory redemption
requirement), an amount, together with other money on deposit therein, sufficient
to pay 1/12 of the next ensuing principal payment of the Parity Bonds, including
any mandatory redemption; and
(b) Into the Reserve Account, on the Issue Date, an amount of Bond proceeds, if
necessary, together with other money on deposit therein, sufficient to fully fund the Reserve
Requirement.
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51298893.3
When the Outstanding Bonds are no longer olltstanding paragraphs (a) and (b) above
shall be deleted and the following paragraphs (a) and (b) shall be effective:
(a) Into the Principal and Interest Account:
(J) before each interest payment date of the Parity Bonds, an amount that will be
sujjicient, together with other money on deposit therein, to pay the interest on the
Parity Bonds on the next succeeding interest payment date; and
(2) before each principal payment date ofthe Parity Bonds (including any mandatory
redemption requirement), an amount that will be sujjicient, together with other
money on deposit therein, to pay the principal of the Parity Bonds on the next
succeeding Principal Payment Date, including mandatory redemption amounts
due on that date with respect to any Term Bonds; and
(b) Into the Reserve Account, an amount sujjicient that the amount on deposit in the
Reserve Account satisfies the Reserve Requirement for the Parity Bonds in the time and manner
required by this ordinance.
Except for withdrawals 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 amount of principal
and interest for aJi 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.
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 by the withdrawal of amounts from the Reserve Account 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 shaJi 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
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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.
When the Outstanding Parity Bonds are no longer outstanding, thefollowing Section 11 shall
become effective:
Section 11. Rate Stabilization Account. The City may at any time, as determined by
the Finance Officer and consistent with Sections 14 and 15 of this ordinance, create the Rate
Stabilization Account and deposit therein amounts from Gross Revenue of the Waterworks
Utility and any other money received by the Waterworks Utility and available to be used for that
purpose, excluding principal proceeds of any Future Parity Bonds. The Finance Officer may at
any time withdraw money from the Rate Stabilization Account for inclusion in the Net Revenue
for the current fiscal year of the Waterworks Utility, except that the total amount withdrawn from
the Rate Stabilization Account in any calendar year may not exceed the total debt service of the
Waterworks Utility in that year. Such deposits or withdrawals may be made up to and including
the date 90 days after the end of the calendar year for which the deposit or withdrawal will be
included as Net Revenue. Earnings from investments in the Rate Stabilization Account shall be
deposited in that fund and shall not be included as Net Revenue unless and until withdrawn from
that fund as provided in this section. The Finance Officer may also deposit earnings from
investments in the Rate Stabilization Account into any Waterworks Utility fund as authorized by
ordinance, and such deposits shall be included as Net Revenue in the year of deposit. No deposit
may be made into the Rate Stabilization Account to the extent that such deposit would prevent
the City from meeting the Coverage Requirement in the relevant calendar year.
Section 12. Separate Utility Systems. The City may create, acquire, construct,
finance, own and operate one or more additional systems for water supply, sewer service, water,
sewage or stormwater transmission, treatment or other commodity or utility service. The revenue
of that Separate Utility System, and any utility local improvement district assessments payable
solely with respect to improvements to a Separate Utility System, shall not be included in the
Gross Revenue and may be pledged to the payment of revenue obligations issued to purchase,
construct, condemn or otherwise acquire or expand the Separate Utility System. Neither the
Gross Revenue nor the Net Revenue may be pledged to the payment of any obligations of a
Separate Utility System except that the Net Revenue may be pledged on a basis subordinate to
the lien of the Parity Bonds.
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Section 13. Pledge of Net Revenue and Lien Position. The Net Revenue of the
Waterworks Utility and UUD Assessments are pledged irrevocably by the City Council to be
paid into the Bond Fund at the times and in the manner required by this ordinance for the
payment of the Parity Bonds. This pledge shall constitute a lien and charge upon such Net
Revenue and UUD Assessments prior and superior to any other charges whatsoever.
Section 14. Covenants. The City covenants and agrees with the Owner of each Bond
at any time outstanding, as follows:
(a) Maintenance and Operation. The City 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. The City 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 governmental 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.
(3) 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. When the Outstanding Parity Bonds are no
longer outstanding, this paragraph (3) shall be deleted.
(c) Sale or Disposition of the Waterworks Utility. The City 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 19 of this ordinance.
The City 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:
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(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.
(d) Liens Upon the Waterworks Utility. The City 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. The City 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. When the Outstanding Parity
Bonds are no longer outstanding, this paragraph (e) shall be deleted and the following
paragraph (e) shall be effective: Books and Records. The City will maintain complete books
and records relating to the operation ofthe Waterworks Utility and its financial affairs, and will
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cause such books and records to be audited annually, and cause to be prepared an annual
financial and operating statement within 120 days ofthe close ofeach fiscal year, which shall be
provided to any owner ofParity Bonds upon request.
(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, the City 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, the City 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. The City 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 of
the 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.
(i) Public Liability and Property Damage Insurance. The City 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 reasonable judgment of the City Council, to protect the
Waterworks Utility and the owners of the Parity Bonds against loss.
When the Outstanding Parity Bonds are no longer outstanding, paragraphs (h) and (i)
above will be deleted and the following paragraph (h) will be effective: Insurance. The City
will at all times carryfire and such otherforms ofinsurance on such ofthe buildings. equipment,
facilities and properties of the Waterworks Utility as are ordinarily carried on such buildings,
equipment, facilities, and properties by utilities engaged in the operation of similar utility
systems to the full insurable value thereof, and also will carry adequate public liability insurance
at all times. The City may self insure or participate in a joint intergovernmental insurance pool
or similar plan, and the cost of that insurance or self insurance shall be considered a part of
Maintenance and Operating Expense.
Section 15. Flow of Funds. All ULID Assessments shall be paid into the Bond Fund
as provided by Section 10. 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 Maintenance and Operation Expense;
(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
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mandatory redemption or sinking fund account created to provide for the payment of the
principal ofTenn Bonds;
(c) To make all payments required to be made into the Reserve Account;
(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 Waterworks Utility junior
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
bettennents, improvements and repairs to or extensions and replacements of the Waterworks
Utility, to make deposits into the Rate Stabilization Account 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 into the Bond Fund.
Section 16. Provisions for Future Parity Bonds. The City reserves the right to issue
Future Parity Bonds if the Parity Conditions are met and complied with at the time of the
issuance of those Future Parity Bonds.
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 lien and
charge 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. Tax Covenants.
(a) 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 pennit
any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds that
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 requirements of Section 148
of the Code are applicable to the Bonds, take all actions necessary to comply (or to be treated as
having complied) with those requirements in cormection with the Bonds.
(b) Post-Issuance Compliance. The Finance Officer is authorized and directed to
review and update the City'S written procedures to facilitate compliance by the City with the
covenants in this ordinance and the applicable requirements of the Code that must be satisfied
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S1298893.3
after the Issue Date to prevent interest on the Bonds from being included in gross income for
federal tax purposes.
Section 18. 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 Parity Bonds, may pass supplemental or amendatory ordinances as
follows:
(1) To cure any fonnal defect, omission, inconsistency or ambiguity in this ordinance
in a manner not adverse to the owner of any Parity Bonds;
(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 restrictions 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 confinn, 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 ofportions 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 Parity 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 ofthe 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 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
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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 Parity 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 Parity Bonds then outstanding, nothing contained in this
section shall permit, or be construed as permitting:
(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 ofany Parity Bond or Parity Bonds
or any other bond or bonds, or
(iii) A reduction in the aggregate principal amount of Parity
Bonds, the consent of the registered owners of Parity 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 Parity Bonds, to the Bond Insurer,
and to the Rating Agency. 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 Parity 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 Parity 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.
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51298893.3
(4) If registered owners of not less than the percentage of Parity Bonds required by
this Subsection (c) shall have consented to and approved the execution and
delivery thereof as herein provided, no owner of the Parity 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 uutstanding, shall thereafter
be determined, exercised and enforced under this ordinance subject in all respects to such
modifications and amendments.
Section 19. Refunding or Defeasance of the Bonds. The City may issue refunding
bonds pursuant to State law or use money available from any other lawful source to carry out a
refunding or defeasance plan, which may include (a) paying when due the principal of and
interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds
prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets
aside in a special trust fund or escrow account irrevocably pledged to that redemption or
defeasance (the "trust account"), money and/or Government Obligations maturing at a time or
times and bearing interest in amounts sufficient to redeem, refund or defease the defeased Bonds
in accordance with their terms, then all right and interest of the Owners of the defeased Bonds in
the covenants of this ordinance and in the funds and accounts obligated to the payment of the
defeased Bonds shall cease and become void. Thereafter, the Owners of defeased Bonds shall
have the right to receive payment of the principal of and interest on the defeased Bonds solely
from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that
event, the City may apply money remaining in any fund or account (other than the trust account)
established for the payment or redemption of the defeased Bonds to any lawful purpose, subject
only to the rights of the owners of any other Parity Bonds then outstanding.
Unless otherwise specified by the City in a refunding or defeasance plan, notice of
refunding or defeasance shall be given, and selection of Bonds for any partial refunding or
defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of
Bonds.
Section 20. Deposit of Bond Proceeds; Refunding of the Refunded Bonds.
(a) Appointment of the Refunding Trustee; Selection of Refunded Bonds. The
Designated Representative is authorized to appoint the Refunding Trustee and to select the
Refunding Candidates to be refunded by each Series of the Bonds. The Designated
Representative may choose to refund fewer than all of the Refunding Candidates. The Refunded
Bonds, as selected by the Designated Representative, shall be identified in the applicable Bond
Purchase Agreement and/or the applicable Refunding Trust Agreement.
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S1298893.3
(b) Deposit ofBond Proceeds; Purchase ofAcquired Obligations. Proceeds from the
sale of each Series of the Bonds in the amount sufficient to carrying out the Refunding Plan and
pay the costs of issuance of the Bonds shall be deposited immediately upon the receipt thereof
with the Refunding Trustee and used to discharge the obligations of the City relating to the
Refunded Bonds under the 2005 Bond Ordinance by providing for the payment of the amounts
required to be paid by the Refunding Plan. Such obligations shall be discharged fully by the
Refunding Trustee's simultaneous purchase of Acquired Obligations, bearing such interest and
maturing as to principal and interest in such amounts and at such times so as to provide, together
with a beginning cash balance, if necessary, for the payment of the amounts required to be paid
by the Refunding Plan. The Acquired Obligations shall be listed and more particularly described
in the Refunding Trust Agreement, but are subject to substitution as set forth below. The
Designated Representative is authorized and directed to approve the Acquired Obligations to be
purchased. The Finance Officer is authorized to cause the City to transfer to the Refunding
Trustee the City Contribution, if any, immediately preceding the Issue Date. Any Bond proceeds
or other money deposited with the Refunding Trustee not needed to carry out the Refunding Plan
or pay the costs of issuance of the Bonds shall be returned to the City as soon as reasonably
practicable following the Issue Date. Any Bond proceeds not needed to carry out the Refunding
Plan and pay the costs of issuance of the Bonds shall be deposited in the Bond Fund and used to
pay interest on the applicable Series of the Bonds on the first interest payment date.
(c) Substitution of Acquired Obligations. Prior to the purchase of any Acquired
Obligations, the City reserves the right to substitute other noncallable, nonprepayable
Government Obligations ("Substitute Obligations") for any of such Acquired Obligations if,
(i) in the opinion of Bond Counsel the interest on the Bonds and the Refunded Bonds will remain
excl uded from gross income for federal income tax purposes under Sections 103, 148 and 149(d)
of the Code, and (ii) such substitution will not impair the timely payment of the amounts
required to be paid by the Refunding Plan, as verified by a nationally recognized independent
certified public accounting firm. The City may use any savings created by the foregoing
substitution to pay interest on the Bonds on the first interest payment date.
After the purchase of Acquired Obligations by the Refunding Trustee, the City reserves
the right to substitute therefor money and/or Substitute Obligations subject to the conditions that
such money or Substitute Obligations held by the Refunding Trustee will be sufficient to carry
out the Refunding Plan, that such substitution will not cause the Bonds and the Refunded Bonds
to be arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder
in effect on the date of such substitution and applicable to obligations issued on the Issue Date,
and that the City obtains, at its expense: (i) a verification by a nationally recognized independent
certified public accounting firm confirming that the payments of principal of and interest on the
Substitute Obligations, if paid when due, and any other money held by the Refunding Trustee
will be sufficient to carry out the Refunding Plan; and (ii) an opinion from Bond Counsel to the
effect that the disposition and substitution or purchase of such Substitute Obligations, under the
statutes, rules and regulations then in force and applicable to the Bonds or the Refunded Bonds,
will not cause the interest on the Bonds or the Refunded Bonds to be included in gross income
for federal income tax purposes and that such disposition and substitution or purchase is in
compliance with the statutes and regulations applicable to the Bonds or the Refunded Bonds.
Any surplus money resulting from the sale, transfer, other disposition or redemption of the
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51298893.3
Acquired Obligations and the substitutions therefor shall be released from the trust estate and
transferred to the City to be used to pay debt service on the Bonds.
(d) Administration of Refunding Plan. The Refunding Trustee is authorized and
directed to purchase the Acquired Obligations (or Substitute Obligations) and to make the
payments required to be made pursuant to the Refunding Plan from the Acquired Obligations (or
Substitute Obligations) and money deposited with the Refunding Trustee pursuant to this
ordinance and the Refunding Plan. All Acquired Obligations (or Substitute Obligations) and
money deposited with the Refunding Trustee and any income therefrom shall be held
irrevocably, invested and applied in accordance with the provisions of the 2005 Bond Ordinance,
this ordinance, chapter 39.53 RCW and other applicable laws of the State and the Refunding
Trust Agreement. All necessary and proper fees, compensation and expenses of the Refunding
Trustee and all other costs incidental to the setting up of the escrow to accomplish the Refunding
Plan and costs related to the issuance, sale and delivery of the Bonds, including bond printing,
rating service fees, verification fees, Bond Counsel's fees and other related expenses, shall be
paid out of the proceeds of the Bonds.
(e) Authorization for Refunding Trust Agreement. To carry out the Refunding Plan,
the Designated Representative is authorized and directed to execute and deliver to the Refunding
Trustee the Refunding Trust Agreement setting forth the duties, obligations and responsibilities
of the Refunding Trustee in connection with the payment, redemption and retirement of the
Refunded Bonds as provided herein and stating that the provisions for payment of the fees,
compensation and expenses of the Refunding Trustee set forth therein are satisfactory to it.
(D Call for Redemption of the Refunded Bonds. Effective upon the Issue Date, the
City calls for redemption all of the Refunded Bonds on April 1, 2015, at par plus accrued
interest. Such calls for redemption shall be irrevocable after the delivery of the Bonds to the
Purchaser. The date on which the Refunded Bonds are herein called for redemption is the first
date on which the Refunded Bonds may be called. The Refunding Trustee is authorized and
directed to give or cause to be given such notices as required, at the times and in the manner
required, pursuant to the 2005 Bond Ordinance and the Refunding Trust Agreement in order to
effect the redemption of the Refunded Bonds prior to their stated maturity dates.
(g) Additional Findings. Prior to the execution of any Bond Purchase Agreement, the
Designated Representative must determine, on behalf of the City, that the issuance, sale and
delivery of that particular Series of the Bonds will effect a net present value savings to the City
and its taxpayers as set forth in paragraph (i)(2) of Exhibit A attached hereto. The City Council
finds and determines that such net present value savings is a substantial savings and that
achieving such net present value savings by issuing Bonds is in the best interest of the City and
in the public interest. In making the finding and determination that the issuance, sale and
delivery of a Series of the Bonds will effect the foregoing net present value savings, the
Designated Representative shall give consideration to the fixed maturities of the Bonds of that
Series and the Refunded Bonds to be refunded by such Series, the costs related to the issuance,
sale and delivery of such Series and the known earned income from the investment of the
proceeds of the issuance and sale of such Series and the City Contribution, if any, used in the
Refunding Plan pending payment and redemption of the Refunded Bonds to be redeemed.
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51298893.3
The Designated Representative further must find and determine that the money to be
deposited with the Refunding Trustee to carry out the Refunding Plan will discharge and satisfy
the obligations of the City under the 2005 Bond Ordinance with respect to the Refunded Bonds,
and the pledges, charges, trusts, covenants and agreements of the City therein made or provided
for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be
outstanding under the 2005 Bond Ordinance immediately upon the deposit of such money with
the Refunding Trustee.
Section 21. Sale and Delivery of the Bonds.
(a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is
authorized to sell each Series of the Bonds by negotiated sale or by competitive sale in
accordance with a notice of sale consistent with this ordinance, based on the assessment of the
Designated Representative of market conditions, in consultation with appropriate City officials
and staff, Bond Counsel and other advisors. In determining the method of sale of the Bonds and
accepting the Final Terms, the Designated Representative shall take into account those factors
that, in the judgment of the Designated Representative, may be expected to result in the lowest
true interest cost to the City.
(b) Procedure for Negotiated Sale. If the Designated Representative determines that
a Series of the Bonds is to be sold by negotiated sale, the Designated Representative shall select
one or more Purchasers with which to negotiate such sale. The Bond Purchase Agreement for
each Series of the Bonds shall set forth the Final Terms. The Designated Representative is
authorized to execute the Bond Purchase Agreement on behalf of the City, so long as the terms
provided therein are consistent with the terms of this ordinance.
(c) Procedure for Competitive Sale. If the Designated Representative determines that
a Series of the Bonds is to be sold by competitive sale, the Designated Representative shall cause
the preparation of an official notice of bond sale setting forth parameters for the Final Terms and
any other bid parameters that the Designated Representative deems appropriate consistent with
this ordinance. Bids for the purchase of each Series of the Bonds shall be received at such time
or place and by such means as the Designated Representative directs. On the date and time
established for the receipt of bids, the Designated Representative (or the designee of the
Designated Representative) shall open bids and shall cause the bids to be mathematically
verified. The Designated Representative is authorized to award, on behalf of the City, the
winning bid and accept the winning bidder's offer to purchase that Series of the Bonds, with
such adjustments to the aggregate principal amount and principal amount per maturity as the
Designated Representative deems appropriate, consistent with the terms of this ordinance. The
Designated Representative may reject any or all bids submitted and may waive any formality or
irregularity in any bid or in the bidding process if the Designated Representative deems it to be
in the City's best interest to do so. If all bids are rejected, that Series of the Bonds may be sold
pursuant to negotiated sale or in any manner provided by law as the Designated Representative
determines is in the best interest of the City, within the parameters set forth in this ordinance.
(d) Preparation, Execution and Delivery ofthe Bonds. The Bonds will be prepared at
City expense and will be delivered to the Purchaser in accordance with the Bond Purchase
Agreement, together with the approving legal opinion of Bond Counsel regarding the Bonds.
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51298893.3
Section 22. Official Statement; Continuing Disclosure.
(a) Preliminary Official Statement Deemed Final. The Designated Representative
shall review the form of the preliminary official statement prepared in connection with each sale
of a Series of the Bonds to the public. For the sole purpose of the Purchaser's compliance with
paragraph (b)(1) of Rule 15c2-12, the Designated Representative is authorized to deem that
preliminary official statement final as of its date, except for the omission of information
permitted to be omitted by Rule 15c2-12. The City approves the distribution to potential
purchasers of the Bonds of a preliminary official statement that has been deemed final in
accordance with this subsection.
(b) Approval ofFinal Official Statement. The City approves the preparation of a final
official statement for each Series of the Bonds to be sold to the public in the form of the
preliminary official statement, with such modifications and amendments as the Designated
Representative deems necessary or desirable, and further authorizes the Designated
Representative to execute and deliver such final official statement to the Purchaser. The City
authorizes and approves the distribution by the Purchaser of that final official statement to
purchasers and potential purchasers of the Bonds.
(c) Undertaking to Provide Continuing Disclosure. To meet the requirements of
paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds, the
Designated Representative is authorized to execute a written undertaking to provide continuing
disclosure for the benefit of holders of the Bonds in substantially the form attached as Exhibit B.
Section 23. General Authorization and Ratification. The Designated Representative
and other appropriate officers of the City are severally authorized to take such actions and to
execute such documents as in their judgment may be necessary or desirable to carry out the
transactions contemplated in connection with this ordinance, and to do everything necessary for
the prompt delivery of the Bonds to the Purchaser and for the proper application, use and
investment of the proceeds of the Bonds. All actions taken prior to the effective date of this
ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the
terms of this ordinance are ratified and confirmed in all respects.
Section 24. Severability. The provisions of this ordinance are declared to be separate
and severable. If a court of competent jurisdiction, all appeals having been exhausted or all
appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as
to any person or circumstance, such offending provision shall, if feasible, be deemed to be
modified to be within the limits of enforceability or validity. However, if the offending provision
cannot be so modified, it shall be null and void with respect to the particular person or
circumstance, and all other provisions of this ordinance in all other respects, and the offending
provision with respect to all other persons and all other circumstances, shall remain valid and
enforceable.
Section 25. 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.
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S129889J.J
PASSED by the City Council and APPROVED by the Mayor of the City of Marysville,
Washington, at an open public meeting thereof, this 22nd day of July, 2013.
ATTEST:tilOL-
APPROVED AS TO FORM:
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51298893.3
Exhibit A
PARAMETERS FOR FINAL TERMS OF THE BONDS
(a) Principal Amount.
(b) Date or Dates.
(c) Denominations, Name, etc.
(d) Interest Rate(s).
(e) Payment Dates.
(£) Final Maturity.
(g) Redemption Rights.
The Bonds may be issued in one or more Series and shall
not exceed the aggregate principal amount of $45,500,000.
Each Bond shall be dated the Issue Date, which date may
not be later than July 1,2014.
The Bonds shall be issued in Authorized Denominations
and shall be numbered separately in the manner and shall
bear any name and additional designation as deemed
necessary or appropriate by the Designated Representative.
Each Bond shall bear interest at a fixed rate per annum
(computed on the basis of a 360-day year of twelve 30-day
months) from the Issue Date or from the most recent date
for which interest has been paid or duly provided for,
whichever is later. One or more rates of interest may be
fixed for the Bonds. No rate of interest for any Bond may
exceed 5.50%, and the true interest cost to the City for each
Series of the Bonds may not exceed 4.90%.
Interest shall be payable at fixed rates semiannually on
dates acceptable to the Designated Representative,
commencing no later than one year following the Issue
Date. Principal payments shall commence on a date
acceptable to the Designated Representative and shall be
payable at maturity or in mandatory redemption
installments, on dates acceptable to the Designated
Representative.
The Bonds shall mature no later than April 1, 2028.
The Designated Representative may approve in the Bond
Purchase Agreement provisions for the optional and
mandatory redemption of Bonds, subject to the following:
(I) Optional Redemption. Any Bond may be designated as
being (A) subject to redemption at the option of the
City prior to its maturity date on the dates and at the
prices set forth in the Bond Purchase Agreement; or (B)
not subject to redemption prior to its maturity date. If a
Bond is subject to optional redemption prior to its
maturity, it must be subject to such redemption on one
or more dates occurring not more than 10Yz years after
the Issue Date.
A-I
51298893 3
(h) Price.
(i) Other Terms and Conditions.
(2) Mandatory Redemption. Any Bond may be designated
as a Term Bond, subject to mandatory redemption prior
to its maturity on the dates and in the amounts set forth
in the Bond Purchase Agreement.
The purchase price for each Series of the Bonds may not be
less than 98% or more than 130% of the stated principal
amount of that Series, and the underwriters' discount may
not exceed 2% of the stated principal amount of that Series.
(l) The Designated Representative may determine whether
it is in the City's best interest to provide for bond
insurance or other credit enhancement; and may accept
such additional terms, conditions and covenants as he
or she may determine are in the best interests of the
City, consistent with this ordinance.
(2) Each Series of the Bonds shall produce a minimum net
present value savings to the City and its ratepayers of
3% (as a percentage of the Refunded Bonds refunded
by such Series). Net present value savings means the
aggregate difference between (i) annual debt service on
the Refunded Bonds to be refunded, less (ii) arumal
debt service on the corresponding Series of the Bonds
(including expenses related to costs of issuance of that
Series of the Bonds) discounted to the Issue Date using
the yield on that Series of the Bonds as the discount
rate, plus (iii) excess cash, if any, distributed to the City
on the Issue Date, and less (iv) the amount of the City
Contribution, if any, made on such Issue Date.
A-2
51298893.3
Exhibit B
[Form ofJ
UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE
City of Marysville, Washington
Water and Sewer Revenue Refunding Bonds, 2013
To meet the requirements of paragraph (b)(5) of Rule 15c2-12, as applicable to a
participating underwriter for the above-referenced bonds (the "Bonds"), the City makes the
following written Undertaking for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of Listed
Events. The City undertakes to provide or cause to be provided, either directly or through a
designated agent, to the MSRB, in an electronic format as prescribed by the MSRB,
accompanied by identifying information as prescribed by the MSRB:
(i) Annual financial information and operating data of the type included in the final
official statement for the Bonds and described in paragraph (b) ("annual financial
information");
(ii) Timely notice (not in excess of 10 business days after the occurrence of the event)
of the occurrence of any of the following events with respect to the Bonds: (1)
principal and interest payment delinquencies; (2) non-payment related defaults, if
material; (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, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notice of Proposed Issue (IRS
Form 5701 -TEB) or other material notices or determinations with respect to the
tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if
material; (8) bond calls (other than scheduled mandatory redemptions of Term
Bonds), if material, and tender offers; (9) defeasances; (10) release, substitution,
or sale of property securing repayment of the Bonds, if material; (11) rating
changes; (12) bankruptcy, insolvency, receivership or similar event of the City, as
such "Bankruptcy Events" are defined in Rule 15c2-12; (13) the consummation of
a merger, consolidation, or acquisition involving the City or the sale of all or
substantially all of the assets of the City other than in the ordinary course of
business, the entry into a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material; and (14) appointment of a successor or
additional trustee or the change of name of a trustee, if material.
(iii) Timely notice of a failure by the City to provide required annual financial
information on or before the date specified in paragraph (b).
(b) Type of Annual Financial Information Undertaken to be Provided. The annual
financial information that the City undertakes to provide in paragraph (a):
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51298893.3
(i) Shall consist of (1) annual financial statements prepared (except as noted in the
financial statements) in accordance with generally accepted accounting principles
applicable to local governmental units of the State such as the City, as such
principles may be changed from time to time, which statements may be unaudited,
provided, that if and when audited financial statements are prepared and available
they will be provided; (2) a statement of authorized, issued and outstanding
bonded debt secured by the Gross Revenue of the Waterworks Utility; (3) debt
service coverage ratios; and (4) [references to the specific sections of the Official
Statement to be inserted upon publication of the Official Statement];
(ii) Shall be provided 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 3 I),as such
fiscal year may be changed as required or permitted by State law, commencing
with the City's fiscal year ending December 31,2013; and
(iii) May be provided in a single or multiple documents, and may be incorporated by
specific reference to documents available to the public on the Internet website of
the MSRB or filed with the SEC.
(c) Amendment of Undertaking. This 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 or the MSRB,
under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice
to the MSRB 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. This Undertaking shall inure to the benefit of the City and the
holder of each Bond, 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 the provisions of Rule 15c2-12 that 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 Bond Counsel delivered to the City, and the City provides timely
notice of such termination to the MSRB.
(f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the
City learns of any failure to comply with this Undertaking, the City will proceed with due
diligence to cause such noncompliance to be corrected. No failure by the City or other obligated
person to comply with this Undertaking shall constitute a default in respect of the Bonds. The
sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated
person to comply with this Undertaking, including seeking an order of specific performance from
an appropriate court.
B-2
51298893.3
(g) Designation of Official Responsible to Administer Undertaking. The Finance
Officer or his or her designee is authorized to take such further actions as may be necessary,
appropriate or convenient to carry out this Undertaking in accordance with Rule 15c2-12,
including the following actions:
(i) Preparing and filing the annual financial information undertaken to be provided;
(ii) Determining whether any event specified in paragraph (a) has occurred, assessing
its materiality, where necessary, with respect to the Bonds, and preparing and
disseminating any required notice of its occurrence;
(iii) Determining whether any person other than the City is an "obligated person"
within the meaning of Rule 15c2-12 with respect to the Bonds, and obtaining
from such person an undertaking to provide any annual financial information and
notice of listed events for that person required under Rule 15c2-12;
(iv) Selecting, engaging and compensating designated agents and consultants,
including financial advisors and legal counsel, to assist and advise the City in
carrying out this Undertaking; and
(v) Effecting any necessary amendment of this Undertaking.
B-3
5129889).)
Exhibit C
PARITY CONDITIONS FOR ISSUANCE OF FUTURE PARITY BONDS
The City may issue Future Parity Bonds on a parity with the Bonds if and only if the
following conditions are met and complied with at the time of issuance of those proposed Future
Parity Bonds:
(a) There shall be no deficiency in the Bond Fund.
(b) The Future Parity Bond Authorizing Ordinance shall provide that all assessments
and interest thereon that may be levied in any ULIO 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 Future Parity Bond Authorizing Ordinance shall provide for the payment of
the principal thereof and interest thereon out of the Bond Fund.
(d) The Future Parity Bond Authorizing Ordinance 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) Alternate
Security or an amount plus 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 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 ULIO 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 ULIO Assessments are insufficient,
then from the Net Revenue of the Waterworks Utility in five approximately equal annual
payments. No Alternate Security may be used to satisfy the Reserve Requirement for Future
Parity Bonds unless (1) the Alternate Security is non-cancelable and (2) the provider of the
Alternate Security as of the time of issuance of such Alternate Security is rated in the highest
rating categories by both Moody's Investors Service, Inc., and Standard & Poor's Corporation.
When the Outstanding Parity Bonds are no longer outstanding, subsection (d)(2) shall be
deleted.
(e) The Future Parity Bond Authorizing Ordinance 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 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:
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S1298893.3
(I) Any changes in rates in effect and being charged or expressly
committed by ordinance to 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) Income from any customers to be connected to the Waterworks
Utility who have paid the required connection charges;
(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 l2-month period.
When the Outstanding Parity Bonds are no longer outstanding, as an alternative to a
certificate from a licensed professional engineer experienced in the design, construction and
operation of municipal utilities, or from an independent certified public accountant, the City
may have on file a certificate of the Finance Officer 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, for each year, shall be at least
equal to the Coverage Requirement for each year thereafter. The Finance Officer shall not
make any ofthe adjustments referred to above.
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
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such refunding bonds are not extended beyond the maturities of the bonds to be refunded
thereby.
For purposes of preparing the 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 (l) 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) ifno 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.
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