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2015 Water and Sewer Revenue Refunding Bonds - $1,742,527 (Ord 2491 - Water and Sewer)
2015 Water and Sewer Revenue Refunding Bonds $1,742,527 FOSTER PEPPER,. TRANSCRIPT OF PROCEEDINGS CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 Bond Dated: December 15, 2015 Closing Date: December 15, 2015 Bond Counsel FOSTER PEPPER PLLC CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 INDEX OF PROCEEDINGS Document Tab Ordinance No. 2491 (Bond Ordinance) 1 Affidavit of Publication of Bond Ordinance 2 Certificate of Designated Representative 3 Ordinance No. 2136 (Refunded Bond Ordinance) 4 Refunding Trust Agreement 5 Refunding Trustee Incumbency Certificate 6 Escrow Verification 7 Refunding Trustee Receipt and Disbursement Schedule 8 Bank Proposal 9 Closing Certificate 10 Certificates of Manual Signature 11 Signature Identification Certificate 12 Tax Exemption and Nonarbitrage Certificate 13 Exhibit A — Post -Issuance Compliance Procedures IRS Form 8038-G 14 State Bond Report Form 15 Certificate Regarding Registration of Bond 16 Specimen Bond 17 Purchaser's Receipt and Certificate 18 Receipt for Payment 19 Defeasance Opinion 20 Legal Opinion and Reliance Letter 21 Closing Memorandum 22 51484995.2 City of Tukwila Washington Ordinance No. Cr 1 1 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO THE WATERWORKS UTILITY OF THE CITY, INCLUDING THE SYSTEM OF SEWERAGE AND SURFACE WATER UTILITY AS A PART THEREOF; PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF A WATER AND SEWER REVENUE REFUNDING BOND IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $2,100,000 TO PROVIDE FUNDS TO ADVANCE REFUND AND DEFEASE OUTSTANDING WATER AND SEWER REVENUE BONDS OF THE CITY AND TO PAY THE ADMINISTRATIVE COSTS OF THE REFUNDING AND THE COSTS OF ISSUANCE AND SALE OF THE BOND; PROVIDING FOR AND AUTHORIZING THE PURCHASE OF CERTAIN OBLIGATIONS OUT OF THE PROCEEDS OF THE SALE OF THE BOND AND FOR THE USE AND APPLICATION OF THE MONEY DERIVED FROM THOSE INVESTMENTS; AUTHORIZING THE EXECUTION OF A REFUNDING TRUST AGREEMENT; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUTSTANDING BONDS TO BE REFUNDED; FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE BOND; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE BOND; PROVIDING FOR THE SALE AND DELIVERY OF THE BOND TO COLUMBIA STATE BANK; PROVIDING FOR SEVERABILITY; ESTABLISHING AN EFFECTIVE DATE; AND PROVIDING FOR OTHER RELATED MATTERS. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following capitalized terms shall have the following meanings: (a) `Acquired Obligations" means the Government Obligations purchased to accomplish the refunding and defeasance of the Refunded Bonds. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 1 of 21 (b) "Annual Debt Service" means, with respect to any Parity Bonds outstanding as of the date of calculation, for any fiscal year, all amounts required to be paid in that fiscal year in respect of principal (whether at maturity or pursuant to mandatory sinking fund redemption) of and interest on those Parity Bonds, less any Tax Credit Subsidy Payments scheduled to be received in that fiscal year. (c) "Average Annual Debt Service" means, with respect to any Parity Bonds outstanding as of the date of calculation, the sum of the Annual Debt Service on those Parity Bonds for each fiscal year during which those Parity Bonds are scheduled to remain outstanding, divided by the number of those fiscal years. (d) `Bank" means Columbia State Bank. (e) "Bank Proposal" means the proposal of the Bank dated November 9, 2015, to purchase the Bond on the terms and conditions set forth therein. (f) "Bond" means the Water and Sewer Revenue Refunding Bond, 2015, issued by the City pursuant to and for the purposes provided in this ordinance. (g) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. (h) "Bond Fund" means the special fund of the City known as the Water and Sewer Revenue Bond Fund, 1961, created by Ordinance No. 334 and continued and renamed the "Water and Sewer Revenue Bond Fund" by this ordinance. (i) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Parity Bonds. (j) "Bond Registrar" means the Fiscal Agent, or any successor bond registrar selected by the City. (k) "City" means the City of Tukwila, Washington, a municipal corporation duly organized and existing under the laws of the State. (I) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (m) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (n) "Contract Resource Obligation" means an obligation of the City, designated as a contract resource obligation and entered into pursuant to Section 19 of this ordinance, to make payments for facilities for water supply or distribution or surface water or sewage collection, treatment or disposal or other utility service or for other commodities or services relating to the Waterworks Utility. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 2 of 21 (o) "Coverage Requirement" means, for any fiscal year, that the sum of Net Revenue in that fiscal year, plus any ULID Assessments due in that fiscal year and not delinquent, plus any Tax Credit Subsidy Payments due in that fiscal year, is not less than 1.25 times the Annual Debt Service on all outstanding Parity Bonds in that fiscal year. (p) "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). (q) "Final Terms" means the terms and conditions for the sale of the Bond, including the amount, date, interest rate, payment dates, final maturity, prepayment rights, price and other terms or covenants, including minimum savings for refunding. (r) "Finance Director" means the Finance Director or such other officer of the City who succeeds to substantially all of the responsibilities of that office. (s) "Fiscal Agent" means the fiscal agent of the State, as the same may be designated by the State from time to time. (t) "Future Parity Bonds" means all revenue obligations of the City issued after the Issue Date in accordance with Section 17 of this ordinance, the payment of the principal of and interest on which are secured by a lien on the Net Revenue, ULID Assessments and Tax Credit Subsidy Payments on a parity with the lien that secures payment of the principal of and interest on the Bond. (u) "Government Obligations" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. (v) "Gross Revenue" means all of the income and revenue received by the City from the maintenance and operation of the Waterworks Utility, including revenues from the sale, lease or furnishing of commodities, services, properties or facilities; earnings from the investment of money of the Waterworks Utility, except as otherwise expressly excluded by this ordinance; and connection and capital improvement charges collected for the purpose of defraying the cost of capital facilities of the Waterworks Utility; but excluding principal proceeds of Parity Bonds or any other indebtedness of the City, earnings from the investment of money in a trust fund created to defease indebtedness of the City (until commingled with other earnings and revenues included in the Gross Revenue); income and revenue that may not legally be pledged for revenue bond debt service; improvement district assessments, including ULID Assessments; federal or state grants and gifts from any source, in each case that are allocated to capital projects; payments under bond insurance or other credit enhancement policy or device; insurance or condemnation proceeds used for the replacement of capital projects or equipment; Tax Credit Subsidy Payments; and revenue from any Separate Utility System. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 3of21 (w) "Independent Consultant" means either (1) an independent licensed professional engineer experienced in the design, construction or operation of municipal utilities of comparable size and character to the Waterworks Utility or, (2) an independent certified public accountant or other professional consultant experienced in the development of rates and charges for municipal utilities of comparable size and character to the Waterworks Utility. (x) "Issue Date" means the date of initial issuance and delivery of the Bond to the Bank in exchange for the purchase price of the Bond. (y) "Net Revenue" means, for any fiscal year, the Gross Revenue for that fiscal year Tess Operation and Maintenance Expenses for that fiscal year, plus withdrawals from the Rate Stabilization Fund allocated to that fiscal year, less deposits into the Rate Stabilization Fund allocated to that fiscal year. In calculating Net Revenue, the City shall not take into account any non-cash gains or losses with respect to any real or personal property, investment or agreement that it may be required to recognize under generally accepted accounting principles, such as unrealized mark -to -market gains and losses and pollution remediation or pension liabilities. (z) "Operation and Maintenance Expenses" means all expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair, working order and condition, including payments made pursuant to contract for such service to any other municipal corporation or private entity for water supply and distribution, surface water and sewage collection, treatment and disposal or other utility service or facilities (if the City combines such service or facilities into the Waterworks Utility), and including charges imposed for the City's administration expenses allocated to the Waterworks Utility, but excluding depreciation, any taxes (or charges in lieu of taxes) levied or imposed by the City and capital additions to or capital replacements of the Waterworks Utility. (aa) "Parity Bond Authorizing Ordinance" means an ordinance of the City (including this ordinance) that authorizes the issuance and sale and establishes the terms of one or more series of Parity Bonds and other matters relating to the same plan of finance. (bb) "Parity Bonds" means the Bond and any Future Parity Bonds. (cc) "Rate Stabilization Fund" means the fund of that name authorized to be created by this ordinance. (dd) "Record Date" means the close of business of the Bond Registrar on the 15th day of the month preceding an interest payment date. With respect to prepayment of the Bond prior to its maturity, the Record Date means the Bond Registrar's close of business on the date on which the Bond Registrar sends the notice of prepayment. (ee) "Redemption Date" means the date fixed for redemption of the then - outstanding Refunded Bonds, which, unless otherwise specified in the Refunding Trust Agreement, shall be December 1, 2016. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 4of21 (ff) "Refunded Bonds" means the 2006 Bonds maturing on December 1 in the years 2016 and 2026, in the aggregate principal amount of $2,060,000. (gg) "Refunding Plan" means (as further described in the Refunding Trust Agreement): (1) the deposit with the Refunding Trustee of proceeds of the Bond and other money of the City; (2) the purchase by the Refunding Trustee of the Acquired Obligations and the application of the principal of and interest on the Acquired Obligations and any other cash balance to the payment and redemption of the Refunded Bonds on the Redemption Date at a price of par plus accrued interest; and (3) the payment of the costs of issuing the Bond and the costs of carrying out the foregoing elements of the Refunding Plan. (hh) "Refunding Trustee" means the trustee, or any successor trustee, designated by the Designated Representative to serve as refunding trustee to carry out the Refunding Plan. (ii) "Refunding Trust Agreement" means a refunding trust agreement between the City and the Refunding Trustee, dated as of the Issue Date, providing for the carrying out of the Refunding Plan. (jj) "Registered Owner" means, with respect to a Parity Bond, the person in whose name the Parity Bond is registered on the Bond Register. (kk) "Separate Utility System" means any water supply or distribution, surface water or sewage collection, treatment or disposal or other utility service or facilities that may be created, acquired or constructed by the City as provided in Section 18 of this ordinance. (II) "State" means the State of Washington. (mm) "System of Registration" means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 1338 of the City. (nn) "Tax Credit Subsidy Payment" means a payment the City is scheduled to receive as a tax credit payable by the United States Treasury to the City under Section 6431 of the Code (or under any similar provision of the Code providing for "direct -pay" tax credit bonds) in respect of any Parity Bonds. (oo) "2006 Bond Ordinance" means Ordinance No. 2136 of the City authorizing the issuance of the 2006 Bonds. (pp) "2006 Bonds" means the Water and Sewer Revenue Bonds, 2006, of the City, issued in the aggregate principal amount of $3,180,000. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM: bjs Page 5 of 21 (qq) "ULID" means any utility local improvement district now existing or hereafter created for the acquisition or construction of additions, extensions or betterments of any portion of the Waterworks Utility, which additions, extensions or betterments are financed through the issuance of Parity Bonds. (rr) "ULID Assessments" means the assessments levied in any ULID, including installment payments of any assessment and the interest and penalties, if any, thereon, less any prepaid assessments permitted by law to be paid into a construction fund or account. Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: (a) The City, by Ordinance No. 320, specified and adopted a system or plan for a system of sewerage and provided that the system of sewerage become a part of the waterworks utility of the City that includes the systems of water supply and distribution and sanitary sewage disposal, combined pursuant to RCW 35.67.320, and any additions thereto and extensions, renewals and betterments thereof thereafter made or constructed. (b) The City, by Ordinance No. 2136, combined the surface water utility of the City with the Waterworks Utility pursuant to RCW 35.67.331. (c) Pursuant to the 2006 Bond Ordinance, the City issued the 2006 Bonds for the purpose of carrying out a system or plan of additions to and betterments and extension of the Waterworks Utility, and reserved the right to (1) redeem the 2006 Bonds maturing on December 1, 2026, prior to their stated maturity date at any time on or after December 1, 2016, as a whole or in part (within one or more maturities selected by the City), at par plus accrued interest to the date fixed for redemption, and (2) defease the 2006 Bonds. (d) The Refunded Bonds bear interest at rates ranging from 4.00% to 4.50%. (e) After due consideration, it appears to the City Council that the Refunded Bonds may be refunded by carrying out the Refunding Plan so that a substantial savings will be effected by the difference between the principal and interest cost over the life of the Bond and the principal and interest cost over the life of the Refunded Bonds but for such refunding. (f) The Refunding Plan will provide sufficient funds to discharge and satisfy the obligations of the City under the 2006 Bond Ordinance. (g) To carry out the Refunding Plan in the manner that will be most advantageous to the City, it is necessary and advisable that the Acquired Obligations be purchased out of a portion of the proceeds of the Bond and other money of the City. (h) The City Council deems it to be in the best interests of the City to issue and sell the Bond to pay part of the cost of carrying out the Refunding Plan. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 6 of 21 (i) RCW 39.46.040(2) provides that an ordinance authorizing the issuance of bonds may authorize an officer of the City to serve as the City's designated representative and to accept, on behalf of the City, an offer to purchase those bonds so long as the acceptance of such offer is consistent with terms established by an ordinance that establishes the following terms for those bonds (or parameters with respect thereto): 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 any other terms and conditions deemed appropriate by the City Council. (j) In fixing the amounts to be paid into the Bond Fund, the City Council has exercised due regard for Operation and Maintenance Expenses, and has not obligated the City to set aside and to pay into the Bond Fund a greater amount or proportion of the Gross Revenue that in the judgment of the City Council will be available over and above the Operation and Maintenance Expenses. Section 3. Authorization of Bond. The City is authorized to issue and sell the Bond, subject to the terms and conditions described in this ordinance, for the purpose of carrying out the Refunding Plan. Section 4. Description of Bond; Appointment of Designated Representative. The Finance Director is appointed as the Designated Representative of the City and is authorized and directed to conduct the sale of the Bond to the Bank in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of the Bond, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. Section 5. Bond Registrar; Registration and Transfer of Bond. (a) Registration of Bond. The Bond shall be issued only in registered form as to both principal and interest, and the ownership of the Bond shall be recorded on the Bond Register. (b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond Registrar. The Bond Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Bond, 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 each Bond transferred in accordance with the provisions of the Bond and this ordinance, to serve as the City's paying agent for the Bond and to carry out all of the Bond Registrar's powers and duties under this ordinance and the System of Registration. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on each Bond. The Bond Registrar may become a Registered Owner with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of the Registered Owners. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 7 of 21 (c) Bond Register; Transfer. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Parity Bond held by each Registered Owner. The Bond may be transferred only (1) in whole, (2) to a "qualified institutional buyer" (as defined in Rule 144A promulgated under the Securities Act of 1933, as amended) and (3) if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any transfer shall be without cost to the Registered Owner of the Bond or the transferee. Section 6. Form and Execution of Bond. (a) Form of Bond; Signatures and Seal. The Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. The Bond shall be signed by the Mayor and the City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. If any officer whose manual or facsimile signature appears on the Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is authenticated by the Bond Registrar, or issued or delivered by the City, the Bond nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. The Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on its Issue Date. (b) Authentication. Only if the Bond bears a Certificate of Authentication in substantially the following form, manually signed by the Bond Registrar, shall the Bond be valid or obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate of Authentication. This Bond is the fully registered City of Tukwila, Washington, Water and Sewer Revenue Bond, 2015, described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. Section 7. Payment of Bond. Principal of and interest on the Bond shall be payable in lawful money of the United States of America. Principal of and interest on the Bond shall be payable by electronic transfer on the payment date to the Registered Owner at the account appearing on the Bond Register on the Record Date. Upon payment of the final installment of principal and all accrued interest on the Bond, the Registered Owner shall present and surrender the Bond to the Bond Registrar. The Bond is not subject to acceleration under any circumstances. Section 8. Bond Fund. The 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 Water and Sewer Revenue Bonds, 1961, of the City and any bonds issued on a parity therewith, is hereby continued and renamed the "Water and Sewer Revenue Bond Fund." The Finance Director may create such accounts and W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 8 of 21 subaccounts in the Bond Fund, including a principal and interest account and one or more reserve accounts, as may be convenient for the payment of the Parity Bonds, so long as the maintenance of such accounts and subaccounts does not conflict with the rights of the Registered Owners. The City shall set aside and pay into the Bond Fund all ULID Assessments and Tax Credit Subsidy Payments upon their receipt and, out of the Net Revenue, certain fixed amounts without regard to any proportion, namely, on or prior to each date on which principal of or interest on the Parity Bonds is due, the amount required, after taking into account the amount then on deposit therein and to be used therefor, to pay such principal and interest on such date. When the amount on deposit in the Bond Fund equals the principal of and interest on all Parity Bonds then outstanding, no further payment need be made into the Bond Fund. The amounts so covenanted to be paid into the Bond Fund shall be a lien and charge on the Net Revenue, ULID Assessments and Tax Credit Subsidy Payments superior to any other charges whatsoever. Section 9. Use of Bond Proceeds; Refunding Plan. (a) Use of Bond Proceeds; Acquisition of Acquired Obligations. On the Issue Date, the proceeds of the sale of the Bond shall be deposited with the Refunding Trustee and used, together with other money of the City, to discharge the obligations of the City relating to the Refunding Bonds by carrying out the Refunding Plan in accordance with the Refunding Trust Agreement. Such obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, for the payment of the amounts required to be paid by the Refunding Plan. The Acquired Obligations shall be listed and more particularly described in a schedule attached to the Refunding Trust Agreement. Any proceeds of the Bond or other money deposited with the Refunding Trustee not needed to carry out the Refunding Plan shall be returned to the City for deposit in the Bond Fund to pay interest on the Bond on the next interest payment date. (b) Appointment of Refunding Trustee. The Designated Representative is authorized and directed to appoint a financial institution to serve as Refunding Trustee and to perform the duties of Refunding Trustee under this ordinance. (c) Refunding Trust Agreement; Administration of Refunding Plan. The Designated Representative is authorized and directed to execute the Refunding Trust Agreement setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with carrying out the Refunding Plan. The Refunding Trust Agreement shall, among other things, authorize and direct the Refunding Trustee to purchase the Acquired Obligations and to make the payments required to be made by the Refunding Plan. All Acquired Obligations and money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance with the provisions of the Refunding Trust Agreement, the 2006 Bond Ordinance, this ordinance, chapter 39.53 RCW and other applicable State law. All administrative costs (including all necessary and proper fees, compensation and expenses of the Refunding Trustee and all other costs incidental to the setting up of the W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM.bjs Page 9 of 21 trust account to accomplish the Refunding Plan) and costs of issuance of the Bond may be paid out of the amounts deposited with the Refunding Trustee or other available money of the City, in accordance with the Refunding Trust Agreement. (d) Call for Redemption of the Refunded Bonds. The Refunding Trustee is authorized and directed to call the then -outstanding Refunded Bonds for redemption on the Redemption Date at par, plus accrued interest. Such call for redemption shall identify the then -outstanding Refunded Bonds, the maturity date, the Redemption Date and the redemption price, and shall be irrevocable after the Bond is delivered to the Bank. The Designated Representative and the Refunding Trustee are each authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, pursuant to the 2006 Bond Ordinance, and to take all other actions necessary to effect the redemption of the then -outstanding Refunded Bonds on the Redemption Date. Section 10. Prepayment of Bond. Principal of the Bond is subject to prepayment at the option of the City only as set forth in Exhibit A. Notice of prepayment of the Bond, unless waived by the Registered Owner, shall be given by the Bond Registrar not less than five business days prior to the scheduled prepayment date by first-class mail, postage prepaid, to the Registered Owner at the address appearing on the Bond Register on the Record Date. The City retains the right to rescind the prepayment notice and the prepayment by giving a notice of rescission to the Registered Owner at any time on or prior to the scheduled prepayment date. Any notice of prepayment that is so rescinded shall be of no effect, and the principal amount of the Bond for which a notice of prepayment has been rescinded shall remain outstanding. Interest on principal of the Bond so prepaid shall cease to accrue on the prepayment date. Section 11. Failure To Pay Bond. If any principal of the Bond is not paid when due, the City shall be obligated to pay interest on such principal at the Default Rate indicated on Exhibit A from and after the date such principal payment is due until such principal is paid in full. If the City fails to set aside and pay into the Bond Fund the amounts required by this ordinance so to be set aside and paid, any Registered Owner may bring action against the City to compel the setting aside and payment. Section 12. Pledge of Net Revenue. The Net Revenue, all ULID Assessments, all Tax Credit Subsidy Payments and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds) are pledged to the payment of the principal of and interest on the Bond. This pledge shall constitute a lien and charge on the Net Revenue, all ULID Assessments, all Tax Credit Subsidy Payments and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds) on a parity with the pledge that secures payment of Future Parity Bonds and superior to any other liens or charges whatsoever. The Bond is payable solely from Net Revenue and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds). The Bond shall not be a general obligation of the City. This W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM: bjs Page 10 of 21 ordinance does not pledge, and the Bond is not payable from, the full faith and credit or taxing power of the City. Section 13. Flow of Funds. All ULID Assessments and Tax Credit Subsidy Payments shall be paid into the Bond Fund, and the Gross Revenue shall be used for the following purposes only and shall be applied in the following order of priority: First, To pay when due the Operation and Maintenance Expenses; Second, To make when due all payments required to be made into the Bond Fund in respect of principal of and premium, if any, and interest on Parity Bonds, and to make payments due under any reimbursement agreement with a credit provider that secures payment of Parity Bonds and that requires those payments to be made on a parity with the Parity Bonds; Third, To make when due all payments required to be made into any reserve account created to secure the payment of Future Parity Bonds, and to make payments due under any reimbursement agreement with a credit provider that secures payment of Parity Bonds and that requires those payments to be made on a parity with payments into such reserve account; Fourth, To make when due all payments required to be made under any other reimbursement agreement with a credit provider that secures payment of Parity Bonds, in any priority not inconsistent with this ordinance that the City may hereafter establish by ordinance; Fifth, To make when due all payments required to be made into any fund or account created for the payment of revenue obligations secured by a charge on the Net Revenue subordinate to the charge that secures payment of the Parity Bonds and all payments required to be made into the Bond Fund, in any priority not inconsistent with this ordinance that the City may hereafter establish by ordinance; and Sixth, For any other lawful purposes of the Waterworks Utility, in any priority not inconsistent with this ordinance that the City may hereafter establish by ordinance. Section 14. Rate Stabilization Fund. The City is authorized to create the Rate Stabilization Fund. The City may at any time, consistent with Sections 12 and 13, deposit Net Revenue into the Rate Stabilization Fund. The City may at any time withdraw any or all of the money from the Rate Stabilization Fund for inclusion in Net Revenue and disbursement consistent with Sections 12 and 13 of this ordinance. If a deposit or withdrawal is made within 90 days after the end of a fiscal year, the City may specify that the deposit or withdrawal is to be allocated to the prior fiscal year rather than to the fiscal year in which that deposit or withdrawal is made. No deposit of Net W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 11 of 21 Revenue may be made into the Rate Stabilization Fund to the extent that such deposit would prevent the City from satisfying the Coverage Requirement in any fiscal year. Section 15. Covenants. The City covenants and agrees with the Registered Owners as follows: (a) Operation and Maintenance. The City will at all times maintain, preserve and keep the properties of the Waterworks Utility in good repair, working order and condition, will make all necessary and proper additions, betterments, renewals and repairs thereto and improvements, replacements and extensions thereof, so that at all times the business carried on in connection therewith will be properly and advantageously conducted, and will at all times operate or cause to be operated the properties of the Waterworks Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (b) Establishment and Collection of Rates and Charges. The City will establish, maintain and collect rates and charges for water supply and distribution and surface water and sewage collection, treatment and disposal so that: (1) the Gross Revenue in each fiscal year will be sufficient to pay when due (A) all Operation and Maintenance Expenses for that fiscal year; (B) all amounts that the City is obligated to pay into the Bond Fund for that fiscal year; (C) all taxes, assessments or other governmental charges lawfully imposed on the Waterworks Utility or the revenue therefrom or payments in lieu thereof for that fiscal year; and (D) any and all other amounts that the City is obligated to pay from the Gross Revenue by law or contract in that fiscal year; and (2) the Coverage Requirement will be satisfied in each fiscal year. The City will promptly collect all ULID Assessments and Tax Credit Subsidy Payments and deposit such collections into the Bond Fund, without those ULID Assessments or Tax Credit Subsidy Payments being allocated to any particular series of Parity Bonds. Except as may be required under the provisions of any federal or State statute, regulation or license, the City will not furnish or supply or permit the furnishing or supplying of any service or facility in connection with the operation of the Waterworks Utility free of charge to any person, firm or corporation, public or private. (c) Sale, Transfer or Disposition of the Waterworks Utility. The City may sell, transfer or otherwise dispose of any of the works, plant, properties, facilities or other part of the Waterworks Utility or any real or personal property comprising a part of the Waterworks Utility (each, as used in this subsection, a "transfer") only upon approval of the City Council by an ordinance that contains one or more of the following determinations, to be made at the discretion of the City Council: (1) the facilities or property being transferred are not material to the operation and maintenance of the Waterworks Utility, or have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the Waterworks Utility; or W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 12 of 21 (2) the aggregate depreciated value of the facilities or property being transferred in any fiscal year comprises no more than five percent of the total assets of the Waterworks Utility; or (3) the City receives from the transferee an amount equal to the fair market value of the portion of the Waterworks Utility transferred; as used in this paragraph, "fair market value" means the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the willing buyer and willing seller each acting prudently and knowledgeably and assuming that the price is not affected by coercion or undue stimulus. In the case of a transfer under paragraph (3): (A) the proceeds of the transfer shall be used (i) promptly to redeem or irrevocably set aside for the redemption of Parity Bonds and/or (ii) to provide for part of the cost of additions to and betterments and extensions of the Waterworks Utility; and (B) before any such transfer, the City must obtain a certificate of an Independent Consultant to the effect that in his or her professional opinion, upon that transfer and the use of proceeds of the transfer as proposed by the City, the remaining Waterworks Utility will retain its operational integrity and the Coverage Requirement will be satisfied in each of the five fiscal years following the fiscal year in which the transfer is to occur, taking into account (i) the reduction in Gross Revenue resulting from the transfer; (ii) the use of any proceeds of the transfer for the redemption of Parity Bonds; (iii) the Independent Consultant's estimate of Gross Revenue allocable to customers anticipated to be served by any additions to and betterments and extensions of the Waterworks Utility financed by the proceeds of the transfer, and (iv) any other adjustment permitted in the preparation of a certificate under Section 17 of this ordinance. (d) Liens on the Net Revenue. Except as otherwise expressly permitted in this ordinance, the City will not at any time create or permit to accrue or to exist any lien, charge or other encumbrance on the Net Revenue, ULID Assessments or Tax Credit Subsidy Payments or any part thereof prior or superior to the lien and charge that secures payment of the Parity Bonds and all payments required to be made into the Bond Fund, and will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien, charge or other encumbrance on the Net Revenue, ULID Assessments or Tax Credit Subsidy Payments or any part thereof, prior or superior to, or on a parity with, the lien and charge that secures payment of the Parity Bonds and all payments required to be made into the Bond Fund, or that might materially adversely affect the security of the Registered Owners. (e) Books and Accounts. The City will keep proper books, records and accounts with respect to the operations, income and expenditures of the Waterworks Utility in accordance with generally accepted accounting practices relating to municipal utilities and any applicable rules and regulations prescribed by the State, and will cause those books, records and accounts to be audited on an annual basis by the State Auditor and/or by a certified public accountant selected by the City. The City will prepare annual financial and operating statements as soon as practicable after the close of each W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 13 of 21 fiscal year showing in reasonable detail the financial condition of the Waterworks Utility as of the dose of that fiscal year, and the income and expenses for that fiscal year, including the amounts paid into the Bond Fund and into any and all funds or accounts created pursuant to the provisions of this ordinance, the status of all funds and accounts as of the end of that fiscal year, and the amounts expended for maintenance, renewals, replacements and capital additions to the Waterworks Utility. (f) Maintenance of Insurance. The City at all times will carry fire and extended coverage, public liability and property damage and such other forms of insurance with responsible insurers and with policies payable to the City on such of the buildings, equipment, works, plants, facilities and properties of the Waterworks Utility as are ordinarily carried by municipal or privately owned utilities engaged in the operation of similar systems, and against such claims for damages as are ordinarily carried by municipal or privately owned utilities engaged in the operation of similar systems, or it will self -insure or will participate in an insurance pool or pools with reserves adequate, in the reasonable judgment of the City, to protect the Waterworks Utility and the Registered Owners against loss. (g) Condemnation Awards and Insurance Proceeds. If the City receives any condemnation awards or proceeds of an insurance policy in connection with any Toss of or damage to any property of the Waterworks Utility, it shall apply the condemnation award or insurance proceeds (other than proceeds of business interruption insurance, which shall constitute Gross Revenue), in the City's discretion, as follows: (1) to the cost of replacing or repairing the lost or damaged properties; (2) to the payment, purchase for cancellation or redemption of Parity Bonds or (3) to the cost of improvements to the Waterworks Utility. Section 16. Tax Covenants; Designation of Bond as "Qualified Tax Exempt Obligation." (a) Preservation of Tax Exemption for Interest. The City covenants that it will take all actions necessary to prevent interest on the Bond 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 Bond or other funds of the City treated as proceeds of the Bond that will cause interest on the Bond to be included in gross income for federal income tax purposes. (b) Post -Issuance Compliance. The Finance Director is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this ordinance and the applicable requirements of the Code that must be satisfied after the Issue Date to prevent interest on the Bond from being included in gross income for federal tax purposes. (c) Designation of Bond as "Qualified Tax Exempt Obligation." The City designates the Bond as a "qualified tax-exempt obligation" for the purposes of Section 265(b)(3) of the Code, and makes the following findings and determinations: W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 14 of 21 (1) the Bond does not constitute a "private activity bond" within the meaning of Section 141 of the Code; (2) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) that 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 Bond is issued will not exceed $10,000,000; and (3) the amount of tax-exempt obligations, including the Bond, 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 Bond is issued does not exceed $10,000,000. Section 17. Provisions for Future Parity Bonds. The City may issue Future Parity Bonds only for lawful purposes of the Waterworks Utility and only if the following conditions are met and complied with at the time of the issuance of those Future Parity Bonds: (a) There shall be no deficiency in the Bond Fund; (b) Except in the case of Future Parity Bonds being issued for the sole purpose of providing for the costs of refunding Parity Bonds for which no coverage certification pursuant to subsection (d) of this section is required, no default under this ordinance or any other Parity Bond Authorizing Ordinance, nor any event or condition which with notice and/or the passage of time would constitute such a default, shall have occurred and be continuing, nor shall the issuance of those Future Parity Bonds, in and of itself, cause a default under this ordinance or any other Parity Bond Ordinance or any event or condition which with notice and/or the passage of time would constitute such a default; (c) The applicable Parity Bond Authorizing Ordinance shall provide for the payment of the principal of and interest on those Future Parity Bonds out of the Bond Fund and for the deposit of all ULID Assessments and Tax Credit Subsidy Payments to be paid into the Bond Fund; and (d) There shall be on file with the City either: (1) a certificate of the Finance Director demonstrating that the Coverage Requirement was satisfied during any fiscal year occurring in the immediately preceding 24 calendar months (assuming that (A) those Future Parity Bonds were outstanding and that the debt service payable on those Future Parity Bonds in that fiscal year was equal to the Average Annual Debt Service on those Future Parity Bonds, and (B) any Parity Bonds to be refunded by those Future Parity Bonds are not outstanding); or W Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 15 of 21 (2) a certificate of an Independent Consultant that in his or her opinion (which opinion and underlying assumptions shall be set forth in the certificate), the Coverage Requirement will be satisfied, assuming that those Future Parity Bonds are outstanding and any Parity Bonds to be refunded by those Future Parity Bonds are not outstanding, in (A) each of the fiscal years for the five consecutive fiscal years following the earlier of (1) the end of the period during which interest on those Future Parity Bonds is fully capitalized or, if that interest is not fully capitalized for any period, the fiscal year in which those Future Parity Bonds are issued; or (ii) the date on which substantially all new facilities or improvements financed in substantial part by those Future Parity Bonds are expected to commence operations, and (B) the fiscal year in which those Future Parity Bonds are issued and any subsequent fiscal year prior to but not included in the fiscal years for which certification is provided pursuant to the foregoing clause (A); that certificate may take into account the following adjustments: (A) any changes in rates and charges of the Waterworks Utility in effect and being charged, or expected to be charged in accordance with a program of specific levels or increases or decreases in overall revenue approved by ordinance; (B) rates and charges from customers of the Waterworks Utility who have become customers during the fiscal year or thereafter, adjusted to reflect one year's Net Revenue and ULID Assessments allocable to those new customers; (C) the estimate of Net Revenue and ULID Assessments allocable to customers reasonably expected to be served by new facilities or improvements financed in substantial part by those Future Parity Bonds; and (D) Net Revenue and ULID Assessments allocable to any person, firm, corporation or municipal corporation under any executed contract for water supply or distribution, surface water or sewage collection, treatment or disposal or other utility service or facilities provided by the Waterworks Utility, which revenue was not included in the historical Net Revenue or ULID Assessments. No such certification of the Coverage Requirement shall be required if: (i) those Future Parity Bonds are issued for the sole purpose of refunding Parity Bonds and, as a result of the issuance of those Future Parity Bonds, (a) the final maturity of those Future Parity Bonds is not more than one year later than the final maturity of the Parity Bonds being refunded and (b) the Annual Debt Service on all outstanding Parity Bonds will not increase more than $5,000 in any fiscal year; or (ii) the principal of those Future Parity Bonds does not exceed the ULID Assessments levied in connection with the issuance of those Future Parity Bonds by more than the sum of (a) $5,000 and (b) the proceeds of those Future Parity Bonds deposited in a reserve account to secure payment of Parity Bonds. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 16 of 21 Nothing contained herein shall prevent the City from issuing (i) Future Parity Bonds to refund maturing Parity Bonds, money for the payment of which is not otherwise available, or (ii) revenue obligations secured by a charge on the Net Revenue subordinate to the charge that secures payment of the Parity Bonds and all payments required to be made into the Bond Fund, and then only if the remedy of acceleration is expressly denied to the owners of those subordinate bonds under all circumstances. Section 18. Separate Utility Systems. The City may create, acquire, construct, finance, own and operate one or more additional systems for water supply or distribution, surface water or sewage collection, treatment or disposal or other utility service or facilities. The revenue of that Separate Utility System shall not be included in the Gross Revenue and may be pledged to the payment of revenue obligations issued to purchase, construct, condemn or otherwise acquire or expand that Separate Utility System. Neither the Gross Revenue nor the Net Revenue, ULID Assessments or Tax Credit Subsidy Payments shall be pledged by the City to the payment of any obligations of a Separate Utility System, except that the Net Revenue may be pledged on a basis subordinate to the pledge that secures payment of the Parity Bonds and all payments required to be made into the Bond Fund. Section 19. Contract Resource Obligations. The City may at any time enter into one or more Contract Resource Obligations for the acquisition, from facilities to be acquired or constructed, of facilities for water supply or distribution or surface water or sewage collection, treatment or disposal or other utility service or other commodities or services relating to the Waterworks Utility. The City may determine that, and may agree under a Contract Resource Obligation to provide that, all payments under the Contract Resource Obligation (including payments prior to the time that the facilities, commodities or services are provided, or during a suspension of or after termination of the provision of the facilities, commodities or services) 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 default under this ordinance or any other Parity Bond Authorizing Ordinance has occurred and is continuing. (b) There shall be on file a certificate of an Independent Consultant stating that (1) the payments to be made by the City in connection with the Contract Resource Obligation are reasonable for the facilities, commodities or services to be provided; (2) the facilities, commodities or services to be provided are sound from a 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 to be set forth in the certificate; and (3) the Coverage Requirement (as estimated by the Independent Consultant in accordance with the provisions of and adjustments permitted in Section 17 of this ordinance) will be satisfied in each of the five fiscal years following the fiscal year in which the Contract Resource Obligation is incurred. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 17 of 21 Payments required to be made under a Contract Resource Obligation shall not be subject to acceleration under any circumstances. Nothing in this Section shall be deemed to prevent the City from entering into other agreements for the acquisition of facilities for water supply or distribution or surface water or sewage collection, treatment or disposal or other utility service or other commodities or services relating to the Waterworks Utility and from treating those payments as Operation and Maintenance Expenses or from securing payments with respect thereto by a charge on Net Revenue subordinate to the charge that secures payment of the Parity Bonds. Section 20. Refunding or Defeasance of the Bond. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any portion of the Bond (the "defeased portion"); (b) prepaying the defeased portion prior to maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a trust fund or escrow account irrevocably pledged to that prepayment 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 portion in accordance with the terms of this ordinance and the Bond, then all right and interest of the Registered Owner in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased portion shall cease and become void. Thereafter, the Registered Owner shall have the right to receive payment of the principal of and interest on the defeased portion solely from the trust account and the defeased portion shall be deemed no longer outstanding. Section 21. Sale and Delivery of the Bond. (a) Approval of Bank Proposal; Delivery of Bond. The Bank has presented the Bank Proposal to the City proposing to purchase the Bond, which written Bank Proposal is on file with the City Clerk. The City Council finds that accepting the Bank Proposal is in the City's best interest and authorizes the Designated Representative to accept a firm offer with substantially the same terms as the Bank Proposal. The Designated Representative is authorized to execute the Bank Proposal on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. (b) Preparation, Execution and Delivery of the Bond. The Bond will be prepared at City expense and will be delivered to the Bank in accordance with the Bank Proposal, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 22. Supplemental Ordinances. This ordinance shall not be modified, altered, amended, supplemented or rescinded in any respect after the Issue Date, except as provided in and in accordance with and subject to the provisions of this section. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 18 of 21 (a) The City may, from time to time, and at any time, without the consent of or notice to the Registered Owners, pass any supplemental ordinance deemed necessary or desirable by the City for the purpose of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this ordinance or any other Parity Bond Authorizing Ordinance, as follows: (1) to provide for the issuance of Future Parity Bonds in accordance with the provisions of this ordinance; (2) to cure any formal defect, omission, inconsistency or ambiguity in this ordinance in a manner not materially adverse to the security of the Registered Owners; (3) to impose upon the Bond Registrar (with its consent) for the benefit of the Registered Owners any additional rights, remedies, powers, authority, security, liabilities or duties that may lawfully be granted, conferred or imposed and that are not contrary to or inconsistent with this ordinance as therefore in effect; (4) to add to the covenants and agreements of, and limitations and restrictions upon, the City in this ordinance, other covenants, agreements, limitations and restrictions to be observed by the City that are not contrary or inconsistent with this ordinance as therefore in effect; (5) to confirm, as further assurance, any pledge under, and the subjection to any lien, charge or pledge created or to be created by this ordinance of any other money, securities or funds; (6) to authorize different denominations of the Parity Bonds and to make correlative amendments and modifications to this ordinance regarding exchangeability of Parity Bonds of different authorized denominations, redemptions of portions of Parity Bonds of particular authorized denominations, provisions providing for relating to a securities depository, and to make similar amendments and modifications of a technical nature not materially adverse to the security of the Registered Owners; (7) to modify, alter, amend or supplement this ordinance in any other respect that is not materially adverse to the security of the Registered Owners that does not involve a change described in subsection (c) of this Section; (8) due to change in federal law or rulings, to maintain any exclusion from gross income of the interest on Parity Bonds from federal income taxation in a manner not materially adverse to the security of the Registered Owners; or (9) to add to the covenants and agreements of, and limitations and restrictions upon, the City in this ordinance, other covenants, agreements, limitations and restrictions to be observed by the City that are requested by a credit provider for Parity Bonds and that are not materially adverse to the security of the Registered Owners. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 19 of 21 (b) Except for any supplemental ordinance passed pursuant to subsection (b) of this section, subject to the terms and provisions contained in this subsection and not otherwise, Registered Owners of not less than a majority of aggregate principal amount of the Parity Bonds then outstanding shall have the right from time to time to consent to and approve the passage by the City of any supplemental ordinance deemed necessary or desirable by the City for the purpose of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this ordinance or any other Parity Bond Authorizing Ordinance; except that, unless approved in writing by each Registered Owner of each affected Parity Bond then outstanding, nothing contained in this section shall permit, or be construed as permitting: (1) a change in the times, amounts or currency of payment of any outstanding Parity Bond, or a reduction in the principal amount of any outstanding Parity Bond or a change in the rate or method of determining the rate of interest thereon or the redemption provisions thereof, or (2) a preference or priority of any Parity Bond over any other Parity Bond, or (3) a reduction in the aggregate principal amount of Parity Bonds, the consent of the Registered Owners of which is required for any supplemental ordinance. (c) Before the City passes any supplemental ordinance, the City shall have received an opinion of Bond Counsel stating that the passage of the supplemental ordinance is authorized or permitted by this ordinance and each other Parity Bond Authorizing Ordinance and will not, in and of itself, adversely affect the exclusion from gross income for federal income tax purposes of interest on any tax-exempt Parity Bonds. Section 23. Financial Reporting. The City shall provide the following to the Bank: (a) within 30 days after receipt from the State Auditor, a copy of the audited financial statements of the City, and (b) within 30 days after a final budget is published, a copy of the City's budget. Section 24. General Authorization and Ratification. The appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Bond to the Bank and for the proper application, use and investment of the proceeds of the Bond. All actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects. Section 25. Corrections by City Clerk or Code Reviser. Upon approval of the City Attorney, the City Clerk and the code reviser are authorized to make necessary corrections to this ordinance, including the correction of clerical errors; references to other local, state or federal laws, codes, rules, or regulations; or ordinance numbering and section/subsection numbering. W: Word Processing\Ordinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 20 of 21 Section 26. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 27. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and this ordinance shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this 7111 day of -S)Q Q rrbe f , 2015. ATTEST/AUTHENTICATED: Christy O'FI`aherty, MMC, City CI- k APPROVED AS TO FORM BY: Bond Counsel Filed with the City Clerk: Passed by the City Council: Published: Effective Date: 6 1_ OrdinanceNumber: a, i4 q / Attachment: Exhibit A — Parameters for Final Terms W: Word ProcessinglOrdinances\Bonds related to water -sewer utility Columbia Bank 11-25-15 PM:bjs Page 21 of 21 EXHIBIT A PARAMETERS FOR FINAL TERMS (,) Principal Amount. The principal amount of the Bond shall not exceed $2,100,000. (b) Issue Date. The Bond shall be dated the Issue Date, which shall be not later than one year after the effective date of this ordinance. (c) Denomination. The Bond shall be in the denomination of the principal amount, shall be numbered in the manner and shall bear the name and additional designation as deemed necessary or appropriate by the Designated Representative. (d) Interest Rate and The Bond shall bear interest at a fixed rate per Default Rate. annum not to exceed 2.50% (computed on the basis of a 360 -day year of twelve 30 -day months) from the Issue Date or from the most recent date for which interest has been paid or duly provided for, whichever is later. If any payment of the Bond is not made when due, or if interest on the Bond becomes includable in the gross income of the Registered Owner for federal income tax purposes, the interest rate may increase at the discretion of the Registered Owner to the Default Rate of 3.60%. (e) Payment Dates. Interest shall be payable semiannually on June 1 and December 1 of each year, commencing June 1, 2016. Principal shall be payable on December 1 of each year from 2016 to 2026, inclusive, using a principal amortization substantially as set forth in the Bank Proposal. (f) Final Maturity. December 1, 2026. (g) Prepayment. The principal of the Bond is subject to prepayment at the option of the City at any time, but only on or after December 1, 2020, as a whole or in part, at par plus accrued interest to the date of prepayment. (h) Price. The purchase price for the Bond is par (100%). (i) Fees. The City shall pay the Bank a one-time commitment fee of $2,100. The City shall pay Bank counsel fees in an amount not to exceed $3,000. CERTIFICATION I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance NogJ (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on rep b 2015, as that ordinance appears on the minute book of the City. 2. The Ordinance will be in full force and effect five days after publication in the Ci 's official newspaper, which publication date is expected to be i)Ce , ,2015. 3. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. Dated: 15 , 2015. CITY OF TUKWILA, WASHINGTON Christy O'Flaherty, MMC, City Cle City of Tukwila Public Notice of Ordinance Adoption for Ordinances 2491-2492. On December 7, 2015 the City Council of the City of Tukwila, Washington, adopted the following ordinances, the main points of which are summarized by title as follows: Ordinance 2491: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON RELATING TO THE WATERWORKS UTILITY OF THE CITY, INCLUDING THE SYSTEM OF SEWERAGE AND SURFACE WATER UTILITY AS A PART THEREOF; PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF A WATER AND SEWER REVENUE REFUNDING BOND IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $2,100,000 TO PROVIDE FUNDS TO ADVANCE REFUND AND DEFEASE OUTSTANDING WATER AND SEWER REVENUE BONDS OF THE CITY AND TO PAY THE ADMINISTRATIVE COSTS OF THE REFUNDING AND THE COSTS OF ISSUANCE AND SALE OF THE BOND; PROVIDING FOR AND AUTHORIZING THE PURCHASE OF CERTAIN OBLIGATIONS OUT OF THE PROCEEDS OF THE SALE OF THE BOND AND FOR THE USE AND APPLICATION OF THE MONEY DERIVED FROM THOSE INVESTMENTS; AUTHORIZING THE EXECUTION OF A REFUNDING TRUST AGREEMENT; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUTSTANDING BONDS TO BE REFUNDED; FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE BOND; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE BOND; PROVIDING FOR THE SALE AND DELIVERY OF THE BOND TO COLUMBIA STATE BANK; PROVIDING FOR SEVERABILITY; ESTABLISHING AN EFFECTIVE DATE; AND PROVIDING FOR OTHER RELATED MATTERS. Ordinance 2492: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NOS. 2458 AND 2478 (PART), WHICH ADOPTED AND AMENDED THE CITY OF TUKWILA'S BIENNIAL BUDGET FOR THE 2015-2016 BIENNIUM, TO ADOPT AN AMENDED MID -BIENNIUM BUDGET; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. The full text of these ordinances will be provided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: December 10, 2015 CERTIFICATION I, the undersigned, City Clerk of the City of Tukwila, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance NoM©11 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on `oprp„.bQf '7 , 2015, as that ordinance appears on the minute book of the City. 2, The Ordinance will be in full force and effect five days after publication in the Cit 's official newspaper, which publication date is expected to be ex ) d , 2015. 3. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. Dated: n\ _ X21-' i , 2015. CITY OF TUKWILA, WASHINGTON Christy O'Flaherty, MMC, City Cle City of Tukwila, Finance Dana Almberg 6200 Southcenter Blvd Tukwila, WA 98188 Re: Advertiser Account # 107510 Ad #: 605636 STATE OF WASHINGTON Counties of King and Snohomish $aUte Q:twcs Agency Account #: 0 Agency Name: Affidavit of Publication The undersigned, on oath states that he/she is an authorized representative of The Seattle Times Company, publisher of The Seattle Times of general circulation published daily in King and Snohomish Counties, State of Washington. The Seattle Times has been approved as a legal newspaper by others of the Superior Court of King and Snohomish Counties. The notice, in the exact form annexed, was published in the regular and entire issue of said paper or papers and distrib- uted to its subscribers during all of the said period. Newspaper and Publication Date(s) Seattle Times 12/10/15 1V2 Signature lUxc /0 a-0 i�" Notary Public in and or th 1f ina C McKenna. tate of Washington, residing at Seattle itt)e$ca teTintes Re: Advertiser Account # 107510 Agency Account #: 0 AD TEXT CITY OF TUKWILA Public Notice of Ordinance Adoption for Ordinances 2491-2492. On December 7, 2015 the City Council of the City of Tukwila, Washington, adopted the following ordinances, the main points of which are summarized by title as fol- lows: TH l ; AN ORDINANCE OF E oITY COUNCIL OF THE CITY OF =T.UI(WILA, WASHINGTON -RELATING TO THE WATERWORKS UTILITY OF THE CITY, INCLUDING THE SYSTEM OF SEWERAGE AND SURFACE WA- TER UTILITY AS A PART THEREOF; PROVIDING FOR THE ISSUANCE, SALE AND DELIVERY OF A WATER AND ISEWER PRINCIPAL AMOUNT OF BOND TO EXCEED 52,100,000 TO PROVIDE FUNDS TO ADVANCE REFUND AND DEFEASE OUTSTANDING WATER AND SEWER REVENUE BONDS OF THE CITY AND TO PAY THE ADMINISTRA- ANHESCTSFHSUCNDD THE OISANEA UHRN;HEVUIRHEADATOIZIIGTPCAS OF CERTAIN OBLIGATIONS OUT OF THE PROCEEDS OF THE SALE OF THE BOND AND FOR THE USE AND APPLICATION OF THE MONEY DE- RIVED FROM THOSE INVESTMENTS; AUTHORIZING THE EXECUTION OF A REFUNDING TRUST AGREEMENT; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUT- STANDING BONDS TO BE REFUNDED; FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE BOND; AP- POINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE BOND; PROVIDING FOR THE SALE AND DELIVERY OF THE BOND TO COLUMBIA STATE BANK; PROVIDING FOR SEVERABILITY; ESTABLISHING AN EFFECTIVE DATE; AND PROVID- ING FORpp��C OTHER2RELATED MATTERS. THE CITY COUNCILOFOORDINANCE R THEA CITY OFF TUKWILA, WASHINGTON, AMEND- ING ORDINANCE NOS. 2458 AND 2478 (PART), WHICH ADOPTED AND AMENDED THE CITY OF TUKWILA'S BIENNIAL BUDGET -FOR -THE 2015-2016 BIENNIUM, TO ADOPT AN AMENDED MID -BIENNIUM BUDGET; PROVIDING FOR SEVERABILITY; AND ESTABLISH- ING AN EFFECTIVE DATE. The full text of these ordinances wilt be Provided upon request. Christy O'Flaherty, MMC, City Clerk Published Seattle Times: December 10, 2015 Ad #: 605636 Agency Name: CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 CERTIFICATE OF DESIGNATED REPRESENTATIVE I, Peggy McCarthy, as Finance Director of the City of Tukwila, Washington (the "City"), hereby certify as follows: 1. Authority; Definitions. On December 7, 2015, the City Council of the City passed Ordinance No. 2491 (the "Bond Ordinance"). Capitalized terms used but not defined in this certificate shall have the meanings as defined in the Bond Ordinance. Pursuant to Section 4 of the Bond Ordinance, I was appointed to serve as the Designated Representative for purposes of accepting a firm offer with substantially the same terms as the Bank Proposal and authoriz ed to execute the Bank Proposal on behalf of the City, so long as the terms provided therein are consistent with the terms of the Bond Ordinance. 2. Bank Proposal. The Bond is to be sold by negotiated sale to the Bank. I have executed the Bank Proposal for the sale of the Bond and confirm that the terms provided in the Bank Proposal are consistent with the terms of the Bond Ordinance. 3. Term of Bonds. (a) Principal Amount. The principal amount of the Bond is $1,742,527, which does not exceed $2,100,000. (b) Date. The Issue Date is expected to be December 15, 2015, which is not later than December 1, 2016, the date that is one year after the effective date of the Bond Ordinance. (c) Denomination. The Bond will be issued in the denomination of $1,742,527, which is equal to the principal amount. (d) Interest Rate. The Bond bears interest at the fixed rate per annum of 2.34%, which rate does not exceed 2.50%. 4. Refunding Trustee. U.S. Bank National Association is appointed Refunding Trustee. Dated: December 15, 2015. CITY OF TUKWILA, WASHINGTON C Finance Direct sc 908 City of Tukwila Washington Ordinance No. / 3 L 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 $3,180,000 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; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. 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 the 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 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 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 C:\Documents and Settings\All Users \Desktop\Kelly \MSDATA\Ordinances \2136 Bond.doc SK:ksn 11/9/2006 Page 1 of 18 "(c) 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/o• 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 nonnal 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 determination 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 he 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. The ordinance authorizing the issuance of such additional bonds shall provide that such additional honds shall provide that an amount equal to the average annual debt service of the additional honds 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 the 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 he made into such account for the payment of principal of such Tern 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 C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\2136 Bond.doc SK:ksn 11/9/2006 Page 2 of 18 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, Financial Security Assurance Inc. (the "Bond Insurer"), has made a commitment to issue an insurance policy (the "Municipal Bond Insurance Policy") insuring the payment when due of the principal of and interest on the Bonds as provided therein, and the City Council of the City deems that the purchase of the Municipal Bond Insurance Policy is in the hest interest of the City; and WHEREAS, Lehman Brothers Inc. of Seattle, Washington (the "Underwriter"), has offered to purchase the Bonds on the terms and conditions set forth in a proposed form of Bond Purchase Contract dated November 6, 2006 (the "Bond Purchase Contract"), between the Underwriter and the City, which Bond Purchase Contract is on file with the City Clerk; and WHEREAS, the Finance Director has advised the City Council that the Underwriter's offer to purchase the Bonds is advantageous to the City, that the City should accept such offer, and that any delay in accepting 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 to purchase the bonds under the terms of the Bond Purchase Contract, 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. A. As used in this ordinance, the following words shall have the following meanings: "Alternate Security" shall mean a surety bond or insurance policy issued to a bond trustee or other independent party as agent of the owners by a company licensed to issue an insurance policy guaranteeing the payment of debt service of, and which may be deposited in the reserve Account to meet the required reserve for, the Outstanding Parity Bonds, the Bonds or any Future Parity Bonds if the claims paying ability of the issuer thereof shall he rated "AAA" or "Aaa" by Standard & Poor's Rating Services, a Division of The McGraw-Hill Companies, Inc., or Moody's Investors Service, respectively. "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 Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof. "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 $3,180,000 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. C::\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\2136 Bond.doc. SK:ksn 11/9/2006 Page 3 of 18 "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 hiternal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. "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, Section 17 of Ordinance No. 1735 and Section 16 hereof, 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 39.53.010(9) as it now reads or hereafter may be amended or replaced. "Municipal Bond Insurance Policy" shall mean the policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due. "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 I-Iome Loan Bank System (senior debt obligations), Federal I-Iome 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. "State" shall mean the state of Washington. "Terni 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 arc 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 terns bond maturity year. "Term Bonds" shall mean any bonds maturing in a Term Bond Maturity Year. E':\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances \2136 Bond.doc SK:ksn 11/9/2006 Page 4 of 18 "Waterworks Utility" shall mean the waterworks utility of the City; including the system of sewerage and, for bond purposes, the surface water utility. 13. Upon the redemption or defeasance 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 25 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 (hut only at the times described in Section 25 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. A. 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 September 1, 2005, and ending August 31, 2006, 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 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. B. It is declared that in creating the Bond Fund and in fixing the amounts to he 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. A. 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 -1 -year- old failing septic tanks. The Plan of Additions includes: C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\2136 Bond.doc SK:ksn 11/9/2006 Page 5 of 18 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. B. The estimated cost of the Plan of Additions, as nearly as may be determined, is declared to be $3,180,000, 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 $3,180,000; 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 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 2007 $100,000 4.00% 2013 $135,000 4.00% 2008 $110,000 4.00% 2014 $140,000 4.00% 2009 $115,000 4.00% 2015 $145,000 4.00% 2010 $120,000 4.00% 2016 $150,000 4.00% 2011 $125,000 4,00% -- -- 2012 $130,000 4.00% 2026 $1,910,000 4.50% Section 5. Registration 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 he 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: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable C:\Documents and Settings\AII Users\Desktop\Kelly \MSDATA\Ordinances\2136 13ond.doc SK:ksn 11/9/2006 Page 6 of 18 laws to provide the services proposed to be provided by it; (ii) to any substitute depository appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds are no longer held in immobilized form. Upon the resignation of 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 110 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 15t 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 December 1, 2026, prior to their stated maturity date 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. Bonds maturing in 2026 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 1 in the years and amounts as follows: MANDATORY REDEMPTION YEARS MANDATORY REDEMPTION AMOUNTS 2017 $155,000 2018 $165,000 2019 $170,000 2020 $180,000 2021 $185,000 2022 $195,000 2023 $200,000 2024 $210,000 2025 $220,000 2026 (Maturity) $230,000 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. C:\Documents and Settings\All Users\Desktop\Kelly \MSDATA\Ordinances\2136 Bond.doc SK:ksn 11/16/2006 Page 7 of 18 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 he 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 he 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 and Standard & Poor's Rating Services, a Division of The McGraw-Hill Companies, Inc., 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 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 lixed proportion, and such other money as provided, namely: 1. 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 2. Into the Reserve Account, on the date of issue, an amount equal to the average annual debt service of the Bonds (hereinafter referred to as the "Reserve Requirement") from funds on deposit in the Reserve Account. 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 C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\2136 Bond.doc SK:ksn 11/9/2006 Parc 8 of 18 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 I3ond 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 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 he 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 he impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: CERTIFICATE OF AUTHENTICATION This bond is one of the fully registered City of 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 hearing his or her facsimile signature are C:\Documents and Settings \All Users\Desktop\ Kelly \MSDA'TAUhdinanccs\2136 nond.doc SK:ksn 11/9/2006 Page 9 of 18 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 he 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 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 sell, 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 salt, lease, encumbrance or disposal from the portion of the Waterworks Utility sold, leased, encumbered or disposed of hears 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. C:\Documents and Settings\All Users\Desktop\Kelly \MSDA'FA\Ordinances\2136 Bond.doc SK:ksn 11/9/2006 Page .10 of 18 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. 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 out 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 he 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 "Qualified 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 govermnental 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 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 defeasance. If money and/o• direct obligations of the (United States of America maturing at a time or times and hearing 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 dcfcased Bonds (hereinafter called the "trust account"), C:\Documents and Settings\All Users\Desktop\Kelly \YISDATA\Ordinances\2136 Bond.doc SK:ksn 11/9/2006 Page 11 of 18 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. Deposit 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. Approval of Bond Purchase Contract and Delivery of Bonds. The City Council finds that entering into the Bond Purchase Contract with the Underwriter is in the City's best interest and, therefore, approves and accepts the offer contained therein and authorizes its execution and delivery 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. Section 20. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement dated October 30, 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"); h. To each NRMSIR or thtr 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- C:\Documents and Settings\All ilsers\Desktop\Kelly\MSDATA\Ordinances\2136 ftond.doc SK:ksn 11/9/2006 Page 12 of 18 payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties: (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (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. Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in subsection (a) of this section: a. Shall consist of (I) 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 he 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 showing debt service requirements and revenue and operating expenses by category of the Waterworks Utility; 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 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 he 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 fhr 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. C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\2136 13ond.doc SK:ksn 11/9/2006 Page 13 of 18 7. Designation of Official Responsible to Administer Undertaking. The Finance Director of the City (or such other officer of the City who may in the future perform the duties of 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; 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 Agent. 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. The City Council finds that it is in the City's best interest to purchase, and that a savings will result from purchasing, the Municipal Bond Insurance Policy for the Bonds. The Mayor or Finance Director is hereby authorized to execute the Bond Insurer's Municipal Bond Insurance Commitment. The City shall purchase from the Bond Insurer the Municipal Bond Insurance Policy insuring the prompt payment of the principal of and interest on the Bonds and agrees to the conditions for obtaining that policy, including the payment of the premium therefor. The following provisions entitled "Provisions Relating to Bond Insurance" are required by the Bond Insurer to be included in this ordinance. The provisions of this section or article shall govern, notwithstanding anything to the contrary set forth in this ordinance, or individually in the appropriate sections: 1. Other than a credit instrument provided by FSA, the prior written consent of the Bond Insurer shall be a condition precedent to the deposit of any Alternate Security provided in lieu of a cash deposit into the Debt Service Reserve Fund, if any. Notwithstanding anything to the contrary set forth in the ordinance, (1) amounts on deposit in the Debt Service Reserve Fund shall be applied solely to the payment of debt service due on the Bonds; and (2) the City may deposit any Alternate Security provided by an entity with a rating in the highest category from a nationally -recognized rating agency. 2. So long as the Bond Insurer is not in payment default of its obligations under the Municipal Bond Insurance Policy, the Bond Insurer shall be deemed to he the sole owner of the Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the owners of the Bonds insured by the Bond Insurer are entitled to take pursuant to this ordinance pertaining to (i) defaults and remedies and (ii) the duties and obligations of the Bond Registrar. 3. The Bond Insurer is included as a third party beneficiary to this ordinance. 4. Unless the Bond Insurer otherwise directs, upon the occurrence and continuance of a failure of the City to make a timely payment of principal of or interest on the Bonds, or an event which with notice or lapse of time would constitute an event of default under this ordinance, amounts on deposit in the Construction Fund shall not be disbursed, but shall instead be applied to the payment of debt service or redemption price of Bonds. C:\Documents and Settings\AII Users\Desktop\Kelly \MSDATA\Ordinances\Bond.doc SK:ksn 11/6/2006 Page 14 of 18 5. Any amendment, supplement, modification to, or waiver of, this ordinance that requires the consent of bondowners or adversely affects the rights and interests of the Bond Insurer shall be subject to the prior written consent of the Bond Insurer. 6. The rights granted to the Bond Insurer under the ordinance to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Municipal Bond Insurance Policy. Any exercise by the Bond hisurer of such rights is merely an exercise of the Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the bondowners and such action does not evidence any position of the Bond Insurer, affirmative or negative, as to whether the consent of the bondowners or any other person is required in addition to the consent of the Bond Insurer. 7. Only Government Obligations defined by RCW 39.53.010(9) as it may be amended and which are otherwise lawful investments of the City, shall be used to effect a defeasance of the Bonds unless the Bond Insurer otherwise approves. To accomplish defeasance, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Bond Insurer, acting reasonably ("Accountant"), verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an escrow deposit agreement (which shall be acceptable in form and substance to the Bond Insurer, acting reasonably), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under this ordinance; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Bond Insurer, acting reasonably. The Bond Insurer shall be provided with final drafts of the above referenced documentation not less than five business days prior to the funding of the escrow. Unless and until a defeasance is carried out in accordance with this clause (f), the Bonds shall continue to be deemed "Outstanding" under this ordinance. 8. Amounts paid by the Bond Insurer under the Municipal Bond Insurance Policy shall not be deemed paid for purposes of this ordinance and the Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the City in accordance with this ordinance. This ordinance shall not be discharged unless all amounts due or to become due to the Bond Insurer have been paid in full or duly provided for. 9. Claims Upon the Municipal Bond Insurance Policy and Payments by and to the Bond Insurer: If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ("Payment Date") there is not on deposit with the Bond Registrar, after making all transfers and deposits required under this ordinance, moneys sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the Bond Registrar shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date, the Bond Registrar shall make a claim under the Municipal Bond Insurance Policy and give notice to the Bond Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Municipal Bond Insurance Policy. The Bond Registrar shall designate any portion of payment of principal on Bonds paid by the Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Bond Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Bond Registrar's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the City on any Bond or the subrogation rights of the Bond Insurer. C:\Docurnenls and Settings\All Users \Desktop\Kelly\MSDATA\Ordinances\nond.doc SK:ksn 11/6/2006 Page 15 of 18 The Bond Registrar shall keep a complete and accurate record of all funds deposited by the Bond Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Bond. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Bond Registrar. Upon payment of a claim under the Municipal Bond Insurance Policy, the Bond Registrar shall establish a separate special purpose trust account for the benefit of Bondowners referred to herein as the "Policy Payments Account" and over which the Bond Registrar shall have exclusive control and sole right of withdrawal. The Bond Registrar shall receive any amount paid under the Municipal Bond Insurance Policy in trust on behalf of Bondowners and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall he disbursed by the Bond Registrar to Bondowners in the same manner as principal and interest payments are to he made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for such payments to he made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Not withstanding anything herein to the contrary, the City agrees to pay to the Bond Insurer (i) a sum equal to the total of all amounts paid by the Bond Insurer under the Municipal Bond Insurance Policy (the "Insurer Advances"); and (ii) interest on such Insurer Advances from the date paid by the Bond Insurer until payment thereof in full, payable to the Bond Insurer at the Late Payment Rate per annum (collectively, the "Insurer Reimbursement Amounts"). "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in The City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The City hereby covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the gross revenues pledged to the payment of the Bonds and payable from such gross revenues pledged to the payment of the Bonds on a parity with debt service due on the Bonds. Funds held in the Policy Payments Account shall not be invested by the Bond Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Bond Registrar. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Bond Insurer. 10. The Bond Insurer shall, to the extent it makes any payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Municipal Bond Insurance Policy. 11. The City shall pay or reimburse the Bond Insurer any and all charges, fees, costs and expenses that the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security under this ordinance; (ii) the pursuit of any remedies under this ordinance or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this ordinance whether or not executed or completed, or (iv) any litigation or other dispute in connection with this ordinance or the transactions contemplated thereby, other than costs resulting from the failure of the Bond Insurer to honor its obligations under the Municipal Bond Insurance Policy. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this ordinance. 12. After payment of reasonable expenses of the Bond Registrar, the application of funds realized upon default shall be applied to the payment of expenses of the City or rebate only after the payment of past due and current debt service on the Bonds and amounts required to restore the Debt Service Reserve Fund to the Debt Service Reserve Requirement. 13. The Bond Insurer shall be entitled to pay principal or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Municipal Bond Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with this ordinance, whether or not C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\Bond.doc SK:ksn 11/6/2006 Page 16 of 18 the Bond Insurer has received a Notice of Nonpayment (as such terms arc defined in the Municipal I3ond Insurance Policy) or a claim upon the Municipal Bond Insurance Policy. 14. The notice address of the Bond Insurer is: Financial Security Assurance Inc., 31 West 52nd Street, New York, New York 10019, Attention: Managing Director — Surveillance, Re: Policy No. , Telephone: (212) 826 0100; Telecopier: (212) 339 3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." 15. The Bond Insurer shall he provided with the following information by the City or Bond Registrar, as the case may be: a. Annual audited financial statements within 150 days after the end of the City's fiscal year, or as soon thereafter as such financial statements become available, and the City's annual budget within 30 days after the approval thereof together with such other information, data or reports as the Bond Insurer shall reasonably request from time to time; b. Notice of any draw upon the Debt Service Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; c. Notice of any default known to the Bond Registrar or City within five Business Days after knowledge thereof; d. Notice of the resignation or removal of the Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto, if the change in Bond Registrar is to any successor other than the fiscal agencies of the State of Washington. e. Prior notice of the advance refunding or redemption of any of the Bonds. including the principal amount, maturities and CUSIP numbers thereof; f. Notice of the commencement of any proceeding by or against the City or Obligor commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); g. Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; h. A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to this ordinance; and i. All reports, notices and correspondence to be delivered to Bondowners under the terms of this ordinance. 16. No contract shall be entered into or any action taken by which the rights of the Bond Insurer or security for or sources of payment of the Bonds may he impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Bond Insurer. 17. In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under this ordinance would adversely affect the security for the Bonds or the rights of the Bondowners, the City shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy. 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 combined with and 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. Contract Resource Obligations. Upon the redemption or defeasance of all then outstanding 1993 Bonds and 1995 Bonds, a new Section 25 shall be added to read as follows: C:\Documents and Settings\AII Users\Desktop\Kelly \MSDATA\Ordinances\Band.doc SK:ksn 11/6/2006 Page 17 of 18 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: 1. No Event of Default has occurred and is continuing. 2. There shall be on file a certificate of an independent professional registered engineer stating that (i) the payments to be made by the City in connection with the Contract Resource Obligation arc reasonable for the supply or transmission rendered; (ii) 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 professional registered engineer's certification; and (iii) the gross revenue of the Waterworks Utility (as estimated by the independent professional registered engineer in accordance with the 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 professional registered 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 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 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 then -outstanding Bonds and Future Parity Bonds. Section 26. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 27. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THR.0 Y OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this Lo day of / 2006. ATT EST/AUTHENTICATED: JanE. Cantu, MC, City Clerk Steven M. Mullet, Mayor Filed with the City Clerk: ////d� Passcd by the City Council: ///&//> IN Published: // /06 Effective Date: /'/,/filo Ordinance Number: ,� /3 C:\Documents and Settings\All Users\Desktop\Kelly\MSDATA\Ordinances\Bond.doc SK:ksn 11/6/2006 Page 18 of 18 SUMMARY OF ORDINANCE No. 2136 City of Tukwila, Washington On November 6, 2006, the City Council of the City of Tukwila, Washington, adopted Ordinance No. 2136, the main points of which are summarized by its title as follows: An ordinance of the City Council of the City of Tukwila, Washington, relating to the Waterworks Utility of the City, including the system of sewerage as 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 $3,180,000 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; providing for severability; and establishing an effective date. The full text of this ordinance will be mailed upon request. Approved by the City Council at their Regular Meeting of November 6, 2006. ./J mac, Jan E. Cantu,'CMC, City Clerk Published Seattle Times: November 9, 2006 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. 2136 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on November 6, 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 6th day of November, 2006. CITY OF TUKWILA, WASHINGTON Jai; E. Cantu, CitClerk 50727479.10 CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 REFUNDING TRUST AGREEMENT This REFUNDING TRUST AGREEMENT (the "Agreement") is made and entered into as of December 15, 2015, by and between the City of Tukwila, Washington (the "City"), a municipal corporation formed pursuant to the laws of the State of Washington, and U.S. Bank National Association (the "Refunding Trustee"). For the purpose of establishing a refunding trust account for the benefit of the City and the owners of the Refunded Bonds (defined below) to provide for the defeasance and redemption of the Refunded Bonds, the City and the Refunding Trustee agree as follows: Section 1. Recitals. 1.1 In order to effect a saving to the City and its ratepayers, the City has determined to issue its Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"), in order to carry out a refunding of its outstanding bonds identified in Exhibit A (the "Refunded Bonds"). 1.2 The City Council of the City duly and validly passed Ordinance No. 2491 on December 8, 2015 (the "Bond Ordinance"), which authorizes, among other things, the issuance and delivery of the Bond, the execution and delivery of this Agreement, and the carrying out of the Refunding Plan (as described in Section 3). Pursuant to the Bond Ordinance, the City has found that carrying out the Refunding Plan will effect a debt service savings to the City and its ratepayers. 1.3 For the purposes of Sections 103, 141, 148, and 149(d) of the Internal Revenue Code of 1986, as amended (the "Code"), the refunding of the Refunded Bonds will be accomplished pursuant to the Refunding Plan and the Bond Ordinance. 1.4 Pursuant to chapter 39.53 RCW and other applicable State law, and in accordance with the defeasance and refunding provisions of Ordinance No. 2136 of the City (the "2006 Bond Ordinance"), upon the issuance of the Bond and the irrevocable deposit of the proceeds of the Bond into the refunding trust account, the sufficiency of which has been verified by receipt of a Verification as described in Section 4, the Refunded Bonds no longer shall be deemed outstanding under the 2006 Bond Ordinance. Section 2. Definitions. Capitalized terms used but not otherwise defined in this Agreement have the meanings given in the Bond Ordinance. Section 3. The Refunding Plan. The Refunding Plan shall be as follows: (a) On or prior to the date of issuance of the Bond (the "Issue Date"), the City shall cause to be delivered to the City and to the Refunding Trustee a Verification as set forth in Section 4. (b) On the Issue Date, the City shall deliver, or cause to be delivered, to the Refunding Trustee the amount of proceeds of the Bond as set forth in Section 5. Upon receipt, the Refunding Trustee shall deposit the amounts received by it into a trust account held by it for the benefit of the owners of the Refunded Bonds, and shall use such money to purchase the Acquired Obligations listed on Exhibit B to this Agreement, to establish a beginning cash balance, and to pay the costs of issuance and the costs of administering this Refunding Plan, all as set forth in Section 6. (c) (d) As set forth in Section 7, the Refunding Trustee shall receive the maturing installments of principal of and interest on the Acquired Obligations, shall deposit such amounts into the trust account, and shall apply such amounts as are held by it in the trust account to make the payments to the paying agent for the Refunded Bonds (the "Fiscal Agent"), as follows: (1) To pay principal of and interest on the Refunded Bonds when due up to and including December 1, 2016; and (2) To call, pay and redeem on December 1, 2016, all of the then -outstanding Refunded Bonds at a price equal to the stated principal amount of the Refunded Bonds to be redeemed. Section 4. Verification of Sufficiency of Acquired Obligations. In accordance with the Refunding Plan, the City shall cause to be delivered, on or prior to the Issue Date, a verification (the "Verification") by a nationally recognized independent certified public accounting firm verifying the mathematical accuracy of the computations showing that the maturing principal of and interest on the Acquired Obligations, together with the specified beginning cash balance (net of amounts directed to be used to pay any costs of issuance and/or administration of the Refunding Plan), will provide sufficient money to make the payments of principal of and interest on the Refunded Bonds, all as required by the Refunding Plan (the "Escrow Requirements"). The Verification shall assume that all principal of and interest on the Acquired Obligations is paid on the due dates thereof and shall assume no reinvestment of such maturing principal and interest. The schedules of the sources, amounts, maturities, and interest rates or yields of the Acquired Obligations and of the Refunded Bonds that will fulfill the foregoing requirements shall be set forth in the Verification. Based upon the Verification, the City represents that the Acquired Obligations and the maturing principal thereof and the interest thereon, if paid when due, together with the beginning cash balance (net of amounts directed to be used to pay any costs of issuance and/or administration of the Refunding Plan), will be sufficient to meet the Escrow Requirements. 51485113.2 2 Section 5. Delivery of Money to Refunding Trustee; Establishment of Trust. 5.1 For the purpose of making the payments required by the Refunding Plan, the City irrevocably conveys, transfers, and assigns to the Refunding Trustee, in trust, all amounts deposited with the Refunding Trustee pursuant to this Agreement, including the Acquired Obligations (the "Trust Estate"). The amounts to be delivered on the Issue Date by or on behalf of the City to the Refunding Trustee pursuant to the Refunding Plan shall be as follows: Proceeds of the Bond: Bond Proceeds 2006 Reserve Account Total $1,742,527.00 430,444.34 $2,172,971.34 The City Contribution shall be derived from the amounts on deposit in the reserve account for the Refunded Bonds. 5.2 The Refunding Trustee irrevocably agrees to hold the Trust Estate in trust and separate at all times from all other funds and investments held by the Refunding Trustee, solely for the purpose of making the payments required by the Refunding Plan. The Refunding Trustee shall not sell, transfer, assign, or hypothecate any Acquired Obligations or other money held by it pursuant to this Agreement except pursuant to Sections 11 and 13. Section 6. Investment and Expenditure of Amounts Held by Refunding Trustee. 6.1 Application of Amounts Held in Trust Estate. In accordance with the Refunding Plan, on the Issue Date, the Refunding Trustee shall apply the money deposited with it to (a) pay on behalf of the City the purchase and/or subscription prices of the Acquired Obligations, (b) to establish a beginning cash balance, and (c) to pay the costs of issuance of the Bonds and the administrative costs of carrying out the Refunding Plan, as set forth in Exhibit C. Immediately upon purchase of the Acquired Obligations, the Refunding Trustee shall deliver to the City evidence of such purchase and payment therefor. Investments in mutual funds and unit investment trusts are prohibited. The costs of issuance of the Bonds and administrative costs of the Refunding Plan shall be as set forth in the closing memorandum for the Bond. All remaining amounts deposited with the Refunding Trustee in excess of the amounts set forth above shall be transferred to the City for application in accordance with the Bond Ordinance within 90 days after the Issue Date. 6.2 Investments Permitted. The Refunding Trustee may make any and all investments permitted by the provisions of this section through its own investment department or the investment departments of any of its affiliates, to the extent such activity is consistent with applicable state or federal banking regulations. 51485113.2 3 Section 7. Collection of Proceeds of Acquired Obligations; Application of Amounts Held in Trust to Payments Required Under the Refunding Plan. 7.1 Collection of Proceeds of Acquired Obligations. In accordance with the Refunding Plan, the Refunding Trustee shall promptly present for payment, and shall collect and receive on the due dates thereof, as shown in the Verification, the maturing installments of the principal of and the interest on the Acquired Obligations. 7.2 Application of Amounts Held in Trust to Payments Required under the Refunding Plan. Solely from the amounts received and held by it pursuant to this Agreement, the Refunding Trustee shall, in a timely manner, make the payments to the Fiscal Agent under the 2006 Bond Ordinance of the amounts required by the Refunding Plan to be paid with respect to the Refunded Bonds as shown in the Verification. Those payments shall be made by check, wire transfer, or such other method of transfer of funds as shall be agreed upon by the Refunding Trustee and the Fiscal Agent for the Refunded Bonds. Section 8. Notices of Defeasance and Redemption. 8.1 Notices to Bondholders and MSRB. As the agent of the City charged with carrying out the Refunding Plan, the Refunding Trustee agrees to provide the notices of defeasance and of redemption of the Refunded Bonds as follows: (a) A notice of defeasance, in substantially the form set forth in Exhibit D, shall be given within two business days following the date of this Agreement by first class mail to the registered owner of the Refunded Bonds and to the Fiscal Agent for the Refunded Bonds. (b) A notice of redemption, in substantially the form set forth in Exhibit E, shall be delivered to the Fiscal Agent for the Refunded Bonds not less than 30 nor more than 60 days prior to December 1, 2016, in accordance with the 2006 Bond Ordinance. (c) No later than two business days following the delivery of each notice of defeasance and each notice of redemption, the Refunding Trustee shall also (1) file a copy of such notice with the Municipal Securities Rulemaking Board (the "MSRB") and (2) mail, postage prepaid, a copy of such notice to (i) each Rating Agency providing a rating on the Refunded Bonds at the request of the City, (ii) the underwriter of Refunded Bonds, and (iii) The Depository Trust Company of New York, New York. 8.2 Notices to MSRB. Unless otherwise directed by the City, notices given to the MSRB shall be posted on the MSRB's Electronic Municipal Market Access ("EMMA") website in the electronic format prescribed by the MSRB and accompanied by the identifying information prescribed by the MSRB. 8.3 Additional Notices. At the written request of the City from time to time, the Refunding Trustee agrees to provide to the MSRB such additional notices of material events affecting the Refunded Bonds in the form provided by the City. 51485113.2 4 8.4 Costs. The cost of giving the notices described in this section shall be paid by the City. Section 9. Reports. The Refunding Trustee shall provide periodic reports to the City, showing the cash and Acquired Obligations held by the Refunding Trustee pursuant to this Agreement. The report shall detail: the obligations that have matured and amounts received by the Refunding Trustee by reason of such maturity, the interest earned on the Acquired Obligations, the amounts paid to the Fiscal Agent for the Refunded Bonds, and any other transaction of the Refunding Trustee pertaining to its duties and obligations as set forth herein. Section 10. Limitation of Liability of Refunding Trustee. The Refunding Trustee's liabilities and obligations in connection with this Agreement are confined to those specifically described herein. None of the provisions contained in this Agreement shall require the Refunding Trustee to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. The Refunding Trustee shall be under no liability for the payment of interest on the Trust Estate, except to the extent it receives payments of principal or interest in respect of the investment of funds comprising a portion of the Trust Estate. The Refunding Trustee is authorized and directed to comply with the provisions of this Agreement and is relieved from all liability for so doing notwithstanding any demand or notice to the contrary by any party hereto. The Refunding Trustee shall not be responsible or liable for the performance or compliance by any party other than the Refunding Trustee with the terms or conditions of any such instruments; or any loss that may occur by reason of forgeries, false representations, or the exercise of the Refunding Trustee's discretion in any particular manner unless such exercise is negligent or constitutes willful misconduct. If any controversy arises between the City and any third person, the Refunding Trustee shall not be required to determine the same or to take any action in the premises, but it may institute, in its discretion, an interpleader or other proceedings in connection therewith as it may deem proper, and in following either course, it shall not be liable. Section 11. Remittance of Funds When Refunded Bonds Paid in Full. At such time as the Refunding Trustee has received the representation of the City that all of the payments required by the Refunding Plan have been made, supported by confirmation of such representation by the Fiscal Agent for the Refunded Bonds, together with such other evidence of such payments as shall be satisfactory to the City and the Refunding Trustee, the trust created pursuant to this agreement shall be deemed discharged and the Refunding Trustee shall remit to the City any remaining Acquired Obligations and money held in the Trust Estate pursuant to this Agreement. Section 12. Compensation of Refunding Trustee. The payment arrangement heretofore made between the Refunding Trustee and the City on compensation and expenses of the Refunding Trustee for services rendered by it pursuant to the provisions of this Agreement is satisfactory to it and to the City, and no further payment to the Refunding Trustee shall be required for such purpose. Such arrangement for compensation and expenses is intended as compensation for the ordinary services as contemplated by this Agreement. If the Refunding Trustee renders any service not expressly provided for in this Agreement but within the scope of the duties and obligations described herein, or the Refunding Trustee is made a party to or intervenes in any litigation pertaining to this Agreement or institutes interpleader proceedings 51485113.2 5 relative hereto, the Refunding Trustee shall be compensated reasonably by the City for such extraordinary services and reimbursed for all fees, costs, liability, and expenses (including reasonable attorneys' fees) occasioned thereby. The Refunding Trustee shall not have a lien against or otherwise be compensated for its services and expenses from the Trust Estate. Section 13. Successor Refunding Trustee. The obligations assumed by the Refunding Trustee pursuant to this Agreement may be transferred by the Refunding Trustee to a successor if (a) the Refunding Trustee has presented evidence satisfactory to the City and to Bond Counsel that the successor trustee is eligible to serve under RCW 39.53.070, as now in effect or hereafter amended; (b) the City approves the appointment of the successor trustee; (c) the successor trustee has assumed all of the obligations of the Refunding Trustee under this Agreement and has been compensated; and (d) all of the Trust Estate has been duly transferred to such successor trustee. Notwithstanding anything to the contrary contained in this Agreement, any company into which the Refunding Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion, or consolidation to which the Refunding Trustee is a party, or any company to which the Refunding Trustee may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Refunding Trustee without execution or filing of any paper or further act, if such company is eligible to serve as Refunding Trustee under RCW 39.53.070. Section 14. Amendments to Agreement. This Agreement is irrevocable and shall not be subject to amendment except for the purpose of clarifying any ambiguity, increasing the protection of the rights of the owners of the Refunded Bonds, or preserving the exclusion of the interest on the Refunded Bonds and the Bonds from gross income for federal income tax purposes, and only if such amendment is accompanied by an opinion of Bond Counsel, addressed to the City and the Refunding Trustee, to the effect that such amendment is necessary for one of the above reasons and does not materially adversely affect the owners of the Refunded Bonds or the Bonds. If such amendment will affect the amount of money and investments in the trust account or the application thereof, prior to the amendment's effective date there must also be delivered to the Refunding Trustee a Verification confirming that after such amendment the Trust Estate will be sufficient to make the payments required by the Refunding Plan. Section 15. Miscellaneous. This Agreement is governed by Washington law without regard to the conflict of laws provisions thereof and may not be modified except by a writing signed by the parties and subject to the limitations of Section 10. If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. 51485113.2 [Signature page follows] 6 Section 16. Counterparts. This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement pursuant to due and proper authorization, all as of the date and year first above written. CITY OF TUKWILA, WASHINGTON U.S. BANK NATIONAL ASSOCIATION, as Refunding Trustee By X42 Peg_, Vi arthy Fin. W'rector By 51485113.2 7 Name: Title: Section 16. Counterparts. This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the pursuant to due and proper authorization, CITY OF TUKWILA, WASHINGTON parties have executed and delivered this Agreement all as of the date and year first above written. U.S. BANK NATIONAL ASSOCIATION, as Refunding Trustee By By V; Prop; demi- Peggy McCarthy Finance Director 51485113.2 Name: Title: Exhibit A Exhibit A Identification of Refunded Bonds City of Tukwila, Washington Water and Sewer Revenue Bonds, 2006 (Interest Payment Dates: June 1 and December 1) Maturity Interest Year Principal Amount Rate CUSIP No. 2016 $ 150,000 4.00% 899057 FZ1 2026* 1,910,000 4.50 899057 GA5 *Term Bonds 51485113.2 Exhibit B Exhibit B Identification of Acquired Obligations Type* Maturity Date Par Amount Interest Rate CERT 06/01/2016 $ 45,871 0.49% CERT 12/01/2016 2,092,891 0.65 * CERT - United States Treasury Certificate of Indebtedness — State and Local Government Series 51485113.2 Exhibit C Exhibit C Uses of Funds Deposited with Refunding Trustee Purchase of the Acquired Obligations $2,138,762.00 Beginning Cash Balance 0.78 Costs of Issuance Public Financial Management, Financial Advisor 15,057.60 Foster Pepper PLLC, Bond Counsel 10,800.00 Causey Demgen & Moore P.C., Verification Agent 2,500.00 U.S. Bank, Refunding Trustee 750.00 Stokes Lawrence, P.S., Purchaser's Counsel 3,000.00 Columbia State Bank, Purchaser 2,100.00 Contingency 0.96 Total $2,172,971.34 51485113.2 Exhibit D Exhibit D Notice of Defeasance City of Tukwila, Washington NOTICE OF DEFEASANCE is hereby given to the owners of the following bonds (the "Defeased Bonds") issued by the City of Tukwila, Washington (the "City"): Water and Sewer Revenue Bonds, 2006 (Dated November 21, 2006) Maturity Interest Year Principal Amount Rate CUSIP No. 2016 $ 150,000 4.00% 899057 FZl 2026* 1,910,000 4.50 899057 GA5 *Term Bonds Pursuant to the Refunding Trust Agreement dated as of December 15, 2015, by and between the City and U.S. Bank National Association (the "Refunding Trustee"), the Refunding Trustee has received and now holds in trust cash and non -callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money to pay the principal of and interest on the Defeased Bonds to and including the redemption date of December 1, 2016. The Defeased Bonds are therefore deemed to be no longer outstanding pursuant to Ordinance No. 2136 of the City relating to the Defeased Bonds, but will be paid by application of the assets in such refunding trust account. U.S. Bank National Association, as Refunding Trustee Dated: 51485113.2 Exhibit E Exhibit E Notice of Redemption City of Tukwila, Washington NOTICE OF REDEMPTION is hereby given that the City of Tukwila, Washington (the "City"), has called the following bonds (the "Refunded Bonds") for redemption on December 1, 2016 (the "Redemption Date"): Water and Sewer Revenue Bonds, 2006 (Dated November 21, 2006) Maturity Interest Year Principal Amount Rate CUSIP No. 2026* $1,910,000 4.50% 899057 GA5 *Term Bonds The Refunded Bonds will be redeemed at a price of one hundred percent (100%) of the principal amount being redeemed, plus accrued interest thereon to the Redemption Date. Interest shall cease to accrue on the Redemption Date. The redemption price of the Refunded Bonds is payable on presentation and surrender of the Refunded Bonds at the office of: U.S. Bank National Association Global Corporate Trust Services 111 Fillmore Ave E St. Paul, MN 55107 By Order of the City of Tukwila, Washington U.S. Bank National Association, as Bond Registrar Dated: Under Section 3406(a)(1) of the Internal Revenue Code, the Bond Registrar may be obligated to withhold a percentage of the principal of a holder who has failed to furnish the Bond Registrar with a valid taxpayer identification number and a certification that the owner is not subject to backup withholding. Owners who wish to avoid the application of these provisions should submit a completed IRS Form W-9 when presenting their certificates for payment. 51485113.2 embank. GLOBAL CORPORATE TRUST SERVICES 1420 Fifth Ave, 7th Floor PD-WA-T7CT Seattle, WA 98101 AUTHORIZED SIGNATURES I hereby certify that the following is a true and exact extract from Article VI of the Bylaws presently in effect for U.S. Bank National Association, a national banking association organized and existing under the laws of the United States: Article VI CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock, bonds, notes, debentures or other negotiable instruments, securities or personal property shall be signed by any elected or appointed officer. All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or facsimile signature of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association, and all other instruments not specifically provided for, whether to be executed in a fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The Secretary or any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. I further cert fy that the following officers of U.S. Bank National Association have been duly elected and qualified and now hold their respective offices, and that the signatures of such officers are authentic: Deborah Kuykendall` Vice President Greg E. Skutnik Assistant Vice President Ryan P. Brennan Trust Officer Carolyn Morrison Vice President Christine Ok Vice President Thomas Zrust Vice President IN WITNESS WHEREOF, I have hereunto set my hand this 16 day of , 2015. U.S. BANK NATIONAL A SOCIATION, By: usbank.com Senior Vice President AMENDED AND RESTATED BYLAWS OF U.S. BANK NATIONAL ASSOCIATION ARTICLE I. MEETINGS OF SHAREHOLDERS Section 1 :Annual: Meeting The annual meeting of the. shareholders, for the election of directors. and *e. transaction of other , business, shall beheld at, a time and place:as. the Chairman or President may. designate.. Section 2. • Special Meetings SpeCiatineetingS'Of shareholders may be called and held atsuch times and upon such notice as is specified in the ArtieleS•of Association. Section 3. Quorum • . . • A majority Of.lthe'Ontstanding capital stock represented in person or by proxy shall constitute:4 446X4X4.,900i44tii4g Of tile shareholders, unless otherwise provided by law, but less than 4:44digx**.y adjOiiinanyineeting, from. time to tin andithe meeting may be held as: adjourned without further notiCe. ,,* . • , s. . • „ -.. • Section 4. Inspectors The Board of Directors may, and in the event of its failure so to do, the Chairman of the Board may appoint Inspectors ofElection who shall determinetbe presence of quorum, the validity ofproxies, 444 the results Of all elections and all other Matteis voted upon by shareholder's at all annual and special Meetings of sharehOlders. . . " • • : ' ' • . • . : . • • Section 5. Voting In deciding on questions at meetings of shareholders, except in the election of directorS,' each shareholder shall be. entitlecl to (peyote for each shar.eof stock A majority of votes cast shall decide each Matter submitted to the shareholder's; except where 'by laW,a larger vote is , required. In all elections of directors, each shareholder shall have the right to vote the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate such shares and give one candidate as many votes as the number of directors multiplied by the number ofhis shares equal, onto .clistribute them on the same principle among as many candidates as he shall think fitSection 6. Waiver and Consent . : ; • .1 ,. The shareholders may act without notice or a meeting by a unanimous written consent by all shareholders. Pagel of 9 ARTICLE TI. MARI).OF DIRECTORS Section 1. Term of Office The directors of this Association shall hold office for one year and until their successors are duly elected and qualified. Section 2. Number As provided in the Articles of Association, the Board of this Association shall consist of not less than five nor more than twenty-five members. At any meeting of the'shareholders held for the purpose of electing directors, or changing the number thereof, the number of directors may be determined by a majority of the votes cast by the shareholders in person or by proxy. Any vacancy occurring in the Board shall be filled by the remaining directors. Between meetings of the shareholders held for the purpose of electing directors, the Board by a majority vote of the full Board may increase the size of the Board by not more than four directors in any one but not to more than a total of twenty-five directors, and fill any vacancy so created in the Board. All directors shall hold office until their successors are elected and qualified. Section 3. Regular Meetings The organizational meeting of the Board of Directors shall be held as soon as practicable following the annual meeting of shareholders at such time and place as the Chairman or President may designate: Other regular Meetings of the Board of Directors:shall be held quarterly at such time and place as may be designated in the noticeeof the meeting. When any; regular meeting of the Board falls on a holiday, the meeting shall be held cin the next banking business day, unless the Board shall designate some other day. Section 4. Special Meetings Special meetings of the Board'of Directors may be,called by the Chairman of the Board of the Association, or atthe request of three or more :Directors: Notice of the time, place and purposes of such meetings shall be given biy letter, by telephone, in person; by facsimile; by electronic mail or other reasonable manner to every Director. Section 5. Quorum A niajonty of the. entiremexnbership of die Board shall constitutea quoruil ;of an 'Section'6:' ` • Necessary` Vote . A inajority of those Directors present and voting at any meeting of the Board of Directors shall decide each matter considered, except where otherwise required by law or the Articles or Bylaws of this Association. Section 7. Compensation Page 2 of 9 Directors, excluding full-time employees of the Bank, shall receive such reasonable compensation as, may be fixed from time to time by the Board of Directors. ARTICLE III. • OJ UCERS Section 1. Who Shall Constitute .... The Officers ofthe Association shall be a Chairman of the Board, Chief Executive Officer, a President, a Secretary, and other officers such asVice Chairman of the Board, • Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Vice Presidents, Assistant Secretaries, Trust Officers, Assistant Trust Officers, Controller, and Assistant Controller, as the Board may appoint from.time to time. The Board may choose to delegate authority to elect officers other than the Chairman, Chief Executive Officer, President, Secretary, Vice Chairman and Executive Vice Presidents, to the Chief Executive Officer or President. Any person•may.hold two offices. The Chief Executive Officer and the President shall at all times.• be. members of the Board of Directors. Section 2. Term of Office All officers shall be elected for and shall hold office until their respective successors are elected and qualified or until their earlier death, resignation, retirement, •disqualification or removal from office, subject to the right of the .Board of Directors in its sole discretion to discharge any officer at any time. . • Section 3. Chairman of the Board The..Chairman of,the .Board. shall have .general .executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. He shall, when present, preside at all meetings of the shareholders and directors and shall be ex.. officio a member: of all committees of the Board. Section 4. Chief Executive Officer The Chief Executive Officer, who may also. be the Chairman or the President, shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the Board of Directors. Section 5. President The President shall have general executive powers and duties and shall perform such other duties as may be assigned from time to time by the board of Directors. In addition, if designated by the Board of Directors, the President shall be the Chief Executive Officer and shall have all the powers and duties of the Chief Executive Officer, including the same power to name temporarily a Chief Executive Officer to serve in the absence of the President if there is a vacancyin the position of the chairman or in the event of the absence or incapacity of the Chairman. Page 3 of 9 Section 6. Vice Chairmen. of the Board The Board of Directors shall have the power to elect one or more Vice Chairinen of the �! Board of Directors. Any such Vice Chairman of the Board shall participate in the formation of the policies of the Association and shall have such other duties as may be assigned to him from time to time by the Chairman of the Board or.by the Board of Directors. Section 7. Other Officers The Secretary and all other officers appointed by the Board of Directors shall have such duties as defined by law and as may from time to time be assigned to them by the Chief Executive Officer or the Board of Directors. ARTICLE IV. COMMITTEES Section 1. Compensation Committee The duties of the Compensation Committee of the Association shall be carried out by the Compensation Committee of the financial holding company that is the parent of this Association. Section 2. Committee on Audit The duties of the Audit Committee of the Association shall be carried out by the Audit Committee of the financial holding company that is the parent ofthis Association. Section 3. Trust Risk Management Committee The Board of Directors ofthis Association shall appoint a Trust Risk Management Comni.ittee to provide oversight of the fiduciary activities of the Association: The Trust Rislc Management Committee shall determine policies governing fiduciary activities. The Trust Risk Management Committee or such sub -committees, officers or others as may be dulydesignated by the Trust Risk Management Committee shall oversee the processes related to fiduciary activities to assure conformity with fiduciary policies it establishes;including ratifying the acceptance and the. closing out or relinquishment of all trusts._ All. actions of the Trust Risk Committee shall be reported to the Board of Directors. . Section 4. Other Committees The Board of Directors may appoint, from time to time, other committees for such purposes and with such powersas the Board may direct. Page. 4 of 9 • ARTICLE V. MINUTE BOOK The organization papers of this Association, the Bylaws as revised or amended from time to time and the proceedings of all regular and special meetings of the shareholders and the directors shall be recorded in: a minute book or books. All reports of committees required to be made to the Board shall be recorded in a minute book or shall be filed by the recording officer. The minutes of each meeting of the shareholders and the Board shall be signed by the recording officer. • ARTICLE VL CONVEYANCES, CONTRACTS, ETC. All transfers and conveyances of real estate, mortgages, and transfers, endorsements or assignments of stock; bonds, notes, deI entures or other negotiable instruments, securities or personal'property shall be signed by any elected or appointed officer. - All checks, drafts, certificates of deposit and all funds of the Association held in its own or in a fiduciary capacity may be paid out by an order, draft or check bearing the manual or . • facsimile signature -of any elected or appointed officer of the Association. All mortgage satisfactions, releases, all types of loan agreements, all routine transactional documents of the Association,:and all other instruments not specifically provided for, whether to be executed.in a•fiduciary capacity or otherwise, may be signed on behalf of the Association by any elected or appointed officer thereof. The Secretary or any Assistant Secretary of the Association or other proper officer may execute and certify that required action or authority has been given or has taken place by resolution of the Board under this Bylaw without the necessity of further action by the Board. ARTICLE VII. SEAL The Association shall have no corporate seal. • • ARTICLE VIII. INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES Section 1. • General. The Association shall indemnify to the full extent permitted by and in the manner. permissible under the Delaware General Corporation Law, as amended from time to time (but, in the case of any such amendment, only to the extent that such amendment permits the Association to provide broader indemnification rights than said law permitted the Association to provide. Page 5 of 9 prior to such amendment), any person made, or threatened to be made, a party to any action, suit, or proceeding, whether criminal, civil, administrative, or, investigative, by reason of the fact that such person (i) is or was a director, advisory director, or officer of the Association or any predecessor of the Association, or (ii) is or was a director, advisory director or officer of the Association or any predecessor of the Association and served any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, advisory director, officer, partner, trustee, employee or agent at the request of the Association or any predecessor of the Association; provided, however, that the Association shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person, except for a proceeding contemplated by Section 4 of this Article VIII, only if such proceeding (or part thereof) was authorized by the Board of Directors. Section 2. Advancement of Expenses. The right to indemnification conferred in this Article VIII shall be a contract right and shall include the right to be paid by the Association the expenses incurred in defending any such proceeding or threatened proceeding in advance of its final disposition, such advances to be paid by the Association within 20 days after the receipt by the Association of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that lithe General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director, advisory director or officer in his or her capacity as a director, advisory director or officer (and not in any other capacity in which service was or is rendered by such person while a director, advisory director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Association of an undertaking by or on. behalf of such director, advisory director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director, advisory director or officer is not entitled to be indemnified under this Article VIII or otherwise. Section 3. Procedure for Indemnification. To obtain indemnication under this Article VIII, a claimant shall submit to the Association a written request, including therein 'or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this Section 3, a determination, if required by applicable laws with respect to the claimant's entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by a majority vote of the Disinterested Directors (as hereinafter defined); even though less than a quorum, or by a majority vote of a committee of Disinterested Directors designated by a majority vote of Disinterested Directors, even though less than a quorum, or (ii) if there are no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination. Page 6 of 9 Section 4. Certain Remedies. If a claim under Section 1 of this Article VIII is not paid in full by the Association within thirty days after a written claim pursuant to Section 3 of this Article VIII has been received by the Association, or if a claim under Section 2 of this Article VIII is not paid in full by the Association within twenty days after a written claim pursuant to Section 2 of this Article VIII has been received by the Association, the claimant may at any time thereafter bring suit against the ,Association to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a • defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking; if any is required, has been tendered to the Association) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the Association to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Association. Neither the failure of the Association (including its Board of Directors or Independent Counsel) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Association (including its Board of Directors or Independent Counsel) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the 'claimant has not met the applicable standard of conduct. Section 5. Binding Effect. If a determination shall have been made pursuant to Section 3 of this Article VIII that the claimant is entitled to indemnification, the Association shall be bound by such determination in any judicial proceeding commenced pursuant to Section 4 of this Article VIII. Section 6. Validity of this Article VIII. The Association shall be precluded from asserting in any judicial proceeding commenced pursuant to Section 4 of this Article VIII that the procedures and presumptions of this Article VIII are not valid, binding and enforceable and shall stipulate in such proceeding that the Association is bound by all the provisions of this Article VIII. Section 7. Nonexclusivity, etc. The right to indemnification and the payment of expenses .incurred in defending a proceeding or threatened proceeding in advance of its final disposition conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Articles of Association, Bylaws, agreement, vote of shareholders or Disinterested Directors or otherwise. No repeal or modification of this Article VIII, or adoption of any provision inconsistent herewithshall in any way diminish or adversely affect the rights of any present or former director, advisory director, officer, employee or agent of the Association or any predecessor thereof hereunder in respect of any occurrence or matter Page 7 of 9 arising, or of any claim involving allegations of acts or omissions occurring or arising, prior to any such repeal or modification. Section S. Insurance, The Association may maintain. insurance, at its expense, to protect itself and any director, officer, employee or agent of the Association or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Association . would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. To the extent that the Association maintains any policy or policies providing such insurance, each such director or officer, and each such .. agent or employee to whom rights to indemnification have been granted as provided in Section 9. of this Article VIII, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee or agent. Section 9. Indemnification of Other Persons. The Association may grant rights toindemnification, and rights to be paid by the Association the expenses incurred in defending any proceeding in advance of its final disposition, to any present or former employee or agent of the Association or any predecessor of the Association to the fullest extent of the provisions of this Article VIE with respect to the indemnification and advancement of expenses of directors, advisory directors and officers of the Association. Section 10. Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the:. remaining provisions of this Article VIII (including, without limitation, each portion of any paragraph of this Article VIII containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affectedor impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of any paragraph of this Article VIII containing any such provision held to be invalid,: illegal or unenforceable) shall be: construed so. as to give effect to the intent manifested by the provision held invalid, illegal or ... unenforceable. Section 11. Certain Definitions. For purposes of this Article VI:. (1) "Disinterested Director" means a director of the Association who is not and; was not a party to the matter..in respect of which indemnification is sought by the claimant. (2) "Independent Counsel" means a law firm, a member of a law firm, or an .: independent practitioner that is experienced in matters of corporation law and shall Page 8 of 9 include any such person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Association or the claimant in an action to determine the claimant's rights under this Article VIII. Section 12. Notices. Any notice, request or other communication required or permitted to be given to the Association under this Article VIII shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Association and shall be effective only upon receipt by the Secretary. Section 13. Payments Notwithstanding any other provision of this Article VIII, however, (a) any indemnification payments to an institution -affiliated party, as defined at 12 USC 1813(u), for an administrative proceeding or civil action initiated by a federal banking agency, shall be reasonable and consistent with the requirements of 12 USC 1828(k) and the associated regulations; and (b) any indemnification payments and advancement of costs and expenses to an institution -affiliated party, as defined at 12 USC 1813(u), in cases involving an administrative proceeding or civil action not initiated by a federal banking agency, shall be consistent with safe and sound banking practices. ARTICLE IX. AMENDMENTS These Bylaws, or any of them, may be added to, altered, amended or repealed by the Board at any regular or special meeting of the Board. ARTICLE X. GOVERNING LAW This Association designates the Delaware General Corporation Law, as amended from time to time, as the governing law for its corporate governance procedures, to the extent not inconsistent with Federal banking statutes and regulations. March 4, 2009 Page 9 of 9 CITY OF TUKWILA, WASHINGTON VERIFICATION REPORT FOR THE WATER AND SEWER REVENUE REFUNDING BOND, 2015 CAUSEY DEMGEN & MOORE P.C. Certified Public Accountants and Consultants CAUSEY DEMGEN & MOORE RC. Certified Public Accountants and Consultants December 15, 2015 City of Tukwila 6200 Southcenter Boulevard Tukwila, Washington 98188 Public Financial Management, Inc. 1200 Fifth Avenue, Suite 1220 Seattle, Washington 98101 1125 Seventeenth Street - Suite 1450 Denver, Colorado 80202-2025 Telephone: (303) 296-2229 Facsimile: (303) 296-3731 www.causeycpas.com Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 Assured Guaranty Municipal Corp. 31 West 52nd Street New York, New York 10019 We have completed our engagement to verify the mathematical accuracy of (a) the computations relating to the adequacy of cash plus U.S. Treasury Securities to be held in escrow to pay the debt service requirements of the Water and Sewer Revenue Bonds, 2006 (herein referred to as the "Refunded Bonds") issued by the City of Tukwila, Washington (herein referred to as the "City") and (b) the computations supporting the conclusion of Bond Counsel that the Water and Sewer Revenue Refunding Bond, 2015 (herein referred to as the "Refunding Bond") to be issued by the City are not "arbitrage bonds" under Section 148 of the Internal Revenue Code of 1986, as amended. We express no opinion as to the attainability of the assumptions underlying the computations or the tax-exempt status of the Refunding Bond. Our verification was performed solely on the information contained in certain schedules of proposed transactions provided by Public Financial Management, Inc. (herein referred to as the "Financial Advisor"). In the course of our engagement to verify the mathematical accuracy of the computations in the schedules provided to us, we prepared Exhibits A through D attached hereto and made a part hereof. The scope of our engagement consisted of performing the procedures described herein. These procedures were performed in a manner that we deem to be appropriate. The accompanying exhibits of proposed transactions were prepared on the basis of assumptions underlying the computations and in accordance with the procedures described herein. We did not independently confirm the information used with outside parties. OUR UNDERSTANDING OF THE TRANSACTION The City intends to issue the Refunding Bond on December 15, 2015 to advance refund the Refunded Bonds. A portion of the proceeds of the Refunding Bond, together with certain amounts to be contributed from the debt service reserve fund associated with the Refunded Bonds, will be used to purchase U.S. Treasury Securities and to provide cash that will be placed into an escrow account to advance refund the Refunded Bonds. The Escrow Agent will pay the debt service requirements of the Refunded Bonds on each scheduled payment date through and including December 1, 2016 and will redeem those Refunded Bonds CAUSEY City of Tukwila, Washington December 15, 2015 Page 2 maturing or subject to sinking fund redemption on December 1, 2017 and thereafter, at a redemption price equal to 100% of par, on December 1, 2016, which is the first optional redemption date. ESCROW ACCOUNT TRANSACTIONS We verified the mathematical accuracy of the accompanying calculations of the escrow account transactions proposed to advance refund the Refunded Bonds. The presently outstanding debt service requirements of the Refunded Bonds will be satisfied by the purchase of U.S. Treasury Securities (as described in Exhibit A-2) plus $0.78 in cash. The securities and cash will be placed in an irrevocable escrow account and held therein until the Refunded Bonds are redeemed as previously described. We read copies of the Official Statement and the Errata Notice for the Refunded Bonds insofar as these obligations are described with respect to principal outstanding, interest rates, maturity dates, and redemption provisions. We assumed these documents to be accurate and all debt service payments on the Refunded Bonds to be current as of December 15, 2015. We compared the above information set forth in these documents with the related information contained in the schedules provided to us and found the infonnation to be consistent. We compared the subscribed interest rates of the U.S. Treasury Securities (State and Local Government Series) to be purchased and placed in escrow with the maximum allowable interest rates as published in the SLGS Daily Rate Table by the Bureau of the Public Debt for December 8, 2015 and found the subscribed rates to be less than or equal to the maximum allowable rates that were in effect on the subscription date for each applicable maturity date. Based on the procedures and information set forth above, the computations provided to us and represented in Exhibits A through B, which indicate that the cash and securities proposed to be placed in escrow by the City will produce the amounts necessary to provide for the timely payment of the proposed debt payment schedule on the Refunded Bonds, are mathematically correct. YIELD ON THE REFUNDING BOND We verified the mathematical accuracy of the accompanying computations of the yield on the Refunding Bond as of December 15, 2015. For purposes of this calculation, yield is defined as the rate of interest which, using the assumptions and procedures set forth herein, discounts the payments to be made on the Refunding Bond to an amount equal to the target purchase price of the Refunding Bond. The computations were made using a 360 -day year with interest compounded semi-annually and a target purchase price equal to the $1,742,527.00 par amount of the Refunding Bond. Based upon the procedures and information set forth above, the computations provided to us and represented in Exhibits C and C-1, which indicate that the yield on the Refunding Bond is 2.34008%, are mathematically correct. City of Tukwila 849428_1.doc City of Tukwila, Washington December 15, 2015 Page 3 YIELD ON THE INVESTMENT IN THE ESCROWED OBLIGATIONS PURCHASED TO REFUND THE REFUNDED BONDS We verified the mathematical accuracy of the accompanying computation of the yield on the investment in the escrowed U.S. Treasury Securities purchased to refund the Refunded Bonds based on an assumed settlement date of December 15, 2015 and a purchase price of $2,138,762.00. For purposes of this calculation, yield is defined as the rate of interest which, using the assumptions and procedures set forth herein, discounts the cash receipts from the escrowed securities to an amount equal to the purchase price of the escrowed securities. The computations were made using a 360 -day year with interest compounded semi-annually and were based on the dates the funds are to be received in the escrow account, and assume that all cash balances are not reinvested. Based upon the procedures and information set forth above, the computations provided to us and represented in Exhibit D, which indicate that the yield on the escrowed securities purchased to refund the Refunded Bonds is 0.64781 % (which is less than the yield on the Refunding Bond), are mathematically correct. USE OF THIS REPORT It is understood that this report is solely for the information of and assistance to the addressees hereof in connection with the issuance of the Refunding Bond and is not to be used, relied upon, circulated, quoted or otherwise referred to for any other purpose without our written consent, except that (i) reference inay be made to the report in any closing documents pertaining to the issuance of the Refunding Bond, (ii) the report may be used in its entirety as an exhibit to the escrow agreement for the Refunded Bonds, (iii) the report may be included in the transcripts pertaining to the issuance of the Refunding Bond, (iv) the report may be relied upon by Bond Counsel in connection with its opinions concerning the Refunded Bonds and the Refunding Bond, (v) the report may be relied upon by any rating agency or bond insurer that shall have rated or insured or that will rate or insure the Refunded Bonds or the Refunding Bond, and (vi) the report may be relied upon by the Escrow Agent for the Refunded Bonds. ********* The scope of our engagement is deemed by the addressees hereto to be sufficient to assist such parties in evaluating the mathematical accuracy of the various computations cited above. The sufficiency of this scope is solely the responsibility of the specified users of this report and should not be taken to supplant any additional inquiries or procedures that the users would undertake in their consideration of the issuance of the bonds related to the transaction described herein. We make no representation regarding the sufficiency of the scope of this engagement. This report should not be used by any party who does not agree to the scope set forth herein and who does not take responsibility for the sufficiency and appropriateness of such scope for their purposes. City of Tukwila 849428_1.doc City of Tukwila, Washington December 15, 2015 Page 4 We have no obligation to update this report because of events, circumstances, or transactions occurring subsequent to the date of this report. Very truly yours, Survi 9,44 li /��d f. C_ City of Tukwila 849428_1.doc EXHIBIT A CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 Date Beginning Balance: 01 -Jun -16 01 -Dec -16 ESCROW ACCOUNT CASH FLOW AS OF DECEMBER 15, 2015 Cash Receipts From U.S. Treasury Securities (Exhibit A-1) Cash Disbursements From Escrow (Exhibit B) Cash Balance $45,974.79 2,105,974.43 $45,975.00 2,105,975.00 $2,151,949.22 $2,151,950.00 $0.78 0.57 0.00 EXHIBIT A-1 CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 CASH RECEIPTS FROM THE ESCROWED SECURITIES AS OF DECEMBER 15, 2015 Payment Date $45,871.00 $2,092,891.00 0.490000% 0.650000% SLGS (1) SLGS (1) 01 -Jun -16 01 -Dec -16 Total Cash Receipts 01 -Jun -16 01 -Dec -16 $45,974.79 $2,105,974.43 $45,974.79 2,105,974.43 $45,974.79 $2,105,974.43 $2,151,949.22 (1) U.S. Treasury Certificate of Indebtedness (State and Local Government Series). EXHIBIT A-2 CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 DESCRIPTION OF THE ESCROWED SECURITIES AS OF DECEMBER 15, 2015 Settlement Maturity Par Coupon Total Type Date Date Amount Rate Price Cost SLGS 15 -Dec -15 01 -Jun -16 $45,871.00 0.490% 100.000000% $45,871.00 SLGS 15 -Dec -15 01 -Dec -16 2,092,891.00 0.650% 100.000000% 2,092,891.00 $2,138,762.00 $2,138,762.00 EXHIBIT B CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 ESCROW ACCOUNT DISBURSEMENT REQUIREMENTS FOR THE REFUNDED BONDS AS OF DECEMBER 15, 2015 Payment For Payment Maturing Principal Date Rate Principal Redeemed Interest Total 01 -Jun -16 01 -Dec -16 Various $45,975.00 $150,000.00 $1,910,000.00 45,975.00 $45,975.00 2,105,975.00 $150,000.00 $1,910,000.00 $91,950.00 $2,151,950.00 EXHIBIT B-1 CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 DEBT SERVICE REQUIREMENTS FOR THE REFUNDED BONDS ASSUMING NO OPTIONAL REDEMPTIONS PRIOR TO MATURITY AS OF DECEMBER 15, 2015 (FOR INFORMATIONAL PURPOSES ONLY) Payment Payment For Total Debt Date Rate Principal Interest Payment 01 -Jun -16 $45,975.00 $45,975.00 01 -Dec -16 4.000% $150,000.00 45,975.00 195,975.00 01 -Jun -17 42,975.00 42,975.00 01 -Dec -17 4.500% 155,000.00 42,975.00 197,975.00 01 -Jun -18 39,487.50 39,487.50 01 -Dec -18 4.500% 165,000.00 39,487.50 204,487.50 01 -Jun -19 35,775.00 35,775.00 01 -Dec -19 4.500% 170,000.00 35,775.00 205,775.00 01 -Jun -20 31,950.00 31,950.00 01 -Dec -20 4.500% 180,000.00 31,950.00 211,950.00 01 -Jun -21 27,900.00 27,900.00 01 -Dec -21 4.500% 185,000.00 27,900.00 212,900.00 01 -Jun -22 23,737.50 23,737.50 01 -Dec -22 4.500% 195,000.00 23,737.50 218,737.50 01 -Jun -23 19,350.00 19,350.00 01 -Dec -23 4.500% 200,000.00 19,350.00 219,350.00 01 -Jun -24 14,850.00 14,850.00 01 -Dec -24 4.500% 210,000.00 14,850.00 224,850.00 01 -Jun -25 10,125.00 10,125.00 01 -Dec -25 4.500% 220,000.00 10,125.00 230,125.00 01 -Jun -26 5,175.00 5,175.00 01 -Dec -26 4.500% 230,000.00 5,175.00 235,175.00 $2,060,000.00 $594,600.00 $2,654,600.00 EXHIBIT C CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 YIELD ON THE REFUNDING BOND AS OF DECEMBER 15, 2015 Present Value at December 15, 2015 Total Debt Using a Semi -Annually Payment Payment Compounded Yield of Date (Exhibit C-1) 2.34008% 01 -Jun -16 $18,801.87 $18,601.25 01 -Dec -16 165,210.57 161,557.41 01 -Jun -17 18,693.14 18,068.39 01 -Dec -17 161,975.14 154,751.03 01 -Jun -18 17,016.74 16,069.77 01 -Dec -18 166,675.74 155,579.98 01 -Jun -19 15,265.73 14,084,68 01 -Dec -19 166,001.73 151,387.51 01 -Jun -20 13,502.12 12,171.03 01 -Dec -20 170,116.12 151,572.02 01 -Jun -21 11,669.73 10,277.38 01 -Dec -21 168,847.73 146,982.26 01 -Jun -22 9,830.75 8,458.72 01 -Dec -22 172,361.75 146,590.80 01 -Jun -23 7,929.14 6,665.61 01 -Dec -23 170,489.14 141,663.73 01 -Jun -24 6,027.18 4,950.22 01 -Dec -24 173,390.18 140,761.08 01 -Jun -25 4,069.04 3,265.11 01 -Dec -25 175,899.04 139,513.96 01 -Jun -26 2,058.63 1,613.91 01 -Dec -26 178,009.63 137,941.15 $1,993,840.84 $1,742,527.00 Dated Date: 15 -Dec -15 Delivery Date: 15 -Dec -15 The above aggregate present value of the future payments equals the following: Par Value of the Issue $1,742,527.00 Proceeds on Delivery Date $1,742,527.00 EXHIBIT C-1 CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 REFUNDING BOND DEBT SERVICE REQUIREMENTS AND PRODUCTION AS OF DECEMBER 15, 2015 Original Issue Payment Payment For Total Debt Reoffering Premium/ Total Date Rate Principal Interest Payment Price (Discount) Production 01 -Jun -16 $18,801.87 $18,801.87 01 -Dec -16 2.340% $144,823.00 20,387.57 165,210.57 100.000% $0.00 $144,823.00 01 -Jun -17 18,693.14 18,693.14 01 -Dec -17 2.340% 143,282.00 18,693.14 161,975.14 100.000% 0.00 143,282.00 01 -Jun -18 17,016.74 17,016.74 0I -Dec -18 2.340% 149,659.00 17,016.74 166,675.74 100.000% 0.00 149,659.00 0 I -Jun-19 15,265.73 15,265.73 01 -Dec -19 2.340% 150,736.00 15,265.73 166,001.73 100.000% 0.00 150,736.00 0I -Jun-20 13,502.12 13,502.12 01 -Dec -20 2.340% 156,614.00 13,502.12 170,116.12 100.000% 0.00 156,614.00 01 -Jun -21 11,669.73 11,669.73 01 -Dec -21 2.340% 157,178.00 11,669.73 168,847.73 100.000% 0.00 157,178.00 01 -Jun -22 9,830.75 9,830.75 0I -Dec -22 2.340% 162,531.00 9,830.75 172,361.75 100.000% 0.00 162,531.00 01 -Jun -23 7,929.14 7,929.14 01 -Dec -23 2.340% 162,560.00 7,929.14 170,489.14 100.000% 0.00 162,560.00 01 -Jun -24 6,027.18 6,027.18 01 -Dec -24 2.340% 167,363.00 6,027.18 173,390.18 100.000% 0.00 167,363.00 01 -Jun -25 4,069.04 4,069.04 0l -Dec -25 2.340% 171,830.00 4,069.04 175,899.04 100.000% 0.00 171,830.00 01 -Jun -26 2,058.63 2,058.63 01 -Dec -26 2.340% 175,951.00 2,058.63 178,009.63 100.000% 0.00 175,951.00 $1,742,527.00 $251,313.84 $1,993,840.84 $0.00 $1,742,527.00 EXHIBIT D CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 Date YIELD ON THE ESCROWED SECURITIES AS OF DECEMBER 15, 2015 Total Cash Present Value at Receipts From December 15, 2015 U.S. Treasury Using a Semi -Annually Securities Compounded Yield of (Exhibit A) 0.64781% 01 -Jun -16 $45,974.79 $45,837.88 01 -Dec -16 2,105,974.43 2,092,924.12 $2,151,949.22 $2,138,762.00 Total Cost of the Securities $2,138,762.00 EXHIBIT E CITY OF TUKWILA, WASHINGTON WATER AND SEWER REVENUE REFUNDING BOND, 2015 ESTIMATED SOURCES AND USES OF FUNDS AS OF DECEMBER 15, 2015 Sources of Funds: Par Value of Bond Debt Service Reserve Fund Contribution Total Sources of Funds Uses of Funds: Beginning Escrow Account Cash Balance Cost of the Escrowed Securities Issuance Costs Total Uses of Funds $1,742,527.00 430,444.34 $2,172,971.34 $0.78 2,138,762.00 34,208.56 $2,172,971.34 CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 REFUNDING TRUSTEE RECEIPT AND DISBURSEMENT SCHEDULE The undersigned, an authorized signatory of U.S. Bank National Association (the "Refunding Trustee"), certifies as follows: 1. As of this date, I acknowledge receipt from Columbia State Bank on behalf of the City of Tukwila, Washington (the "City"), of the amount of $1,742,527 of proceeds from the $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015, of the City (the "Bond"), and from the City of the amount of $430,444.34, for a total of $2,172,971.34. 2. I have applied the $2,172,971.34 in the following manner: a. $2,138,762 as payment in full for the Acquired Obligations identified in Exhibit B attached to the December 15, 2015, Refunding Trust Agreement between the City and the Refunding Trustee (the "Agreement"), which Acquired Obligations, together with $0.78 of Bond proceeds, will be held in trust by the Refunding Trustee pursuant to and for the purposes described in Ordinance No. 2491 of the City and the Agreement, and which Acquired Obligations have been received by the Refunding Trustee and receipt of which is acknowledged; and b. The remaining $34,208.56 for payment of expenses of the City in connection with the issuance and sale of the Bond as set forth in Exhibit C attached to the Agreement. DATED: December 15, 2015. 51484995,2 U.S. BANK NATIONAL ASSOCIATION, as Refunding Trustee m Name: Title: CaKdcy %7 om:soli V i c.e /''etsdent- L; ColumbiaBank November 9, 2015 City of Tukwila Peggy McCarthy 6200 Southcenter Blvd. Tukwila, WA 98188 Public Financial Management Duncan Brown 1200 Fifth Avenue, Suite 1220 Seattle, WA 98101 Thank you for the opportunity to present Columbia Bank's proposal for the purchase of a Bank Qualified Tax-exempt, Water and Sewer Revenue and Refunding Bond. Terms and conditions in the following proposal are subject to final credit approval of. Columbia Bank. We concur with the Schedule of Events as proposed. Confidential Terms and Conditions: Issuer: City of Tukwila, Washington. Total Amount: Up to $2,100,000 but anticipated to be approximately $1,761,000 Purpose: Refund existing Water and Sewer Revenue Refunding Bonds Form: Registered, Bank Qualified Tax-exempt, Water and Sewer Revenue and Refunding Bonds issued by the City of Tukwila, Washington (the City) and purchased by Columbia Bank (the Bank) at private sale. Collateral: The Bond will be secured by and payable from gross revenue of the Waterworks Utility, consisting of the Water System, Sewer System, and for Bond purposes, the Surface Water Utility System (which is otherwise separate from the Waterworks Utility). The Bond will be considered a parity revenue bond. Interest Rate: Based on closing as Bank Qualified Tax-exempt by 12/31/2015, the City would be offered a fixed interest rate of 2.34% from closing through December 1, 2026 (the final maturity). Interest Payments: Interest will be payable semiannually on June 1 and December 1, commencing June 1, 2016. Debt Service Reserve: The debt service reserve will no longer be required when the 2006 bonds are defeased at closing. 719 2"d Avenue Suite 500 • Seattle, Washington 98104-1728 • Fax (206) 223-4540 City of Tukwila November 9, 2015 Principal Payments: Period Ending Principal will be payable annually on December 1, commencing December 1, 2016. Amortization is estimated as follows but may be subject to minor adjustments based on the final interest rate of the Bond; however, the rate above is based on the amortization being approximately as follows: Principal 12/01/2016 12/01/2017 12/01/2018 12/01/2019 12/01/2020 12/01/2021 12/01/2022 12/01/2023 12/01/2024 12/01/2025 12/01/2026 146,253 144,803 151,217 152,330 158,244 158,847 164,239 164,308 169,152 173,661 177,824 1,760,878 Maturity: Prepayment: Fees: Conditions: Rate Covenant: Final maturity of 12/1/2026. Prepayments are allowed without penalty beginning 12/1/2020. Prepayments are not allowed prior to 12/1/2020. The City will pay a one-time commitment fee of $2,100. The City will pay bank counsel fees necessary to close the transaction satisfactory to the Bank. Bank counsel fees are estimated not to exceed $3,000. In addition to any other conditions required by the Bank, the Bank shall have reviewed and approved the resolution of the City authorizing issuance of the Bond; shall have received an opinion from bond counsel satisfactory to the Bank that the resolution is duly adopted, the Bond is duly issued, the Bond is the valid, binding, enforceable obligation of the City. The City covenants to establish, maintain and collect rates and charges for water and sewer service for the payment of debt service on the Bonds, the Outstanding Parity Bonds and any Future Parity Bonds in an amount equal to at least 1.25 times the average annual debt service, after deducting costs of operation and maintenance of the Waterworks Utility, but before depreciation. City of Tukwila November 9, 2015 Financial Reporting: For as long as the obligation is outstanding, the City will provide to the Bank the following information: Within 30 days of receipt from the State Auditor, a copy of the audited financial statements of the City and a copy of the Citv's budget; within 30 days of a final published budget. Bond documents will be in standard form customarily required by the Bank for municipal funding and may include additional terms and conditions not discussed above. At the date of closing, the financial condition and credit of the City and all other features of this transaction will be as represented to the Bank without material or adverse change. Thank you for this opportunity to work with the City and its finance team. If the City wishes to accept financing as outlined in this proposal then please sign below and return to me by November 16, 2015, or terms of this proposal will terminate. The proposal (and proposed rate) is considered a firm proposal through December 31, 2015; after which date the proposed terms would terminate. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW. Very truly yours, ,(4.6t, 13- iv e Luke Pingel Vice President Municipal Finance Acknowledged and accepted: City of Tukwila, Washington Date; i 1 - CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 CLOSING CERTIFICATE I, JIM HAGGERTON, certify that I am the duly elected and acting Mayor of the City of Tukwila, Washington (the "City"), authorized to execute and deliver this certificate and further certify on behalf of the City as follows: 1. This certificate is delivered in connection with the issuance of the $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"), of the City. 2. Ordinance No. 2491 of the City, the ordinance authorizing the issuance and sale of the Bond, has not been modified or repealed. 3. No litigation of any nature is now pending or, to my knowledge, threatened, seeking to restrain or enjoin the issuance and delivery of the Bond or the collection of the revenues, rates and charges pledged to pay the principal of and interest on the Bond, or in any manner questioning the proceedings and authority under which the Bond is issued or the validity of the Bond thereunder; neither the corporate existence or boundaries of the City nor the title of the present officers to their respective offices is being contested; and no authority or proceeding for the issuance of the Bond has been repealed, revoked or rescinded. DATED: December 15, 2015. 51484995.2 CITY OF TUKWILA, WASHINGTON CERTIFICATE OF MANUAL SIGNATURE STATE OF WASHINGTON ) ) ss: COUNTY OF KING FILED DEC 1 0 2008 SECRETARY OF STATE STATE OF WASHINGTON I, the undersigned affiant, being first duly sworn, on oath depose and say: My Name is Jim Ifaggerton (print or type) I have been duly chosen and am qualified and acting as: Mayor for (title or position) City of Tukwila, Washington (name of entity) The signature appearing above is my true manual signature. This affidavit is made to comply with Chapter 86, Washington Laws of 1969. Subscribed and sworn to before me this .'�.4xj t t q-y-ytAON fie -1',1,,0 6i eta tysq,q` /pi i 1.4 o r� s09s]s99.1 v'' r ✓e,1 3`2n_NC) `• day of December, 2008. Notary Publ' in an 'for the State of Washington, residing at fZ -v'-*v ^ W faf Printed Name ?aer{oa. ca My Commission expires 3-.1 'T -i 0 CERTIFICATE OF MANUAL SIGNATURE 1=164)4 fa ' iie srgnature STATE OF WASHINGTON ) ) ss: COUNTY OF KING ) FILED DEC 1 0 2008 SECRETARY OF STATE STATE OF Wt. �:t.?I,NMN I, the undersigned affiant, being first duly sworn, on oath depose and say: My Name is Christy O'Flaherty (print or type) I have been duly chosen and am qualified and acting as: for City Clerk (title or position) City of Tukwila, Washington (name of entity) The signature appearing above is my true manual signature. This affidavit is made to comply with Chapter 86, Washington Laws of 1969. r Signature Subscribed and sworn to before me this ar" day of December, 2008. J SA LIP, i 50 N: .� o - • _ ,-; iii A asp P 1'r+ a-29-\ 4-0 Mitt f ,o 50953599.1 /��i,C�t Notary Public in( nd for the State of Washington, residing at 12Q-✓ A-. h lel P Printed Name bele r~ too,c a 5 . SA tc'f-n fl My Commission expires 3 - . 9 - t 0 CERTIFICATE OF MAILING The undersigned, an employee of Foster Pepper PLLC, DO HEREBY CERTIFY that on December 8, 2008, I mailed by U.S. mail, postage prepaid, certificates of manual signature in the form attached hereto executed by the following officials of the City of Tukwila, Washington: Name Position Jim Haggerton Mayor Christy O'Flaherty City Clerk to the Secretary of State of the State of Washington via Federal Express at the following address: Dated 1.2/eh°08 50954&70.1 Office of the Secretaty of State State Archives Division 1129 Washington Street SE Olympia, WA 98504 (360) 586-1492 (SIGNATURE) CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 SIGNATURE IDENTIFICATION CERTIFICATE STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) I, CHRISTY O'FLAHERTY, MMC, certify that I am the City Clerk of the City of Tukwila, Washington (the "City"), and have been at all times since April 2008, and that JIM HAGGERTON is the Mayor of the City and has been at all times since January 2008. I further certify that the $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015, of the City dated December 15, 2015, bears my facsimile signature as City Clerk of the City and the facsimile signature of JIM HAGGERTON as Mayor of the City. CITY OF TUKWILA, WASHINGTON Christy O'Flaherty, MMC, City Clerk SUBSCRIBED AND SWORN TO before me this t171/11 day of December, 2015. 51484995.2 (Signature of Notary) (Legibly Print or Stamp Name of Notary) Notary public in and fqr the State of Washington, residing at Tkkn/a Gt`Uv? My appointment expires /0 } AGI -Y�7 TAX EXEMPTION AND NONARBITRAGE CERTIFICATE CONCERNING $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 OF THE CITY OF TUKWILA, WASHINGTON I, Peggy McCarthy, on behalf of the City of Tukwila, Washington (the "City"), certify as follows: 1. General. 1.1 Responsible Officer. I am the Finance Director of the City and, as such, am an officer of the City responsible for issuing the City's $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"), dated, delivered and paid for on the same date as the date of this certificate (the "Issue Date"). 1.2 Purpose of Certificate. This certificate is executed to establish the facts, estimates, and circumstances in existence on the Issue Date and the bona fide reasonable expectations of the City on the Issue Date as to future events in connection with the Bond for the purposes of the applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable Treasury Regulations under Sections 103, 141, and 148-150 of the Code. 1.3 Reasonable Basis for Expectations. To the best of my knowledge, information, and belief, this certificate accurately summarizes the facts, estimates, and circumstances in existence on the Issue Date, and the expectations of the City on the Issue Date about future events in connection with the Bond are reasonable. 1.4 Defined Terms. Capitalized words used but not otherwise defined in this certificate have the meaning set forth in Ordinance No. 2491 of the City (the "Bond Ordinance"). 2. Purpose of Issuing the Bond. 2.1 Governmental Purpose. The City is a local government unit of the State of Washington, and the Bond is being issued for the purpose of providing the funds necessary to defease and redeem on December 1, 2016, all of the outstanding Water and Sewer Revenue Bonds, 2006, of the City (the "Refunding"), and to pay the costs of issuance and sale of the Bond and the administrative costs of such defeasance and redemption, all as provided by the Bond Ordinance. The proceeds of the Water and Sewer Revenue Bonds, 2006, of the City (the "prior issue") were used to pay the costs of the design and construction of wastewater pumping facilities, force mains and 14,100 lineal feet of 8" gravity sewer mains, street widening with ditches and storm drain improvements with new catch basins, water line improvements to meet fire flow requirements, and other improvements included in the City's plan of additions adopted in connection with the issuance of the prior issue (collectively, the "Refinanced Improvements"). 2.2 No Impermissible Private Business Use. No more than 10% ($174,252.70) of the proceeds of the Bond (or of a corresponding portion of the Refinanced Improvements) will be 51485062.2 used for any private business use. No more than 5% ($87,126.35) of the proceeds of the Bond (or of a corresponding portion of the Refinanced Improvements) will be used either for any private business use that is unrelated to the governmental purpose of the Bond or for any private business use that is related to a governmental purpose of the Bond but exceeds the amount of proceeds of the Bond that are expected to be used for that governmental purpose. No more than 5% of the proceeds of the Bond will be used directly or indirectly to make or finance loans to any person other than a governmental unit, except a loan, if any, which enables the borrower to finance a governmental tax or assessment of general application for a specific essential governmental function, or that constitutes a nonpurpose investment within the meaning of Section 148 of the Code. 3. Source and Disbursement of Proceeds. 3.1 Purchaser and Purchase Price of the Bond. The Bond will be sold to Columbia State Bank (the "Purchaser"), at a price of par. 3.2 Funds into Which Proceeds From the Issuance and Sale of the Bond Will Be Deposited. The City expects that the proceeds to be derived from the issuance and sale of the Bond will be deposited in the following funds or accounts and used for the following purposes: (a) Principal Proceeds. The principal proceeds to be derived by the City from the issuance and sale of the Bond will be deposited and used as follows: (i) Refunding Escrow. The sale proceeds to be derived by the City from the issuance and sale of the Bond will be deposited with U.S. Bank National Association, as refunding trustee (the "Refunding Trustee"), and used to establish a refunding escrow and pay the costs of issuance and sale of the Bond and the administrative costs of the Refunding. (ii) Reserve Account. As described in Section 5.3, no proceeds of the Bond will be deposited in a reserve for the Bond. 4. The Refunding. 4.1 Use of Proceeds and Other Funds. Of the sale proceeds of the Bond deposited with the Refunding Trustee, $1,708,317.66, together with $430,444.34 transferred from the Reserve Account allocable to the prior issue, will be used on the Issue Date to acquire United States Treasury Certificates of Indebtedness, Notes, and Bonds—State and Local Government Series (the "Acquired Obligations"), which will be held together with a $0.78 beginning cash balance by the Refunding Trustee in the refunding escrow established to accomplish the Refunding. The remaining sale proceeds of the Bond deposited with the Refunding Trustee will be used to pay the costs of issuance of the Bond. After payment of all costs of issuance, excess proceeds of the Bond of $0.96 (which is an amount less than 1% of the sale proceeds of the Bond) will be deposited in the Bond Fund and used to pay interest on the Bond on the first interest payment date. Proceeds of the Bond and other amounts deposited in the refunding escrow are allocated to expenditures to pay principal, interest, and redemption prices of the prior issue so that the expenditures of proceeds do not occur faster than ratably with expenditures of the other amounts. 2 51485062.2 4.2 Purpose and Effect of the Refunding. (a) Interest Cost Savings. The purpose of the Refunding is to accomplish a debt service savings to the City of $660,759.16 with a net present value of $147,882.28, as represented by the difference between debt service on the Bond and debt service on the prior issue discounted to the Issue Date using the yield on the Bond as the discount rate, less prior funds on hand, plus refunding funds on hand. (b) Permitted Advance Refunding. The issuance of the Bond represents only the first advance refunding of an issue issued after 1985 to provide tax-exempt new money financing for the Refinanced Improvements. (c) Required Redemption of Prior Issue. The date on which the prior issue will be called for redemption pursuant to the Refunding is the first date on which the prior issue may be called for redemption. 5. Payment of Bond. 5.1 Debt Service Structure. The Bond is a revenue bond of the City. Principal of the Bond is payable annually on December 1 of each year from 2016 to 2026, inclusive. Interest on the Bond is payable semiannually on each June 1 and December 1, commencing on June 1, 2016. The principal of the Bond is subject to prepayment at the option of the City at any time, but only on or after December 1, 2020, as a whole or in part, at par plus accrued interest to the date of prepayment. 5.2 Source of Payment. The Bond is payable from revenues deposited in the Bond Fund. Funds deposited in the Bond Fund relating to the Bond will be used within 13 months of their deposit in that account for payment of principal of or interest on the Bond. The deposits into the Bond Fund relating to the Bond will be used primarily to achieve a proper matching of revenue of the City and debt service on the Bond within each bond year. It is expected that the money in the Bond Fund relating to the Bond will be depleted at least once a year (on each December 1), except for a reasonable carryover amount not expected to exceed the greater of one year's earnings on that fund or 1/12 of the annual debt service on the Bond. Investment earnings from money on deposit in the Principal and Interest Account allocable to the Bond are not expected to equal or exceed $100,000 in any bond year. 5.3 No Reserve for the Bond. No reserve secures payment of principal of and interest on the Bond. 5.4 Absence of Other Sinking Funds. Except for the Bond Fund, the City has not created or established and does not expect to create or establish any reserve fund, sinking fund or other similar fund that is reasonably expected to be used directly or indirectly to pay debt service on the Bond or any pledged fund with respect to which there is reasonable assurance that money will be available in that fund to pay debt service on the Bond even if the City were to encounter financial difficulties. 3 51485062.2 6. Restrictions on Investing Proceeds of the Bond in Higher Yielding Investments. 6.1 Calculation of Yield on Bond. The yield on the Bond has been calculated as the yield that, when used in computing the present worth of all payments of principal of and interest on the Bond, produces an amount equal to the issue price of the Bond. The "issue price" of the Bond is the initial offering price (including accrued interest and original issue discount or premium, if any) at which a substantial amount (at least 10%) of the Bond has been sold to the public (not including bond houses, brokers or other intermediaries). The Bond will be held by the Purchaser for its own account and will not be reoffered to the public. Therefore, the "issue price" of the Bond is the amount paid for the Bond by the Purchaser and the yield has been calculated to be 2.3401%. In determining this yield, no adjustments were made for any costs of issuance of the Bond. 6.2 Calculation of Yield on Acquired Obligations. The yield on the Acquired Obligations has been calculated (using the same method and frequency intervals used in calculating the yield on the Bond) as the yield that, when used in computing the present worth of all payments of principal of and interest on the Acquired Obligations, produces an amount equal to the purchase price of the Acquired Obligations. The purchase price of the Acquired Obligations is their subscription price paid on the Issue Date to the Division of Special Investments of the United States Bureau of Public Debt, which subscription price is deemed to be the fair market value of the Acquired Obligations pursuant to Treasury Regulations Section 1.148-5(d)(6)(i). As so determined, the yield on the Acquired Obligations is 0.6478%, which is 1.6923% less than the yield on the Bond. 6.3 Restrictions on Investment of Proceeds in Higher Yielding Investments. (a) Proceeds in Refunding Escrow. The applicable temporary period for investing proceeds of the Bond held in the refunding escrow is 30 days after the Issue Date, but the City elects to waive this temporary period, and those proceeds (including investment proceeds) will not be invested at a yield higher than the yield on the Bond. Amounts held in the refunding escrow that are not proceeds of the Bond but instead are transferred from the Reserve Account allocable to the prior issue will not be invested at a yield higher than the yield on the prior issue. (b) Proceeds Used for Costs of Issuance. Proceeds of the Bond to be used to pay costs of issuance of the Bond may be invested in higher yielding investments for a temporary period of one year from the Issue Date. (c) Bond Fund. Amounts treated as replacement proceeds of the Bond because they are held in the Bond Fund may be invested in higher yielding investments for a temporary period not exceeding 13 months from the date of their deposit in the Bond Fund. (d) Investment Earnings. Investment proceeds of the Bond (other than investment earnings on Acquired Obligations in the refunding escrow) for which no other temporary period is available may be invested in higher yielding investments for a temporary period of one year from the date of receipt of those investment earnings. 4 51485062.2 (e) Restricted Yield Investments. Proceeds (and amounts treated as replacement proceeds) of the Bond that may not be invested in higher yielding investments will be invested only in (i) obligations purchased at fair market value in bona fide, arm's-length transactions in an established market for those obligations and having yields not materially higher than the yield on the Bond when calculated using the same frequency interval of compounding interest as used for the Bond, (ii) obligations the interest on which is excluded from gross income under Section 103 of the Code that are not private activity bonds under Section 141 of the Code (or obligations treated as tax-exempt obligations under Section 103 of the Code, e.g., obligations issued by certain qualified regulated investment companies that invest, to the extent practicable, all of their assets in tax-exempt governmental bonds and meet certain other conditions), (iii) Demand Deposit Securities issued by the United States Treasury pursuant to the State and Local Government Series program, or (iv) other United States Treasury Obligations—State and Local Government Series having yields not materially higher than the yield on the Bond. 7. Compliance with Arbitrage Rebate Requirement or Conditions for Exception From Arbitrage Rebate Requirement. 7.1 General Arbitrage Rebate Compliance. If the Bond becomes subject to the rebate requirement imposed by Section 148(f) of the Code, the City, in the manner and to the extent required by that Section, will calculate and rebate to the United States any investment earnings on gross proceeds of the Bond that are in excess of the amounts that would have been earned if those gross proceeds had been invested at the yield on the Bond, plus any income attributable to such excess earnings. Investment earnings on amounts held in the Bond Fund relating to the Bond will not be taken into account for this purpose at any time, even if the amount earned is $100,000 or more in a bond year, because the Bond bears interest at a fixed rate (i.e., a rate that does not vary during the term of the Bond) and has an average maturity of at least 5 years. If the City for any reason fails to comply with the rebate requirement to the extent applicable to the Bond, the City, to the extent permitted and required by Section 148(0(7) of the Code, will pay any penalty that may be necessary to preserve the tax exemption for interest on the Bond. However, it is not expected that any rebate amount will become payable in respect of the Bond because, as described in Section 6, the proceeds of the Bond held in the refunding escrow to carry out the Refunding will be irrevocably invested in Acquired Obligations at a yield substantially lower than the yield on the Bond, and proceeds used for issuance costs of the Bond will be spent for that purpose on the Issue Date. 8. Bond Meets Other Arbitrage Requirements. 8.1 No Other Governmental Obligations Part of This Issue. There are no other obligations of the City that are being sold at substantially the same time (less than 15 days apart) as the Bond pursuant to the same plan of financing and that are reasonably expected to be paid from substantially the same source of funds. 8.2 No Replacement of Funds Invested in Higher Yielding Investments. No portion of the proceeds of the Bond will be used directly or indirectly to replace funds of the City invested in higher yielding investments. 5 51485062.2 8.3 No Abusive Arbitrage Device. The primary, bona fide governmental purpose of issuing the Bond is to finance the costs of the Refunding. No action is being taken or will be taken in connection with the issuance of the Bond that has the effect of (i) enabling the City to exploit the difference between tax-exempt and taxable interest rates to obtain a material financial advantage by investing any portion of the gross proceeds of the Bond over any period of time, and (ii) overburdening the tax-exempt bond market as a result of issuing the Bond in a greater principal amount, issuing the Bond earlier, or allowing the Bond to remain outstanding longer than is otherwise reasonably necessary to finance the costs of the Refunding. 8.4 No Intent to Earn Impermissible Arbitrage Profit. The City will not take any intentional action to earn any impermissible arbitrage profit from the investment of gross proceeds of the Bond. 9. Bond Meets Other Requirements for Tax Exemption. 9.1 Bond in Registered Form. The Bond is issued only in registered form. 9.2 No Federal Guaranty. Except as otherwise permitted by the Code, payment of the principal of or interest on the Bond is not guaranteed in whole or in part by the United States or any agency or instrumentality thereof. 9.3 Information Return to Be Filed. The City will cause a Form 8038-G Information Return respecting the Bond to be timely filed with the Internal Revenue Service. 9.4 Bond Not Hedge Bond. On the date of issue of the prior issue, the City reasonably expected that (i) at least 85% of the spendable proceeds of the prior issue would be used to carry out the governmental purposes of the prior issue within the 3 -year period beginning on the date of issue, and (ii) not more than 50% of the proceeds of the prior issue would be invested in nonpurpose investments having a substantially guaranteed yield for 4 years or more. 9.5 Post -Issuance Compliance Procedures. The City has previously established written procedures, attached as Exhibit A, to (i) ensure that any portion of the Bond that becomes nonqualified is remediated in accordance with the requirements under Treasury Regulations Section 1.141-12 and (ii) monitor the requirements of Sections 141 and 148 of the Code after the issue date. 10. Bond Tax -Exempt and Not Arbitrage Bond. The City expects that bond counsel to the City will rely upon the foregoing facts, estimates and circumstances in existence on the Issue Date and the reasonable expectations of the City as to future events respecting the Bond to enable them to conclude that it is not expected that proceeds of the Bond will be used in any manner that would cause the Bond to be an arbitrage bond and to provide their opinion that the Bond is a governmental obligation the interest on which is excluded from gross income for federal income tax purposes under Section 103 of the Code. 6 51485062.2 DATED: December 15, 2015. CITY OF TUKWILA, WASHINGTON By: Exhibit A: Post -Issuance Compliance Procedures 7 51485062.2 C Peggy rthy, Finance Direc Exhibit A POST -ISSUANCE COMPLIANCE PROCEDURES FOR TAX-EXEMPT BONDS 1. Purpose. The purpose of these post -issuance compliance procedures ("Compliance Procedures") for tax-exempt bonds and other obligations (sometimes collectively referred to herein as "bonds" or "tax-exempt bonds") issued by the City of Tukwila (the "City") for which federal tax exemption is provided by the Internal Revenue Code of 1986, as amended (the "Code"), is to facilitate compliance by the City with the applicable requirements of the Code that must be satisfied after the issue date of the bonds to maintain the tax exemption for the bonds after the issue date. 2. Responsibility for Monitoring Post -Issuance Tax Compliance. The City Council of the City has the overall, final responsibility for monitoring whether the City is in compliance with post -issuance federal tax requirements for the City's tax-exempt bonds. However, the City Council has delegated the primary operating responsibility to monitor the City's compliance with post -issuance federal tax requirements for the City's bonds. The City Council also has authorized and directed the Finance Director of the City to adopt and implement on behalf of the City these Compliance Procedures. 3. Arbitrage Yield Restriction and Rebate Requirements. The Finance Director will maintain or cause to be maintained records of: (a) purchases and sales of investments made with bond proceeds (including amounts treated as "gross proceeds" of bonds under section 148 of the Code) and receipts of earnings on those investments; (b) expenditures made with bond proceeds (including investment earnings on bond proceeds) in a timely and diligent manner for the governmental purposes of the bonds, such as for the costs of purchasing, constructing and/or renovating property and facilities; (c) information showing, where applicable for a particular calendar year, that the City was eligible to be treated as a "small issuer" in respect of bonds issued in that calendar year because the City did not reasonably expect to issue more than $5,000,000 of tax-exempt bonds in that calendar year; (d) calculations that will be sufficient to demonstrate to the Internal Revenue Service ("IRS") upon an audit of a bond issue that, where applicable, the City has complied with an available spending exception to the arbitrage rebate requirement in respect of that bond issue; (e) calculations that will be sufficient to demonstrate to the IRS upon an audit of a bond issue for which no exception to the arbitrage rebate requirement was applicable, that the rebate amount, if any, that was payable to the United States of America in respect of investments made 51188049.1 with gross proceeds of that bond issue was calculated and timely paid with Form 8038-T timely filed with the IRS; and (f) information and records showing that investments held in yield -restricted advance refunding or defeasance escrows for bonds, and investments made with unspent bond proceeds after the expiration of the applicable temporary period, were not invested in higher -yielding investments. 4. Restrictions on Private Business Use and Private Loans. The Finance Director will adopt procedures calculated to educate and inform the principal operating officials of those departments, including utility departments, if any, of the City (the "users") for which land, buildings, facilities and equipment ("property") are financed with proceeds of tax-exempt bonds about the restrictions on private business use that apply to that property after the bonds have been issued, and of the restriction on the use of proceeds of tax-exempt bonds to make or finance any loan to any person other than a state or local government unit. In particular, following the issuance of bonds for the financing of property, the Finance Director shall provide to the users of the property a copy of these Compliance Procedures and other appropriate written guidance advising that: (a) "private business use" means use by any person other than a state or local government unit, including business corporations, partnerships, limited liability companies, associations, nonprofit corporations, natural persons engaged in trade or business activity, and the United States of America and any federal agency, as a result of ownership of the property or use of the property under a lease, management or service contract (except for certain "qualified" management or service contracts), output contract for the purchase of electricity or water, privately sponsored research contract (except for certain "qualified" research contracts), "naming rights" contract, "public-private partnership" arrangement, or any similar use arrangement that provides special legal entitlements for the use of the bond -financed property; (b) under section 141 of the Code, no more than 10% of the proceeds of any tax-exempt bond issue (including the property financed with the bonds) may be used for private business use, of which no more than 5% of the proceeds of the tax-exempt bond issue (including the property financed with the bonds) may be used for any "unrelated" private business use that is, generally, a private business use that is not functionally related to the governmental purposes of the bonds; and no more than the lesser of $5,000,000 or 5% of the proceeds of a tax-exempt bond issue may be used to make or finance a loan to any person other than a state or local government unit; (c) before entering into any special use arrangement with a nongovernmental person that involves the use of bond -financed property, the user must consult with the Finance Director, provide the Finance Director with a description of the proposed nongovernmental use arrangement, and determine whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond -financed property; 2 51188049.1 (d) in connection with the evaluation of any proposed nongovernmental use arrangement, the Finance Director should consult with nationally recognized bond counsel to the City as may be necessary to obtain federal tax advice on whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond -financed property, and, if not, whether any "remedial action" permitted under section 141 of the Code may be taken by the City as a means of enabling that use arrangement to be put into effect without adversely affecting the tax-exempt status of the bonds that financed the property; and (e) the Finance Director and the user of the property shall maintain records of such nongovernmental uses, if any, of bond -financed property, including copies of the pertinent leases, contracts or other documentation, and the related determination that those nongovernmental uses are not inconsistent with the tax-exempt status of the bonds that financed the property. 5. Records to be Maintained for Tax -Exempt Bonds. It is the policy of the City that, unless otherwise permitted by future IRS regulations or other guidance, written records (which may be in electronic form) will be maintained with respect to each bond issue for as long as those bonds remain outstanding, plus three years. For this purpose, the bonds include refunding bonds that refund the original bonds and thereby refinance the property that was financed by the original bonds. The records to be maintained are to include: (a) the official Transcript of Proceedings for the original issuance of the bonds; (b) records showing how the bond proceeds were invested, as described in 3(a) above; (c) records showing how the bond proceeds were spent, as described in 3(b) and 4(c) above, including purchase contracts, construction contracts, progress payment requests, invoices, cancelled checks, payment of bond issuance costs, and records of "allocations" of bond proceeds to make reimbursement for project expenditures made before the bonds were actually issued; (d) information, records and calculations showing that, with respect to each bond issue, the City was eligible for the "small issuer" exception or one of the spending exceptions to the arbitrage rebate requirement or, if not, that the rebate amount, if any, that was payable to the United States of America in respect of investments made with gross proceeds of that bond issue was calculated and timely paid with Form 8038-T timely filed with the IRS, as described in 3(c), (d) and (e) above; and (e) records showing that special use arrangements, if any, affecting bond -financed property made by the City with nongovernmental persons, if any, are consistent with applicable restrictions on private business use of property financed with proceeds of tax-exempt bonds and restrictions on the use of proceeds of tax-exempt bonds to make or finance loans to any person other than a state or local government unit, as described in 4 above. 3 51188049.1 The basic purpose of the foregoing record retention policy for the City's tax-exempt bonds is to enable the City to readily demonstrate to the IRS upon an audit of any tax-exempt bond issue that the City has fully complied with all federal tax requirements that must be satisfied after the issue date of the bonds so that those bonds continue to be tax-exempt under the Code. 6. Identification and Remediation of Potential Violations of Federal Tax Requirements for Tax -Exempt Bonds. (a) So long as any of the City's tax-exempt bond issues remain outstanding, the Finance Director will periodically consult with the users of the City's bond -financed property to review and determine whether current use arrangements involving that property continue to comply with applicable federal tax requirements as described in these Compliance Procedures. This may be accomplished, for example, by periodically meeting with users, providing questionnaires to users about current use arrangements, or adopting other protocols reasonably calculated to ensure compliance with applicable federal tax requirements on a continuing basis. This periodic review may be scheduled, for example, at or before the times that the City is required to file with the Municipal Securities Rulemaking Board the annual financial information and operating data pursuant to the City's undertaking to provide continuing disclosure with respect to outstanding bond issues. (b) If at any time during the life of an issue of tax-exempt bonds, the City discovers that a violation of federal tax requirements applicable to that issue may have occurred, the Finance Director will consult with bond counsel to determine whether any such violation actually has occurred and, if so, take prompt action to accomplish an available remedial action under applicable Internal Revenue Service regulations or to enter into a closing agreement with the Internal Revenue Service under the Voluntary Closing Agreement Program described under Notice 2008-31 or other future published guidance. 7. Education Policy With Respect to Federal Tax Requirements for Tax -Exempt Bonds. It is the policy of the City that the Finance Director and his or her staff, as well as the principal operating officials of those departments of the City for which property is financed with proceeds of tax-exempt bonds should be provided with education and training on federal tax requirements applicable to tax-exempt bonds. The City recognizes that such education and training is vital as a means of helping to ensure that the City remains in compliance with those federal tax requirements in respect of its bonds. The City therefore will enable and encourage those personnel to attend and participate in educational and training programs offered by, among others, the Washington Municipal Treasurers Association and the Washington Finance Officers Association with regard to the federal tax requirements applicable to tax-exempt bonds. 4 51188049.1 Form 8038-G (Rev. September 2011) Department of the Treasury Internal Revenue Service Information Return for Tax -Exempt Governmental Obligations 10- Under Internal Revenue Code section 149(e) ► See separate instructions. Caution: If the issue price is under $100,000, use Form 8038 -GC. OMB No. 1545-0720 Part I Reporting Authority If Amended Return, check here ► ❑ 1 Issuer's name City of Tukwila, Washington 2 Issuer's employer identification number (EIN) 91-6001519 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is not delivered to street address) 6200 Southcenter Boulevard Room/suite 5 Report number (For IRS Use Only) 3 .h 6 City, town, or post office, state, and ZIP code Tukwila, Washington 98188 7 Date of issue 12/15/2015 8 Name of issue Water and Sewer Revenue Refunding Bond, 2015 9 CUSIP number N/A 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see instructions) Peggy McCarthy, Finance Director 10b Telephone number of officer or other employee shown on 10a 206-433-1838 Part II Type of Issue (enter the issue price). See the instructions and attach schedule. 11 Education 12 Health and hospital 13 Transportation 14 Public safety 11 12 13 14 15 Environment (including sewage bonds) 15 1,742,527 16 Housing 16 17 Utilities 17 18 Other. Describe ► 18 19 If obligations are TANs or RANs, check only box 19a ► ■ If obligations are BANs, check only box 19b ► ■f 20 If obligations are in the form of a lease or installment sale, check box ► ■ Part III Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 12/01/2026 $ 1,742,527 $ 1,742,527 6.16 years 2.3401 % Part IV Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest 23 Issue price of entire issue (enter amount from line 21, column (b)) 24 Proceeds used for bond issuance costs (including underwriters' discount) . 25 Proceeds used for credit enhancement 26 Proceeds allocated to reasonably required reserve or replacement fund 27 Proceeds used to currently refund prior issues 28 29 30 Proceeds used to advance refund prior issues Total (add lines 24 through 28) Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) 24 34,208 25 0 26 0 27 0 28 1,708,318 22 23 29 0 1,742,527 1,742,526 30 1 Part V Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . ► 0 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . ► 6.79 years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) ► 12/01/2016 34 Enter the date(s) the refunded bonds were issued ► (MM/DD/YYYY) 11/21/2006 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S Form 8038-G (Rev. 9-2011) Form 8038-G (Rev. 9-2011) Page 2 Part VI Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) b Enter the final maturity date of the GIC ► c Enter the name of the GIC provider ► 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units 38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ► ❑ and enter the following information: b Enter the date of the master pool obligation 0- c c Enter the EIN of the issuer of the master pool obligation 0- d d Enter the name of the issuer of the master pool obligation 0- 39 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ► ✓❑ 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ► ❑ 41a If the issuer has identified a hedge, check here ► ❑ and enter the following information: b Name of hedge provider 0- c c Type of hedge 0- d d Term of hedge 0- 42 42 If the issuer has superintegrated the hedge, check box 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box 10- 44 44 If the issuer has established written procedures to monitor the requirements of section 148, check box ► ❑✓ 45a If some portion of the proceeds was used to reimburse expenditures, check here ► ❑ and enter the amount of reimbursement ► b Enter the date the official intent was adopted ► 35 36a 37 Signature and Consent Paid Preparer Use Only Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to process th rn, to the pe - • that I . uthorized above. Signature o u orized representative Print/Type prep T'' ame Marc R. Greenough Pre. ) signature 2. (g (S , Peggy McCarthy, Finance Director Date Type or print name and title Date �7_(Lf is Check EI if self -employe Firm's name ► Foster Pepper PLLC Firm's address ► 1111 Third Avenue, Suite 3400, Seattle, WA 98101 Firm's EIN ► Phone no. Form 8038-G (Rev. 9-2011) PTIN d P01061698 91-0606972 206-447-4400 CERTIFICATE OF MAILING I, Susan Carpenter, a legal assistant at Foster Pepper PLLC, in Seattle, Washington, certify that on this day I mailed the original IRS Form 8038-G relating to: City of Tukwila King County, Washington $1,742,527 Water and Sewer Revenue Refunding Bond, 2015 Issue Date: December 15, 2015 Dated Date: December 15, 2015 to the Department of the Treasury, Internal Revenue Service Center, Ogden, Utah 84201, by certified mail, return receipt requested (7012 2210 0002 1583 7974). DATED: December 16, 2015. C Susan Carpente 5 SENDER: COMPLETE THIS SECTION • Complete items 1, 2, and 3. Also complete item 4 if Restricted Delivery is desired. • Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space permits. 1. Article Addressed to: Department of the Treasury InternalRevenue Service Center Ogden, UI' 84201 COMPLETE THIS SECTION ON DELIVERY sR'ECEIVED B. ReceivebpyCr(g1Narg15 ❑ Agent O Addressee C. Date of Delivery D. Is dep Tr e# UJitern 1? 0 Yes IIR�aYES` tJ��a ❑ No 3. Service Type %Certified Mail ❑ Registered ❑ Insured Mail ❑ Express Mail ❑ Return Receipt for Merchandise ❑ C.O.D. 4. Restricted Delivery? (Extra Fee) 0 Yes 2 2. Article Number 1 (Transfer from: service lane!) 7012 2210 0002 1583 4974 1 F PS Form 3811, Fetiruary.2004 sW � z (C J W O f P°Q R ~ o c >o wW 4 u, o W re: 2 Domestic Return Receipt' 102595,02 -ht -1540 U.S. Postal Servicer, CERTIFIED MAIL., RECEIPT (Domestic Mail Only, No Insurance Coverage Provided) For delivery information visit our website at www.usps.com Postage Certified Fee rU Return Reoefpl Fee Q(Endorsement Required) O Restricted Delivery Fee (Endorsement rlequlred) L1 r9 ru RI may' w 1U UNITED STATES POSTAL. SERVICR ru O Total Postage & Fees Sant To .:10,10:, Department of the Treasury a: SUS Internal Revenue Service Center Ogden, UT 84201 First -Class Mail Postage & Fees Paid USPS Permit No. G-10 • Sender: Please print your name, address, and ZIP+4 in this box • ® FOSTER PEPPER,. 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101-3299 L/O 33o STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 BOND 101 REPORT FORM Issue ID: 1512-028 Date Submitted: 12/18/2015 Name of Issuer: City of Tukwila, Washington Address of Issuer: 6200 Southcenter Blvd. Tukwila, WA 98188 Issue Type: City/Town Principle User, if different than issuer: Counties in which the entity using the bond proceeds is located: King ❑ Various Counties - More than four o Statewide Was this bond voter approved? O Yes • No Exact title of issue: Water and Sewer Revenue Refunding Bond, 2015 Issue Sale Method: Private Placement If Competitive Bid, number of bids: Debt Type: Revenue Bond Debt Category: Bond Series: New/Refund/Combo: Refund Dated Date of Issue: 12/15/2015 Issue Closing Date: 12/15/2015 Date of Issue Sale: 11/09/2015 Issue Maturity Date: 12/01/2026 Purpose of Proceeds: Refund Water and Sewer Bonds, 2006 Purpose Type: Water/Sewer Is this a Bond Cap issuance? ❑ Yes • No If yes: Bond Cap Use Category: Project Title: Bond Cap Amount: Tax -Exempt Par Value: $1,742,527.00 Net Tax -Exempt Interest Rate: 2.34% 0 Variable Taxable par Value: $0.00 Net Taxable Interest Rate: 0% 0 Variable Total Par Value: $1,742,527.00 Discount: $0.00 Premium: $0.00 Printed on 12/18/2015 1:09:25 PM Page 1 of 3 STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box'42525 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 Underlying security that supports the debt (e.g. taxes or other revenue streams Revenues of the Water and Sewer System Gross Underwriting Spread: $2,100.00 0 Estimate Underwriting Spread per $1,000: $1.21 Bond Counsel Fee: $10,800.00 0 Estimate Legal/Underwriter's Counsel Fee: $3,000.00 0 Estimate Adminsitrative/Commission Fee: 0 Estimate Feasiblity Study Cost: $0.00 0 Estimate Rating Agency Fee: $0.00 0 Estimate Trustee Fee: $0.00 0 Estimate Credit Enhancement: $0.00 0 Estimate Escrow Costs: $750.00 0 Estimate Financial Advisor Fee: $15,057.66 0 Estimate Bond Insurance: $0.00 0 Estimate Printing, inc. Office Statement: $0.00 0 Estimate Out -of -State Travel: $0.00 0 Estimate Miscellaneous: $2,500.00 0 Estimate ✓ . IssuanceTe ..r �ss�� aeh- :, f ....:+Y'4i�uiAat�3.5 � a?�Sw tT+c�"��€z s.w ,'u4'�.�€'r=fYs-e�"*'+±�Z�s� xA -�'> �y{ nam ¢ _ . �. �,... .0 Name of Financial Advisor: Public Financial Management, Inc. Name of Bond Counsel: Foster Pepper PLLC Name Of Lead Underwiter(s): Columbia Bank Name Of Company Insuring Bond: Name of Bond Registrar: U.S. Bank National Association Name of Trustee: U.S. Bank National Association �,P, ; mg xx>> } Hv � ��hY.' i� ..:5.t 1��,�� g �'_ 1`3''�y���4.. ��i*�i�_-,e4;?��ui x?✓st.= Standard & Poor's: Moody's: Fitch: nv3'=t�.iY` X-'msU Are bond covenants available? • Yes 0 No Is an Official Statement available? 0 Yes ■ No "w t ik' az . 5 Ls.Yt` l l5 s.ef3e ¢r '.S) ? Reporter Contact Information 5� Reporter Name: Marc R Greenough Title: Bond Counsel Affiliation: Foster Pepper PLLC Printed on 12/18/2015 1:09:25 PM Page 2 of 3 STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 Address: 1111 Third Avenue, Suite 3400 Seattle, WA 98101 Email: greem@foster.com Phone: (206) 447-4400 Printed on 12/18/2015 1:09:25 PM Page 3 of 3 CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 CERTIFICATE REGARDING REGISTRATION OF BOND U.S. BANK NATIONAL ASSOCIATION (the "Fiscal Agent"), as paying agent and registrar for the $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"), of the City of Tukwila, Washington, certifies as follows: 1. As Fiscal Agent for the State of Washington and its political subdivisions, in accordance with the terms and conditions of Resolution No. 1160 of the State Finance Committee and that certain Agreement for Fiscal Agency Services (the "Agreement") effective as of February 1, 2015, entered into by and between the Fiscal Agent and the State of Washington, the Fiscal Agent acknowledges that it duly and properly has authenticated and registered the Bond. 2. The employee of the Fiscal Agent whose signature appears on the Certificate of Authentication on the authenticated Bond is a regular employee of the Fiscal Agent and has authenticated the Bond as one of his or her responsibilities as an employee, and is duly authorized by the Fiscal Agent to do the same. 3. The Bond authenticated by the authorized employee of the Fiscal Agent bore, in the space appropriate for the insertion of such information, the name of the registered owner, the principal amount, the interest rate, the maturity date, and the Bond number. 4. The Fiscal Agent accepts the duties and responsibilities created in the Agreement. The Fiscal Agent shall act in good faith, and no implied duties or obligations shall be incurred by the Fiscal Agent other than those specified in the Agreement. DATED: December 15, 2015. 51464995.2 U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent Name: COkDGyh /I/CorrrSv1► Title: V j ( e . tiv k 11.1- No. R Interest Rate: UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF TUKWILA WATER AND SEWER REVENUE REFUNDING BOND, 2015 December 1, Registered Owner: COLUMBIA STATE BANK Maturity Date: Principal Amount: THOUSAND AND NO/100 DOLLARS The CITY OF TUKWILA, WASHINGTON (the "City"), a municipal corporation of the State of Washington, promises to pay to the Registered Owner set forth above on the Maturity Date set forth above, from the Water and Sewer Revenue Bond Fund (the "Bond Fund") maintained by the City to pay this Bond, the Principal Amount set forth above and to pay interest thereon at the Interest Rate per annum set forth above (computed on the basis of a 360 -day year of twelve 30 -day months), from the date of this Bond or from the most recent date for which interest has been paid or duly provided for, whichever is later, payable semiannually on June 1 and December 1 of each year, commencing June 1, 2016, to the maturity or earlier prepayment of this Bond. If any payment of this Bond is not made when due, or if interest on this Bond becomes includable in the gross income of the Registered Owner for federal income tax purposes, the interest rate may increase at the discretion of the Registered Owner to the Default Rate of 3.60%. 51455009.1 Principal is payable in annual installments on December 1 of each year in the amount as follows: Year Amount 2016 $ 144,823 2017 143,282 2018 149,659 2019 150,736 2020 156,614 2021 157,178 2022 162,531 2023 162,560 2024 167,363 2025 171,830 2026 175,951 Total $1,742,527 Page 1 of 4 The City has designated this Bond as a "qualified tax-exempt obligation" for the purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Principal of and interest on this Bond are payable in lawful money of the United States of America. Principal of and interest on this Bond are payable by electronic transfer on the payment date to the Registered Owner at the account appearing on the Bond Register on the Record Date. Upon payment of the final installment of principal of and all accrued interest on this Bond, the Registered Owner shall present and surrender this Bond to the Bond Registrar. This Bond is not subject to acceleration under any circumstances. This Bond may be transferred only (1) in whole, (2) to a "qualified institutional buyer" (as defined in Rule 144A promulgated under the Securities Act of 1933, as amended) and (3) if endorsed in the manner provided hereon and surrendered to the Bond Registrar. This Bond is issued by the City for the purpose of carrying out the Refunding Plan as set forth in Ordinance No. 2491 of the City (the "Bond Ordinance"). Reference is made to the Bond Ordinance for the definitions of the capitalized terms used and not otherwise defined herein. The City has covenanted to set aside and pay into the Bond Fund all ULID Assessments and Tax Credit Subsidy Payments upon their receipt and, out of the Net Revenue, certain fixed amounts without regard to any proportion, namely, on or prior to each date on which principal of or interest on the Parity Bonds is due, the amount required, after taking into account the amount then on deposit therein and to be used therefor, to pay such principal and interest on such date. The amounts so covenanted to be paid into the Bond Fund are a lien and charge on the Net Revenue, ULID Assessments and Tax Credit Subsidy Payments superior to any other charges whatsoever. The Net Revenue, all ULID Assessments, all Tax Credit Subsidy Payments and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds) are pledged to the payment of the principal of and interest on this Bond. This pledge constitutes a lien and charge on the Net Revenue, all ULID Assessments, all Tax Credit Subsidy Payments and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds) on a parity with the pledge that secures payment of Future Parity Bonds and superior to any other liens or charges whatsoever. This Bond is payable solely from Net Revenue and all money and investments held in the Bond Fund (other than money held in any reserve account created to secure the payment of Future Parity Bonds). This Bond is not a general obligation of the City. The Bond Ordinance does not pledge, and this Bond is not payable from, the full faith and credit or taxing power of the City. The principal of this Bond is subject to prepayment at the option of the City at any time, but only on or after December 1, 2020, as a whole or in part, at par plus accrued interest to the date of prepayment. Reference is made to the Bond Ordinance for other covenants and declarations of the City and other terms and conditions upon which this Bond has been issued, which terms and conditions, including terms pertaining to defeasance, are made a part hereof by this reference. The City irrevocably and unconditionally covenants that it will keep and perform all of the covenants of this Bond and of the Bond Ordinance. The City and the Bond Registrar may deem and treat the Registered Owner of this Bond as its absolute owner for the purpose of receiving payment of principal and interest and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary other than proper notice of assignment. As used herein, Registered Owner means the person or entity named as Registered Owner of this Bond on the front hereof and on the Bond Register. Page 2 of 4 51485009.1 This Bond shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon has been signed by the Bond Registrar. The principal of and interest on this Bond shall be paid only to the Registered Owner as of the Record Date and to no other person or entity, and Registered Ownership of this Bond may not be assigned except on the Bond Register. It is certified that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have been done, have happened and have been performed as required by law, and that the total indebtedness of the City, including this Bond, does not exceed any constitutional or statutory limitations. IN WITNESS WHEREOF, the City has caused this Bond to be executed on behalf of the City by the facsimile signatures of its Mayor and City Clerk and a facsimile reproduction of the seal of the City to be printed hereon, this 15th day of December, 2015. CITY OF TUKWILA, WASHINGTON By By Date of Authentication: December 15, 2015 CERTIFICATE OF AUTHENTICATION This Bond is the fully registered City of Tukwila, Washington, Water and Sewer Revenue Refunding Bond, 2015, described in the Bond Ordinance. WASHINGTON STATE FISCAL A Bond Registrar By Page 3 of 4 51485009.1 uthorized Signer ASSIGNMENT For value received, the undersigned Registered Owner does sell, assign and transfer unto: (name, address and social security or other identifying number of assignee) the within mentioned Bond and irrevocably constitutes and appoints to transfer the same on the Bond Register s{''' ,�1 :' wer of substitution in the premises. DATED: Signature Guaranteed: (NOTE: Signature must be guaranteed pursuant to law.) 51485009.1 Registered Owner (NOTE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or enlargement or any change whatsoever.) Page 4 of 4 CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 PURCHASER'S RECEIPT AND CERTIFICATE I, Luke Pingel, Vice President of Columbia State Bank (the "Purchaser"), hereby certify and acknowledge on behalf of the Purchaser as follows: 1. The Purchaser acknowledges receipt this day of the $1,742,527 principal amount Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"), of the City of Tukwila, Washington (the "City"), dated December 15, 2015, and of the initial fee and reimbursement for counsel's fee in the combined amount of $5,100. The Bond is authorized pursuant to Ordinance No. 2491 of the City (the "Bond Ordinance"). 2. The Purchaser has made a complete investigation of the facts and circumstances furnished to it by the City relating to the issuance and delivery of the Bond. Such investigation included a review of: (i) the nature and purpose of the Bond and application of the Bond proceeds as set forth in the Bond Ordinance, (ii) the financial condition of the City, including its outstanding debt and its ability to pay the principal of and interest on the Bond when due, (iii) the Purchaser's remedies in the event of default in the payment of principal of and interest on the Bond subject to applicable laws affecting creditors' rights, and (iv) the Bond Ordinance. 3. The Purchaser acknowledges that (i) the Bond is not registered under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended, or otherwise qualified for sale under the "blue sky" laws and regulations of any state, and the Bond Ordinance has not been qualified under the Trust Indenture Act of 1939, as amended, (ii) the Bond carries no rating from any credit rating agency, (iii) no trading market exists or is expected to exist for the Bond, (iv) no official statement or other offering material is being provided with respect to the Bond, and the Purchaser has made its own inquiry and analysis with respect to the City and the Bond and the security therefor, and (v) the City's CAFR and all other information regarding the City speaks only as of its date and does not contain all material information regarding the City. 4. The Purchaser has sufficient knowledge and experience in financial and business matters, including the purchase and ownership of tax-exempt municipal obligations, to be able to evaluate the risks and merits of the purchase of the Bond. The Purchaser is satisfied that it has had access to all material information necessary to make a sound lending decision and that the City has responded fully and accurately to all requests for information, and no further information is desired. 5. The Bond will be held by the Purchaser for its own account and will not be reoffered to the public. The Purchaser is a "qualified institutional buyer" as defined in Section 144A of the Securities Act and is a "bank" within the meaning of Section (a)(1)(vi) of the Securities Act. The Purchaser acknowledges the restrictions on transfer of the Bond set forth in the Bond Ordinance and the Bond, and that as a condition precedent to any such transfer, the transferee must sign and deliver a certificate substantially in the form of this certificate. 6. The undersigned is a duly appointed and acting representative of the Purchaser and is authorized to cause the Purchaser to make the certifications contained herein by execution of this certificate on behalf of the Purchaser. DATED: December 15, 2015. COLUMBIA STATE BANK .A-t—he P Name: Luke Pingel Title: Vice President CITY OF TUKWILA, WASHINGTON $1,742,527 WATER AND SEWER REVENUE REFUNDING BOND, 2015 RECEIPT FOR PAYMENT The CITY OF TUKWILA, WASHINGTON, acknowledges receipt of $1,742,527 from Columbia State Bank, representing the principal amount of the City's Water and Sewer Revenue Refunding Bond, 2015, which amount was wired to U.S. Bank National Association, as Refunding Trustee. DATED: December 15, 2015. 51484995.2 CITY OF TUKWILA, WASHINGTON C Peggy f to rthy, Finance Direct FOSTER PEPPER„„ December 15, 2015 Assured Guaranty Municipal Corp. Re: City of Tukwila, Washington $1,742,527 Water and Sewer Revenue Refunding Bond, 2015 We have served as bond counsel to the City of Tukwila, Washington (the "City"), in connection with the issuance of its Water and Sewer Revenue Refunding Bond, 2015 (the "Bond"). The Bond was issued, in part, to provide for the defeasance of all of the outstanding City of Tukwila, Washington, Water and Sewer Revenue Bonds, 2006, maturing on December 1 of each of the years 2016 and 2026 (the "Defeased Bonds"). We have examined a certified transcript of proceedings had by the City relating to the defeasance of the Defeased Bonds, the related escrow verification prepared by Causey Demgen & Moore P.C., and such other documents as we deemed necessary or appropriate for purposes of this opinion. As to matters of fact material to this opinion, we have relied upon representations contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing, it is our opinion that as a consequence of the irrevocable deposit of the beginning cash balance specified in the Refunding Trust Agreement dated December 15, 2015, by and between the City and U.S. Bank National Association, as Refunding Trustee (the "Agreement"), in trust with the Refunding Trustee pursuant to the Agreement, the Defeased Bonds are no longer to be considered outstanding under Ordinance No. 2136 of the City authorizing their issuance. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. No attorney-client relationship has existed or exists between our firm and Assured Guaranty Municipal Corp. in connection with the Bond or the Defeased Bonds or by virtue of this letter. We bring to your attention the fact that the foregoing opinions are expressions of our professional judgment on the matters expressly addressed and do not constitute guarantees of result. Respectfully submitted, FOSTER PEPPER PLLC 4,07•114 C TSI,: 206.447.4400 FAX: 206.447.9700 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101-3299 WWW.FOSTER.coM SEATTLE WASHINGTON SPOKANE WASHINGTON 51485134.1 FOSTER PEPPER,. December 15, 2015 Columbia State Bank Re: City of Tukwila, Washington $1,742,527 Water and Sewer Revenue Refunding Bond, 2015 We have rendered an approving legal opinion dated December 15, 2015, regarding the above -referenced bond and addressed to the City of Tukwila, Washington, which opinion is attached hereto and is delivered with the bond. You may rely on that opinion as though it were addressed to you. No attorney-client relationship has existed or exists between our firm and yourselves in connection with the bond or by virtue of this letter. Very truly yours, FOSTER PEPPER PLLC By: kAt-e-ait, Marc R. Greenough TEL: 206.447.4400 FAX: 206.447.9700 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101-3299 WWW FOSTER.coM SEATTLE WASHINGTON SPOKANE WASHINGTON FOSTER PEPPER,. December 15, 2015 City of Tukwila, Washington Re: City of Tukwila, Washington $1,742,527 Water and Sewer Revenue Refunding Bond, 2015 We have served as bond counsel to the City of Tukwila, Washington (the "City"), in connection with the issuance of the above -referenced bond (the "Bond"), and in that capacity have examined such law and such certified proceedings and other documents as we have deemed necessary to render this opinion. As to matters of fact material to this opinion, we have relied upon representations contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. The Bond is issued by the City pursuant to Ordinance No. 2491 (the "Bond Ordinance") to provide funds for the purposes of refunding all of the outstanding Water and Sewer Revenue Bonds, 2006, of the City, and paying the administrative costs of such refunding and the costs of issuing and selling the Bond, all as set forth in the Bond Ordinance. Reference is made to the Bond and the Bond Ordinance for the definitions of capitalized terms used and not otherwise defined herein. We express no opinion concerning the completeness or accuracy of any official statement, offering circular or other sales or disclosure material relating to the issuance of the Bond or otherwise used in connection with the Bond. Under the Internal Revenue Code of 1986, as amended (the "Code"), the City is required to comply with certain requirements after the date of issuance of the Bond in order to maintain the exclusion of the interest on the Bond from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bond in higher yielding investments in certain circumstances and the arbitrage rebate requirement to the extent applicable to the Bond. The City has covenanted in the Bond Ordinance to comply with those requirements, but if the City fails to comply with those requirements, interest on the Bond could become taxable retroactive to the date of issuance of the Bond. We have not undertaken and do not undertake to monitor the City's compliance with such requirements. Based upon the foregoing, as of the date of initial delivery of the Bond to the purchaser thereof and full payment therefor, it is our opinion that under existing law: 1. The City is a duly organized and legally existing municipal corporation under the laws of the State of Washington; TEL: 206.447.4400 FAX: 206.447.9700 1111 THIRD AVENUE, SUITE 3400 SEATTLE, WASHINGTON 98101-3299 www.FOSTER.coM 51485136.2 SEATTLE WASHINGTON SPOKANE WASHINGTON City of Tukwila, Washington December 15, 2015 Page 2 2. The Bond Ordinance has been duly adopted and the Bond has been duly authorized and executed by the City and is issued in full compliance with the provisions of the Constitution and laws of the State of Washington and the ordinances of the City relating thereto; 3. The City has covenanted to set aside and pay into the Bond Fund all ULID Assessments and Tax Credit Subsidy Payments upon their receipt and, out of the Net Revenue, certain fixed amounts without regard to any proportion, namely, on or prior to each date on which principal of or interest on the Parity Bonds is due, the amount required, after taking into account the amount then on deposit therein and to be used therefor, to pay such principal and interest on such date; and the amounts so covenanted to be paid into the Bond Fund are a lien and charge on the Net Revenue, ULID Assessments and Tax Credit Subsidy Payments superior to any other charges whatsoever; 4. The Bond and the Bond Ordinance each constitutes a valid and binding obligation of the City, provided that the Bond is payable solely out of Net Revenue and certain other amounts to be paid into the Bond Fund, enforceable in accordance with its terms, except only to the extent that enforcement of payment may be limited by bankruptcy, insolvency or other laws affecting creditors' rights and by the application of equitable principles and the exercise of judicial discretion in appropriate cases; and 5. Assuming compliance by the City after the date of issuance of the Bond with applicable requirements of the Code, the interest on the Bond is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals; however, while interest on the Bond also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bond received by corporations is to be taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations, interest on the Bond received by certain S corporations may be subject to tax, and interest on the Bond received by foreign corporations with United States branches may be subject to a foreign branch profits tax. We express no opinion regarding any other federal tax. consequences of receipt of interest on the Bond. The City in the Bond Ordinance has designated the Bond as a "qualified tax-exempt obligation" for the purposes of Section 265(b)(3) of the Code. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. We bring to your attention the fact that the foregoing opinions are expressions of our professional judgment on the matters expressly addressed and do not constitute guarantees of result. Respectfully submitted, FOSTER PEPPER PLLC /14.4 51485136.2 To: The PFM Group Fina dal inve5tart aot Advitim CLOSING MEMORANDUM City of Tukwila, Washington Water and Sewer Revenue Refunding Bond, 2015 Peggy McCarthy, City of Tukwila Vicky Carlsen, City of Tukwila Marc Greenough, Foster Pepper PLLC Susan Carpenter, Foster Pepper PLLC Luke Pingel, Columbia Bank Alan Schulkin, Stokes Lawrence P.S. From: Duncan Brown, Public Financial Management, Inc. Dylan Locati, Public Financial Management, Inc. Date: December 11, 2015 Re: City of Tukwila, Washington Water and Sewer Revenue Refunding Bond, 2015 Charissa Johnston, Stokes Lawrence P.S. Carolyn Morrison, U.S. Bank Ryan Brennan, U.S. Bank Greg Skutnik, U.S. Bank Doug Carlile, Causey Demgen & Moore P.C. The above referenced Bond will close on: Tuesday, December 15, 2015 The parties intend that closing will be completed by 12:00 p.m. Pacific Time. Parties to the closing do not need to be present, but should be available by telephone for closing. • Promptly upon receiving funds from Columbia Bank and the City, U.S. Bank is to notify Marc Greenough (206-447-7888) or Susan Carpenter (206-447-5938) at Foster Pepper PLLC, Bond Counsel, or via email at greem@foster.com or carps@foster.com, respectively. • After notification from the Escrow Agent, Bond Counsel will then contact Luke Pingel (206-223- 4550, Ipingel@columbiabank.com) to notify of the release of the Bond. The first interest payment on the Bond will be due on June 1, 2016. The first principal payment will be due on December 1, 2016. 1) Columbia Bank will deliver $1,742,527.00 for credit to U.S. Bank, the Escrow Agent. Wire Instructions: BBK ABA BNF ACCOUNT # REFERENCE ATTN: U.S. Bank National Association 091000022 U.S. Bank Corporate Trust 180121167365 City of Tukwila WSRRB 15 (06) ESC Greg Skutnik, 206-344-4607 2) The City will deliver $430,444.34 for credit to U.S. Bank, the Escrow Agent. Wire Instructions: BBK U.S. Bank National Association ABA 091000022 BNF U.S. Bank Corporate Trust ACCOUNT # 180121167365 REFERENCE City of Tukwila WSRRB 15 (06) ESC ATTN: Greg Skutnik, 206-344-4607 1 The PFM Group Financial & is acatratiat Adviaon 3) The Escrow Agent will use the proceeds for the following: a. $2,138,762.00 will be invested by the Escrow Agent for the purchase of U.S. Treasury State and Local Government Series ("SLGS"), and be used to pay interest due on the refunded bonds in the amount of $45,975.00 on June 1, 2016, and principal and interest due on the Refunded Bonds in the amount of $2,105,975.00 (principal of $1,910,000.00 and interest of $45,975.00), on December 1, 2016. b. The Escrow Agent will pay costs of issuance as set forth below upon receipt of invoices in the amount of $34,208.56: Public Financial Management, Financial Advisor Foster Pepper PLLC, Bond Counsel Causey Demgen & Moore P.C., Verification Agent U.S. Bank, Escrow Agent Stokes Lawrence, P.S., Purchaser's Counsel Columbia Bank, Purchaser Contingency $15,057.60 10,800.00 2,500.00 750.00 3,000.00 2,100.00 0.96 Amounts remaining in the escrow fund after the 2006 Bonds have been redeemed will the City in accordance with the Refunding Trust Agreement. $34,208.56 be transferred to It has been a pleasure working with you on this transaction. If you have any questions please contact Duncan Brown at (206) 858-5367. Sources & Uses Total Sources Bond Proceeds 2006 Reserve Account Total $1,742,527.00 430,444.34 $2,172,971.34 Total Uses Refunding Escrow Deposits: Cash Deposit $0.78 SLGS Purchases 2,138,762.00 Delivery Date Expenses: Cost of Issuance $34,208.56 Total $2,172,971.34 2