Loading...
HomeMy WebLinkAboutCOW 2006-10-23 Item 4A - Ordinance - Allentown Foster Point Sewer Revenue Bonds COUNCIL AGENDA S 1 �l 4 ti n I Meeting Date Prepared b Iztitialr ITEM NO. O �Z Q i g y Mayor's review Council review cn ti p 10/23/06 KAF A ,t1 1 1 1 ITEM INFORMATION CAS NUMBER: 06-122 I ORIGINAL AGENDA DATE: 10/23/06 AGENDA ITEM TITLE Allentown /Foster Point Sewer Revenue Bonds CATEGORY Discussion Motion El kesolution Ordinance Bid Award Public Hearing Other Mtg Date 10/23/06 Mtg Date Mtg Date Mtg Date 11/06/06 Mtg Date Mtg Date Mtg Date SPONSOR Council Mayor Adm Svcs DCD Finance Fire Legal P&R Police PW SPONSOR'S A $3.3 million revenue bond issue was included in the adopted 2006 -2011 Capital SUMMARY Improvement Program as a funding source for the Allentown /Foster Point Sewer Project. As this project also includes water and surface water improvements, the debt will be spread proportionately amongst the (3) utilities (sewer 55 water 29 and surface water 16 REVIEWED BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. Planning Comm. DATE: 10/16 17/06 RECOMMENDATIONS: SPONSOR /ADMIN. Adopt ordinance authorizing the issuance of revenue bonds COMMrITEE Unanimous approval; forward to COW Meeting on 10/23/06 COST IMPACT FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $3.3 M Fund Source: N/A Comments: N/A MTG. DATE RECORD OF COUNCIL ACTION I I MTG. DATE I ATTACHMENTS 10/23/06 Memorandum to Finance Safety and Utilities Committees, Dated 10/12/06 Draft Bond Debt Service Schedule Draft Bond Ordinance Finance Safety Committee Meeting Minutes 10/16/06 Utilities Committee Meeting Minutes 10/17/06 To: Finance Safety Committee Utilities Committee From: Kevin A. Fuhrer, Finance Director VaL. Date: October 12, 2006 Subject: Allentown/Foster Point Sewer Revenue Bonds By way of background, a $3.3 million revenue bond issue was included in the adopted 2006 -2011 Capital Improvement Program as a funding source for the Allentown/Foster Point Sewer Project. As this project also includes water and surface water improvements, the debt will be spread proportionately amongst the (3) utilities (sewer 55 water 29 surface water 16 The City has retained the services of Hugh Spitzer, Foster Pepper, as bond counsel and Sean Keatts, Lehman Brothers, as bond underwriter. Both individuals and their respective firms have worked with the City in the past and each are highly regarded in the municipal finance community. The schedule of activity as it now stands is to work through the committee process on October 16 and 17, obtain the committees' recommendation to forward to the Council of the Whole meeting on October 23, and close with Council adoption of the bond ordinance on November 6. Final pricing of the bonds will occur on November 6 and bond proceeds will be distributed to the City on November 20. Both Hugh and Sean will attend, make presentations, and respond to Council inquiries at the October 23rd and November 6th meetings. Attached to this memorandum are (2) documents. The first (Attachment A) is a very preliminary bond debt service schedule. The bond repayment will be structured over a 20 -year term with level debt service. Please note that market conditions may change the amount of the bonds slightly as we draw closer to the issue date. The second document (Attachment B) is a draft bond ordinance. In closing, I look forward to the meetings next week. r /4 BOND DEBT SERVICE City of Tukwila, Washington Water and Sewer Revenue Bonds, 2006 Period Annual Ending Principal Coupon Interest Debt,Service Debt Service 11/21/2006 06/01/2007 70,319.79 70,319.79 12/01/2007 105,000 4.000% 66,618.75 171,618.75 241,938.54 06/01/2008 64,518.75 64,518.75 12/01/2008 115,000 4.000% 64,518.75 179,518.75 244,037.50 06/01/2009 62,218.75 62,218.75 12/01/2009 115,000 4.000% 62,218.75 177,218.75 239,437.50 06/01/2010 59,918.75 59,918.75 12/01/2010 120,000 4.000% 59,918.75 179,918.75 239,837.50 06/01/2011 57,518.75 57,518.75 12/01/2011 125,000 4.000% 57,518.75 182,518.75 240,037.50 06/01/2012 55,018.75 55,018.75 12/01/2012 130,000 4.000% 55,018.75 185,018.75 240,037.50 06/01/2013 52,418.75 52,418.75 12/01/2013 135,000 4.000% 52,418.75 187,418.75 239,837.50 06/01/2014 49,718.75 49,718.75 12/01/2014 140,000 4.000% 49,718.75 189,718.75 239,437.50 06/01/2015 46,918.75 46,918.75 12/01/2015 145,000 4.000% 46,918.75 191,918.75 238,837.50 06/01/2016 44,018.75 44,018.75 12/01/2016 155,000 4.000% 44,018.75 199,018.75 243,037.50 06/01/2017 40,918.75 40,918.75 12/01/2017 160,000 4.000% 40,918.75 200,918.75 241,837.50 06/01/2018 37,718.75 37,718.75 12/01/2018 165,000 4.250% 37,718.75 202,718.75 240,437.50 06/01/2019 34,212.50 34,212.50 12/01/2019 175,000 4.250% 34,212.50 209,212.50 243,425.00 06/01/2020 30,493.75 30,493.75 12/01/2020 180,000 4.250% 30,493.75 210,493.75 240,987.50 06/01/2021 26,668.75 26,668.75 12/01/2021 190,000 4.250% 26,668.75 216,668.75 243,337.50 06/01/2022 22,631.25 22,631.25 12/01/2022 195,000 4.250% 22,631.25 217,631.25 240,262.50 06/01/2023 18,487.50 18,487.50 12/01/2023 205,000 4.250% 18,487.50 223,487.50 241,975.00 06/01/2024 14,131.25 14,131.25 12/01/2024 215,000 4.250% 14,131.25 229,131.25 243,262.50 06/01/2025 9,562.50 9,562.50 12/01/2025 220,000 4.250% 9,562.50 229,562.50 239,125.00 06/01/2026 4,887.50 4,887.50 12/01/2026 230,000 4.250% 4,887.50 234,887.50 239,775.00 3,220,000 1,600,901.04 4,820,901.04 4,820,901.04 Oct 11, 2006 12:12 pm Prepared by Lehman Brothers (Finance 5.017 tukwila:WATERSWR- 20061121) Page 2 44- DRAFT 10/12/06 CITY OF TUKWILA, WASHINGTON ORDINANCE NO. An ordinance of thel City of Tukwila, Washington, relating to the Waterworks Utility of the City, including the system of sewerage as a part thereof; specifying, adopting and ordering to be carried out a system or plan of additions to and betterments and extension of the waterworks utility; providing for the issuance of [$3,500,000] principal amount of Water and Sewer Revenue Bonds, 2006, of the City for the purpose of providing a part of the cost of that system or plan, and to pay costs of issuing the bonds; fixing the date, form, maturities, interest rates, terms and covenants of such bonds; [providing for bond insurance;] and providing for the sale and delivery of such bonds to Lehman Brothers Inc., Seattle, Washington. Prepared By: Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 206 447 -4400 50727479 4 TABLE OF CONTENTS Section Page Section 1. Definitions. 4 Section 2. Findings. 6 Section 3. Adoption of Plan of Additions 7 Section 4. Authorization and Description of Bonds. 7 Section 5. Registration and Transfer of Bonds. 8 Section 6. Payment of Bonds 9 Section 7. Optional Redemption; Mandatory Redemption; and Open Market Purchase of Bonds. 9 Section 8. Notice of Redemption 10 Section 9. Failure to Redeem Bonds. 11 Section 10. Payments into Bond Fund 11 Section 11. Pledge of Gross Revenue and Lien Position. 12 Section 12. Form and Execution of Bonds. 12 Section 13. Bond Registrar. 13 Section 14. Covenants. 13 Section 15. Small Governmental Issuer Arbitrage Rebate Exception and Designation of Bonds as "Qualified Tax- Exempt Obligations." 15 Section 16. Parity Provisions 15 Section 17. Refunding or Defeasance of Bonds. 16 Section 18. Deposit of Bond Proceeds. 16 Section 19. Approval of Bond Purchase Contract and Delivery of Bonds 16 Section 20. Preliminary Official Statement Deemed Final 17 Section 21. Undertaking to Provide Continuing Disclosure 17 Section 22. Bond Insurance. 20 Section 23. Ratification and Confirmation. 20 Section 24. Surface Water Utility Deemed Part of Waterworks Utility. 20 Section 25. Declaration of Emergency; Effective Date 20 50727479.4 CITY OF TUKWILA, WASHINGTON ORDINANCE NO. An ordinance of the City of Tukwila, Washington, relating to the Waterworks Utility of the City, including the system of sewerage as a part thereof; specifying, adopting and ordering to be carried out a system or plan of additions to and betterments and extension of the waterworks utility; providing for the issuance of [$3,500,000] principal amount of Water and Sewer Revenue Bonds, 2006, of the City for the purpose of providing a part of the cost of that system or plan, and to pay costs of issuing the bonds; fixing the date, form, maturities, interest rates, terms and covenants of such bonds; [providing for bond insurance;} and providing for the sale and delivery of such bonds to Lehman Brothers Inc., Seattle, Washington. WHEREAS, the City of Tukwila, Washington (then the Town of Tukwila), by Ordinance No. 320, passed by the Town Council and approved by the Mayor on May 1, 1961, and subsequently amended, specified and adopted a system or plan for a system of sewerage for the Town and provided that system of sewerage become a part of the waterworks utility of the Town, and authorized the issuance and sale of Water and Sewer Revenue Bonds, 1961, in the principal amount of not to exceed $170,000 to pay a portion of the cost thereof, such waterworks utility, as hereinafter referred to, being deemed to include the systems of water supply and distribution and sanitary sewage disposal, as combined by Ordinance No. 320 pursuant to RCW 35.67.320, and any additions thereto and extensions, renewals and betterments thereof hereafter made or constructed; and WHEREAS, $170,000 par value Water and Sewer Revenue Bonds, 1961, of the City (the "1961 Bonds were issued pursuant to Ordinance No. 334 and were payable from the gross revenues of the waterworks utility, including as a part of such revenues a water and sanitary sewage disposal service surcharge payable under a contract between the City and Puget Western, Inc., a Washington corporation, all of which bonds have matured or have been redeemed and retired; and WHEREAS, pursuant to Section 7 of Ordinance No. 334, as amended and restated by Section 16 of Ordinance No. 1575, as further amended and replaced by Section 19 of Ordinance No. 1676 that provided for the issuance by the City of Tukwila, Washington (the "City of its Water and Sewer Refunding Revenue Bonds, 1993 (the "1993 Bonds and as incorporated by reference in Section 17 of Ordinance No. 1735 that provided for the issuance by the City of its Water and Sewer Revenue Bonds, 1995 (the "1995 Bonds," and, together with the 1993 Bonds (the "Outstanding Parity Bonds the City reserved the right to issue water and sewer revenue bonds having a charge and lien upon the gross revenues of the waterworks utility on a parity with the lien and charge upon such gross revenues of the Outstanding Parity Bonds for the payment of 1 50727479 4 the principal thereof and interest thereon if the following conditions are met and complied with at the time of issuance of those bonds: "(a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and "(b) The historical gross revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the city and any third party, for any twelve consecutive months out of the immediately preceding fifteen months' period adjusted to reflect (1) a year's net income from each customer of the Waterworks Utility connected to such utility at the end of that twelve -month period who has not been a customer for the entire twelve -month period, (2) the additional revenue, from whatever source and of whatever nature, anticipated to be received from the improvement in connection with which additional water and sewer revenue bonds are to be issued, (3) revenue to be derived from any customer under any executed contract for water and/or sewer service which revenue was not included in the historical gross revenues of the Waterworks Utility, and (4) the engineer's estimate of the gross revenues to be derived by the City from customers within improved property available to commit to any additions to and improvements an extensions of the Waterworks Utility to be paid out of the proceeds of the sale of the Future Parity Bonds or other additions to and improvements and betterments of the Waterworks Utility then under construction and not fully connected to the Waterworks Utility when such additions, improvements and betterments are completed and connected, shall be deemed sufficient, after the payment of normal operation and maintenance costs (adjusted to reflect actual or reasonably anticipated changes in those operation and maintenance costs subsequent to that twelve -month period) and state and federal taxes, to equal at least 1.25 times the average annual principal and interest requirements of all then outstanding water and sewer revenue bonds, including the Bonds and of the additional or refunding bonds proposed to be so issued, but except the principal requirements of any Term Bond Maturity Year or Years of any bonds payable out of the Bond Fund, such termination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. -2 50727479. "(c) The ordinance authorizing the issuance of such additional bonds shall provide that such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, those amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and that reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof. In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the Reserve Account for the bonds to be refunded shall be transferred to the Reserve Account in the Bond Fund, or that the money in thli Reserve Account for the bonds to be refunded shall be used to redeem such bonds, in which event an amount equal to the average annual debt service for the refunding bonds proposed to be issued shall be accumulated as a reserve in the same manner and within the same times as set forth herein for additional revenue bonds. The City may at any time substitute an Alternate Security in lieu of all or any part of the cash deposit in the amount of the required reserve in the Reserve Account; and "(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the creation of a sinking fund account in the Bond Fund for any Term Bonds to be issued and for regular payments to be made into such account for the payment of principal of such Term Bonds on or before their maturity, or, as an alternative, for the mandatory redemption of such Term Bonds prior to their maturity date from money on deposit in the Principal and Interest Account;" and WHEREAS, the City Council has determined that certain capital improvements to the Waterworks Utility are necessary to enable the City to provide water and sewer services to the areas of the City described in the Comprehensive Surface Water Management Plan established by Ordinance No. 2064 of the City; and WHEREAS, the City Council has determined to issue the Bonds to provide the funds to pay part of the cost of the Plan of Additions and paying the cost of issuance and sale of the Bonds; and WHEREAS, [Insurance] and; WHEREAS, Lehman Brothers Inc. of Seattle, Washington, has offered to purchase the Bonds on the terms and conditions set forth in its written offer (the "Offer which offer is subject to withdrawal if not accepted on 2006; and WHEREAS, the Finance Director has advised the City Council that the Offer is advantageous to the City, that the City should accept the Offer, and that any delay in accepting -3 S0727479 -4 the Offer risks having interest costs increased to the detriment of the City and its utility ratepayers; and WHEREAS, to authorize the acceptance of the Offer, under its terms, this ordinance must become effective as soon as permitted under RCW 35A.12.130; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "Alternate Security" shall mean any bond insurance, collateral, security, letter of credit, guaranty, surety bond or. similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest on any Parity Bonds, issued by an institution which has been assigned a credit rating at the time of issuance of such Parity Bonds secured by such Alternate Security equal to or better than the highest then- existing rating for any of the Parity Bonds. "Bond Fund" shall mean that special fund of the City known as the Water and Sewer Revenue Bond Fund, 1961, created by Ordinance No. 334 for the payment of the principal of and interest on the 1961 Bonds and any bonds issued on a parity therewith, including the Outstanding Parity Bonds and the Bonds. ["Bond Insurer" shall mean] "Bond Registrar" shall mean the Fiscal Agency of the State of Washington, or any successor bond registrar selected by the City, whose duties include the registration and authentication of the Bonds, maintenance of the Bond Register, effecting transfer of ownership of the Bonds, and paying the principal of and premium, if any, and interest on the Bonds. "Bonds" shall mean the $[3,500,000] par value of Water and Sewer Revenue Bonds, 2006, of the City issued pursuant to and for the purposes provided in this ordinance. "1961 Bonds" shall mean the Water and Sewer Revenue Bonds, 1961, issued for the purposes provided in and pursuant to Ordinance No. 334, as amended, all of which 1961 Bonds have matured and have been redeemed. "1993 Bonds" shall mean the outstanding Water and Sewer Refunding Revenue Bonds, 1993, of the City issued pursuant to and for the purposes described in Ordinance No. 1676. "1995 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1995, of the City issued pursuant to and for the purposes described in Ordinance No. 1735. "City" shall mean the City of Tukwila, Washington, formerly the Town of Tukwila. "Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. -4- 50727479.4 "Future Parity Bonds" shall mean any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds and in accordance with Section 19 of Ordinance No. 1676 and Section 17 of Ordinance No. 1735, the payment of the principal of and interest on which constitutes a charge and lien upon the revenue of the Waterworks Utility equal in rank with the charge and lien upon such revenue required to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Outstanding Parity Bonds and the Bonds. "Government Obligations" shall mean those government obligations defined by RCW 39.51010(9) as it now reads or hereafter may be amended or replaced. j "Municipal Bond Insurance `•Policy" shall mean the policy issued by the Bond Insurer insuring the payment of the principal of and interest on the Bonds.] "Outstanding Parity Bonds" shall mean the outstanding 1993 Bonds and the 1995 Bonds. "Permitted Investments" shall mean legal investments for the City which are (1) direct obligations of the United States of America (in the form of obligations issued or held in book entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America; (2) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies (full faith and credit agencies): U. S. Export-Import Bank (direct obligations or fully guaranteed certificates of beneficial ownership), Farmers Home Administration (certificates of beneficial ownership), Federal Financing Bank, Federal Housing Administration (debentures), General Services Administration (participation certificates), Government National Mortgage Association (GNMA guaranteed- mortgage backed bonds and GNMA guaranteed- pass through obligations), U. S. Maritime Administration (guaranteed Title XI financing), New Communities Debentures (U. S. Government guaranteed debentures), and U. S. Public Housing Notes and Bonds (U. S. government guaranteed public housing notes and bonds); (3) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following U. S. government agencies (non full -faith and credit agencies): Federal Home Loan Bank System (senior debt obligations), Federal Home Loan Mortgage Association (participation certificates), Federal National Mortgage Association (mortgage backed securities and senior debt obligations), and Student Loan Marketing Association (senior debt obligations); and (4) certificates of deposit, savings accounts or deposit accounts which are fully secured by the FDIC. "Plan of Additions" shall mean the system or plan of additions to and betterments and extensions of the Waterworks Utility as further described in Section 3 hereof. "Principal and Interest Account" shall mean the account of that name created in the Bond Fund for the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds and Future Parity Bonds. "Reserve Account" shall mean the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds and Future Parity Bonds. -5 50727479 4 "Term Bond Maturity Year or Years" shall mean any last maturity year in which the outstanding amount of bonds of any one issue or series which are scheduled to mature (regardless of any reservation of parity redemption rights) is more than two times the average annual principal maturity of the bonds of that issue or series and of all bonds issued on a parity therewith for three years immediately proceeding such term bond maturity year.] "Term Bonds" shall mean any bonds maturing in a Term Bond Maturity Year.] "Waterworks Utility" shall mean the waterworks utility of the City, including the system of sewerage and, for bond purposes, the surface water utility. Upon the redemption or defea +ance of all then outstanding 1993 Bonds and 1995 Bonds, the following definitions shall become effective: "Contract Resource Obligation" means an obligation of the City, designated as a Contract Resource Obligation and entered into pursuant to Section 26 of this ordinance, to make payments for water supply, transmission or other commodity or service to another person or entity. "Operation and Maintenance Expenses" means all expenses incurred by the City in causing the Waterworks Utility of the City to be operated and maintained in good repair, working order and condition, including without limitation: deposits, premiums, assessments or other payments for insurance, if any, on the Waterworks Utility; payments into pension funds; State imposed taxes; amounts due under Contract Resource Obligations (but only at the times described in Section 26 of this ordinance); payments made to the Cascade Water Alliance as "Member Charges" under the Amended and Restated Interlocal Contract among the members of the Cascade Water Alliance dated December 15, 2004;and other payments made to any other person or entity for the receipt of water supply or transmission or other commodity or service; and payments with respect to any other expenses of the Waterworks Utility that are properly treated as operation and maintenance expenses under generally accepted accounting principles applicable to municipal corporations. Operation and Maintenance Expenses does not include any depreciation or taxes levied or imposed by the City, or payments to the City in lieu of taxes, or capital additions or capital replacements to the Waterworks Utility. Section 2. Findings. The City Council finds: (1) All payments required by any ordinance of the City pertaining to Outstanding Parity Bonds of the City have been made into the Bond Fund for the payment of such Outstanding Parity Bonds and no deficiency exists therein; (2) As determined and certified by an independent professional registered engineer in accordance with Section 19 of Ordinance No. 1676, the revenues of the Waterworks Utility for the twelve -month period commencing 200_, and ending 200_, is sufficient, after the payment of normal operation and maintenance costs and taxes, to equal at least 1.25 times the average annual principal and interest requirements of the Outstanding Parity Bonds and the Bonds authorized herein; and -6- (3) Provision is made in Section 10 herein for the payment into the Reserve Account of the cash deposits or Alternate Security in the amounts required by Section 19 of Ordinance No. 1676. It is declared that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund, as aforesaid, the City Council and corporate authorities of the City have due regard to the cost of operation and maintenance expenses of the Waterworks Utility and to any proportion or part of the gross revenue previously pledged as a fund for the payment of bonds, warrants or other indebtedness or obligations and declare that the City has not set aside into the Bond Fund a greater amount or proportion of that gross revenue and proceeds than in its judgment will be available over and above such cost of operation and maintenance and the debt service and reserve requirements for the presently outstanding Outstanding Parity Bonds and other obligations of that gross revenue. Section 3. Adoption of Plan of Additions. The City specifies, adopts and orders to be carried out a system or plan of additions to and betterments and extensions of the Waterworks Utility (the "Plan of Additions" and each element thereof an "Addition described as follows: The City of Tukwila's Neighborhood Revitalization Allentown and Foster Point Sewer Systems Project is the design and construction of wastewater pumping facilities, force mains and 14,100 lineal feet of 8" gravity sewer mains. The primary purpose of the Plan of Additions is to replace 60+ year old failing septic tanks. The Plan of Additions includes: (1) Sewer main installation and Location of a lift station in each neighborhood; (2) Street widening with ditch and storm drain improvements with new catch basins; (3) Water line improvements to meet fire flow regulations; and (4) Replacement of curb, gutters, and sidewalks along one arterial street. The estimated cost of the Plan of Additions, as nearly as may be determined, is declared to be ${3,500,000], all of which is expected to be financed from the proceeds of water and sewer revenue bonds and other obligations of the City. The Plan of Additions may be modified to include other improvements if the City determines by ordinance that those amendments or other improvements constitute a system or plan of additions to and betterments and extensions of the Waterworks Utility. Section 4. Authorization and Description of Bonds. The bonds shall be called Water and Sewer Revenue Bonds, 2006, of the City (the "Bonds shall be in the aggregate principal amount of $[3,500,000j; shall be dated the date of their initial delivery; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional designation as the fiscal agent of the State of Washington (as the same may be designated by the State of Washington from time to -7 50727479 4 time) (the "Bond Registrar deems necessary for purposes of identification; shall bear interest (computed on the basis of a 360 -day year of twelve 30 -day months) payable semiannually on each June 1 and December 1, commencing June 1, 2007, to the maturity {or earlier redemption] of the Bonds; and shall mature on December 1 in years and amounts and bear interest at the rates per annum as follows Maturity Interest Maturity Interest Years Amounts Rates Years Amounts Rates Section 5. Reaistration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and recorded on books or records maintained by the Bond Registrar (the "Bond Register The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same interest rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding any principal payment or redemption date. The Bonds initially shall be registered in the name of Cede Co., as the nominee of The Depository Trust Company, New York, New York "DTC The Bonds so registered shall be held in fully immobilized form by DTC as depository in accordance with the provisions of a Blanket Issuer Letter of Representations dated October 18, 1999 between the City and DTC (as it may be amended from time to time, the "Letter of Representations Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds regarding accuracy of any records maintained by DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or any notice which is permitted or required to be given to registered owners hereunder (except such notice as is required to be given by the Bond Registrar to DTC). For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its successor depository shall be deemed to be the registered owner for all purposes hereunder and all references to registered owners, bondowners, bondholders or the like shall mean DTC or its nominee and, except for the purpose of the City's undertaking herein to provide continuing disclosure, shall not mean the owners of any beneficial interests in the Bonds. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (1) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) to any substitute depository -8- appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds are no longer held in immobilized form. Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository, or a determination by the City that it no longer wishes to continue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the City may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. If (i) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (ii) the City determines that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any person as provided herein and the Bonds no longer shall be held in fully immobilized form. Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the 15 day of the month preceding the interest payment date or, if requested in writing by a registered owner of $1,000,000 or more in principal amount of Bonds prior to the applicable record date, by wire transfer on the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners to the Bond Registrar. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds shall be made in the manner set forth in the Letter of Representations. The Bonds shall be payable solely out of the Bond Fund and shall not be general obligations of the City. Section 7. Optional Redemption; Mandatory Redemption; and Open Market Purchase of Bonds. Bonds maturing in the years 2007 through 2016, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after December 1, 2017, prior to their stated maturity dates at any time on or after December 1, 2016, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. [ADD FOR TERM BONDS] [Bonds maturing in are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption randomly (in such manner as the Bond Registrar shall determine) at par plus accrued interest on December I in years and amounts as follows: -9- Mandatory Mandatory Redemption Redemption Years Amounts [If the City redeems under the optional redemption provisions, purchases in the open market or defeases Term Bonds, the par amount of the Term Bonds so redeemed, purchased or defeased (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 at least 60 days prior to the earliest mandatory redemption date for that maturity of Term Bonds for which notice of redemption has not already been given.] Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. The City further reserves the right and option to purchase any or all of the Bonds in the open market at any time at any price acceptable to the City plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be canceled. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of Representations. Section 8. Notice of Redemption. The City shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first -class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard Poor's at their offices in New York, New York, or their successors, to Lehman Brothers Inc., at its principal office in Seattle, Washington, or its successor, to each NRMSIR or the MSRB and to such other persons[, including registered securities depositories,] and with such additional information as the City Finance Director shall 10 OYTflS O 4 determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, notice of redemption shall be given in accordance with the Letter of Representations. Section 9. Failure to Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity [or call] date, the City shall be obligated'to pay interest on that Bond at the same rate provided in the Bond from and after its maturity [or call date] until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the bond redemption fund hereinafter created and the Bond has been called for payment by giving notice of that call to the registered owner of each of those unpaid Bonds. Section 10. Payments into Bond Fund. The Bond Fund was created by Ordinance No. 334 and has been divided into two accounts, the Principal and Interest Account and the Reserve Account. So long as any Bonds are outstanding against the Bond Fund, the City covenants to set aside and to pay into the Principal and Interest Account and the Reserve Account, out of the gross revenue of the Waterworks Utility, in addition to the amounts required to be paid and retained therein for the Outstanding Parity Bonds certain fixed amounts, without regard to any fixed proportion, and such other money as provided, namely: (a) Into the Principal and Interest Account, there shall be deposited the accrued interest received by the City as partial payment for the Bonds on their delivery; and monthly, beginning with the month of December, 2006, an amount that, together with the accrued interest and other money on deposit therein, will equal at Least 1/6 of the next ensuing requirement for interest on the Bonds due and payable on the next interest payment date; and, beginning with the month of December, 2006, an amount that, together with other money on deposit therein, will at least 1/12 of the next ensuing requirement for principal on the Bonds due and payable on the next principal payment date; and (b) Into the Reserve Account, on the date or issue, an amount equal to the average annual debt service of the Bonds (hereinafter referred to as the "Reserve Requirement from proceeds of the Bonds. The City covenants and agrees that it will at all times maintain in the Reserve Account the required reserves as set forth, except for withdrawals as authorized in this section, until there is a sufficient amount in the Principal and Interest Account and the Reserve Account to pay the principal of and interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds to the final maturity thereof, at which time no further payments need be made into the Bond Fund. The City may at any time substitute an Alternate Security in lieu of all or any part of the cash deposit in the amount of the required reserve in the Reserve Account. If there shall be a deficiency in the Principal and Interest Account to meet maturing installments of either principal of or interest on bonds payable from the Bond Fund, such deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose. Any deficiency created in the Reserve Account by reason of any such withdrawal -11- sm»a79 4 then shall be made up from the gross revenue of the Waterworks Utility which shall be first available after required payments into the Principal and Interest Account. The Reserve Account may be accumulated from any other money of the City available therefor in addition to the gross revenue of the Waterworks Utility. All money in the Reserve Account may be kept on deposit in the official bank depository of the City or may be invested and reinvested in Permitted Investments at a fixed price and maturing no later than one month prior to the final maturity date of the last outstanding bonds payable out of the Bond Fund. In no event shall any money in the Bond Fund or any other money reasonably expected to be used to pay principal of and/or interest on the Bonds be invested in other than Permitted Investments or at a yield which would cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code. If the required reserve is deposited in the Reserve. Account, interest earned on any such investment or on such bank deposit in the Reserve Account attributable to the Bonds or Future Parity Bonds shall be deposited into the Principal and Interest Account and used to pay the next interest or principal coming due on bonds payable from the Bond Fund. If the City fails to set aside and pay into the Bond Fund the amounts above set forth, the owner of any of the outstanding bonds payable out of the Bond Fund may bring action against the City to compel such setting aside and payment. Section 11. Pledge of Gross Revenue and Lien Position. The gross revenue of the Waterworks Utility is pledged to the payments required by this ordinance, and the Bonds constitute a charge and lien upon the gross revenue of the Waterworks Utility prior and superior to all other charges of any kind or nature, excluding charges for operation and maintenance, except that the charge and lien on the gross revenue of the Waterworks Utility for the Bonds shall be on a parity with the charge and lien thereon for the Outstanding Parity Bonds and any Future Parity Bonds. Section 12. Form and Execution of Bonds. The Bonds shall be printed or lithographed on good bond paper in a form consistent with the provisions of this ordinance and state law and shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: 12 CERTIFICATE OF AUTHENTICATION This bond is one of the fully registered City of Tukwila, Washington, Water and Sewer Revenue Bonds, 2006, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENT Bond Registrar By Authorized Signer The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the date of issuance of the Bonds. Section 13. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this ordinance and City Ordinance No. 1338 establishing a system of registration for the City's bonds and obligations. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 14. Covenants. The City covenants and agrees with the owner of each of the Bonds at any time outstanding, as follows: (1) It will establish, maintain and collect such rates and charges for water and for sanitary sewage disposal service so long as Outstanding Parity Bonds, Bonds or Future Parity Bonds are outstanding, as will make available, together with interest accruing from investment of money in the Reserve Account and any water and sanitary sewage disposal service surcharge payable under any 13 agreement between the City and any third party, for the payment of the principal of and interest on such bonds as the same shall become due an amount equal to at least 1.25 -times the average annual debt service, both principal and interest, of such bonds, after deducting the costs of operation and maintenance of the Waterworks Utility, but before depreciation. (2) It will at all times maintain and keep the Waterworks Utility in good repair, working order and condition, and will at all times operate such Waterworks Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (3) It will not sekl, lease, mortgage or in any manner encumber or dispose of all the property of the Waterworks Utility unless provision is made for payment into the .Bond Fund of a sum sufficient to pay the principal of and interest on all bonds payable out of the Bond Fund at any time outstanding, and it will not sell, lease, mortgage or in any manner encumber or dispose of any part of the property of the Waterworks Utility that is used, useful and material to the operation thereof, unless provision is made for the replacement thereof, or for payment into the Bond Fund of the total amount of gross revenues received which shall not be less than an amount which shall bear the same ratio to the amount of outstanding bonds payable out of the Bond Fund as the revenue of the Waterworks Utility available for debt service for such outstanding bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility sold, leased, encumbered or disposed of bears to the revenues available for debt service for such bonds from the entire Waterworks Utility for the same period. Any such money so paid into the Bond Fund shall be used to retire such outstanding bonds at the earliest possible date. (4) While any of the Bonds remain outstanding, it will keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to the Waterworks Utility, and it will furnish the original purchaser of the bonds or any subsequent owner or owners of the bonds, at the written request of such owner or owners, complete operating and income statements of such waterworks utility in reasonable detail covering any calendar year not more than 90 days after the close of such calendar year, and it will grant any owner or owners of at least 25% of the outstanding Bonds the right at all reasonable times to inspect the entire waterworks utility and all records, accounts and data of the City relating thereto. Upon request of any owner of any such Bonds, it also will furnish to such owner a copy of the most recently completed audit of the City's accounts by the State Auditor of Washington or such other audit as is authorized by law in lieu thereof. (5) It will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge and will promptly take legal action to enforce collection of all delinquent accounts. 14 (6) It will carry the types of insurance on the properties of the Waterworks Utility in the amounts normally carried by private water and sewer companies engaged in the operation of waterworks utilities, and the cost of such insurance shall be considered a part of operating and maintaining such utility. If, as and when the United States of America or some agency thereof shall provide for war risk insurance, the City further agrees to take put and maintain such insurance on all or such portions of such utility on which such war risk insurance may be written in an amount or amounts to cover adequately the value thereof. (7) It will pay all costs of operation and maintenance of the Waterworks Utility and the debt service requirements for the Outstanding Parity Bonds and otherwise meet the'obligations of the City as herein set forth. (8) It will take all actions necessary to prevent the interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any actions nor make or permit any use of proceeds of the Bonds or other funds of the Waterworks Utility treated as proceeds of the Bonds at any time during the term of the Bonds which will cause the interest on the Bonds to be included in gross income for federal income tax purposes. The City further covenants that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. Section 15. Small Governmental Issuer Arbitrage Rebate Exception and Designation of Bonds as "Oualified Tax Exempt Obligations." The City finds and declares that (a) it is a duly organized and existing governmental unit of the State of Washington and has general taxing power; (b) no Bond which is part of this issue of Bonds is a "private activity bond" within the meaning of Section 141 of the United States Internal Revenue Code of 1986, as amended (the "Code (c) at least 95% of the net proceeds of the Bonds will be used for local governmental activities of the City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City); (d) the aggregate face amount of all tax- exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) issued by the City and all entities 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) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000; and (e) 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. The City therefore certifies that the Bonds are eligible for the arbitrage rebate exception under Section 148(f)(4)(D) of the Code and designates the Bonds as "qualified tax- exempt obligations" for the purposes of Section 265(b)(3) of the Code. Section 16. Parity Provisions. The City covenants and agrees with the owner of each Bond payable from the Bond Fund at that time outstanding that it will not issue any Future Parity Bonds unless it shall first satisfy the conditions set forth in Section 19 of Ordinance No. 1676, which section is by reference incorporated herein and made a part hereof and shall be applicable 15 to the Bonds so long as any of the same are outstanding. Nothing herein contained shall prevent the City from issuing water and sewer revenue bonds or other obligations which are a charge upon the gross revenue of the Waterworks Utility junior or inferior to the payments required to be made therefrom into the Bond Fund for the payment of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. Section 17. Refunding or Defeasance of Bonds. The City may issue refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay when due or callable the principal of and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such then- outstanding Bonds (hereinafter collectively called the defeased Bonds and to pay the costs of the refunding or defeasahce. If money and/or direct obligations of the United States of America maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for notices of redemption of Bonds. Section 18. Denosit of Bond Proceeds. The principal proceeds received from the sale and delivery of the Bonds shall be paid into the appropriate funds and accounts of the Waterworks Utility as determined by the City's Director of Finance (collectively, the "Construction Fund and used for the purposes specified in Section 3 of this ordinance. Until needed to pay the costs of the Plan of Additions and costs of issuance of the Bonds, the City may invest principal proceeds temporarily in any legal investment, and the investment earnings may be retained in the Construction Fund and be spent for the purposes of that fund except that earnings subject to a federal tax or rebate requirement may be withdrawn from the Construction Fund and used for those tax or rebate purposes. Section 19. Annroval of Bond Purchase Contract and Delivery of Bonds. Lehman Brothers Inc. of Seattle, Washington (the "Purchaser has presented a bond purchase contract dated November 2006 (the "Bond Purchase Contract to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this 16- cn,,,.t,U 4 reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best interest and, therefore, accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the Purchaser in accordance with the terms of the Bond Purchase Contract with the approving legal opinion of Foster Pepper PLLC, municipal bond counsel of Seattle, Washington, regarding the Bonds. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the Purchaser and for the proper application and use of the proceeds of the sale thereof. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds of the sale thereof. Section 20. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement dated 2006 (the "Preliminary Official Statement prepared in connection with the sale of the Bonds. For the sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission Rule 15c2- 12(b)(1), the City "deems final" that Preliminary Official Statement as of its date, except for the omission of information as to offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity dates, options of redemption, delivery dates, ratings and other terms of the Bonds dependent on such matters. Section 21. Undertaking to Provide Continuing Disclosure. To meet the requirements of United States Securities and Exchange Commission "SEC Rule 15c2- 12(b)(5) (the "Rule as applicable to a participating underwriter for the Bonds, the City makes the following written undertaking (the "Undertaking for the benefit of holders of the Bonds: (1) Undertaking to Provide Annual Financial Information and Notice of Material Events. The City undertakes to provide or cause to be provided, either directly or through a designated agent: (a) To each nationally recognized municipal securities information repository designated by the SEC in accordance with the Rule "NRMSIR and to a state information depository, if any, established in the State of Washington (the "SID annual financial information and operating data of the type included in the final official statement for the Bonds and described in subsection (b) of this section "annual financial information (b) To each NRMSIR or the Municipal Securities Rulemaking Board "MSRB and to the SID, timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (1) principal and interest payment delinquencies; (2) non payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting 17 financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax- exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changes; and (c) To each NRMSIR or to the MSRB, and to the SID, timely notice of a failure by the City to provide required annual financial information on or before the date specified in subsection (b) of this section. (2) Tyne of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in subsection (a) of this section: (a) Shall consist of (1) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles promulgated by the Government Accounting Standards Board "GASB as such principles may be changed from time to time, which statements shall not be audited, except, however, that if and when audited financial statements are otherwise prepared and available to the City they will be provided; (2) a statement of authorized, issued and outstanding bonded debt secured by gross revenue of the Waterworks Utility; (3) debt service coverage ratios; and (4) general customer statistics for the Waterworks Utility; (b) Shall be provided to each NRMSIR and the SID, not later than the last day of the ninth month after the end of each fiscal year of the City (currently, a fiscal year ending December 31), as such fiscal year may be changed as required or permitted by State law, commencing with the City's fiscal year ending December 31, 2006; and (c) May be provided in a single or multiple documents, and may be incorporated by reference to other documents that have been filed with each NRMSIR and the SID, or, if the document incorporated by reference is a "final official statement" with respect to other obligations of the City, that has been filed with the MSRB. (3) Amendment of Undertaking. The Undertaking is subject to amendment after the primary offering of the Bonds without the consent of any holder of any Bond, or of any broker, dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and the SID, of the substance (or provide a copy) of any amendment to the Undertaking and a -18- cn77747C 4 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. (4) Beneficiaries. The Undertaking evidenced by this section shall inure to the benefit of the City and any holder of Bonds, and shall not inure to the benefit of or create any rights in any other person. (5) Termination of Undertaking. The City's obligations under this Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's obligations under this Undertaking shall terminate if those provisions of the Rule which require the City to comply with this Undertaking become legally inapplicable in respect of the Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws delivered to the City, and the City provides timely notice of such termination to each NRMSIR or the MSRB and the SID. (6) 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 a default in respect of the Bonds. The sole remedy of any holder of a Bond shall be to take such actions as that holder deems necessary, including seeking an order of specific performance from an appropriate court, to compel the City or other obligated person to comply with the Undertaking. (7) Desianation of Official Responsible to Administer Undertaking. The Finance Director of the City (or such other officer of the City who may in the future perform the duties of that office) or his or her designee is authorized and directed in his or her discretion to take such further actions as may be necessary, appropriate or convenient to carry out the Undertaking of the City in respect of the Bonds set forth in this section and in accordance with the Rule, including, without limitation, the following actions: (a) Preparing and filing the annual financial information undertaken to be provided; (b) Determining whether any event specified in subsection (a) has occurred, assessing its materiality with respect to the Bonds, and, if material, preparing and disseminating notice of its occurrence; (c) Determining whether any person other than the City is an "obligated person" within the meaning of the Rule with respect to the Bonds, and obtaining from such person an undertaking to provide any annual financial information and notice of material events for that person in accordance with the Rule; 19- (d) 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 (e) Effecting any necessary amendment of the Undertaking. (8) Centralized Dissemination Aaent. To the extent authorized by the SEC, the City may satisfy the Undertaking by transmitting the required filings using http: /www.disclosureusa.org (or such other centralized dissemination agent as may be approved by the SEC). Section 22. Bond Insurance. Section 23. Ratification and Confirmation. All actions of the City or its officers prior to the date hereof and consistent with the terms of this ordinance, including but not limited to the execution of the Transfer Agreements, are ratified and confirmed. Section 24. Surface Water Utility Deemed Part of Waterworks Utility. Pursuant to RCW 35.67.331 the Surface Water Utility of the City is deemed to be a part of the system of sewerage of the City and therefore, for bond purposes shall be part of the Waterworks Utility. Section 25. Effective Date. This ordinance shall become effective five days after its passage and legal publication as provided by law. Section 26. Contract Resource Obligations. Upon the redemption or defeasance of all then outstanding 1993 Bonds and 1995 Bonds, a new Section 26 shall be added to read as follows: The City may at any time enter into one or more Contract Resource Obligations for the acquisition, from facilities to be constructed, of water supply, transmission or other commodity or service relating to the Waterworks Utility. The City may determine that, and may agree under a Contract Resource Obligation to provide that, all payments under that Contract Resource Obligation (including payments prior to the time that water supply or transmission or other commodity or service is being provided, or during a suspension or after termination of supply or service) shall be Operation and Maintenance Expenses if the following requirements are met at the time such a Contract Resource Obligation is entered into: (a) No Event of Default has occurred and is continuing. (b) There shall be on file a certificate of an independent consulting engineer stating that (i) the payments to be made by the City in connection with the Contract Resource Obligation are reasonable for the supply or transmission rendered; (it) the source of any new supply, and any facilities to be constructed to provide the supply or transmission, are sound from a water or other commodity supply or transmission planning standpoint, are technically and economically feasible in accordance with prudent utility practice, and are likely to provide supply or transmission no later than a date set forth in the independent consulting engineer's certification; and (iii) the gross revenue of the Waterworks Utility (as estimated by the independent consulting engineer in accordance with the 20 50727479. provisions of and adjustments permitted in Section 19(b) of Ordinance No. 1676 of the City) available for payment of principal of and interest on the Bonds and Future Parity Bonds after payment of Operation and Maintenance Expenses (adjusted by the independent consulting engineer's estimate of the payments to be made in accordance with the Contract Resource Obligation) for each of the five fiscal years following the year in which the Contract Resource Obligation is incurred, will be at least equal to 1.25 times average annual debt service on the Bonds and Future Parity Bonds. Payments required to be made under Contract Resource Obligations shall not be subject to acceleration. Nothing in this Section shale be deemed to prevent the City from entering into other agreements for the acquisition of water supply, transmission or other commodity or service from existing facilities and from treating those payments as Operation and Maintenance Expenses. Nothing in this Section shall be deemed to prevent the City from entering into other agreements for the acquisition of water supply, transmission or other commodity or service from facilities to be constructed and from agreeing to make payments with respect thereto, such payments constituting a lien and charge on the gross revenue of the Waterworks Utility subordinate to that of the Bonds and Future Parity Bonds. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a regular [special] open public meeting thereof this day of November, 2006. Steve Mullet, Mayor ATTEST: City Clerk APPROVED AS TO FORM: By FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: PUBLISHED: EFFECTIVE DATE: ORDINANCE NO: -21 -774794 CERTIFICATION I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City hereby certify as follows: 1. The attached copy of Ordinance No. (the "Ordinance is a full, true and correct copy of an ordinance duly passed at a regular [special] meeting of the City Council of the City held at the regular [a special] meeting place thereof on November 2006, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after publication in the City's official newspaper; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this day of November, 2006. CITY OF TUKWILA, WASHINGTON Jane E. Cantu, City Clerk [ADD BETWEEN 1 AND 2 ABOVE THE FOLLOWING 2 ITEMS FOR SPECIAL MEETING] 3. Written notice specifying the time and place of the special meeting and noting the business to be transacted was given to all members of the City Council by mail or by personal delivery at least 24 hours prior to the special meeting, a true and complete copy of which notice is attached hereto as Appendix 1; 4. No local radio or television stations, or newspapers of general circulation, have on file with the City a written request to be notified of any special meetings; [OR] Written notice of the special meeting was given to each local radio or television station and to each newspaper of general circulation that has on file with the City a written request to be notified of special meetings, or to which such notice customarily is given; -22- sp727479 4 Finance Safety Committee October 16, 2006 5:00 p.m. Present: Pam Carter, Chair; Jim Haggerton and Verna Griffin, Councilmembers. Rhonda Berry, City Administrator; Kevin Fuhrer Director of Finance; Jim Morrow, Director of Public Works; Bob Giberson, Acting City Engineer; Gail Labanara, Public Works Analyst; Lori Sutter, Assistant Police Chief; Darrell Baskin, Assistant Police Chief; Derek Speck, Economic Development Administrator; Katherine Kertzman, Program Director of Seattle Southside Visitor Center; and Diane Jenkins, Administrative Assistant to the City Council. Business Agenda A. Annual write -off of accounts receivable and return write -offs Mr. Fuhrer referred to the annual proposed resolution to write off $17,778.30 in accounts receivables which have been deemed to be uncollectible. There are three different categories, false alarms, miscellaneous, and returned checks. These accounts have been turned for collection. The City does not have the authority to withhold a business license if a business owes the City money. Ms. Berry noted that there are restrictions as to what can be evaluated in order to issue a business license. It is usually code related. Mr. Fuhrer suggested reviewing the City's current fee structure for false alarms and evaluating fee increases and providing incentive to those businesses which pay the fines in a timely manner. Mr. Fuhrer continued and noted that when a check is returned, departments are notified to no longer accept checks from these individuals. Ms. Carter inquired about the $5,000 being written off. Mr. Fuhrer explained the City suffered property damage and the owner's car was totaled as a result of her vehicle being stolen; both parties were victims. Ms. Carter surmised that approximately $14,000 is related to damage to City property. Unanimous approval. Forward to 10/16 regular meeting. B. Allentown/Foster Point revenue bond issuance Mr. Fuhrer explained that the City is planning on issuing $3.3 million in bonds as a funding source for the Allentown/Foster Point Sewer Project. This information will also be shared with members of the Utilities Committee. Representatives from Foster Pepper (bond counsel) and Lehman Brothers (bond underwriters) will be present at the October 23 Committee of the Whole and November 6 Regular Council meeting to make presentations and respond to questions. He reviewed the process for the pricing and selling of bonds. Mr. Fuhrer noted that sewer will be paying the largest portion, however, water and surface management will also pay a share. Ms. Carter noted that it would be helpful to include information on the 1993 bond which was paid off this fall in the budget. Mr. Fuhrer related that the principal amount of the bond will change depending on market conditions, closing costs, and bond insurance. He pointed out, though, that it may be possible to draw down on'the bond reserve to keep this issuance a little smaller. It is feasible to end up with $3.3 million yet only issue $3.2 million in bonds. Ms. Carter asked that Hugh Spitzer, bond counsel, review the responsibilities of council members during his presentation. Unanimous approval. Forward to 10/23 Committee of the Whole meeting. C. Continuation of review of 2007 uronosed budget and CIP The Finance and Safety Committee reviewed the following pages of the 2007 Proposed Budget and Capital Improvement Program (CIP). Mr. Fuhrer highlighted changes from last year and responded to questions of the council members. Utilities Committee October 17, 2006 5:00 p.m. Present: Jim Haggerton, Chair; Pam Linder and Verna Griffin, Council members. Jim Morrow, Director of Public Works; Frank Iriarte, Deputy Director; Bob Giberson, Acting City Engineer; Pat Brodin, Operations Manager; Mike Cusick, Senior Engineer; Ryan Larson, Senior Engineer; Gail Labanara, Public Works Analyst; Diane Jenkins, Administrative Assistant to the Council, and Chuck Parrish, community member. qc Business Agenda A. Allentown/Foster Point Sewer Revenue Bonds Mr. Morrow explained that the City is planning on issuing $3.3 million in bonds as a funding source for the Allentown/Foster'•Point Sewer Project. This information was also shared with members of the Finance Safety Committee. Mr. Fuhrer noted that representatives from Foster Pepper (bond counsel) and Lehman Brothers (bond underwriters) will be present at the October 23 Committee of the Whole and November 6 Regular Council meeting to make presentations and respond to questions. Mr. Fuhrer reviewed the process for the pricing and selling of bonds. He noted that sewer will be paying the largest portion, however, water and surface management will also pay a share. Also, the 1993 bond was retired this fall and he will include information on this bond in the budget. Mr. Morrow conveyed that the project is going well. More connections are being requested for water and sewer than originally planned and those connections are only being provided to legal lots. Unanimous approval. Forward to 10/23 Committee of the Whole meeting. B. Water and Sewer Rates for 2007 Mr. Morrow distributed a copy of "Single Family Sewer Waste Water Rates, October 2006." Ms. Linder noted that, in the past, the city subsidized these rates. The Council realized it needed to seek increases in incremental steps rather than one huge increase. Ms. Labanara noted that there is a proposed 3% rate increase for water. There has not been a water increase since 2000. Mr. Morrow noted that the water department and Enterprise Fund had a goal to reduce the loss of water. Due to the efforts of the crews, a 15% water loss rate in 2005 dropped to 4.6% because of the replacement of worn out pipes and having the necessary equipment to identify potential problems. Ms. Griffin asked about the differences between water and fire lines. Mr. Cusick replied fire lines are not metered. Ms. Labanara noted that fire line charges have not been increased since 1996. Ms. Labanara then noted that King County sewer treatment is proposing a 9.17% increase and that fee will be passed through to the residents. The City of Tukwila's flat monthly sewer fee factored in a 10% increase. This will put the City of Tukwila in the middle in comparison with other cities. Mr. Haggerton requested that both the old and new City ordinances be included in the packet for review by the Council. There are no increases planned for surface water. Unanimous approval. Forward to Regular Council for approval.