HomeMy WebLinkAbout5255 CITY OF BREMERTON, WASHINGTON
WATER AND SEWER REVENUE BONDS, 2014
ORDINANCE NO. 5255
AN ORDINANCE of the City of Bremerton, Washington, providing for the
issuance and sale of not to exceed $8,000,000 principal amount of water and
sewer revenue bonds to obtain funds for certain capital improvements to the
City's water and sewer system; fixing or setting parameters with respect to
certain terms and covenants of the bonds; appointing the City's designated
representative to approve the final terms of the sale of the bonds; and
providing for other related matters.
Passed: August 20, 2014
This document prepared by:
Foster Pepper PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
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TABLE OF CONTENTS
Page
Section1. Definitions............................................................................................................... 1
Section 2. Plan of Improvements............................................................................................. 7
Section 3. Authorization of the Bonds..................................................................................... 7
Section 4. Description of the Bonds; Appointment of Designated Representative................. 7
Section 5. Bond Registrar; Registration and Transfer of Bonds.............................................. 8
Section 6. Payment of Bonds................................................................................................. 10
Section 7. Redemption Provisions and Open Market Purchase of Bonds. ............................ 10
Section8. Failure to Pay Bonds............................................................................................. 11
Section 9. Combined Utility System Fund ............................................................................ 11
Section 10. Rate Stabilization Account ................................................................................... 12
Section11. Bond Account....................................................................................................... 12
Section 12. Adequacy of Revenue........................................................................................... 14
Section 13. General Covenants................................................................................................ 14
Section 14. Tax Covenants; Designation of Bonds as "Qualified Tax-Exempt
Obligations".......................................................................................................... 17
Section 15. Payment Agreements. ........................................................................................... 18
Section 16. Future Parity Bonds .............................................................................................. 19
Section 17. Refunding or Defeasance of the Bonds ................................................................ 21
Section18. Form of the Bonds ................................................................................................ 22
Section 19. Execution and Authentication of the Bonds ......................................................... 24
Section 20. Lost or Stolen Bonds............................................................................................. 25
Section 21. Sale and Delivery of the Bonds. ........................................................................... 25
Section 22. Official Statement. ................................................................................................ 25
Section 23. Continuing Disclosure .......................................................................................... 25
Section 24. Application of Bond Proceeds.............................................................................. 28
Section 25. Events of Default.................................................................................................. 28
Section 26. Bondowners' Trustee............................................................................................ 29
Section 27. Suits at Law or in Equity ...................................................................................... 29
Section 28. Application of Money Collected by Bondowners' Trustee.................................. 30
Section 29. Duties and Obligation of Bondowners' Trustee ................................................... 30
Section 30. Suits by Individual Bondowners Restricted.......................................................... 31
Section 31. Authorization to Officials and Agents.................................................................. 32
Section 32. Supplements and Amendments............................................................................. 32
Section33. Severability........................................................................................................... 33
Section34. Ratification............................................................................................................ 33
Section35. Effective Date. ...................................................................................................... 33
513836982
CITY OF BREMERTON, WASHINGTON
ORDINANCE NO. 5255
AN ORDINANCE of the City of Bremerton, Washington, providing for the
issuance and sale of not to exceed $8,000,000 principal amount of water and
sewer revenue bonds to obtain funds for certain capital improvements to the
City's water and sewer system; fixing or setting parameters with respect to
certain terms and covenants of the bonds; appointing the City's designated
representative to approve the final terms of the sale of the bonds; and
providing for other related matters.
WHEREAS, the City of Bremerton, Washington (the "City") owns, operates and
maintains a combined waterworks, sewerage and storm drainage system (the "System"); and
WHEREAS, it is in the best interest of the City that the City undertake various capital
improvements to the System; and
WHEREAS, the City now has outstanding its Water and Sewer Revenue and Refunding
Bond, 2007 issued pursuant to Ordinance No. 5011 passed by the City Council on June 6, 2007
(the "2007 Bond"); and
WHEREAS, in order to finance capital improvements to the System, it is hereby found
necessary and advisable that the City issue water and sewer revenue bonds (the "Bonds") with a
lien on the revenues of the System;
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF BREMERTON,
WASHINGTON, DOES ORDAIN as follows:
Section 1. Definitions. As used in this ordinance the following words shall have the
following meanings:
"Annual Debt Service" for any fiscal year or calendar year means the sum of:
A. the interest due in such year on all outstanding Parity Bonds excluding,
however, interest to be paid from the proceeds of Parity Bonds, and any Payment Agreement
Payments due in such year,
B. the principal of all outstanding Serial Bonds due in such year, and
C. the Sinking Fund Requirement, if any, for such year.
If the interest rate on any such bonds is other than a fixed rate, the rate applicable at the
time of the computation shall be used.
Notwithstanding the foregoing, debt service on Parity Bonds with respect to which a
Payment Agreement is in force shall be calculated by the City to reflect the net economic effect
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on the City intended to be produced by the terms of such Parity Bonds and the terms of such
Payment Agreement, in accordance with the requirements applicable to such Payment
Agreement.
Once the 2007 Bond is no longer outstanding, the City may deduct the.direct payment the
City is expected to receive in respect of any Future Parity Bonds for which the federal
government will provide the City with a direct payment of a portion of the interest from the
interest portion of Annual Debt Service for calculating the Reserve Account Requirement.
"Assessments" means assessments (including interest and penalties) levied in any utility
local improvement district of the City for the acquisition or construction of additions and
improvements to and extension of the System, if such assessments are pledged to be paid into the
Bond Account, including ULID No. 2002-01.
"Authorized Denomination" means $5,000 or any integral multiple thereof within a
maturity.
"Average Annual Debt Service" means the amount determined by dividing (A) the sum
of all interest and principal to be paid on all Parity Bonds from the date of determination to the
last maturity date of such Parity Bonds, by (B) the number of fiscal years or calendar years from
and including the fiscal year or calendar year in which the determination is made to the last fiscal
year or calendar year in which any of such Parity Bonds will be outstanding.
"Beneficial Owner"means, with respect to a Bond, the owner of any beneficial interest in
that Bond.
"Bond Account" means that special fund of the City to be known as the "Utility Debt
Service Account," created for the purpose of paying and securing the principal of and interest on
the Bonds, the 2007 Bond and any Future Parity Bonds.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of identifying ownership of the Bonds.
"Bond Registrar" means the Fiscal Agent, or any successor bond registrar selected by the
City.
"Bonds" means the bonds issued pursuant to and for the purposes provided in this
ordinance.
"City" means the City of Bremerton, Washington, a first class city of the State of
Washington.
"Code" means the federal Internal Revenue Code of 1986, as amended, and applicable
regulations thereunder.
"Council" means the City Council of the City, the general legislative authority of the
City, as the same shall be duly and regularly constituted from time to time.
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"Combined Utility System Fund" means the water system revenue fund, the sewer
system revenue fund and the storm drainage system revenue fund (and sub-funds and accounts
therein) of the City heretofore created into which fund shall be paid the Gross Revenue of the
System.
"Director of Financial Services" means the duly qualified, appointed and acting Director
of Financial Services of the City or any other officer who succeeds to the duties now delegated to
that office.
"DTC"means The Depository Trust Company, New York, New York, or its nominee.
"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).
"Final Terms"means the terms and conditions for the sale of the Bonds including, but not
limited to, the amount, date or dates, denominations, interest rate or rates (or mechanism for
determining interest rate or rates), payment dates, final maturity, redemption rights, price, and
other terms or covenants.
"Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the
State from time to time.
"Future Parity Bonds" means all revenue bonds or other revenue obligations of the City
issued after the date of the issuance of the Bonds and having a lien upon Gross Revenue for the
payment of the principal thereof and interest thereon equal to the lien upon Gross Revenue for
the payment of the principal of and interest on the Bonds and the 2007 Bond.
"Government Obligations" has the meaning given to such term in RCW Chapter 39.53,
as the same may be amended from time to time.
"Gross Revenue" means all earnings and revenue, except Assessments, received by the
System from any source, including proceeds from the sale of forest products from System-owned
lands, except general ad valorem taxes, grants from the state, federal or local governments,
earnings in any refunded bond escrow account or fund, gifts to the System for capital purposes,
proceeds from the sale of City or System property, and proceeds of City or System obligations.
"Issue Date" means, with respect to the Bonds, the date of initial issuance and delivery of
the Bonds to the Underwriter in exchange for the purchase price of the Bonds.
"Letter of Representations" means the Blanket Issuer Letter of Representations between
the City and the Securities Depository, dated November 19, 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.
"MSRB"means the Municipal Securities Rulemaking Board.
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"Maximum Annual Debt Service" means the maximum amount of Annual Debt Service
which shall become due in any future year on the outstanding Bonds, the 2007 Bond or Future
Parity Bonds.
"Moody's" means Moody's Investors Services or its comparably recognized business
successor.
"Net Revenue"means Gross Revenue less the Operating and Maintenance Expenses.
"Operating and Maintenance Expenses" means all reasonable expenses incurred by the
City in causing the System to be operated and maintained in good repair, working order and
condition, including without limitation payments (other than payments out of proceeds of Parity
Bonds) of premiums for insurance on the System, and any State-imposed taxes, and also
including all payments made to another agency for treatment or disposal of sewerage or
acquisition of water, but excluding depreciation and amortization, and any City-imposed utility
taxes or payments in lieu of taxes payable from the Gross Revenue of the System.
"Parity Bonds" means the Bonds, the 2007 Bond and any Future Parity Bonds.
"Payment Agreement" means, to the extent permitted from time to time by applicable
law, a written agreement entered into by the City (A) in connection with or incidental to the
issuance, incurring or carrying of any Parity Bonds; (B) for the purpose of managing or reducing
the City's exposure to fluctuations or levels of interest rates, currencies or commodities or for
other interest rate, investment, asset or liability management purposes; (C) with a Qualified
Counterparty; and (D) which provides, on either a current or forward basis, for an exchange of
payments determined in accordance with a formula specified therein.
"Payment Agreement Payments" means the amounts periodically required to be paid by
the City to the Qualified Counterparty pursuant to a Payment Agreement. The term "Payment
Agreement Payments" does not include any termination payment required to be paid with respect
to a Payment Agreement.
"Payment Agreement Receipts" means the amounts periodically required to be paid by
the Qualified Counterparty to the City pursuant to a Payment Agreement.
"Permitted Investments" means any investments or investment agreements permitted for
cities under the laws of the State of Washington as amended from time to time.
"Principal and Interest Account" means the account of that name previously created in
the Bond Account for the payment of the principal of and interest on the Bonds and any Future
Parity Bonds.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with water, wastewater and storm
drainage systems of comparable size and character to the System in such areas as are relevant to
the purposes for which they are retained.
"Project" means the improvements to the System identified in Section 2 hereof.
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"Qualified Counterparty" means with respect to a Payment Agreement an entity
(A) whose senior long term debt obligations, other senior unsecured long term obligations or
claims paying ability or whose payment obligations under a Payment Agreement are guaranteed
by an entity whose senior long term debt obligations, other senior unsecured long term
obligations or claims paying ability are rated (at the time the Payment Agreement is entered into)
at least as high as A3 by Moody's and A- by S&P, or the equivalent thereof by any successor
thereto, and (B) who is otherwise qualified to act as the other party to a Payment Agreement
under any applicable laws of the State.
"Qualified Insurance" means any unconditional municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States or by a service corporation acting on behalf of one or more such
insurance companies, which insurance company or service corporation, as of the time of issuance
of such policy or surety bond, is currently rated in one of the two highest rating categories by
Moody's and S&P.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of the owners of any Parity Bonds, which
institution maintains an office, agency or branch in the United States and as of the time of
issuance of such letter of credit, is currently rated in one of the two highest rating categories by
Moody's or S&P.
"Rate Stabilization Account" means the account of that name authorized to be created
within the Combined Utility System Fund pursuant to Section 10 of this ordinance.
"Rating Agency" means any nationally recognized rating agency then maintaining a
rating on the Bonds at the request of the City.
"Rebate Amount" means the amount, if any, determined to be payable with respect to the
Bonds to the United States of America in accordance with Section 148(f) of the Code.
"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 7.
"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 system for the
Bonds under the Letter of Representations, Registered Owner shall mean the Securities
Depository.
"Reserve Account" means the account of that name previously created in the Bond
Account to secure the payment of principal of and interest on the Parity Bonds.
"Reserve Account Requirement" means with respect to all outstanding Parity Bonds the
lesser of (A) 125% of Average Annual Debt Service or (B) maximum Annual Debt Service;
provided, however, that at the time of issuance of any series of Parity Bonds, the Reserve
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Account Requirement allocable to a series of Parity Bonds shall not exceed 10% of the initial
principal amount of that series of Parity Bonds.
"Resource Obligation" means an obligation of the City to pay the following costs
associated with a resource from Gross Revenue as (A) Operating and Maintenance Expenses for
any month in which any Resources were made available to the System during such month
(regardless of whether or not the System actually scheduled or received Resources during such
month) and (B) at all other times as an indebtedness of the System payable from Gross Revenue
on a parity of lien with Parity Bonds:
(i) costs associated with the System and any Resources hereafter acquired,
purchased or constructed by the City and declared by the Council to be a separate system, which
such costs shall include but are not limited to costs of normal operation and maintenance,
renewals and replacements, additions and betterments and debt service on the bonds or other
obligations of such separate system, but shall exclude costs paid or to be paid from the proceeds
of the sale of bonds or other obligations of such separate system, and
(ii) costs associated with the purchase of Resources under a contract.
"Resources"means facilities or resources of the System.
"Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the Securities
Exchange Act of 1934, as amended.
"SEC" means the United States Securities and Exchange Commission.
"Securities Depository" means DTC, any successor thereto, any substitute securities
depository selected by the City, or the nominee of any of the foregoing. Any Securities
Depository must be qualified under applicable laws and regulations to provide the services
proposed to be provided by it.
"S&P" means Standard & Poor's Rating Services, or its comparably recognized business
successor.
"Serial Bonds" means Parity Bonds other than Term Bonds.
"Sinking Fund Requirement" means, for any fiscal year or calendar year, the principal
amount of Term Bonds required to be purchased, redeemed or paid at maturity in such year as
established by the ordinance of the City authorizing the issuance of such Term Bonds.
"State"means the State of Washington.
"System" means the existing combined water and sewerage system of the City, including
the storm drainage system, together with any refuse disposal system or other utility system now
or hereafter combined therewith, as the same may be added to, improved and extended for as
long as the Bonds and any Future Parity Bonds are outstanding, but shall not include any
separate utility system established by the City.
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"Term Bonds" means any Future Parity Bonds identified as Term Bonds in the ordinance
authorizing the issuance thereof, the payment of the principal of which is provided for by a
mandatory schedule of deposits of money equal (in the aggregate) to the full principal amount of
such Term Bonds, into the Bond Account, and by a mandatory redemption schedule
corresponding (as to time and amounts) to such mandatory schedule of deposits.
"2007 Bond" means the City's "Water and Sewer Revenue and Refunding Bond, 2007"
issued under date of June 14, 2007, pursuant to Ordinance No. 5011.
"Undertaking" means the undertaking to provide continuing disclosure entered into
pursuant to Section 23 of this ordinance.
"Underwriter" means D.A. Davidson & Co. who has been selected by the Designated
Representative to serve as the underwriter for the Bonds.
"ULiD No. 2002-01" means Utility Local Improvement District No. 2002-01 established
by the City pursuant to Ordinance No. 4837.
Section 2. Plan of Improvements. The City hereby specifies and adopts a system or
plan of additions to and betterments and extensions of the System, including water, distribution
and sewer main replacements and cleaning, machinery and equipment, meter replacements, fire
hydrants, reservoir coatings, road access maintenance, improvements and replacements, land
purchase, Washington Avenue project improvements and restoration, wastewater treatment plan
and pump station improvements, odor control replacements, generation installations, sewer,
pumps and filter replacements and upgrades (collectively, the "Project"), and any other capital
improvements to the System approved by the Council. The Project will be undertaken in
accordance with specifications and contracts for acquisition and construction approved by the
Council from time to time. It is hereby provided that the Project shall be subject to such changes
as to details as may be authorized by the Council either prior to or during the actual course of
construction. The estimated cost of the Project is approximately $7,000,000.
Section 3. Authorization of the Bonds. The City shall now issue and sell its water
and sewer revenue bonds to provide funds to pay costs of the Project, to fund the Reserve
Account and to pay costs of issuance of the Bonds.
Section 4. Description of the Bonds, Appointment of Designated Representative.
The Mayor or Director of Financial Services is appointed as the City's Designated
Representative and is authorized and directed 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 she deems advisable, within the following
parameters:
A. Principal Amount. The Bonds may be issued in one or more series and
shall not exceed the aggregate principal amount of$8,000,000.
B. Date or Dates. The Bonds shall be dated as of their date of delivery to the
Underwriter, which date may not be later than December 31, 2015.
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C. Denominations, Series Designation, etc. The Bonds must be issued in
Authorized Denominations, shall be numbered separately in the manner and shall bear any name
and additional designation as deemed necessary or appropriate by the Designated Representative.
D. Interest Rate(s). The Bonds shall bear interest at fixed rates per annum
(computed on the basis of a 360-day year of twelve 30-day months) from their date or from the
most recent interest payment 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, provided that no
rate of interest for any Bond may exceed 5.50%, and the "all-in" true interest cost to the City for
the Bonds may not exceed 4.50%.
E. Payment Dates. Interest must be payable at fixed rates semiannually on
such dates as are acceptable to the Designated Representative, commencing no later than one
year following the Issue Date. Principal payments shall commence on a payment date acceptable
to the Designated Representative and must be payable at maturity or in mandatory redemption
installments on such dates as are acceptable to the Designated Representative.
F. Final Maturity. The Bonds shall mature no later than December 1, 2034.
G. Redemption Rights. In her discretion, the Designated Representative may
approve provisions for the optional and mandatory redemption of Bonds, as follows:
(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 or (B) not subject to
redemption prior to its maturity date.
(ii) Mandatory Redemption. Any Bond may be designated as a Term
Bond, subject to mandatory redemption prior to its maturity.
H. Price. The purchase price for the Bonds may not be less than 98% or
more than 130% of the stated principal amount of the Bonds.
I. Other Terms and Conditions.
(i) The Bonds may be sold in accordance with Section 21 of this
ordinance.
(ii) 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 she may determine are in the best interests of
the City, consistent with this ordinance.
Section 5. Bond Registrar; Registration and Transfer of Bonds.
A. Registration of Bonds. The Bonds shall be issued only in registered form
as to both principal and interest and shall be recorded on the Bond Register.
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B. Bond Registrar; Duties. The Fiscal Agent is appointed as Bond Registrar
for the Bonds. 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. 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 a Registered Owner of a Bond 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 Beneficial Owners.
C. Bond Register; Transfer and Exchange. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on the Bond Register. The
Bond Register shall contain the name and mailing address of the Registered Owner of each Bond
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 interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shall be without cost to the Registered 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 Form. The Bonds initially shall be
registered in the name of Cede & Co., as the nominee of DTC, acting as Securities Depository.
Bonds so registered shall be held fully immobilized in book-entry form by DTC in accordance
with the provisions of the Letter of Representations. Registered ownership of any Bond (or
portion of a Bond) held in book-entry form may not be transferred except: (i) to any successor
Securities Depository; (ii) to any substitute Securities Depository appointed by the City or such
substitute Securities Depository's successor; or(iii) to any person if the Bonds are no longer held
in book-entry form. Upon the resignation of the Securities Depository from its functions as
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) a Securities Depository resigns from
its functions as depository, and no substitute Securities Depository can be obtained, or (ii) the
City determines that a Bond is to be in certificated form, such Bond no longer shall be held in
book-entry form and the ownership of such 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 Registrar shall be responsible for any notice which 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.
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Section 6. Payment of Bonds. Principal of and interest on the Bonds shall be payable
in lawful money of the United States of America. For as long as a Bond is registered in the name
of the Securities Depository, payment of principal of and interest on that Bond shall be made in
the manner set forth in the Letter of Representations. If a Bond ceases to be in book-entry form,
interest on that Bond shall be paid 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 as of 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 at least 10 days before an interest payment date and at the sole expense of the
requesting Registered Owner. Principal of a Bond shall be 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 7. Redemption Provisions and Open Market Purchase of Bonds.
A. Optional Redemption. The Bonds shall be subject to optional redemption
acceptable to the Designated Representative, within the parameters set forth in Section 4. Any
Bond that is subject to optional redemption may be selected by the City, in its sole discretion, for
redemption in whole or in part at any time.
B. Mandatofy Redemption. Bonds designated as Term Bonds by the
Designated Representative, within the parameters set forth in Section 4, if not previously
redeemed under any optional redemption provisions, defeased 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. If Term Bonds are
redeemed under the optional redemption provisions, defeased or purchased by the City and
cancelled, the principal amount of the Term Bonds so redeemed, defeased or purchased
(irrespective of their actual redemption or purchase prices) shall be credited against one or more
scheduled mandatory redemption amounts for those Term Bonds. 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 maturity of Term Bonds for
which notice of redemption has not already been given.
C. Selection of Bonds for Redemption; Partial Redemption. All or a portion
of the principal amount of any Bond that is subject to optional or mandatory redemption 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 maturity and interest rate in any Authorized Denomination in the
aggregate principal amount remaining unredeemed. The principal portion of any Bond
registered in the name of the Securities Depository which is to be partially redeemed shall be
selected in accordance with the Letter of Representations. if a Bond ceases to be held in book-
entry form, the portion to be partially redeemed shall be selected randomly in such manner as the
Bond Registrar shall determine.
D. Notice of Redemption. While a Bond is registered in the name of the
Securities Depository, notice of redemption shall be given as required in accordance with the
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Letter of Representations. If a Bond ceases to be held in book-entry form, unless waived by the
Registered Owner of the Bond to be redeemed, the City shall cause notice of an intended
redemption of Bonds to 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 of each Bond to be redeemed 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 of any Bond. 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 Designated Representative shall determine, but these
additional mailings shall not be a condition precedent to the redemption of a Bond.
E. Rescission of Optional 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 optional redemption of those Bonds by giving a notice of rescission to
the affected Registered Owners at any time prior to the scheduled optional redemption date. Any
notice of optional redemption that is so rescinded shall be of no effect, and a Bond for which a
notice of optional redemption has been rescinded shall remain outstanding.
F. Effect of Redemption. Interest on Bonds called for redemption shall cease
to accrue on the date fixed for redemption, unless either the notice of redemption is rescinded as
set forth above, or money sufficient to effect such redemption is not on deposit in the Bond
Account (or in an escrow account established to carry out a refunding or defeasance of the
redeemed Bonds, if any).
G. Open Market Purchase. The City reserves the right to purchase any or all
of the Bonds in the open market at any time at any price acceptable to the City plus accrued
interest to the date of purchase.
Section 8. Failure to Pay Bonds. If any Bond is not redeemed when 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 Account and the Bond has been called for
payment by giving notice of that call to the Registered Owner.
Section 9. Combined Utility System Fund. The City pledges to pay all of the Gross
Revenues of the System as collected into the Combined Utility System Fund. The Gross
Revenue deposited in the Combined Utility System Fund shall be used only for the following
purposes and in the following order of priority:
FIRST, to pay the Operating and Maintenance Expenses and costs associated with
a Resource Obligation (to the extent payable as Operating and Maintenance Expenses);
SECOND, to make all required payments into the Principal and Interest Account
for all Parity Bonds and to make Payment Agreement Payments;
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THIRD, to make all required payments into the Reserve Account for all Parity
Bonds and to make all payments required to be made pursuant to a reimbursement agreement in
connection with a Qualified Insurance or Qualified Letter of Credit, except that if there is not
sufficient money to make all payments under reimbursement agreements, the payments will be
made on a pro rata basis;
FOURTH, to make all required payments into any revenue bond redemption fund
created to pay and secure the payment of the principal of and interest on any revenue bonds or
short-term obligations of the City having a lien and charge upon the Gross Revenue of the
System subordinate and inferior to the lien thereon for the payment of principal of and interest on
any Parity Bonds; and
FIFTH, to redeem and retire any water and sewer revenue bonds of the City then
outstanding or to purchase any or all of those bonds in the open market, to make necessary
additions, betterments, repairs, extensions and replacements of the System or other purposes
proper to its maintenance and operation, including the payment of any City-imposed utility taxes
or payments in lieu of taxes payable from Gross Revenue of the System, or for any other lawful
City purpose.
The City may transfer from any funds or accounts of the City legally available therefor,
except bond redemption funds, any money therein to meet the required payments to be made into
the Bond Account.
Section 10. Rate Stabilization Account. A special account of the City to be designated
the "Water and Sewer Rate Stabilization Account" (the "Rate Stabilization Account") may be
created within the Combined Utility System Fund, at the discretion of the Director of Financial
Services, to cope with future increases in revenue requirements of the System. The City may
from time to time appropriate or budget amounts in the Combined Utility System Fund for
deposit in the Rate Stabilization Account and may from time to time withdraw amounts
therefrom to prevent or mitigate water and sewer rate increases or for other lawful purposes of
the City related to the System. Amounts withdrawn from the Rate Stabilization Account shall
increase Gross Revenue for the period for which they are withdrawn, and amounts deposited in
the Rate Stabilization Account shall reduce Gross Revenue for the period for which they are
deposited. Credits to or from the Rate Stabilization Account that occur within 90 days after the
end of a fiscal year may be treated as occurring within such fiscal year. Earnings on the Rate
Stabilization Account shall be credited to the Combined Utility System Fund.
Section 11. Bond Account. There has heretofore been created in the office of the
Director of Financial Services a fund of the City known as the "Utility Debt Service Account"
(the "Bond Account"), which fund shall be drawn upon for the sole purpose of paying the
principal of, premium if any, and interest on the Parity Bonds. The money in the Bond Account
shall be kept separate and apart from all other funds and accounts of the City.
A. Debt Service Account. A special account known as the Debt Service
Account has been created in the Bond Account for the purpose of paying the principal of,
premium, if any, and interest on the Parity Bonds.
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As long as the Bonds remain outstanding, the City hereby irrevocably obligates and binds
itself to set aside and pay from the Combined Utility System Fund into the Debt Service
Account, on or before the date due, those amounts necessary, together with Gross Revenue
collected and deposited and such other money as is on hand and available therefor in the Debt
Service Account, to pay the interest or principal and interest next coming due on the outstanding
Parity Bonds.
The City covenants and agrees that in the event it issues any Future Parity Bonds that are
Term Bonds, it will provide in each ordinance authorizing the issuance of the same for annual
payments to be made from the Combined Utility System Fund into the Debt Service Account
sufficient together with Gross Revenue collected and deposited and such other money as is on
hand and available therefor in such account to satisfy the Sinking Fund Requirement with respect
to such Term Bonds.
B. Reserve Account. A Reserve Account has been created in the Bond
Account for the purpose of securing the payment of the principal of and interest on the Bonds,
the 2007 Bond and any Future Parity Bonds. The City hereby covenants that it will deposit into
the Reserve Account Bond proceeds or other available funds in a sum equal to the Reserve
Account Requirement for the Bonds.
The City further covenants that in the event it issues any Future Parity Bonds it will
provide in each ordinance authorizing the issuance of such Future Parity Bonds for the payment
into the Reserve Account out of Future Parity Bond proceeds, Gross Revenue or Assessments
(or, at the option of the City, out of any other funds on hand and legally available therefor)
approximately equal additional annual installments so that by five years from the date of
issuance of such Future Parity Bonds there will have been paid into the Reserve Account an
amount that, together with money already on deposit therein, will be at least equal to the Reserve
Account Requirement. The City may substitute Qualified Insurance or a Qualified Letter of
Credit for amounts required to be deposited into the Reserve Account. Such Qualified Letter of
Credit or Qualified Insurance shall not be cancellable on less than five years' notice. In the event
of any cancellation, the Reserve Account shall be funded in accordance with the provisions of
this section providing for payment in the event of a deficiency therein, as if the Parity Bonds that
remain outstanding had been issued on the date of such notice of cancellation. The City may
create a separate reserve account for a series of Future Parity Bonds, in which case the Reserve
Account shall not secure Future Parity Bonds.
The City further covenants and agrees that when the required deposits have been made
into the Reserve Account, it will at all times maintain therein an amount at least equal to the
Reserve Account Requirement, as redetermined in each calendar year with respect to the Parity
Bonds secured by such Reserve Account. Whenever there is a sufficient amount in the Bond
Account, including all accounts therein, to pay the principal of, premium, if any, and interest on
all outstanding Parity Bonds, the money in the Reserve Account may be used to pay the principal
of, premium, if any, and interest on the Parity Bonds secured thereby. Money in the Reserve
Account may also be withdrawn to redeem and retire, and to pay the premium, if any, and
interest due to such date of redemption, on the outstanding Parity Bonds secured by such Reserve
Account, as long as the money remaining on deposit in such Reserve Account is at least equal to
the Reserve Account Requirement determined with respect to the Parity Bonds then outstanding.
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51383698.'_'
In the event the Bonds outstanding are ever refunded, the money set aside in the Reserve
Account to secure the payment thereof may be used to retire Bonds or may be transferred to any
other reserve account that may be created to secure the payment of any bonds issued to refund
the Bonds.
In the event there shall be a deficiency in the Debt Service Account to meet maturing
installments of either interest on or principal of and interest on the outstanding Parity Bonds
payable out of such Account, such deficiency shall be made up from the Reserve Account by the
withdrawal of money therefrom and by the sale or redemption of obligations held in the Reserve
Account, if necessary, in such amounts as will provide cash in the Reserve Account sufficient to
make up any such deficiency, and if a deficiency still exists immediately prior to an interest
payment date and after the withdrawal of cash, the City shall then draw from any Qualified
Letter of Credit, Qualified Insurance, or other equivalent credit facility in sufficient amount to
make up the deficiency. Such draw shall be made at such times and under such conditions as the
agreement for such Qualified Letter of Credit or such Qualified Insurance shall provide. If more
than one Qualified Letter of Credit or Qualified Insurance is available, draws shall be made
ratably thereon to make up the deficiency. Any deficiency created in the Reserve Account by
reason of any such withdrawal shall then be made up from money in the Combined Utility
System Fund first available after making the payments required to be made under paragraphs
"FIRST"through "FOURTH" of Section 9 of this ordinance.
C. Lien of Bond Account. The Bonds, together with the interest thereon,
shall be payable from Assessments, if any, and Gross Revenue, and such Assessments and Gross
Revenue are hereby pledged and set aside out of the Combined Utility System Fund into the
Bond Account. The amounts so pledged are hereby declared to be a lien and charge upon
Assessments, if any, and Gross Revenue equal to the lien and charge thereon to secure and pay
the principal of and interest on any Future Parity Bonds and superior to all other charges of any
kind or nature, except the Operating and Maintenance Expenses.
D. Investment of Money in Bond Account. All money in the Debt Service
Account or Reserve Account may be kept in cash or invested in Permitted Investments maturing
not later than the maturity of the Bonds outstanding at the time of such purchase. Interest earned
on or profits made from the sale of such investments shall be deposited in and become a part of
the Bond Account or the Combined Utility System Fund.
Section 12. Adequacy of Revenue. The Council hereby declares that in fixing the
amounts to be paid into the Bond Account it has considered and has due regard for the Operating
and Maintenance Expenses and payments associated with Resource Obligations in any month in
which any Resources were made available to the System during such month (regardless of
whether or not the System actually scheduled or received energy from such Resources during
such month) and has not obligated the City to set aside and pay into the Bond Account more
money from the Combined Utility System Fund than in its judgment will be available over and
above such Operating and Maintenance Expenses.
Section 13. General Covenants. The City hereby covenants with the owner of the
Bonds for as long as the same remains outstanding as follows:
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A. Rates and Charges. The City will establish, maintain and collect lawful
rates and charges for the use of the services and facilities of the System, and shall adjust such
rates and charges from time to time so that:
(i) Gross Revenue will at all times be sufficient (a) to pay all
Operating and Maintenance Expenses and to pay all taxes, assessments or other governmental
charges lawfully imposed on the System or the revenue therefrom or payments in lieu thereof
and all other amounts that the City may now be and hereafter become obligated to pay from
Gross Revenue by law or contract, and, together with Assessments actually collected, (b) to pay
the principal of and interest on all outstanding Parity Bonds as and when the same become due
and payable, to make all payments required to be made into the Bond Account to satisfy the
Sinking Fund Requirement, and to make when due all payments required to be made into the
Reserve Account; and
(ii) the Net Revenue in each calendar year will equal at least
1.30 times Annual Debt Service for such year(after deducting Assessments actually collected for
such year). For the purpose of meeting the requirement of this paragraph there may be added to
Net Revenue for any calendar year any amount withdrawn from the Rate Stabilization Account
and credited to Gross Revenue as provided in Section 10 of this ordinance. There shall be
subtracted from Net Revenue for any calendar year any amounts in such year withdrawn from
the Combined Utility System Fund and deposited into the Rate Stabilization Account in such
calendar year.
The failure to collect Gross Revenue in any fiscal year sufficient to comply with the
covenant contained in this subsection shall not constitute an event of default if the City, before
the 90th day of the following fiscal year, both (a) employs a Professional Utility Consultant to
recommend changes in the City's rates which are estimated to produce Gross Revenue sufficient
(once the rates recommended by the Professional Utility Consultant have been imposed by the
City) to meet the requirements of this subsection; and (b) imposes rates at least as high as those
recommended by such Professional Utility Consultant at the time or times so recommended.
B. Maintenance of System. The City will at all times keep and maintain the
System in good repair, working order and condition, and will at all times operate the same and
the business in connection therewith in an efficient manner and at a reasonable cost.
C. Sale or Disposition of the System. The City will not sell, mortgage, lease
or otherwise dispose of or encumber all or any portion of the System, except as follows:
(i) The City may sell, mortgage, lease or otherwise dispose of all or
substantially all of the System if, simultaneously with such sale, mortgage, lease or other
disposition or encumbrance, provision is made for the payment into the Bond Account of cash or
Government Obligations sufficient, together with interest to be earned thereon, to pay the
principal of and interest on all then outstanding Parity Bonds.
(ii) Except as provided in subsection (iii) below, the City will not sell,
mortgage, lease or otherwise dispose of or encumber any part of the useful operating properties
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of the System in excess of 5% of the value of the net utility plant of the System unless prior to
such sale, mortgage, lease or other disposition or encumbrance:
(a) there shall have been filed with the Director of Financial
Services a certificate of a Professional Utility Consultant stating that such sale, mortgage, lease
or other disposition or encumbrance will not impair the ability of the City to comply with the rate
covenants set forth in Section 13.A of this ordinance; or
(b) provision is made for the payment, redemption or other
retirement of a principal amount of outstanding Parity Bonds equal to the greater of the
following amounts: (1) an amount that will be in the same proportion to the net principal amount
of Parity Bonds then outstanding (defined as the total principal amount of the Parity Bonds less
the amount of cash and investments in the Bond Account and accounts therein) that the Net
Revenue from the portion of the System sold or disposed of for the 12 preceding months bears to
the total Net Revenue for such period; or (2) an amount that will be in the same proportion to the
net principal amount of Parity Bonds then outstanding that the book value of the part of the
System sold or disposed of bears to the book value of the entire System immediately prior to
such sale or disposition.
(iii) The City may sell or otherwise dispose of any of the works, plant,
properties and facilities of the System or any real or personal property comprising a part of the
same with a value less than 5% of the net utility plant of the System or which shall have become
unserviceable, inadequate, obsolete or unfit to be used in the operation of the System, or no
longer necessary, material to or useful in such operation, without making any deposit into the
Bond Account.
D. Collection of Assessments. The City shall promptly collect all
Assessments levied in any utility local improvement district now or hereafter created to secure
the payment of the principal of and interest on any Parity Bonds and shall pay the same into the
Bond Account without allocation of such Assessments to any particular series of Parity Bonds.
It is hereby provided further, however, that nothing in this ordinance or in this subsection shall
be construed to prohibit the City from issuing revenue bonds having a lien on Gross Revenue
junior to the lien on such revenue for the payment of the principal of and interest on Parity Bonds
and pledging as security for the payments of such junior lien bonds assessments levied in any
utility local improvement district that may have been created to pay part or all the cost of
improvements to the System for which such junior lien revenue bonds were specifically issued.
E. Books and Accounts. The City will maintain complete books and records
relating to the operation of the System and its financial affairs, and will cause such books and
records to be audited annually, and cause to be prepared an annual financial and operating
statement.
F. Insurance. The City will carry fire and extended coverage insurance on
the System as is ordinarily carried on the property of similar public utilities by other municipal
corporations engaged in the operation of the same if such insurance can be obtained at a
reasonable cost, to the full insurable value thereof, and will also carry adequate public liability
insurance and other kinds of insurance as under good practices are ordinarily carried on the
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properties of similar public utilities by private companies engaged in the operation of the same;
provided, however, that the City may if deemed necessary and advisable by the Council, institute
or continue a self-insurance program with respect to any or all of the aforementioned risks. The
premiums paid for all such insurance shall be regarded and paid as an Operating and
Maintenance Expense.
G. Delinquencies. The City will promptly collect all service charges and
Assessments, determine in a timely manner all delinquencies, and take all necessary legal action
to enforce collection of such delinquencies.
H. No Free Service. Except as permitted by law, the City will not furnish any
service of the System to any customer free of charge.
Section 14. Tax Covenants, Designation of Bonds as "Qualified Tax-Exempt
Obligations."
A. Preservation of Tax Exemption for Interest on the Bonds. The City
covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor
make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of
the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate 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 connection with the Bonds, including the calculation and payment of any
penalties that the City has elected to pay as an alternative to calculating rebatable arbitrage, and
the payment of any other penalties if required under Section 148 of the Code to prevent interest
on the Bonds from being included in gross income for federal income tax purposes.
B. Post-Issuance Compliance. The Director of Financial Services is
authorized and directed to review and update the City's written procedures to facilitate
compliance by the City with the covenants in this Section 14 and the applicable requirements of
the Code that must be satisfied after the issue date to maintain the tax treatment of the Bonds and
the receipt of interest thereon.
C. Designation of Bonds as "Qualified Tax-Exempt Obligations. " The
Bonds shall be designated as "qualified tax-exempt obligations" for the purposes of
Section 265(b)(3) of the Code, if the following conditions are met:
(i) the Bonds are not "private activity bonds" within the meaning of
Section 141 of the Code;
(ii) the reasonably anticipated amount of tax-exempt obligations (other
than private activity bonds and other obligations not required to be included in such calculation)
which the City and any entity subordinate to the City (including any entity that the City controls,
that derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt
obligations on behalf of the City) will issue during the calendar year in which the Bonds are
issued will not exceed $10,000,000; and
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(iii) the amount of tax-exempt obligations, including the Bonds,
designated by the City as "qualified tax-exempt obligations" for the purposes of
Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not
exceed $10,000,000.
Section 15. Payment Agreements.
A. General. To the extent and for the purposes permitted from time to time
by Chapter 39.96 RCW and other applicable provisions of State law, the City may enter into
Payment Agreements with respect to any Parity Bonds, subject to the conditions set forth in this
section and in other provisions of this ordinance.
B. Manner and Schedule of Payments. Each Payment Agreement shall set
forth the manner in which the Payment Agreement Payments and the Payment Agreement
Receipts shall be calculated and a schedule of payment dates.
C. Authorizing Ordinance. Prior to entering into a Payment Agreement, the
Council shall pass an ordinance authorizing such agreement and setting forth such provisions as
the Council deems necessary or desirable and are not inconsistent with the provisions of this
ordinance.
D. Calculation of Payment Agreement Payments and Debt Service on Junior
Lien Obligations with Respect to which a Payment Agreement is in Force. It is the intent of the
City, for purposes of the rate coverage requirement set forth in Section 13.A(ii) of this ordinance
and the Future Parity Bonds test set forth in Section 16.A(v) of this ordinance, that debt service
on Parity Bonds with respect to which a Payment Agreement is in force shall be calculated to
reflect the net economic effect on the City intended to be produced by the terms of the Parity
Bonds and the terms of the Payment Agreement. In calculating such amounts, the City shall be
guided by the following requirements:
(i) The amount of interest deemed to be payable on any Parity Bonds
with respect to which a Payment Agreement is in force shall be an amount equal to the amount of
interest that would be payable at the rate or rates stated in those Parity Bonds plus Payment
Agreement Payments minus Payment Agreement Receipts.
(ii) For any period during which Payment Agreement Payments are
not taken into account in calculating interest on any outstanding Parity Bonds because the
Payment Agreement is not then related to any outstanding Parity Bonds, Payment Agreement
Payments on that Parity Payment Agreement shall be calculated based upon the following
assumptions:
(a) Cit), Obligated to Make Payments Based on Fixed Rate. If
the City is obligated to make Payment Agreement Payments based on a fixed rate and the
Qualified Counterparty is obligated to make payments based on a variable rate index, payments
by the City will be based on the assumed fixed payor rate, and payments by the Qualified
Counterparty will be based on a rate equal to the average rate determined by the variable rate
index specified by the Payment Agreement during the fiscal quarter preceding the quarter in
which the calculation is made; and
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(b) City Obligated to Make Payments Based on Variable Rate
Index. If the City is obligated to make Payment Agreement Payments based on a variable rate
index and the Qualified Counterparty is obligated to make payments based on a fixed rate,
payments by the City will be based on a rate equal to the average rate determined by the variable
rate index specified by the Payment Agreement during the fiscal quarter preceding the quarter in
which the calculation is made, and the Qualified Counterparty will make payments based on the
fixed rate specified by the Payment Agreement.
Section 16. Future Parity Bonds. The City hereby further covenants with the owner of
the Bonds for as long as the same remains outstanding as follows:
A. That it will not issue any bonds with a lien on Gross Revenue superior to
the lien on such revenues of the Bonds and the 2007 Bond. The City may issue Future Parity
Bonds and incur Resource Obligations and obligations under reimbursement agreements related
to the provision of credit enhancement devices that secure any Parity Bonds for:
FIRST, the purpose of acquiring, constructing and installing additions and
improvements to and extensions of, acquiring necessary equipment for, or making necessary
replacements or repairs and capital improvements to the System, or for any other lawful purpose;
or
SECOND, the purpose of refunding or purchasing and retiring at or prior to their
maturity any outstanding revenue bonds or other obligations payable out of Gross Revenue; and
to pledge that payments be made into the Bond Account for the payment of the principal thereof
and interest thereon out of the Combined Utility System Fund sufficient to pay the principal of
and interest on such Future Parity Bonds and to maintain the reserves required therefor, which
such payments may rank equally with the payments out of such Combined Utility System Fund
into the Bond Account and the Reserve Account to pay and secure the payment of the principal
of and interest on any Parity Bonds then outstanding, upon compliance with the following
conditions:
(i) That at the time of the issuance of such Future Parity Bonds there
is no deficiency in the Bond Account.
(ii) If there are Assessments levied in any utility local improvement
district in which additions and improvements to and extensions of the System will be constructed
from the proceeds of such Future Parity Bonds, the ordinance authorizing such Future Parity
Bonds shall require that such Assessments be paid into the Bond Account.
(iii) if there are Assessments pledged to be paid into a warrant or bond
redemption fund for revenue bonds or warrants being refunded by Future Parity Bonds, the
ordinance authorizing such Future Parity Bonds shall require such Assessments to be used for the
refunding or paid into the Bond Account.
(iv) The principal of and interest on the Future Parity Bonds shall be
payable out of the Bond Account, and the ordinance authorizing their issuance shall further
provide for payments into the Bond Account to satisfy the Sinking Fund Requirement and
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payments into the Reserve Account to satisfy the Reserve Account Requirement, all as required
by Section 11 of this ordinance.
(v) Prior to the delivery of any Future Parity Bonds, the City shall
have on file in the office of the Director of Financial Services either:
(a) a certificate of the Director of Financial Services showing
that the Net Revenue determined as hereafter provided for each calendar or fiscal year after the
issuance of such Future Parity Bonds will equal at least 1.30 times the Annual Debt Service
(after deducting Assessments, allocated to the years in which they would be received if the
unpaid balance of each assessment roll were paid in the remaining number of installments with
interest on the declining balance at the times and at the rate provided in the ordinance confirming
the assessment roll) for each such calendar or fiscal year for all Parity Bonds plus the Future
Parity Bonds proposed to be issued. For purposes this certificate, "Net Revenue" shall be the
Net Revenue for a period of any 12 consecutive months (which may include amounts withdrawn
from the Rate Stabilization Account, as provided in Section 10 of this ordinance) out of the
24 months immediately preceding the date of delivery of such proposed Future Parity Bonds.
(b) a certificate of a Professional Utility Consultant showing
that the Net Revenue determined and adjusted as hereafter provided for each calendar or fiscal
year after the issuance of such Future Parity Bonds (the "Adjusted Net Revenue") will equal at
least 1.30 times the Annual Debt Service (after deducting Assessments, allocated to the years in
which they would be received if the unpaid balance of each assessment roll were paid in the
remaining number of installments with interest on the declining balance at the times and at the
rate provided in the ordinance confirming the assessment roll) for each such calendar or fiscal
year for all Parity Bonds plus the Future Parity Bonds proposed to be issued.
The Adjusted Net Revenue shall be the Net Revenue for a period of any 12 consecutive
months (which may include amounts withdrawn from the Rate Stabilization Account, as
provided in Section 10 of this ordinance) out of the 24 months immediately preceding the date of
delivery of such proposed Future Parity Bonds as adjusted by such Professional Utility
Consultant to take into consideration changes in Net Revenue estimated to occur under the
following conditions for each year after such delivery for so long as any Parity Bonds, including
the Future Parity Bonds proposed to be issued, shall be outstanding:
(x) the additional Net Revenue that would have been received
if any change in rates and charges adopted prior to the date of such certificate and subsequent to
the beginning of such 12-month period, had been in force during the full 12-month period;
(y) the additional Net Revenue that would have been received
if any facility of the System that became fully operational after the beginning of such 12-month
period had been so operating for the entire period; and
(z) the additional Net Revenue estimated by such Professional
Utility Consultant to be received as a result of any additions, betterments and improvements to
and extensions of any facilities of the System that are (1) under construction at the time of such
certificate or(2) will be constructed from the proceeds of the Future Parity Bonds to be issued.
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Such Professional Utility Consultant may rely upon, and his or her certificate shall have
attached thereto, financial statements of the System certified by the Director of Financial
Services showing income and expenses for the period upon which the same is based.
B. Notwithstanding the foregoing requirement, if Future Parity Bonds are to
be issued for the purpose of refunding at or prior to their maturity any part or all of the then
outstanding Parity Bonds and the issuance of such refunding Future Parity Bonds will result in a
debt service savings and does not require an increase of more than $5,000 in any fiscal or
calendar year for principal of and interest on such refunding Future Parity Bonds over and above
the amount required in such year for the principal of and interest on the bonds being refunded
thereby, the condition stated in subsection A(v) of this section need not be met.
C. Nothing herein contained shall prevent the City from issuing any revenue
bonds, warrants or other obligations that are a charge upon the money in the Combined Utility
System Fund junior or inferior to the payments required by this ordinance to be made into the
Bond Account and the Reserve Account.
Section 17. 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 the affected 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.
While a Bond is registered in the name of the Securities Depository, notice of any
defeasance shall be given in the manner prescribed in the Letter of Representations for notices of
redemption of Bonds. If a Bond ceases to be held in book-entry form, then unless specified by
the City in a refunding or defeasance plan, selection of Bonds to be defeased, notice of
defeasance and replacement of Bond certificates shall be done in accordance with the provisions
of this ordinance for the redemption of Bonds prior to their maturity.
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Section 18. Form of the Bonds. The Bonds shall be in substantially the following
form:
No. $
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF BREMERTON
WATER AND SEWER REVENUE BOND, 2014
INTEREST RATE: % MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & Co.
PRINCIPAL AMOUNT: DOLLARS
The City of Bremerton, Washington (the "City"), for value received, hereby promises to
pay to the Registered Owner identified above, or registered assigns, on the Maturity Date
identified above, the Principal Amount indicated above and to pay interest thereon from the
, 2014, or the most recent date to which interest has been paid or duly provided
for until payment of this Bond at the Interest Rate set forth above, payable on [June 1, 2015], and
semiannually thereafter on the first days of each December 1 and June 1. The principal of and
interest on this Bond are payable solely out of the special fund of the City known as the Utility
Debt Service Account (the "Bond Account").
Both principal of and interest on this Bond are payable in lawful money of the United
States of America. For so long as the Bonds are held in fully immobilized form, payments of
principal and interest shall be made as provided in accordance with the operational arrangements
of DTC referred to in the Blanket Issuer Letter of Representations from the City to The
Depository Trust Company. In the event that the Bonds are no longer held in fully immobilized
form, interest on this Bond shall be paid by check or draft mailed to the Registered Owner at the
address appearing on the Bond Register on the 15th day of the month preceding the interest
payment date, and principal of this Bond shall be payable upon presentation and surrender of this
Bond by the.Registered Owner at the principal office of the fiscal agency of the State of
Washington in New York, New York (the "Bond Registrar").
Principal and interest are payable solely out of the Bond Account, into which fund the
City hereby irrevocably binds itself to pay certain fixed amounts out of the Gross Revenue of the
System, as the same is defined in Ordinance No. of the City (the "Bond Ordinance"),
without regard to any fixed proportion, namely, amounts sufficient to pay the principal of and
interest on the outstanding Bonds, the 2007 Bond and any additional and/or refunding water and
sewer revenue bonds issued on a parity of lien with the Bonds and the 2007 Bond and to
accumulate a reserve, all at the times and in the manner set forth in the Bond Ordinance.
Reference is made to the Bond Ordinance for definitions of capitalized terms not otherwise
defined herein.
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.51383698_
This Bond is one of a total issue of $ par value of the Bonds, all of like
date and tenor, except as to maturity, redemption provisions and interest rates, all payable from
the Bond Account and all issued by the City under and pursuant to the laws of the State of
Washington and the Bond Ordinance for the purpose of providing funds to pay the cost of certain
capital improvements to the System as specified in the Bond Ordinance.
The Bonds are subject to redemption prior to their stated maturity as provided in the
Bond Ordinance and certificate outlining the Final Terms of the Bonds.
The Gross Revenue is hereby pledged to the payment of principal of and interest on the
Bonds, and the Bonds constitute a charge or lien upon such revenues prior and superior to any
other charges whatsoever, excluding charges for Operation and Maintenance Expenses of the
System and payments associated with Resource Obligations, if any, and equal to the lien and
charge thereon of the 2007 Bond and any Future Parity Bonds. The Bonds are not a general
obligation of the City.
[The City has designated the bond as qualified tax-exempt obligations for purposes of
Section 265(b) of the Internal Revenue Code of 1986.]
The City hereby covenants and agrees with the owners of the Bonds to carry out fully all
covenants and meet all obligations of the City as set forth herein and in the Bond Ordinance, and
reference is hereby made to the Bond Ordinance for a complete statement of such covenants.
This Bond shall not become valid or obligatory for any purpose until the certificate of
authentication set forth hereon has been signed by the Bond Registrar.
This Bond is interchangeable for Bonds of any authorized denomination of an equal
aggregate principal amount, and of the same interest rate and maturity. This Bond is transferable
only upon the registry books of the Bond Registrar by surrender of this certificate to the Bond
Registrar, duly assigned and executed as indicated below. Such exchange or transfer shall be
without cost to the owner or transferee. The City may deem the person in whose name this Bond
is registered to be the absolute owner thereof for the purpose of receiving payment of the
principal of and interest on such Bond and for any and all other purposes whatsoever. The Bond
Registrar shall not be obligated to transfer or exchange this Bond during the fifteen days
preceding any interest payment date or the date on which notice of redemption of such Bond is to
be given nor after such notice has been given.
It is hereby certified and declared that the Bonds are issued pursuant to and in strict
compliance with the Constitution and laws of the State of Washington and the ordinances of the
City and that all acts, conditions and things required to be done precedent to and in the issuance
of this Bond have happened, have been done and have been performed as required by law.
IN WITNESS WHEREOF, the City has caused this Bond to be signed by the manual or
facsimile signature of its Mayor and attested by the manual or facsimile signature of its City
Clerk, and its corporate seal to be impressed or a facsimile thereof imprinted hereon this [23`d]
day of[September], 2014.
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CITY OF BREMERTON, WASHINGTON
By /s/
Mayor
ATTEST:
/s/
City Clerk
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This is one of the City of Bremerton, Washington, Water and Sewer Revenue Bonds,
2014, dated [September 23], 2014, described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
By:
Authorized Officer
Section 19. Execution and Authentication of the Bonds. The Bonds shall be signed on
behalf of the City by the manual or facsimile signature of the Mayor and attested by the manual
or facsimile signature of the City Clerk and shall have the seal of the City impressed or a
facsimile thereof imprinted thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated
and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds shall cease to be an
officer or officers of the City before the Bonds so signed shall have been authenticated or
delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be
authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be
as binding upon the City as though those who signed the same had continued to be such officers
of the City. Any Bond may also be signed and attested on behalf of the City by such persons as
at the actual date of execution of such Bond shall be the proper officers of the City although at
the original date of such Bond any such person shall not have been such officer of the City.
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Section 20. Lost or Stolen Bonds. In case any Bonds shall be lost, stolen or destroyed,
the Bond Registrar may deliver a new bond or bonds of like amount, date, maturity, interest rate,
tenor, and effect to the Registered Owner or nominee thereof upon the owner paying the
expenses and charges of the City in connection therewith and upon filing with the Bond
Registrar evidence satisfactory to said Bond Registrar that such bond or bonds were actually lost,
stolen or destroyed and or ownership thereof, and upon furnishing the City with indemnity
satisfactory to both.
Section 21. Sale and Delivery of the Bonds.
A. Manner of Sale of Bonds; Delivery of Bonds. The Designated
Representative is authorized to sell the Bonds by negotiated sale to the Underwriter based on her
assessment of market conditions, in consultation with appropriate City officials and staff and
advisors. In determining the Final Terms, the Designated Representative shall take into account
those factors that, in her judgment, may be expected to result in the lowest true interest cost on
the Bonds to their maturity, including, but not limited to current interest rates for obligations
comparable to the Bonds.
B. Preparation, Execution and Delivery of the Bonds. The Bonds will be
prepared at City expense and will be delivered to the Underwriter, with the approving legal
opinion of nationally recognized bond counsel regarding the Bonds.
Section 22. Official Statement.
A. Preliminary Official Statement. The Designated Representative shall
review the form of each preliminary official statement prepared in connection with the sale of the
Bonds to the public. For the sole purpose of the Underwriter's compliance with paragraph (b)(1)
of Rule 15c2-12, the Designated Representative is authorized to "deem final" that preliminary
official statement 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 paragraph.
B. Approval of Final Of Statement. The City approves the preparation
of a final official statement for 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 Underwriter. The City authorizes and approves
the distribution by the Underwriter of that final official statement to purchasers and potential
purchasers of the Bonds.
Section 23. Continuing Disclosure. 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
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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 subsection (b) of this
section("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: (a) principal and interest payment delinquencies; (b) non-payment related defaults, if
material; (c)unscheduled draws on debt service reserves reflecting financial difficulties;
(d)unscheduled draws on credit enhancements reflecting financial difficulties; (e) substitution of
credit or liquidity providers, or their failure to perform; (f) 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; (g) modifications to rights of holders of the Bonds, if material;
(h) bond calls (other than scheduled mandatory redemptions of Term Bonds), if material, and
tender offers; (i) defeasances; 0) release, substitution, or sale of property securing repayment of
the Bonds, if material; (k) rating changes; (1) bankruptcy, insolvency, receivership or similar
event of the City, as such "Bankruptcy Events" are defined in Rule 15c2-12; (m) 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
(n) 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 subsection (B) of this section.
B. Type of Annual Financial Infor•niation Undertaken to be Provided. The
annual financial information that the City undertakes to provide in subsection (A) of this section:
(i) Shall consist of (a) annual financial statements showing ending
fund equity for the System prepared in accordance with generally accepted accounting principles
applicable to government entities (and modified as may be required by the Washington State
Auditor pursuant to RCW 43.09.200 (or any successor statute); (b) the principal amount of
outstanding Parity Bonds; and(c) debt service coverage for the Parity Bonds;
(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 31), as such
fiscal year may be changed as required or permitted by State law, commencing with the City's
fiscal year ending December 31, 2014; 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.
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C. Amendment of Undertaking. The Undertaking is subject to amendment
after the primary offering of the Bonds without the consent of any holder of any Bond, or of any
broker, dealer, municipal securities dealer, participating underwriter, Rating Agency 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. The Undertaking evidenced by this section shall inure to
the benefit of the City and the Beneficial Owner of a 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 those provisions of Rule 15c2-12 which
require the City to comply with this Undertaking become legally inapplicable in respect of the
Bonds for any reason, as confirmed by an opinion of nationally recognized bond 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 the 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 the Undertaking shall constitute an Event of Default (as defined
in Section 25 of this ordinance) in respect of the Bonds. The sole remedy of a Beneficial Owner
of a Bond shall be to take action to compel the City or other obligated person to comply with the
Undertaking, including seeking an order of specific performance from an appropriate court.
G. Designation of Official Responsible to Administer Undertaking. The
Designated Representative 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, without limitation, the following actions:
(i) Preparing and filing the annual financial information undertaken to
be provided;
(ii) Determining whether any event specified in subsection (A) has
occurred, assessing its materiality, 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 in accordance with Rule 15c2-12;
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51383698 2
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel, to assist and advise
the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 24. Application of Bond Proceeds. The proceeds of the Bonds shall be
applied as follows:
A. The amount necessary to satisfy the Reserve Account Requirement shall
be deposited into the Reserve Account.
B. The balance of the Bond proceeds shall be deposited into the Combined
Utility System Funds and applied to pay costs of the Project and the costs of issuing the Bonds.
Section 25. Events of Default. The City hereby covenants and agrees with the owners
of the Bonds, in order to protect and safeguard the covenants and obligations undertaken by the
City securing the Bonds, that the following shall constitute "Events of Default":
A. If default shall be made in the due and punctual payment of the principal
of and premium, if any, on any of the Parity Bonds when the same shall become due and
payable, either at maturity or by proceedings for mandatory redemption or otherwise;
B. If default shall be made in the due and punctual payment of any
installment of interest on any Parity Bond;
C. If the City shall fail to purchase or redeem any Term Bonds, if any, in an
aggregate principal amount at least equal to the Sinking Fund Requirement for the applicable
Fiscal Year;
D. If the City shall default in the observance and performance of any other of
the covenants, conditions and agreements on the part of the City contained in this ordinance and
the default or defaults shall have continued for a period 90 days after the City shall have received
from the Bondowners' Trustee (hereinafter defined) or from the owners of not less than 20% in
principal amount of Parity Bonds outstanding, a written notice specifying and demanding the
cure of such default;
E. If an order,judgment or decree shall be entered by any court of competent
jurisdiction: (i) appointing a receiver, trustee or liquidator for the City or the whole or any
substantial part of the System; (ii) approving a petition filed against the City seeking the
bankruptcy, arrangement or reorganization of the City under any applicable law of the United
States or the State; or (iii) assuming custody or control of the City or of the whole or any
substantial part of the System under the provisions of any other law for the relief or aid of
debtors and such order,judgment or decree shall not be vacated or set aside or stayed (or, in case
custody or control is assumed by said order, such custody or control shall not be otherwise
terminated) within 60 days from the date of the entry of such order,judgment or decree; or
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513836982
F. If the City shall: (i) admit in writing its inability to pay its debts generally
as they become due; (ii) file a petition in bankruptcy or seeking a composition of indebtedness
under any state or federal bankruptcy or insolvency law; (iii) make an assignment for the benefit
of its creditors; (iv) consent to the appointment of a receiver of the whole or any substantial part
of the System; or (v) consent to the assumption by any court of competent jurisdiction under the
provisions of any other law for the relief or aid of debtors of custody or control of the City or of
the whole or any substantial part of the System.
Section 26. Bondowners' Trustee. So long as an Event of Default has not been
remedied, a bondowners' trustee (the "Bondowners' Trustee") may be appointed by the
registered owners of 25% in principal amount of the Parity Bonds, by an instrument or
concurrent instruments in writing signed and acknowledged by such registered owners of the
Parity Bonds or by their attorneys-in-fact duly authorized and delivered to such Bondowners'
Trustee, notification thereof being given to the City. That appointment shall become effective
immediately upon acceptance thereof by the Bondowners' Trustee. Any Bondowners' Trustee
appointed under the provisions of this section shall be a bank or trust company organized under
the laws of the State of Washington or the State of New York or a national banking association.
The bank or trust company acting as Bondowners' Trustee may be removed at any time, and a
successor Bondowners' Trustee may be appointed, by the registered owners of a majority in
principal amount of the Parity Bonds, by an instrument or concurrent instruments in writing
signed and acknowledged by such registered owners of the Bonds or by their attorneys-in-fact
duly authorized. The Bondowners' Trustee may require security and indemnity as may be
reasonable against the costs, expenses and liabilities that may be incurred in the performance of
its duties.
In the event that any Event of Default in the sole judgment of the Bondowners' Trustee is
cured and the Bondowners' Trustee furnishes to the City a certificate so stating, that Event of
Default shall be conclusively deemed to be cured and the City, the Bondowners' Trustee and the
registered owners of the Parity Bonds shall be restored to the same rights and position which
they would have held if no Event of Default had occurred.
The Bondowners' Trustee appointed in the manner herein provided, and each successor
thereto, is declared to be a trustee for the registered owners of all the Parity Bonds and is
empowered to exercise all the rights and powers herein conferred on the Bondowners' Trustee.
Section 27. Suits at Law or in Equity. Upon the happening of an Event of Default and
during the continuance thereof, the Bondowners' Trustee may, and upon the written request of
the registered owners of not less than 25% in principal amount of the Parity Bonds outstanding
shall, take such steps and institute such suits, actions or other proceedings, all as it may deem
appropriate for the protection and enforcement of the rights of the registered owners of the Parity
Bonds, to collect any amounts due and owing to or from the City, or to obtain other appropriate
relief, and may enforce the specific performance of any covenant, agreement or condition
contained in this ordinance or in any of the Parity Bonds.
Nothing contained in this section shall, in any event or under any circumstance, be
deemed to authorize the acceleration of maturity of principal on the Parity Bonds, and the
remedy of acceleration is expressly denied to the registered owners of the Parity Bonds under
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any circumstances including, without limitation, upon the occurrence and continuance of an
Event of Default.
Any action, suit or other proceedings instituted by the Bondowners' Trustee hereunder
shall be brought in its name as trustee for the registered owners of the Parity Bonds and all such
rights of action upon or under any of the Parity Bonds or the provisions of this ordinance may be
enforced by the Bondowners' Trustee without the possession of any of those Parity Bonds and
without the production of the same at any trial or proceedings relative thereto except where
otherwise required by law. Any such suit, action or proceeding instituted by the Bondowners'
Trustee shall be brought for the ratable benefit of all of the registered owners of those Parity
Bonds, subject to the provisions of this ordinance and the ordinances authorizing the issuance of
other outstanding Parity Bonds. The respective registered owners of the Parity Bonds, by taking
and holding the same, shall be conclusively deemed irrevocably to appoint the Bondowners'
Trustee the true and lawful trustee of the respective registered owners of those Parity Bonds,
with authority to institute any such action, suit or proceeding; to receive as trustee and deposit in
trust any sums becoming distributable on account of those Parity Bonds; to execute any paper or
documents for the receipt of money; and to do all acts with respect thereto that the registered
owner himself or herself might have done in person. Nothing herein shall be deemed to
authorize or empower the Bondowners' Trustee to consent to accept or adopt, on behalf of any
registered owner of the Parity Bonds, any plan of reorganization or adjustment affecting the
Parity Bonds or any right of any registered owner thereof, or to authorize or empower the
Bondowners' Trustee to vote the claims of the registered owners thereof in any receivership,
insolvency, liquidation, bankruptcy, reorganization or other proceeding to which the City is a
party.
Section 28. Application of Money Collected by Bondowners' Trustee. Any money
collected by the Bondowners' Trustee at any time shall be applied in the following order of
priority:
A. first, to the payment of the charges, expenses, advances and compensation
of the Bondowners' Trustee and the charges, expenses, counsel fees, disbursements and
compensation of its agents and attorneys; and
B. second, to the payment to the persons entitled thereto first of required
interest and then of unpaid principal amounts on any Parity Bonds which shall have become due
(other than Parity Bonds previously called for redemption for the payment of which money is
held pursuant to the provisions hereto), whether at maturity or by proceedings for redemption or
otherwise, in the order of their due dates and, if the amount available shall not be sufficient to
pay in full the principal amounts due on the same date, then to the payment thereof ratably,
according to the principal amounts due thereon to the persons entitled thereto, without any
discrimination or preference.
Section 29. Duties and Obligation of Bondowners' Trustee. The Bondowners' Trustee
shall not be liable except for the performance of such duties as are specifically set forth herein.
During an Event of Default, the Bondowners' Trustee shall exercise such of the rights and
powers vested in it hereby, and shall use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of his or her own
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affairs. The Bondowners' Trustee shall have no liability for any act or omission to act hereunder
except for the Bondowners' Trustee's own negligent action, its own negligent failure to act or its
own willful misconduct. The duties and obligations of the Bondowners' Trustee shall be
determined solely by the express provisions of this ordinance, and no implied powers, duties or
obligations of the Bondowners' Trustee shall be read into this ordinance.
The Bondowners' Trustee shall not be required to expend or risk its own funds or
otherwise incur individual liability in the performance of any of its duties or in the exercise of
any of its rights or powers as the Bondowners' Trustee, except as may result from its own
negligent action, its own negligent failure to act or its own willful misconduct.
The Bondowners' Trustee shall not be bound to recognize any person as a registered
owner of any Parity Bond until his or her title thereto, if disputed, has been established to its
reasonable satisfaction.
The Bondowners' Trustee may consult with counsel and the opinion of such counsel shall
be full and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel. The Bondowners'
Trustee shall not be answerable for any neglect or default of any person, firm or corporation
employed and selected by it with reasonable care.
Section 30. Suits by Individual Bondowners Restricted. Neither the registered owner
nor the beneficial owner of any one or more of Parity Bonds shall have any right to institute any
action, suit or proceeding at law or in equity for the enforcement of same unless:
A. An Event of Default has happened and is continuing; and
B. A Bondowners' Trustee has been appointed; and
C. Such owner previously shall have given to the Bondowners' Trustee
written notice of the Event of Default on account of which such suit, action or proceeding is to
be instituted; and
D. The registered owners of 25% in principal amount of the Parity Bonds,
after the occurrence of such Event of Default, have made written request of the Bondowners'
Trustee and have afforded the Bondowners' Trustee a reasonable opportunity to institute such
suit, action or proceeding; and
E. There have been offered to the Bondowners' Trustee security and
indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or
thereby; and
F. The Bondowners' Trustee has refused or neglected to comply with such
request within a reasonable time.
No registered owner or beneficial owner of any Parity Bond shall have any right in any
manner whatever by his or her action to affect or impair the obligation of the City to pay from
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the Net Revenue the principal of and interest on such Parity Bonds to the respective owners
thereof when due.,
Section 31. Authorization to Officials and Agents. The proper City officials are
hereby authorized and directed to approve an official statement or other disclosure document,
and to do everything necessary and proper for the prompt issuance, execution and delivery of the
Bonds in conformance with the provisions of this ordinance and for the proper use and
application of the proceeds of the sale thereof as provided in this ordinance.
Section 32. Supplements and Amendments.
A. The Council from time to time and at any time may adopt an ordinance or
ordinances supplementing or amending this ordinance, which ordinance or ordinances thereafter
shall become a part of this ordinance, for any one or more or all of the following purposes:
(i) To add to the covenants and agreements of the City in this
ordinance other covenants and agreements thereafter to be observed, which shall not adversely
affect the interests of the owners of any Parity Bonds in any material respect, or to surrender any
right or power herein reserved to or conferred upon the City.
(ii) To make such provisions for the purpose of curing any ambiguities
or of curing, correcting or supplementing any defective provision contained in this ordinance in
regard to such matters or questions as the Council may deem necessary or desirable and not
inconsistent with this ordinance and which shall not adversely affect the interests of the owners
of any Parity Bonds in any material respect.
(iii) To amend or supplement any provision contained in this ordinance
for the purpose of obtaining or maintaining a rating on the Bonds so long as such amendment or
supplement is not inconsistent with this ordinance and will not adversely affect the interests of
the owners of any Parity Bonds in any material respect.
Any such supplemental ordinance of the Council may be adopted without the consent of
the owners of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of
subsection B of this section; provided, however, that the City shall obtain an opinion of
nationally recognized bond counsel to the effect that such supplemental ordinance complies with
this subsection A and will not adversely affect the interests of the owners of any Parity Bonds in
any material respect.
B. With the consent of the owners of not less than a majority in aggregate
principal amount of the Parity Bonds at the time outstanding, the Council may adopt an
ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this ordinance or of any
supplemental ordinance; provided, however, that no such supplemental ordinance shall:
(i) Extend the fixed maturity of any Parity Bond, or reduce the rate of
interest thereon, or extend the time of payments of interest from their due date, or reduce the
amount of the principal thereof, or reduce any premium payable on the redemption thereof,
without the consent of the owner of each Parity Bond so affected; or
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513836982
(ii) Reduce the aforesaid percentage of owners of Parity Bonds
required to approve any such supplemental ordinance, without the consent of the owners of all
Parity Bonds then outstanding.
It shall not be necessary for the consent of bondowners under this subsection B to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof.
C. Upon the adoption of any supplemental ordinance pursuant to the
provisions of this section, this ordinance shall be deemed modified and amended in accordance
therewith, and the respective rights, duties and obligations of the City under this ordinance and
the owner of the Bonds outstanding hereunder shall thereafter be determined, exercised and
enforced thereunder, subject in all respects to such modification and amendments, and all the
terms and conditions of any such supplemental ordinance shall be deemed to be part of the terms
and conditions of this ordinance for any and all purposes.
Section 33. Severability. If any one or more of the covenants or agreements provided
in this ordinance to be performed on the part of the City shall be declared by any court of
competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or
agreements shall be null and void and shall be deemed separable from the remaining covenants
and agreements of this ordinance and shall in no way affect the validity of the other provisions of
this ordinance or of the Bonds.
Section 34. Ratification. Any action consistent with the authority but prior to the
effective date of this ordinance is hereby ratified and confirmed.
Section 35. Effective Date. This ordinance shall take effect ten days after its passage,
approval and publication as required by law.
APPROVED by the City Council of the City of Bremerton, Washington the 20th day of
August, 2014.
PASSED by the City Council of the City of Bremerton, Washington this 20th day of
August, 2014.
"V
Greg eler, Council President
APPROVED this 2V'`day of August, 2014.
atty Le yor
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ATTEST:
Shannon L. Corin, City Clerk
APPROVED AS TO FORM:
oc* *G Co
NanTNeraas, Bond Counsel
PUBLISHED
EFFECTIVE DATE 30 /
ORDINANCE NO. 5
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51383698 2
AFFIDAVIT OF PUBLICATION
Account#42742 AD#20142937
STATE OF WASHINGTON
COUNTY OF KITSAP
I,Teresa Hull,being first duly sworn on oath,deposes and says: That she is now,and at all times embraced
in the publication herein mentioned was the principal clerk of the printers and publishers of KITSAP SUN;
that said newspaper has been approved as a legal newspaper by order of the Superior Court of the County
of Kitsap, in which County it is published and is now and has been for more than six months prior to the
date of the publication hereinafter referred to,published in the English language continually as a daily
newspaper in Bremerton, Kitsap County,Washington,a weekly newspaper in Kitsap County,Washington
and is now and during all of said time, was printed in an office maintained in the aforesaid place of
publication of said newspaper;that the following is a true text of an advertisement as it was published in
regular issues(and not in supplement form)of said newspaper on the following date,to wit:And on Aug.
25,2014 such newspaper was regularly distributed to its subscribers during all of said period.The full
amount of the fee charged for the foregoing publication is the sum of$47.52.This amount has not been
paid in full.
(Signature of Principal Clerk)
NOTARY PUBLIC
Subscribed and sworn to before me this day of September 4,2014. STATE OF WASHINGTON
CHRISTY IIA MOFFITT
My Appointment Expires July 08,2016
ORDINANCE NO.5255
AN ORDINANCE of the City Council of the City of Bremerton,Washington,providing for the issuance
and sale of not to exceed$8,000,000 principal amount of water and sewer revenue bonds to obtain funds
for certain capital improvements to the City's water and sewer system; fixing or setting parameters with
respect to certain terms and covenants of the bonds;appointing the City's designated representative to
approve the final terms of the sale of the bonds;and providing for other related matters.
PASSED by the City Council on the 20th day of August,2014.
The full text of this ordinance is available from the City Clerk's Office,345 Sixth Street, Suite 600,
Bremerton,WA 98337.
AUG. 25,2014
AD#20142937