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HomeMy WebLinkAbout3398 ,,; Distribution: O~ ~/~/~8. Bremerton Sun '~' ~ Attorney file Bond Attorney (3 certified)~ CITY OF BREMERTON, WASHINGTON AN ORDINANCE of the City of Bremerton, Washington, specifying and adopting a plan for the acquisition, construction, and installation of certain additions and improvements to and extensions of the combined water and sewerage system of the City; declaring the estimated cost thereof as nearly as may be; providing for the payment of such cost; providing for the issuance of water and sewer revenue bonds of the City to pay part of such cost; providing the date, fo~, terms and maturities of such bonds; creating a bond redemption fund for such bonds; providing and adopting certain covenants and pro- tective features safeguarding the payment of the principal of and interest in the same; and provid- ing for the sale of those bonds as a single bond to the Economic Development Administration, United States Department of Commerce, and declaring an emergency. ~fHEREAS, in the judgment of the City Council of the City of Bremerton, Washington (hereinafter called the "City"), the public health, welfare, safety and convenience require and it is advisable that certain additions to and betterments and extensions of the combined water and sewer system of the City, all as more particularly hereinafter set forth; and WHEREAS, the City Council has determined in order to carry out the plan providing the acquisition, construction and installation hereinafter specified and adopted, it is necessary to issue and sell $204,000 par value of water and sewer revenue bonds to provide a part of the funds with which to pay the cost of carrying out such plan to evidence loans in such aggregate total amount authorized by the Economic Development Administration, United States Department of Commerce as provided in and in accordance with a certain loan and grant agreement by and between the City and the Economic Development Administration, United States Department of Commerce dated September 14, 1977; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON, DO ORDAIN, as follows: Section 1. As used in this ordinance, the following words shall have the following meanings: (a) "Bonds" shall mean the $204,000 par value of "Water and Sewer Revenue Bonds, 1977," of the City, the issuance and sale of which are provided for in this ordinance. (b) "Bond Fund" shall mean the "Bremerton 1977 Water and Sewer Revenue Bond Redemption Fund" created by this ordinance. (c) "City" shall mean the City of Bremerton, Washington. (d) "Gross Revenue of the Waterworks Utility" shall mean all the earnings and revenue received by the Waterworks Utility from any source whatsoever, except taxes, charges in lieu of taxes, utility local improvement district assessments, proceeds from the sale of City property and bond proceeds. (e) "Maintenance and Operation Expenses" shall mean all reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair, working order and condition, but shall not include any depreciation or taxes or charges in lieu of taxes levied or imposed by the City. (f) "Net Revenue of the Waterworks Utility" shall mean the Gross Revenue of the Waterworks Utility, less the Maintenance and Operation Expenses. (g) "Parity Bonds" shall mean any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds, the payment of the principal of and interest on which constitutes a lien and charge on the Gross Revenue of the Waterworks Utility equal in rank with the lien and charge upon such revenue required to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Bonds. - 2 - (h} "Plan of Additions and Betterments" shall mean the system or plan providing for additions to and betterments and extensions of the Waterworks Utility of the City as specified and adopted herein. (i) "Prior Lien Bonds" shall mean the City's "Water and Sewer Revenue Bonds, 1955," "Water and Sewer Revenue Bonds, 1962," "Water and Sewer Revenue Bonds, 1965," "Water and Sewer Revenue Bonds, 1971," and "Water and Sewer Revenue Bonds, 1973" heretofore issued and any water and sewer revenue bonds hereafter issued on a parity therewith (in accordance with the right of the City reserved to issue such additional Prior Lien Bonds as set forth in Section 16 of this ordinance), the payment of the principal of and interest on which constitutes a lien and charge on the Gross Revenue of the Waterworks Utility prior and superior to the lien and charge upon such revenue for the payment of the Bonds and Parity Bonds. (j) "Single Bond" shall mean the single bond or bonds authorized and described in Section 7 of this ordinance which may be substituted for the Bonds as evidence of indebtedness authorized herein or any specified part thereof. All provisions of this ordinance applicable to the Bonds shall be equally applicable to the Single Bond, and Vice Versa, unless the conditions of any such provision shall clearly indicate to the contrary. (k) "Waterworks Utility" shall mean the existing Waterworks Utility of the City, including the sanitary sewerage system as a part thereof, as the same shall be added to, bettered, improved and extended for as long as any of the Bonds or Parity Bonds are outstanding. Section 2. The City hereby specifies and adopts the Plan of Additions and Betterments as follows: - 3 - (a) The repair and improvement of Well No. 4, located on Anderson Creek in the S.W. 1/4 of the S.E. 1/4, Section 33, Township 24 North Range 1 East W.M., by installing a spreader collar at a depth of about 345 feet, screens and a submersible pump, electrical supply facilities, and miscellaneous items. (b) The drilling and installation of Well No. 8, located in the N.E. 1/4 of the S.W. 1/4 of Section 33, Township 24 North, Range 1 East W.M., to a depth of 573 feet, with 12" casing and screen. (c) The drilling and installation of Bridle Ridge Well, located in the S.E. 1/4 of Section 22, Township 25 North, Range 1 East, Trace A, Bridle Ridge Division II, to a depth of 950 feet, and installing screens, developing the well, install- ing electrical supply facilities, pump, chlorinator, and con- nection to the existing water distribution system of the City. (d) The development of the Parkwood East Well located in the S.W. 1/4 of Section 23, Township 25 North, Range 1 East, W.M., by installation of 26 inch submersible pump, underground electrical power to the site, and chlorination and metering equipment. (e) Construction of the Vena/Sandra Lane Reservoir and transmission line, located in the S.W. 1/4 of Section 35, Township 25 North, Range 1 East, comprising a 1 million gallon tank, and 2,850 feet of 12" iron ductile pipe transmission line connecting the tank to the existing water distribution system of the City; and (f) Replacement of 796 lineal feet of leaking water distribution lines in the Shore Drive and Gorst Triangle areas of the City, as is more particularly shown on records of the Water- works Utility to which reference is made and so incorporated herein. - 4 - It is a part of this Plan of Additions and Betterments that the City may make such changes in the details of the Plan prior to or in actual course of construction and installation which may be found necessary or desirable, provided the same do not substantially change the Plan as hereinabove set forth. Section 3. The gross benefits and revenues to be derived from the maintenance and operation of the Waterworks Utility at the rates to be charged for water and sanitary sewage disposal service will, in the judgment of the City Council, be more than sufficient to meet all Maintenance and Operation Expenses, to meet the debt service on all outstanding Prior Lien Bonds when due, and to permit the setting aside into a special fund out of the Gross Revenue of the Waterworks Utility of sufficient amounts to pay the interest on the Bonds herein authorized to be issued as such interest becomes due and payable and to pay and redeem all of those Bonds at maturity. Section 4. The life of the foregoing additions to and betterments and extensions of the existing Waterworks Utility to be acquired and constructed pursuant to such Plan of Additions and Betterments is hereby declared to be at least ten (10) years. Section 5. The estimated cost, as near as may be, of the aforesaid Plan of Additions and Betterments is hereby declared to be $630,000. Section 6. The cost of carrying out the Plan of Additions and Betterments shall be met and defrayed from the issuance and sale of water and sewer revenue bonds in the amount of $204,000 to evidence the loan authorized by the Economic Development Administration, United States Department of Commerce, and the balance of such cost from grants anticipated to be received from the Economic Development Administration, United - 5 - States Department of Commerce, in part to pay the cost of the Additions and Betterments, and in part to reimburse $27,000 of additional money spent by the City for increased water pumping costs from November, 1976 to June, 1977, in the total aggregate amount of $131,000, and from other money of the City available therefor. Section 7. For the purpose of providing a part of the funds with which to carry out the Plan of Additions and Betterments, the City shall cause to be issued the Single Bond in the amount of $204,000. The Single Bond shall be dated as of the date of delivery to the purchaser thereof, shall be registered as to both principal and interest in the office of the Treasurer of the City as registrar, shall be numbered R-l, and shall bear interest at the rate of 5% per annum. Interest shall be payable annually on December 1 of each year, with full obligation on the part of the City to pay interest at the bond rate from and after the bond maturity dates until the Single Bond (or Bonds, if later converted into serial bonds), both principal and interest, is paid in full. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America at the office of the Treasurer of the City. The Bonds shall be payable solely from Gross Revenue of the Waterworks Utility pledged to the Bond Fund, and shall not be a general obligation of the City. The Single Bond shall be payable in principal install- ments on December 1 of each of the following maturity years: Maturity Year Principal Amount 1978 $17,000 1979 19,000 1980 19,000 1981 19,~000 1982 21,000 1983 21,000 1984 21,000 - 6 - 1985 22,000 1986 22,000 1987 23,000 Such Single Bond shall be registered as to principal and interest and thereafter shall be payable as directed by the purchaser but otherwise conforming to the requirements of the Bonds. The City covenants that upon request of the holder of a Single Bond, it shall issue at its own expense and within ninety (90) days from the date of such request negotiable bearer serial coupon bonds in the denomination of $100 each or a multiple thereof, in an aggregate amount equal to the amount of the Single Bond (or Bonds, if later converted to serial bonds) shall be of type composition on paper of sufficient weight and strength to prevent deterioration throughout the life of the loan, except that the Single Bond may be typed on bond paper. The Single Bond shall conform in size to standard practice and contain the approved maturity schedule for payment of principal. Section 8. The Bonds are issued without the right in the City to prepay the same except that as long as the United States of America shall hold the Single Bond, the City may at any time prepay the entire unpaid principal of the Bonds or, from time to time, in inverse chronological order of installments, such lesser portion in multiples of $100 as the City may determine, plus accrued interest to the date of such prepayment. Section 9. There is hereby created and established in the office of the City Treasurer a special fund to be called the "Water and Sewer Revenue Bond Fund, 1977" (hereinbefore designated for the purposes of this ordinance as the "Bond Fund"), which fund shall be drawn upon for the sole purpose of paying the principal of and interest on the Bonds and any Parity Bonds. The - 7 - Bond Fund shall be divided into a Principal and Interest Account and a Reserve Account. So long as any Bonds and/or Parity Bonds are outstanding, the City shall set aside and pay into the Bond Fund out of the Gross Revenue of the Waterworks Utility, a fixed amount, without regard to any fixed proportion, namely: (a) Into the Principal and Interest Account at least fifteen days prior to each interest payment date and each principal payment date, an amount which shall on each such interest payment date or principal payment date be sufficient to pay the interest or principal and interest, as the case may be, then falling due upon the Bonds and upon any Parity Bonds, and (b) Into the Reserve Account, in substantially equal monthly installments, such amount together with money from time to time which may be held therein, so that there will be, by no later than December 1, 1982, an amount at least equal to the maximum amount required in any calendar year thereafter to pay the principal of and interest on all then outstanding Bonds due that year. The City shall at all times maintain in the Reserve Account an amount which will at least equal the maximum annual principal and interest requirements on the Bonds, until there is sufficient amount in the Bond Fund as presently constituted to pay the principal and interest on all outstanding Bonds, at which time the money in the Reserve Account may be used to pay such principal and interest. ~ney in the Reserve Account may be withdrawn to pay the principal of and interest on the outstanding Bonds so long as the money left remaining on deposit in the Reserve Account meets the reserve requirements of this section. - 8 - In the event that there shall be a deficiency in the Principal and Interest Account to meet maturing installments of either principal or interest on the Bonds outstanding, such deficiency shall be made up from the Reserve Account by the with- drawal of cash therefrom. Any deficiency created in the Reserve Account by reason of any such withdrawal shall then be made up from Net Revenue of the Waterworks Utility which shall be first available after making necessary provisions for the required payments into the Principal and Interest Account. All money in the Bond Fund may be kept on deposit in the official bank depository of the City, or may be invested and reinvested in any legal investment permitted for City money maturing not later than one month prior to the last maturity of any outstanding Bonds payable out of the Bond Fund. Interest earned on any such investment shall be deposited in and become a part of the Reserve Account until the reserve requirements have been accumulated in that account and, thereafter, shall be deposited into the Principal and Interest Account. In the event the Bonds outstanding are ever refunded, the money set aside in the Reserve Account to secure the payment of the Bonds may be used to retire Bonds, or may be kept in the Reserve Account as a reserve to secure the payment of such refunding bonds or Parity Bonds, or may be transferred to any other reserve account which may be created to secure the payment of the bonds issued to refund the Bonds, as long as the money left remaining in the Reserve Account is at least equal to the maximum amount required in any calendar year thereafter to pay the principal of and interest on all remaining outstanding bonds payable out of the Bond Fund due that year. It is hereby declared that in creating the Bond Fund and in fixing the amounts to be paid into it, as aforesaid, the - 9 - City Council has had due regard for the Maintenance and Operation Expenses of the Waterworks Utility and hereby declares that the Council is not setting aside into the Bond Fund a greater amount than in its judgment will be available over and above such maintenance and Operation Expenses and the amounts necessary to pay the principal of and interest on outstanding Prior Lien Bonds when due. If the City fails to set aside and pay into the Bond Fund the amounts above set forth, the holder of any of the out- standing Bonds and/or Parity Bonds payable out of the Bond Fund may bring action against the City and compel the setting aside and payment. Section 10. The Gross Revenue of the Waterworks Utility is hereby pledged to the payments required to be made into the Bond Fund, and the Bonds and any Parity Bonds shall constitute a lien and charge upon such Gross Revenue prior and superior to all other liens and charges whatsoever, subject only to Maintenance and Operation Expenses and subject further to the lien and charge on any such revenue for Prior Lien Bonds now outstanding or hereafter issued, the right to issue such additional Prior Lien Bonds being reserved by Section 16 hereof. Section 11. The registered Single Bond to be issued to the Economic Development Administration, United States Department of Commerce, shall be in substantially the following form: No. R-1 $204,000 UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF BREMERTON WATER AND SEWER REVENUE BOND, 1977 5% - 10 - The City of Bremerton, Washington (sometimes hereinafter called the "City"), a municipal corporation of the State of Washington, for value received promises to pay to the Economic Development Administration, United States Department of Commerce, or its registered assigns, the principal sum of TWO HUNDRED FOUR THOUSAND DOLLARS payable in installments on December 1 in each of the following maturity years. Maturity Year Principal Amount 1978 $17,000 1979 19,000 1980 19,000 1981 19,000 1982 21,000 1983 21,000 1984 21,000 1985 22,000 1986 22,000 1987 23,000 together with interest thereon at the rate of FIVE PERCENT (5%) per annum, payable annually on December 1 of each year. Both principal of and interest on this bond are payable in such coin or currency which, on the respective dates 'of payment of such principal and interest, is legal tender for payment of debts due the United States of America solely from the special fund of the City known as the "Water and Sewer Revenue Bond Fund, 1977" (hereinafter called the "Bond Fund"), created by Ordinance No. (hereinafter called the "Bond Ordinance"), into~ich fund the City hereby irrevocably binds and obligates itself to pay certain fixed amounts out of the gross revenue of the waterworks utility of the City, including the sanitary sewerage system as a part thereof, and including all additions, extensions and betterments at any time made or constructed (hereinafter referred to exclusively as the "Waterworks Utility of the City"), without regard to any fixed proportion, namely, amounts sufficient to pay the principal of and interest on this bond any additional water and sewer revenue bonds hereafter issued on a parity of lien with this bond in accordance with the provisions of Section 16 of the Bond Ordinance, as they respec- tively become due, all at the times and in the manner set forth in the Bond Ordinance. This bond is not a general obligation of the City and is payable solely out of the Bond Fund. This bond is payable, both principal and interest, at the office of the Treasurer of the City. Pay- ments of principal and interest, including prepayments - 11 - of installments of principal as hereinafter provided, shall be noted on the Payment Record made a part of this bond, and such payment shall fully discharge the obligation of the City hereon to the extent of the payments so made. Upon final payment of principal and interest this bond shall be submitted to the Treasurer of the City for cancellation. This bond, designated as the "Water and Sewer Revenue Bond, 1977" (herein referred to as the "Bond"), is issued in the aggregate principal amount of $204,000 pursuant to the laws of the State of Washington for the purpose of paying a part of the cost of carrying out the plan providing for additions and improvements to and extensions of the Waterworks Utility of the City as specified and adopted by the Bond Ordinance, all as set forth in the Bond Ordinance and herein. Reference is made to the Bond Ordinance as more fully describing the covenants with and rights of holder of this bond. The bond is issued without the right in the City to prepay the same, except that so long as the United States of America shall hold this bond, the City reserves the right to prepay the entire unpaid principal hereof, or, from time to time, in inverse chronological order of principal installments, may prepay such lesser poktion in multiples of $100 as the City may determine of the unpaid principal amount hereof, plus accrued interest to the date of such prepayment. Notice of any such optional prepayment shall be given at least thirty days prior to the prepayment date by mailing to the registered owner of this bond a notice fixing such prepayment date and the amount of principal to be prepaid. The bond may be assigned and upon such assignment the assignor shall promptly notify the City at the office of the Treasurer of the City by registered mail, and the assignee shall surrender the same to the City Treasurer either in exchange for a fully registered bond or for transfer on the registration records and verification of the endorsements made on the Payment Record attached hereto of the portion of the principal amount hereof and interest hereon paid or prepaid, and every such assignee shall take this bond subject to such condition. As provided in the Bond Ordinance, this bond is exchangeable at the sole expense of the City at any time, upon ninety days' notice, at the request of the registered owner hereof and upon surrender of this bond to the City at the office of the City Treasurer in the City for negotiable coupon bonds, payable to bearer, registrable at the option of the holder as to principal of the denomination of One Hundred Dollars ($100) each or a multiple thereof, - 12 - in an aggregate principal amount in the form of such coupon bond as provided for in the Bond Ordinance. The City hereby covenants and agrees to main- tain the Waterworks Utility of the City in good condition, to operate the same in an efficient manner and at a reasonable cost, to establish, maintain and collect such rates for water and sewer service furnished as will provide sufficient revenues to produce the gross revenues required to pay the expenses of maintenance and operation of the Waterworks Utility of the City, and to meet the obligations of the City and otherwise perform all of the covenants of the City, as set forth herein and in the Bond Ordinance. The gross revenues from the Waterworks Utility of the City have been pledged for the pas~ent of this bond and any additional bonds hereafter issued on a parity of lien therewith pursuant to the provisions of Section 16 of the Bond Ordinance, including both principal and interest, in accord- ance with their terms, at any time outstanding, and this pledge shall constitute a lien and charge upon such gross revenues prior and superior to any other charges whatsoever, subject only to maintenance and operation expenses of that utility and subject further to the lien and charge on such revenues for Prior Lien Bonds (as defined in the Bond Ordinance) now outstanding or hereafter issued, the right to issue additional Prior Lien Bonds being reserved by Section 16 of the Bond Ordinance. Under existing federal law and rulings, the interest payable on this bond is exempt from federal income tax. It is hereby certified that this bond is issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and the ordinances of the City, that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this bond do exist, have happened and have been performed as provided by law. IN WITNESS WHEREOF, the City of Bremerton, Washington, has caused this bond to be signed by the manual signature of its Mayor and attested by the manual signature of its City Clerk and its City seal to be hereto affixed as of the day of December, 1977. CITY OF BREMERTON, WASHINGTON By Mayor ATTEST: - 13 - City Clerk CERTIFICATE OF CITY TREASURER This bond is the single registered installment bond described in the within-mentioned Ordinance No. . City Treasurer (FORM OF PAYMENT RECORD) Principal Interest Principal Balance Payment Date Signature of City Date Due Payment Due 5% Paid Treasurer December 1, 1978 December 1, 1979 Etc. SCHEDULE "A" Principal installments on which payments have been made prior to maturity. Principal Due Principal Date Signature Date Amt. Payment Balance Paid City Clerk ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner thereof hereby sells, assigns and transfers the within bond unto . DATED: In the presence of: Section 12. Such Single bond shall be redeemable in whole or in part, to the extent, at the time and in the manner set forth in Section 8 hereof. - 14 - Such Single Bond may also be transferred by the registered owner thereof, provided that such transfer relates to the entire principal amount of such Single Bond, by proper execution of the assignment endorsed on such bond, and any such transfer shall be noted on the bond registration book of the City by the City Treasurer. If the Single Bond is exchanged for serial Bonds, such definitive serial Bonds shall be in the denomination of $100 each or a multiple thereof, shall have coupons attached bearing maturity dates representing all unpaid installments of interest due on each of those Bonds, shall be in the total principal sum of the unpaid principal due on the Single Bond and shall mature as provided in Section 7 hereof on those dates of maturity which have not yet occurred on the date of such exchange, except that if any prepayment authorized herein shall have been effected the same shall be deemed to have re- deemed such definitive serial Bonds in inverse numerical order. Such definitive serial Bonds and the coupons attached thereto shall be executed as herein provided therefor. Section 13. The Single Bond may be in typewritten form or may be printed on lithographed form, shall be signed by the Mayor, attested by the City Clerk and certified by the City Treasurer, and shall be sealed with the City seal. If any bearer coupon bonds are issued upon the conversion of a Single Bond, the same shall be signed by the facsimile signature of the then City Clerk and shall have interest coupons attached thereto executed with facsimile signatures of the persons who are then the Mayor and City Clerk. Section 14. The City hereby covenants and agrees with the owner and holder of each of the Bonds as follows: (a) It will at all times maintain and keep the Waterworks Utility in good repair, working order and condition, and also will at all times operate the utility and the business in connection there- with in an efficient manner and at a reasonable cost, and will maintain and collect such rates - 15 - and charges for water and sewer service furnished as will produce Gross Revenue of the Waterworks Utility sufficient to meet the Maintenance and Operation Expenses and to meet the debt service and reserve require- ments of all outstanding Bonds and any Parity Bonds and all outstanding Prior Lien Bonds heretofore or hereafter issued. (b) It will not mortgate, sell, lease, or in any manner encumber or dispose of all the property of the Waterworks Utility, unless provision is made for payment into the Bond Fund of a sum sufficient to pay the principal of and interest on all outstanding Bonds and Parity Bonds, and it will not mortgage, sell, lease or in any manner encumber or dispose of any part of the Waterworks Utility that is used, useful and material to the operation of that utility unless provision is made for replace- ment thereof or for payment into the Bond Fund of an amount which shall bear the same ratio to the amount of the outstanding Bonds and Parity Bonds as the revenue available for debt service for those bond's for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility so sold, leased, encumbered or disposed of bears to the revenue available for debt service for those bonds from the entire Waterworks Utility for the same period. Any such money so paid into the Bond Fund shall be used to retire outstanding Bonds and Parity Bonds at the earliest possible date. (c) It will keep proper and separate accounts and records in which complete and separate en- tries shall be made of all transactions relating to the Waterworks Utility and it will furnish the original purchaser of the Bonds or any sub- sequent holder or holders thereof at the written request of such holder or holders complete operating and income statements of the Waterworks Utility in reasonable detail covering any calendar year not more than ninety days after the close of such calendar year. Upon request of any holder of any Bonds, it will grant the right at all rea- sonable times to inspect the entire Waterworks Utility and all records, accounts and data of the City relating thereto, and will also furnish to such holder a copy of the most recently completed audit of the City's accounts by the State Auditor of Washington. (d) It will not furnish water or sanitary sewage disposal service to any customer whatso- ever free of charge and will promptly take appro- priate legal action to enforce collection of all delinquent accounts. - 16 - (e) It will carry the types of insurance on the properties of the Waterworks Utility in the amounts normally carried by private utili- ties operating similar services, and the cost of such insurance shall be considered a part of the normal cost of maintenance and operation. If, as, and when the United States of America or some agency thereof shall provide for War Risk Insurance, the City further agrees to take out and maintain such insurance on all or such portions of the Waterworks Utility on which such War Risk Insurance may be written in an amount or amounts'to cover adequately the value thereof. (f) It will pay all costs of maintenance and operation and debt service requirements for the Prior Lien Bonds and otherwise meet the obliga- tions of the City as herein set forth. (g) It will make no use of the proceeds of the Bonds or other funds of the City at any time during the term of the Bonds which, if such use had been reasonably expected at the date that the Bonds are issued, would have caused the Bonds to be arbitrage bonds within the meaning of Section 103(c) of the United States Internal Revenue Code of 1954, as amended, and the appli- cable regulations thereunder, all as of the date of delivery of the Bonds. Section 15. In the event the City shall issue advance refunding bonds pursuant to the laws of the State of Washington, or have money available from any other lawful source, to pay the principal of and interest on the Bonds or such portion thereof in- cluded in the refunding plan as the same become due and payable and to refund all such then outstanding Bonds and to pay the costs of refunding, and shall have irrevocably set aside for and pledged to such payment and refunding, money and/or direct obligations of the United States of America or other legal investments (with the right of the City to make substitutions for such investments) sufficient in amount, together with known earned income from the investments thereof, to make such payments and to accomplish the refunding as scheduled (hereinafter called the "trust account") and shall irre- vocably make provisions for redemption of such Bonds, then in that case all right and interest of the owners or holders of the Bonds - 17 - to be so retired or refunded and the appurtenant coupons therein- after collectively called the "defeased Bonds") in the covenants of this ordinance, and in the Gross Revenue of the Waterworks Utility and funds and accounts obligated to the payment of such Bonds shall thereafter cease and become void, except such owners and holders shall have the right to receive payment of the principal of and inter- est on the defeased Bonds from the trust account and, in the event the funds in the trust account are not available for such payment, shall have the residual right to receive payment of the principal of and interest on the defeased Bonds from the Gross Revenue of the Waterworks Utility without any priority of lien or charge against those revenues or covenants with respect thereto except to be paid therefrom. After the establishing and full funding of such trust account, the City may then apply any money in any other fund or ac- count established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine, subject only to the rights of the holders of any other bonds then outstanding. In the event that the refunding plan provides that the Bonds being refunded or the refunding bonds to be issued be secured by cash and/or direct obligations of the United States of America or other legal investments pending the prior redemption of those bonds beinq refunded and if such refunding plan also provides that certain cash and/or direct obligations of the United States of America or other legal investments are irrevocably pledged for the prior redemption of those Bonds included in the refunding plan, then only the debt service on the Bonds which are not defeased Bonds and refunding bonds, the payment of which is not so secured by the refunding plan, shall be included in the computation of coverage for issuance of Parity Bonds. Section 16. The City reserves the right to issue Parity Bonds, which shall constitute a lien and charge upon the - 18 - Gross Revenue of the Waterworks Utility, on a parity with the Bonds, if the following conditions are met and complied with at the time of the issuance of such Parity Bonds: (a) No default exists in the payment of the principal or interest on any outstanding water and sewer revenue bonds of the City, and the amounts required to have been paid into the Bond Fund shall have been paid and maintained intact therein; and (b) There shall be on file with the City Treasurer a certificate of a national recog- nized firm of certified Public accountants or a professional engineer licensed to practice in the State of Washington and experienced in municipal utilities to the effect that the Gross Revenue of the Waterworks Utility, after providing for Maintenance and Operation Expenses, for the calendar year preceding the year in which such Parity Bonds are to be issued is not less than 120% of the average annual debt ser- vice requirements of all water and sewer revenue bonds of the City then outstanding and the Parity Bonds proposed to be so issued, but this requirement may be waived or modified by the written consent of the holders representing 75% of then outstanding Bonds and Parity Bonds pay- able out of the Bond Fund. Nothing herein contained shall prevent the City from issuing water and sewer revenue bonds which are a charge upon the Gross Revenue of the Waterworks Utility junior or inferior to the payments required to be made therefrom into the Bond Fund for the payment of the Bonds and Parity Bonds or from pledging the payment of utility local improvement district assessments into a fund or ac- count created to pay and secure the payment of principal of and in- terest on such junior lien bonds so long as such assessments are levied in any utility local improvement district created in connec- tion with carrying out the improvements to be constructed from the proceeds of the sale of such junior lien bonds, nor shall anything herein contained prevent the City from issuing water and sewer revenue bonds to refund maturing water and/or sewer revenue bonds of the City for the payment of which money is not otherwise available. - 19 - The City further, however, reserves the right to issue Prior Lien Bonds at such times and upon such terms and conditions as the City shall hereafter determine, but only if the City can demon- strate to the satisfaction of the Economic Development Administration, United States Department of Commerce (hereinafter called the "Government"), that (1) there is existing and projected Net Revenue of the Waterworks Utility after the issuance of such Prior Lien Bonds of not less than 1.1 times the debt service requirements for the Bonds, after all other debt service requirements of the City have been met, including required reserves; and (2) the City is in com- pliance with all other reserve requirements for the Bonds and any other outstanding Parity Bonds and then outstanding Prior Lien Bonds of the City. The failure of the Government to object in writing to any proposed issue of Prior Lien Bonds within 30 da~s of notification of the Regional Office of the Government shall be deemed to consti- tute a finding by the Government that it is satisfied that the afore- mentioned conditions for the proposed Prior Lien Bonds have been met. Section 17. The Economic Development Administration, United States Department of Commerce, has made an offer to purchase the Single Bond at a price of par, the City to furnish the printed Single Bond and the unqualified approving legal opinion of Roberts, Shefelman, Lawrence, Gay & ~Dch, municipal bond counsel of Seattle, Washington, at the City's expense. The City Council being of the opinion that it is in the best interest of the City to accept such offer hereby accepts the same. The Single Bond shall, therefore, after its execution, be delivered to the Economic Development Administration, United States Department of Commerce, upon payment therefor as aforesaid. Upon receipt thereof the principal proceeds of the Bonds shall be deposited in the construction fund established in the office of the City Treasurer and designated to be used for paying - 20- the costs of the Plan of Additions and Betterments and the issuance and sale of the Bonds. Section 18. For the reason that it is necessary for the City to obtain this loan as soon as possible in order to Proceed with the projects specified in SeCtion 2 of this ordinance ~dr~ught relief), an emergency is hereby~i~ec~l&red to exist, and it is hereby found necessary for the public~hea!~th,~welfare and safety t~at~ this ordinance become effective'~!i.~ediately u~On its passage and publication. PA$S~F~.~,~M~DUSLY by~ ~it~y Council of the~C~tY of BremertoE, WaShingtOn, at a regdla9 ...... open public meetin~"~he~e~f, signed by the Mayor, and attes~ed~ the~ Cit¥:Glerk in a~hentication of such passage this 7th day of December, 1977. ATTEST: C~ty Clerk FOP~ APPROVED - 21 -