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HomeMy WebLinkAboutOrd 1676 - Water and Sewer Revenue Bonds for Waterworks Utility0080490.04 CITY OF TUKWILA, WASHINGTON ORDINANCE NO. /6 7 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; PROVIDING FOR THE ISSUANCE OF $2,925,000 PRINCIPAL AMOUNT OF WATER AND SEWER REFUNDING REVENUE BONDS, 1993, OF THE CITY FOR THE PURPOSE OF PROVIDING A PART OF THE FUNDS REQUIRED TO ADVANCE REFUND A PORTION OF THE CITY'S OUTSTANDING WATER AND SEWER REFUNDING AND CONSTRUCTION REVENUE BONDS, 1972, WATER AND SEWER REVENUE BONDS, 1986, AND WATER AND SEWER REVENUE BONDS, 1990, AND TO PAY COSTS OF SUCH REFUNDING AND OF ISSUING THE BONDS; FIXING THE DATE, FORM, MATURITIES, INTEREST RATES, TERMS AND COVENANTS OF SUCH BONDS; PROVIDING FOR AND AUTHORIZING THE PURCHASE OF CERTAIN OBLIGATIONS OUT OF THE PROCEEDS OF THE SALE OF THE BONDS HEREIN AUTHORIZED AND FOR THE USE AND APPLICATION OF THE MONEY DERIVED FROM THOSE INVESTMENTS; AUTHORIZING THE EXECUTION OF A CONTRACT WITH SEATTLE FIRST NATIONAL BANK OF SEATTLE, WASHINGTON; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUTSTANDING BONDS TO BE REFUNDED; PROVIDING FOR BOND INSURANCE; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO LEHMAN BROTHERS INC., SEATTLE, WASHINGTON. WHEREAS, the City of Tukwila, Washington (then the Town of Tukwila), by Ordinance No. 320, passed by the Town Council and approved by the Mayor on May 1, 1961, and subsequently amended, specified and adopted a system or plan for a system of sewerage for the Town and provided that system of sewerage become a part of the waterworks utility of the Town, and authorized the issuance and sale of Water and Sewer Revenue Bonds, 1961, in the principal amount of not to exceed $170,000 to pay a portion of the cost thereof, such waterworks utility, as hereinafter referred to, being deemed to include the systems of water supply and distribution and sanitary sewage disposal, as combined by Ordinance No. 320 pursuant -1- to RCW 35.67.320, and any additions thereto and extensions, renewals and betterments thereof hereafter made or constructed; and WHEREAS, $170,000 of the Water and Sewer Revenue Bonds, 1961 (the "1961 Bonds were issued pursuant to Ordinance No. 334 and are 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; and WHEREAS, pursuant to Section 7 of Ordinance No. 334, as amended and restated by Section 16 of Ordinance No. 1575, the City of Tukwila, Washington (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 1961 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: 0080490.04 "(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 revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve months out of the immediately preceding fifteen months' period adjusted to reflect 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, plus the additional revenue, from whatever source and of whatever nature, anticipated to be received from the proposed improvement in connection with which such additional water and sewer revenue bonds are to be issued, shall be deemed -2- 0080490.04 sufficient, after the payment of normal operation and maintenance costs and taxes, to equal at least 1.35 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, as defined in Section 8 of this Ordinance, 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 be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby; and "(c) The ordinance authorizing the issuance of such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, said 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 said 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 moneys 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. "In lieu of the accumulation of a reserve in the manner provided in this subsection 7(c), the ordinance authorizing such additional bonds may provide for a cash deposit by a third party with an escrow agent acceptable to the City in an amount equal to the average annual debt service of the additional bonds proposed to be issued, which deposit shall be made on or before the delivery of the additional bonds and shall be conditioned on the -3- 0080490.04 payment into the "Reserve Account" of the Bond Fund of amounts necessary to make up any deficiency in the Principal and Interest Account in the Bond Fund to meet maturing installments of either principal or interest on such additional bonds. That third party shall also be bound by agreement with the City to make such additional cash deposits in escrow as are necessary to maintain that deposit at the required level in the event that the original or subsequent deposits are called upon to make up the deficiencies in the Principal and Interest Account of the Bond Fund. Such cash deposits shall remain in escrow at the required level until the moneys in the Reserve Account paid in for those additional bonds equal the average annual debt service of those additional bonds and "Upon the redemption or defeasance of all of the 1961 Bonds, 1963 Bonds, 1965 Bonds and 1972 Bonds, the City may issue Future Parity Bonds if the following conditions shall be met and complied with at the time of issuance of such Future Parity Bonds: "(a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and "(b) The historical gross revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve consecutive months out of the immediately preceding fifteen months' period adjusted to reflect (1) a year's net income from each customer of the Waterworks Utility connected to such utility at the end of the at twelve -month period who has not been a customer for the entire twelve -month period, (2) the additional revenue, from whatever source and of whatever nature, anticipated to be received from the improvement in connection with which additional water and sewer revenue bonds are to be issued, (3) revenue to be derived from any customer under any executed contract for water and /or sewer service which revenue was not included in the historical gross revenues of the Waterworks Utility, and (4) the engineer's estimate of the gross revenues to be derived by the City from customers within improved property available to commit to any additions to and improvements an extensions of the Waterworks Utility to be paid out of the proceeds of the sale of the Future Parity Bonds (as defined in Ordinance No. 1408) or other additions to and improvements and betterments of the Waterworks Utility then under construction and not fully connected to the -4- 0080490.04 Waterworks Utility when such additions, improvements and betterments are completed and connected, shall be deemed sufficient, after the payment of normal operation and maintenance costs (adjusted to reflect actual or reasonably anticipated changed in those operation and maintenance costs subsequent to that twelve -month period) and state and federal taxes, to equal at least 1.35 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, as defined in Section 8 of this Ordinance No. 334 of any bonds payable out of the Bond Fund, such termination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby; and "(c) The ordinance authorizing the issuance of such additional bonds shall provide that such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, those amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and that reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof. In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the Reserve Account for the bonds to be refunded shall be transferred to the 'Reserve Account' in the Bond Fund, or that the money in 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. "(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the creation of a -5- and 0080490.04 sinking fund account in the Bond Fund for any Term Bonds to be issued and for regular payments to be made into such account for the payment of principal of such Term Bonds on or before their maturity, or, as an alternative, for the mandatory redemption of such Term Bonds prior to their maturity date from money on deposit in the Principal and Interest Account. WHEREAS, pursuant to Ordinance No. 387, the City heretofore issued its $190,000 par value Water and Sewer Revenue Bonds, 1963 (the "1963 Bonds dated October 1, 1963, which bonds were issued on a parity of lien with the 1961 Bonds; and WHEREAS, pursuant to Ordinance No. 422, the City heretofore issued its $85,000 par value Water and Sewer Revenue Bonds, 1965 (the "1965 Bonds dated March 1, 1965, which bonds were issued in a parity of lien with the 1961 Bonds and 1963 Bonds; and WHEREAS, pursuant to Ordinance No. 748, the City heretofore issued its $675,000 par value Water and Sewer Refunding and Construction Revenue Bonds, 1972 (the "1972 Bonds dated December 1, 1972, which bonds were issued on a parity of lien with the 1961 Bonds, 1963 Bonds and 1965 Bonds; and WHEREAS, pursuant to Ordinance No. 748, the City reserved the right to redeem prior to their maturity the 1972 Bonds on December 1, 1985, or on any interest payment date thereafter, at par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $185,000 par value of 1972 Bonds maturing on December 1 of each of the years 1995 through 1998, inclusive, and bearing interest at the rate of 6.40% (the "Refunded 1972 Bonds -6- WHEREAS, pursuant to Ordinance No. 1408, as amended by Ordinances Nos. 1413 and 1575, the City heretofore issued its $3,600,000 par value Water and Sewer Revenue Bonds, 1986 (the "1986 Bonds dated December 1, 1986, which bonds were issued on a parity of lien with the 1961 Bonds, 1963 Bonds, 1965 Bonds and 1972 Bonds; and WHEREAS, pursuant to Ordinance No. 1408, the City reserved the right to redeem prior to their maturity the 1986 Bonds on December 1, 1996, or on any interest payment date thereafter, at par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $2,145,000 par value of 1986 Bonds maturing on December 1 of each of the years 1998 through 2006, inclusive, and bearing various interest rates from 6.40% to 7.00% (the "Refunded 1986 Bonds WHEREAS, pursuant to Ordinance No. 1575, the City issued its $1,030,000 par value Water and Sewer Revenue Bonds, 1990 (the "1990 Bonds dated July 1, 1990, which bonds were issued on a parity of lien with the 1961 Bonds, 1963 Bonds, 1965 Bonds, 1972 Bonds and 1986 Bonds; and WHEREAS, pursuant to Ordinance No. 1575, the City reserved the right to redeem prior to their maturity the 1990 Bonds on December 1, 1993, or on any interest payment date thereafter, at a price of 101% of par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $390,000 par value of 1990 Bonds maturing on December 1 of each of the years 1995 and 0080490.04 -7-- 1996, and bearing interest at the rates of 6.65% and 6.70 respectively (the "Refunded 1990 Bonds and WHEREAS, after due consideration, it appears to the City Council that the Refunded 1972 Bonds, Refunded 1986 Bonds and Refunded 1990 Bonds (collectively the "Refunded Bonds may be refunded by the issuance and sale of the water and sewer refunding revenue bonds authorized herein (the "Bonds so that a substantial saving will be effected by the difference between the principal and interest cost of the Bonds and the principal and interest cost over the life of the Refunded Bonds but for such refunding, which refunding will be effected by: and 0080490.04 (a) The issuance of the Bonds and the payment of the costs of the issuance of the Bonds and the costs of the refunding; (b) The payment of the interest on the Refunded 1972 Bonds when due up to and including June 1, 1994, and, on June 1, 1994, the call, payment and redemption of all of the Refunded 1972 Bonds at a price of par; (c) The payment of the interest on the Refunded 1986 Bonds when due up to and including December 1, 1996, and, on December 1, 1996, the call, payment and redemption of all of the Refunded 1986 Bonds at a price of par; and (d) The payment of the interest on the Refunded 1990 Bonds when due up to and including June 1, 1994, and, on June 1, 1994, the call, payment and redemption of all of the Refunded 1990 Bonds at a price of 101% of par; WHEREAS, in order to effect such refunding in the manner that will be most advantageous to the City it is found necessary and advisable that certain Acquired Obligations (hereinafter defined) bearing interest and maturing at such time or times as necessary to -8- accomplish the refunding as aforesaid be purchased out of a portion of the proceeds of the Bonds; and WHEREAS, the City Council has determined to issue the Bonds to provide the funds to pay part of the cost of effecting the refunding of the Refunded Bonds and paying the cost of issuance and sale of the Bonds; and WHEREAS, Lehman Brothers Inc. of Seattle, Washington, has offered to purchase the Bonds on the terms and conditions hereinafter set forth; and WHEREAS, the Municipal Bond Investors Assurance Corporation of Armonk, New York, has made a commitment to issue an insurance policy (the "Municipal Bond Insurance Policy relative to the Bonds effective as of the date of issuance of the Bonds, and the City Council deems that the purchase of the Municipal Bond Insurance Policy is in the best interest of the City; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "Acquired Obligations" shall mean those United States Treasury Certificates of Indebtedness, Notes and Bonds -State and Local Government Series and other direct, noncallable obligations of the United States of America purchased to accomplish the refunding of the Refunded Bonds as authorized by this ordinance. "Alternate Security" shall mean a surety bond or insurance policy issued to a bond trustee or other independent 0080490.04 -9- 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 Bonds or any Future Parity Bonds if the claims paying ability of the issuer thereof shall be rated "AAA" or "Aaa" by Standard Poor's Corporation or Moody's Investors Service Inc., 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 the Municipal Bond Investors Assurance Corporation "MBIA of Armonk, New York. "Bond Registrar" shall mean the fiscal agencies of the State of Washington in Seattle, Washington, and New York, New York, as the same may be designated from time to time. "Bonds" shall mean the $2,925,000 par value of Water and Sewer Refunding Revenue Bonds, 1993, 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. "1963 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1963, issued for the purposes provided in and pursuant to Ordinance No. 387. 0080490.04 -10- "1965 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1965, issued for the purposes provided in and pursuant to Ordinance No. 422. "1972 Bonds" shall mean the outstanding Water and Sewer Refunding and Construction Revenue Bonds, 1972, issued for the purposes provided in and pursuant to Ordinance No. 748. "1986 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1986, of the City issued pursuant to and for the purposes provided in Ordinance No. 1408, as amended by Ordinance No. 1413 and Ordinance No. 1575. "1990 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1990, of the City issued pursuant to and for the purposes provided in Ordinance No. 1575. "City" shall mean the City of Tukwila, Washington, formerly the Town of Tukwila. "Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. "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 7 of Ordinance No. 334, as amended by Ordinances Nos. 1408, 1413 and 1575, and Section 19 of this ordinance, 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 0080490.04 secure the payment of the principal of and interest on the Outstanding Parity Bonds and the Bonds. "Government Obligations" shall mean United States Treasury Certificates, Notes and Bonds (including State and Local Government Series "SLGS and direct obligations of the U.S. Treasury which have been stripped by the Treasury itself (excludes CATS, TRGS and similar securities). "Municipal Bond Insurance Policy" shall mean the policy issued by the Bond Insurer insuring the payment of the principal of and interest on the Bonds. "Nonrefunded 1972 Bonds" shall mean the 1972 Bonds maturing in the years 1993 and 1994. "Nonrefunded 1986 Bonds" shall mean the 1986 Bonds maturing in the years 1993 through 1997, inclusive. "Nonrefunded 1990 Bonds" shall mean the 1990 Bonds maturing in the years 1993 and 1994. "Outstanding Parity Bonds" shall mean the outstanding 1963 Bonds, 1965 Bonds, Nonrefunded 1972 Bonds, Nonrefunded 1986 Bonds and Nonrefunded 1990 Bonds. "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. "Refunded Bonds" shall mean, collectively, the Refunded 1972 Bonds, Refunded 1986 Bonds and Refunded 1990 Bonds. 0080490.04 -12- "Refunded 1972 Bonds" shall mean all of the outstanding 1972 Bonds maturing on December 1 in each of the years 1995 through 1998, inclusive. "Refunded 1986 Bonds" shall mean all of the outstanding 1986 Bonds maturing on December 1 in each of the years 1998 through 2006, inclusive. "Refunded 1990 Bonds" shall mean all of the outstanding 1990 Bonds maturing on December 1 in each of the years 1995 and 1996. 0080490.04 "Refunding Plan" shall mean: (a) the placement of sufficient proceeds of the Bonds which, with other money of the City, if necessary, will acquire the Acquired Obligations to be deposited, with cash, if necessary, with the Refunding Trustee; (b) the payment of the interest on the Refunded 1972 Bonds when due up to and including June 1, 1994, and, on June 1, 1994, the call, payment and redemption of all of the Refunded 1972 Bonds at a price of par; (c) the payment of the interest on the Refunded 1986 Bonds when due up to and including December 1, 1996, and, on December 1, 1996, the call, payment and redemption of all of the Refunded 1986 Bonds at a price of par; and (d) the payment of the interest on the Refunded 1990 Bonds when due up to and including June 1, 1994, and, on June 1, 1994, the call, payment and redemption of all of the Refunded 1990 Bonds at a price of 101% of par; and (e) the payment of the costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan. "Refunding Trust Agreement" shall mean a Refunding Trust Agreement between the City and the Refunding Trustee substantially in the form of that which is on file with the City Clerk and by this reference incorporated herein. -13- "Refunding Trustee" shall mean Seattle -First National Bank of Seattle, Washington, serving as trustee or escrow agent or any successor trustee or escrow agent. "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. "Term Bond Maturity Year or Years" shall mean any last maturity year in which the outstanding amount of bonds of any one issue or series which are scheduled to mature (regardless of any reservation of parity redemption rights) is more than two times the average annual principal maturity of the bonds of that issue or series and of all bonds issued on a parity therewith for three years immediately proceeding such term bond maturity year. "Term Bonds" shall mean any bonds maturing in a Term Bond Maturity Year. "Waterworks Utility" shall mean the waterworks utility of the City, including the system of sewerage. Section 2. Findings. The City Council finds: (1) All payments required by any ordinance of the City pertaining to outstanding water and sewer revenue bonds of the City have been made into the Bond Fund for the payment of such water and sewer revenue bonds and no deficiency exists therein; and (2) Since the Bonds are for the sole purpose of refunding water and sewer revenue bonds of the City and the amount requested for payment of principal and interest in each year for the Bonds is not increased over the amount required for the Refunded Bonds and 0080490.04 -14- the maturities of the Bonds are not extended beyond the maturities of the Refunded Bonds, no certification of coverage pursuant to Section 7(b) of Ordinance No. 334, as amended, shall be required. (3) Provision is made in Section 9 herein for the payment into the Reserve Account of the amounts required by Section 7 of Ordinance No. 334, as amended. It is declared that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund, as aforesaid, the City Council and corporate authorities of the City have due regard to the cost of operation and maintenance expenses of the Waterworks Utility and to any proportion or part of the gross revenue previously pledged as a fund for the payment of bonds, warrants or other indebtedness or obligations and declare that the City has not set aside into the Bond Fund a greater amount or proportion of that gross revenue and proceeds than in its judgment will be available over and above such cost of operation and maintenance and the debt service and reserve requirements for the presently outstanding Outstanding Parity Bonds and other obligations of that gross revenue. Section 3. Authorization and Description of Bonds. For the purpose of providing part of the money required to carry out the Refunding Plan and pay the costs of issuance and sale of the Bonds, the City shall issue the Bonds in the aggregate principal amount of $2,925,000. The Bonds shall be designated Water and Sewer Refunding Revenue Bonds, 1993; shall be dated November 1, 1993; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately, in 0080490.04 -15- the manner and with any additional designation as the Bond Registrar deems necessary for purpose of identification; shall bear interest (computed on the basis of a 360 -day year of twelve 30 -day months), payable on June 1, 1994, and semiannually thereafter on each succeeding December 1 and June 1 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: Section 4. Reaistration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and recorded on books or records maintained by the Bond Registrar (the "Bond Register The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same interest rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any exchange or transfer 0080490.04 Maturity Interest Years Amounts Rates 1994 35,000 2.60% 1995 280,000 3.00 1996 280,000 3.25 1997 75,000 3.40 1998 260,000 3.60 1999 215,000 3.80 2000 225,000 4.00 2001 235,000 4.10 2002 245,000 4.20 2003 250,000 4.30 2004 265,000 4.50 2005 275,000 4.60 2006 285,000 4.70 -16- 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. Section 5. 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 mailed by the Bond Registrar on the the registered owners at the addresses Register on the 15th day payment date. 0080490.04 Principal of the of the -17- month Bonds presentation and surrender of the Bonds by interest payment date to appearing on the Bond preceding the interest shall be payable upon the registered owners at either of the principal offices of the Bond Registrar at the option of the owners. The Bonds shall be payable solely out of the Bond Fund and shall not be general obligations of the City. Section 6. Optional Redemption; Open Market Purchase of Bonds. Bonds maturing in the years 1994 through 2003, 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 Bonds maturing on or after December 1, 2004, prior to their stated maturity dates as a whole or in part at any time within one or more maturities selected by the City (and by lot within a maturity in such manner as the Bond Registrar shall determine) on or after December 1, 2003, at the redemption prices shown below (expressed as a percentage of the principal amount of the Bonds to be redeemed) plus accrued interest to the date fixed for redemption: 0080490.04 Redemption Redemption Period Price December 1, 2003, through November 30, 2004 102% December 1, 2004, through November 30, 2005 101 December 1, 2005, and thereafter 100 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 at either of the principal offices of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. The City further reserves the right and option to purchase any or all of the Bonds in the open market at any time at a price not in excess of par plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. Section 7. Notice of Redemption. The City shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first -class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed -18- for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard Poor's Corporation 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 the Bond Insurer at its principal office in Armonk, New York, and to such other persons 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. Section 8. 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 Fund 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 9. 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 Finance Director 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 0080490.04 -19- Outstanding Parity Bonds certain fixed amounts, without regard to any fixed proportion, and such other money as provided, namely: (a) Into the Principal and Interest Account, there shall be deposited the accrued interest received by the City as partial payment for the Bonds on their delivery, and, on or before the 20th day of each month, commencing with the month of December, 1993 (after deducting the accrued interest to be deposited), and thereafter and continuing as long as any of the Bonds are outstanding, an amount equal to at least 1/6 of the next ensuing requirements for interest and 1/12 of the principal to become due and payable on the next principal payment date on all of the Bonds then outstanding. (b) 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 non -Bond proceeds of the City. The City covenants and agrees that it will at all times maintain in the Reserve Account the required reserves as set forth, except for withdrawals as authorized in this section, until there is a sufficient amount in the Principal and Interest Account and the Reserve Account to pay the principal of and interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds to the final maturity thereof, at which time no further payments need be made into the Bond Fund. Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, Nonrefunded 1972 Bonds, Nonrefunded 1986 Bonds and Nonrefunded 1990 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. 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 0080490.04 -20- 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. mean legal investments permitted the City which are (1) direct 0080490.04 For the purpose of this section, Permitted Investments shall -21- 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 an interest on which are unconditionally guaranteed by the United States of America; (2) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies (full faith and credit agencies): U. S. Export- Import Bank (direct obligations or fully guaranteed certificates of beneficial ownership), Farmers Home Administration (certificates of beneficial ownership), Federal Financing Bank, Federal Housing Administration (debentures), General Services Administration (participation certificates), Government National Mortgage Association (GNMA- guaranteed mortgage- backed bonds and GNMA- guaranteed -pass- through obligations), U. S. Maritime Administration (guaranteed Title XI financing), New Communities Debentures (U. S. Government guaranteed debentures), and U. S. Public Housing Notes and Bonds (U. S. government guaranteed public housing notes and bonds); (3) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following U. S. government agencies (non -full faith and credit agencies): Federal Home Loan Bank System (senior debt obligations), Federal Home Loan Mortgage Association (participation certificates), Federal National Mortgage Association (mortgage backed securities and senior debt obligations), and Student Loan Marketing Association (senior debt obligations); and (4) certificates of deposit, savings accounts or deposit accounts which are fully secured by the FDIC or FSLIC. 0080490.04 -22- 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 10. Pledae 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 11. Form and Execution of Bonds. The Bonds shall be printed, typed or multicopied, or lithographed on good bond paper in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: 0080490.04 CERTIFICATE OF AUTHENTICATION This bond is one of the fully registered City of Tukwila, Washington, Water and Sewer Refunding Revenue Bonds, 1993, described in the Bond Ordinance. -23- WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Signer The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated, delivered and issued and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the date of issuance of the Bonds. Section 12. Bond Reaistrar. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds which shall at all times be open to inspection by the City. 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 0080490.04 -24- 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 13. Bonds Negotiable Instruments. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8 -102 and 62A.8 -105. Section 14. Refundina of the Refunded Bonds. (a) Appointment of Refunding Trustee. Seattle -First National Bank is appointed the Refunding Trustee. (b) Use of Bond Proceeds: Acauisition and Substitution of Acauired Obligations. All of the proceeds of the sale of the Bonds, exclusive of the accrued interest thereon, if any, which shall be paid into the Principal and Interest Account, shall be deposited immediately upon the receipt thereof with the Refunding Trustee and used, together with other money of the City to be deposited with the Refunding Trustee, to discharge the obligations of the City relating to the outstanding Refunded Bonds under Ordinances Nos. 748, 1408, as amended, and 1575 by providing for the payment of the amounts required to be paid by the Refunding 0080490.04 -25- Plan. The Refunding Plan shall be carried out and proceeds of the Bonds shall be applied in accordance with the provisions of Chapter 39.53 RCW. To the extent practicable, 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 of $5,423.75 (which amount may be increased or decreased), for the payment of the amounts required to be paid by the Refunding Plan. The Acquired Obligations are listed and more particularly described in Schedule A attached to the Refunding Trust Agreement between the City and the Refunding Trustee, but are subject to substitution as set forth below. Any Bond proceeds not needed to purchase the Acquired Obligations and pay costs of issuance and providing a beginning cash balance, if any, shall be returned to the City at the time of delivery of the Bonds to the initial purchaser thereof and deposited in the Principal and Interest Account to pay interest on the Bonds on the first interest payment date. Prior to the purchase of any such Acquired Obligations, the City reserves the right to substitute other direct, noncallable Government Obligations for any of the Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (a) in the opinion of Foster Pepper Shefelman, the City's bond counsel, the interest on the Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and (b) such substitution shall not impair the timely payment of the amounts required to be 0080490.04 -26- paid by the Refunding Plan, as verified by a nationally recognized firm of independent certified public accountants. After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute therefor cash or direct, noncallable Government Obligations subject to the conditions that such money or securities held by the Refunding Trustee shall be sufficient to carry out the Refunding Plan, that such substitution will not cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of such substitution and applicable to obligations issued on the issue date of the Bonds, and obtains, at its expense: (1) verification by a nationally recognized independent certified public accounting firm acceptable to the Refunding Trustee confirming that the payments of principal of and interest on the substitute Acquired Obligations, if paid when due, and any other money held by the Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster Pepper Shefelman, bond counsel to the City, its successor, or other nationally recognized bond counsel to the City, to the effect that the disposition and substitution or purchase of such securities, under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or the Refunded Bonds to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition or 0080490.04 -27- redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful City purpose. (c) Administration of Refundina Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations (or substitute obligations) and to make the payments required to be made by the Refunding Plan from the Acquired Obligations (or substitute obligations) and money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied in accordance with the provisions of the Ordinances Nos. 748, 1408, as amended, and 1575, this ordinance, Chapter 39.53 RCW and other applicable statutes of the State of Washington and the Refunding Trust Agreement. All necessary and proper fees, compensation and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up of the escrow to accomplish the refunding of the Refunded Bonds and costs related to the issuance and delivery of the Bonds, including bond printing, rating service fees, verification fees, bond counsel's fees and other related expenses, shall be paid out of the proceeds of the Bonds. (d) Authorization for Refundina Trust Agreement. In order to carry out the Refunding Plan provided for by this ordinance, the Mayor is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement substantially in the form on file with the City Clerk and by this 0080490.04 -28- reference made a part hereof setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the payment, redemption and retirement of the Refunded Bonds as provided herein and stating that the provisions for payment of the fees, compensation and expenses of such Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement, the Mayor is authorized to make such changes therein which do not change the substance and purpose thereof or which assure that the escrow provided therein and the Bonds are in compliance with the requirements of federal law governing the exclusion of interest on the Bonds from gross income for federal income tax purposes. Section 15. Calls for Redemption of the Refunded Bonds. The City calls for redemption on June 1, 1994, all of the Refunded 1972 Bonds at par and the Refunded 1990 Bonds at 101% of par, and on December 1, 1996, all of the Refunded 1986 Bonds at par. The dates on which the above identified Refunded Bonds are called for redemption are the earliest dates, respectively, on which those Bonds may be called for redemption. Such calls for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof. The City Finance Director is authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, by Ordinance No. 748 in order to effect the redemption prior to their maturity of the Refunded 1972 Bonds, by Ordinance No. 1408, as amended, in order to effect the redemption prior to their maturity of the Refunded 1986 Bonds, and by 0086490.04 -29- Ordinance No. 1575 in order to effect the redemption prior to their maturity of the Refunded 1990 Bonds. Section 16. City Findings with Respect to Refunding. The City Council finds and determines that the issuance and sale of the Bonds at this time will effect a saving to the City and its ratepayers and is in the best interest of the City and in the public interest. In making such finding and determination, the City Council has given consideration to the fixed maturities of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the known earned income from the investment of the proceeds of the issuance and sale of the Bonds and other money of the City used in the Refunding Plan pending payment and redemption of the Refunded Bonds. The City Council further finds and determines that the money to be deposited with the Refunding Trustee for the Refunded Bonds in accordance with Section 14 of this ordinance will discharge and satisfy the obligations of the City under Ordinance No. 748 with respect to the Refunded 1972 Bonds, Ordinance No. 1408, as amended, with respect to the Refunded 1986 Bonds and Ordinance No. 1575 with respect to the Refunded 1990 Bonds, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to those Refunded Bonds, and that the Refunded 1986 Bonds and Refunded 1990 Bonds shall no longer be deemed to be outstanding under their respective ordinances immediately upon the deposit of such money with the Refunding Trustee. Section 17. Covenants. The City covenants and agrees with the owner of each of the Bonds at any time outstanding, as follows: 0080490.04 -30- (a) 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 1.35 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. Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, Nonrefunded 1972 Bonds, Nonrefunded 1986 Bonds and Nonrefunded 1990 Bonds, the foregoing subsection 17(a) shall be amended and replaced to read as follows: 0080490.04 (a) 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. (b) 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. (c) 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 -31- 0080490.04 outstanding bonds payable out of the Bond Fund as the revenue of the Waterworks Utility available for debt service for such outstanding bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility sold, leased, encumbered or disposed of bears to the revenues available for debt service for such bonds from the entire Waterworks Utility for the same period. Any such money so paid into the Bond Fund shall be used to retire such outstanding bonds at the earliest possible date. (d) 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. (e) 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. (f) 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. (g) 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. -32- 0080490.04 (h) It will take all actions necessary to prevent the interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any actions nor make or permit any use of proceeds of the Bonds or other funds of the Waterworks Utility treated as proceeds of the Bonds at any time during the term of the Bonds which will cause the interest on the Bonds to be included in gross income for federal income tax purposes. The City further covenants that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. Section 18. Small Governmental Issues Arbitrage Rebate Exception and Desianation 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 Code; (c) at least 95 percent of the net proceeds of the Bonds will be used for local governmental activities of the City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City); (d) the aggregate face amount of all tax exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) issued by the City and all entities subordinate to the City (including any entity which the City controls or which derives its authority to issue tax exempt obligations from the City or which issues tax exempt obligations on behalf of the City) during the current calendar year is not reasonably expected to exceed $5,000,000; and (e) the amount of -33- tax exempt obligations, including the Bonds, designated as "qualified tax exempt obligations" for the purposes of Section 265(b)(3) of the Code or any predecessor provision of federal law by the City 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 19. 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 first shall satisfy the conditions set forth in Section 7 of Ordinance No. 334, as amended and restated by Section 16 of Ordinance No. 1575, which sections are 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. Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, Nonrefunded 1972 Bonds, Nonrefunded 1986 Bonds and Nonrefunded 1990 Bonds, Section 7 of Ordinance No. 334, as previously amended and restated by Section 16 0080490.04 -34- of Ordinance No. 1575, shall be amended and replaced to read as follows: The City reserves the right to issue additional or refunding water and sewer revenue bonds which shall constitute a charge or lien upon the gross revenues of the Waterworks Utility, including all additions thereto and betterments, replacements and extensions thereof at any time made, on a parity of lien with the Bonds, if the following conditions shall be made and complied with at the time of issuance of such additional or refunding water and sewer revenue bonds: 0080490.04 (a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and (b) The historical gross revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve consecutive months out of the immediately preceding fifteen months' period adjusted to reflect (1) a year's net income from each customer of the Waterworks Utility connected to such utility at the end of the at twelve -month period who has not been a customer for the entire twelve -month period, (2) the additional revenue, from whatever source and of whatever nature, anticipated to be received from the improvement in connection with which additional water and sewer revenue bonds are to be issued, (3) revenue to be derived from any customer under any executed contract for water and /or sewer service which revenue was not included in the historical gross revenues of the Waterworks Utility, and (4) the engineer's estimate of the gross revenues to be derived by the City from customers within improved property available to commit to any additions to and improvements an extensions of the Waterworks Utility to be paid out of the proceeds of the sale of the Future Parity Bonds or other additions to and improvements and betterments of the Waterworks Utility then under construction and not fully connected to the Waterworks Utility when such additions, improvements and betterments are completed and connected, shall be deemed sufficient, after the payment -35- 0080490.04 of normal operation and maintenance costs (adjusted to .reflect actual or reasonably anticipated changed in those operation and maintenance costs subsequent to that twelve -month period) and state and federal taxes, to equal at least 1.25 times the average annual principal and interest requirements of all then outstanding water and sewer revenue bonds, including the Bonds and of the additional or refunding bonds proposed to be so issued, but except the principal requirements of any Term Bond Maturity Year or Years of any bonds payable out of the Bond Fund, such termination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. (c) The ordinance authorizing the issuance of such additional bonds shall provide that such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, those amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and that reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof. In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the Reserve Account for the bonds to be refunded shall be transferred to the Reserve Account in the Bond Fund, or that the money in 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. (d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the creation of a -36- 0080490.04 sinking fund account in the Bond Fund for any Term Bonds to be issued and for regular payments to be made into such account for the payment of principal of such Term Bonds on or before their maturity, or, as an alternative, for the mandatory redemption of such Term Bonds prior to their maturity date from money on deposit in the Principal and Interest Account. Section 20. Refunding or Defeasance of Bonds. The City may issue advance refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay the principal of and interest on the Bonds, or such portion thereof included in a refunding or defeasance plan, as the same become due and payable and to redeem and retire, release, refund or defease all such then outstanding Bonds (hereinafter collectively called the "defeased Bonds and to pay the costs of such refunding or defeasance. In the event that money and /or direct obligations of the United States of America sufficient in amount, together with known earned income from the investments thereof, to redeem and retire, release, refund or defease the defeased Bonds in accordance with their terms are set irrevocably in a special fund for and pledged irrevocably to such redemption, retirement or defeasance (hereinafter called the "trust account all right and interest of the owners of the defeased Bonds in the covenants of this ordinance, in the gross revenue of the Waterworks Utility and in funds and accounts obligated to the payment of such defeased Bonds, other than the right to receive the funds so set aside and pledged, thereafter shall cease and become void. Such owners shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account and, in the event the funds in the trust account are not available for such payment, shall have -37- the residual right to receive payment of the principal of and interest on the defeased Bonds from the gross revenue of the Waterworks Utility without any priority of lien or charge against those revenues or covenants with respect thereto except to be paid therefrom. After the establishing and full funding of such trust account, the City then 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, subject only to the rights of the owners of any other bonds then outstanding. In the event that the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by cash and /or Government Obligations pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain cash and /or Government Obligations are pledged irrevocably for the prior redemption of the defeased Bonds included in that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds, the payment of which is not so secured by the refunding plan, shall be included in the computation of coverage for the issuance of Future Parity Bonds and for determining compliance with the rate covenants. If the principal of and /or interest due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Bonds shall not be considered paid by the City, and the covenants, agreements and other obligations of the City to the registered owners shall continue to exist and the Bond Insurer shall be subrogated to the rights of the registered owners. 0080490.04 -38- Section 21. Ordinance a Contract. The covenants of the City contained in this ordinance constitute a contract between the City and the owners of the Bonds. In the event of default of any covenant by the City, any such bondowner may enforce performance and obtain other appropriate relief in the proper form as permitted by law. Section 22. Anbroval of Bond Purchase Contract and Delivery of Bonds. Lehman Brothers Inc. of Seattle, Washington (the "Purchaser has presented a bond purchase agreement (the "Bond Purchase Contract to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best interest and, therefore, accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the Purchaser in accordance with the terms of the Bond Purchase Contract with the approving legal opinion of Foster Pepper Shefelman, municipal bond counsel of Seattle, Washington, relative to the issuance of the Bonds, printed on each Bond. Bond counsel has not been retained to and shall not be required to review or express any opinion concerning the completeness or accuracy of any official statement, offering circular or other sales material issued or used in connection with the Bonds, and bond counsel's opinion shall so state. 0080490.04 -39- 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 23. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement dated October 22, 1993 (the "Preliminary Official Statement prepared in connection with the sale of the Bonds. For the sole purpose of the 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 date, ratings, bond insurance and other terms of the Bonds dependent on such matters. Section 24. 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 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 and the following provisions entitled "Payments under the Policy" required by the Bond Insurer to be included in this ordinance: 0080490.04 "A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the -40- 0080490.04 Obligations, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. "B. If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. "C. In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligation to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. "D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Holders of the Obligations as follows: "1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Policy (the "Insurance Paying Agent in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Holders; and "2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the -41- 0090490.04 Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Holders. "E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligations and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. "F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent hereby agree for the benefit of the Insurer that, "1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations; and "2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Obligations, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. "G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. -42- "H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard Poor's Corporation. "I. The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. "J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget. "Notices" Any notice that is required to be given to a holder of the Obligation or to the Paying Agent pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance." Section 25. Effective Date. This ordinance shall be in full force and effect five days after its passage and legal publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a regular open public meeting thereof this 1st day of November, 1993. ATTEST: PPROVED AS TO FORM: City Clerk 0080490.04 By(.G FILED WITH THE CITY CLERK: 4 :404 PASSED BY THE CITY COUNCIL: �f PUBLI'S?tED: P-05-93 z.... .1, EFFECI,VE DATE://- /a-..r� 3 ORDINANCE NO: John W. Rants, Mayor SUMMARY OF CITY OF TUKWILA, WASHINGTON ORDINANCE NO. /4o 3 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; PROVIDING FOR THE ISSUANCE OF $2,925,000 PRINCIPAL AMOUNT OF WATER AND SEWER REFUNDING REVENUE BONDS, 1993, OF THE CITY FOR THE PURPOSE OF PROVIDING A PART OF THE FUNDS REQUIRED TO ADVANCE REFUND A PORTION OF THE CITY'S OUTSTANDING WATER AND SEWER REFUNDING AND CONSTRUCTION REVENUE BONDS, 1972, WATER AND SEWER REVENUE BONDS, 1986, AND WATER AND SEWER REVENUE BONDS, 1990, AND TO PAY COSTS OF SUCH REFUNDING AND OF ISSUING THE BONDS; FIXING THE DATE, FORM, MATURITIES, INTEREST RATES, TERMS AND COVENANTS OF SUCH BONDS; PROVIDING FOR AND AUTHORIZING THE PURCHASE OF CERTAIN OBLIGATIONS OUT OF THE PROCEEDS OF THE SALE OF THE BONDS HEREIN AUTHORIZED AND FOR THE USE AND APPLICATION OF THE MONEY DERIVED FROM THOSE INVESTMENTS; AUTHORIZING THE EXECUTION OF A CONTRACT WITH SEATTLE FIRST NATIONAL BANK OF SEATTLE, WASHINGTON; PROVIDING FOR THE CALL, PAYMENT AND REDEMPTION OF THE OUTSTANDING BONDS TO BE REFUNDED; PROVIDING FOR BOND INSURANCE; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO LEHMAN BROTHERS INC., SEATTLE, WASHINGTON. On y the City Council of the City of Tukwila passed Ordinance No. /6;74; providing for the issuance of $2,925,000 principal amount of water and sewer refunding revenue bonds; providing for bond insurance; and providing for the sale and delivery of such bonds to Lehman Brothers Inc., Seattle, WA.; and setting an effective date. The full text of this ordinance will be mailed without charge to anyone who submits a written request to the City Clerk of the City of Tukwila for a copy of the text. APPROVED by the City Council at its meeting of 73 Published: Seattle Times 11/9/93�A. C )ane E. Cantu, City Clerk ORDINANCE NO. 1676 TABLE OF CONTENTS Section Page Recitals. 1 Section 1. Definitions 9 Section 2. Findings 14 Section 3. Authorization and Description of Bonds 15 Section 4. Registration and Transfer of Bonds 16 Section 5. Payment of Bonds 17 Section 6. Optional Redemption; Open Market Purchase ofBonds 17 Section 7. Notice of Redemption 18 Section 8. Failure to Redeem Bonds 19 Section 9. Payments into Bond Fund 19 Section 10. Pledge of Gross Revenue and Lien Position 23 Section 11. Form and Execution of Bonds 23 Section 12. Bond Registrar 24 Section 13. Bonds Negotiable Instruments 25 Section 14. Refunding of the Refunded Bonds 25 (a) Appointment of Refunding Trustee 25 (b) Use of Bond Proceeds; Acquisition and Substitution of Acquired Obligations 25 (c) Administration of Refunding Plan 28 (d) Authorization for Refunding Trust Agreement 28 Section 15. Calls for Redemption of the Refunded Bonds 29 Section 16. City Findings with Respect to Refunding 30 Section 17. Covenants 30 Section 18. Small Governmental Issues Arbitrage Rebate Exception and Designation of Bonds as "Qualified Tax Exempt Obligations 33 0080490.04 -i- Section Page Section 19. Parity Provisions 34 Section 20. Refunding or Defeasance of Bonds 37 Section 21. Ordinance a Contract 39 Section 22. Approval of Bond Purchase Contract and Delivery of Bonds 39 Section 23. Preliminary Official Statement Deemed Final 40 Section 24. Bond Insurance 40 Section 25. Effective Date 43 Signatures 43 0080490.04