HomeMy WebLinkAbout3925oRDTNANCE NO. 3%,5
AN ORDINANCE of the City of Kent,
Washington; approving certain additions,
betterments and improvements to the City's
Waterworks Utility; authorizing the issuance of
one or more series of combined utility system
revenue bonds of the City in the aggregate
principal amount of not to exceed $25,000,000 to
pay the costs of said improvements; delegating
authority to approve the final terms of the
bonds; and reserving the right to issue revenue
bonds on a parity with the Bonds upon
compliance with certain conditions.
PASSED: August 4,2009
Combined Utility System Revenue Bonds, Serr'es 2OO9
CITY OF KENT, WASHINGTSN
oRDINANCE No. 37Aâ"
TABLE OF CONTENTS*
1. - Definitions
2. - Findings and Purposes; Plan of Additions and
Betterments to the System
3. - Authorization and Description of Bonds
4. - Registration, Exchange and Payments
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15
16
17
5. - Redemption and Purchase. ......2L
6. - Revenue Fund; Priority of Application of Revenue;
Coverage Stabilization Account; Contract
Resource Obligations 25
7. - Bond Fund and Reserve Account.... ........29
8. - Specific Covenants..34
9. - Tax Covenants 37
10. - Issuance of Future Parity Bonds 39
11. - Form of Bonds .......43
L2. - Execution of Bonds 46
13. - Defeasance ,,,....46
t4. - Lost or Destroyed Bonds 47
15, - Sale of Bonds; Bond Insurance 47
16. - Application of Bond Proceeds 50
L7. - Derivative Products 50
18. - Undertaking to Provide Ongoing Disclosure.........51
19. - Severability 54
20, - Effective Date .. 55
* This Table of Contents and the cover page are provided for convenience
only and are not a part of this ordinance.
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Combined Utility System Revenue Bonds, Series 2OOg
ORDINANCE NO 39 a5
AN ORDINANCE of the City of Kent,
Washington; approving certain additions,
betterments and improvements to the City's
Waterworks Utility; authorizing the issuance of
one or more series of combined utility system
revenue bonds of the City in the aggregate
principal amount of not to exceed $25,000,000 to
pay the costs of said improvements; delegating
authority to approve the final terms of the
bonds; and reserving the right to issue revenue
bonds on a parity with the Bonds upon
compliance with certain conditions.
RECITALS
A. The City of Kent, Washington (the "City") owns, operates and
maintains a water collection and distribution system (the "Water Utility");
and
B. The City owns, operates and maintains a combined sanitary
sewage collection and disposal system and storm and surface water utility
(the "System of Sewerage"); and
C. The City Council has determined it is in the best interests of
the City to combine the Water Utility and the System of Sewerage
(hereinafter defined as the "System") for the purpose of debt issuance;
and
D. The System is in need of additions, improvements and
betterments (hereinafter defined as the "Projects"); and
E. The City is authorized pursuant to chapters 35.92 and 39.46
RCW to issue revenue bonds payable from the operating revenues of the
System for the purpose of financing the costs of the Projects; and
F. The City has received a written offer from Piper Jaffray & Co.,
Barclays Capital Inc. and Siebert Brandford Shank & Co., LLC, to purchase
the revenue bonds herein authorized under the terms set forth herein and
therein; and
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Combined Utility System Revenue Bonds, Series 2OOg
G. It is hereby found to be in the best interests of the City that
said offer be accepted;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DO ORDAIN as follows:
SECTION 7. - Definitions. As used in this ordinance the following
definitions shall apply unless a different meaning clearly appears from the
context:
Accreted Value means (1) with respèct to any Capítal Appreciation
Bonds, as of any date of calculation, the sum of the amount set forth in the
ordinance authorizing their issuance as the amount representing the initial
principal amount of such Capital Appreciation Bonds plus the interest
accumulated, compounded and unpaid thereon as of the most recent
compounding date, or (2) with respect to Original Issue Discount Bonds, as
of the date of calculation, the amount representing the initial public
offering price of such Original Issue Discount Bonds plus the amount of
discounted principal that has accreted since the date of issue. In each
case, the Accreted Value shall be determined in accordance with the
provisions of the ordinance authorizing the issuance of such Balloon
Maturity Bonds.
Annual Debt Service means the total amount of Debt Service for any
Parity Bond or series of Parity Bonds or other evidences of indebtedness
payable from Revenue of the System in any fiscal year or Base Period,
Balloon MaturÌty Bonds mean any evidences of indebtedness of the
City payable from Revenue of the System that are so designated in the
ordinance pursuant to which such indebtedness is incurred.
Base Period means any consecutive 12-month period selected by the
City out of the 24-month period next preceding the date of issuance of an
additional series of Future Parity Bonds.
Beneficial Owner means any person that has or shares the power,
directly or indirectly, to make investment decisions concerning ownership
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Combined Utility System Revenue Bonds, Series 2OOg
of any Bonds (including persons holding Bonds through nominees,
depositories or other intermediaries).
Bond Fund means the City of Kent Revenue Bond Fund and also shall
include any fund established in the future for the payment of debt service
on Parity Bonds.
Bond Insurance Polícy means the municipal bond insurance policy, if
any, issued by the Insurer insuring the payment when due of the principal
of and interest on all or a portion of the Bonds as provided therein.
Bond Purchase Contract means the purchase contract for the Bonds
between the City and the Underwriters entered into pursuant to the terms
of Section 15 of this ordinance.
Bond Register means the books or records maintained by the
Registrar containing the name and mailing address of the owner of each
Bond or nominee of such owner and the principal amount and number of
Bonds held by each owner or nominee.
Bonds mean the not to exceed $25,000,000 par value City of Kent,
Washington, Combined Utility System Revenue Bonds, Series 2009[_]
fTaxable], issued in one or more series pursuant to this ordinance.
Capital Appreciation Bonds mean any Future Parity Bonds all or a
portion of the interest on which is compounded, accumulated and payable
only upon redemption or on the maturity date of such Capital Appreciation
Bonds. If so provided in the ordinance authorizing their issuance, Future
Parity Bonds may be deemed to be Capital Appreciation Bonds for only a
portion of their term. On the date on which Future Parity Bonds no longer
are Capital Appreciation Bonds, they shall be deemed outstanding in a
principal amount equal to their Accreted Value.
City means the City of Kent, a municipal corporation of the State of
Washington.
City Council means the City Council as the general legislative
authority of the City as the same shall be duly and regularly constituted
from time to time.
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Combined Utility System Revenue Bonds, Serr'es 2OOg
City Representative means the Mayor of the City or such other
official or employee of the City designated in writing by the Mayor.
Code means the United States Internal Revenue Code of 1986, as
amended, together with all applicable rulings and regulations heretofore or
hereafter prom ulgated thereunder.
Consultanf means at any time an independent municipal financial
consultant appointed by the City to perform the duties of the Consultant as
required by this ordinance. For the purposes of delivering any certificate
required by Section 10 hereof and making the calculation required by
Section 10 hereof, the term Consultant shall also include any independent
public accounting firm or engineer appointed by the City to make such
calculation or to provide such certificate.
Contract Resource Oblígation means an obligation of the City,
designated as a Contract Resource Obligation and entered into pursuant to
Section 6(d) of this ordinance, to make payments for water or sewer
supply, transmission or other commodity or service to another person or
entity.
Cosfs of Maintenance and Operation means all reasonable expenses
incurred by the City in causing the System of the City to be operated and
maintained in good repair, working order and condition, deposits,
premiums, assessments or other payments for insurance, if any, on the
System; payments into pension funds; State-imposed taxes; amounts due
under Contract Resource Obligations (but only at the times described in
Section 6(d) of this ordinance); payments made to any other person or
entity for the receipt of water or sewer supply or transmission or other
right, commodity or service; payments made to any other person or entity
that are required in connection with the operation of the System or the
acquisition or transmission of water or sewer or storm water and that are
not subordinate to the lien of the Parity Bonds; and payments with respect
to any other expenses of the System that are properly treated as operation
and maintenance expenses under generally accepted accounting principles
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Combined Utility System Revenue Bonds, Serr'es 2OOg
applicable to municipal corporation, but shall not include any payments for
principal or interest or into the Reserve Account, 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 System.
Coverage Stabilization Accounf means the account of that name
maintained pursuant to Section 6(c) of this ordinance.
Covered Bonds mean the Bonds and those Future Parity Bonds
designated in the ordinance authorizing their issuance as Covered Bonds
secured by the Reserve Account.
Debt Service means, for any period of time,
(a) with respect to any outstanding Original Issue Discount Bonds
or Capital Appreciation Bonds which are not designated as Balloon Maturity
Bonds in the ordinance authorizing their issuance, the principal amount
thereof shall be equal to the Accreted Value thereof maturing or scheduled
for redemption in such period, and the interest payable during such period;
(b) with respect to any outstanding Fixed Rate Bonds, an amount
equal to (1) the principal amount of such Fixed Rate Bonds due or subject
to mandatory redemption during such period and for which no sinking fund
installments have been established, (2) the amount of any payments
required to be made during such period into any sinking fund established
for the payment of any such Fixed Rate Bonds, plus (3) all interest payable
during such period on any such outstanding Fixed Rate Bonds and with
respect to Fixed Rate Bonds with mandatory sinking fund requirements,
calculated on the assumption that mandatory sinking fund installments will
be applied to the redemption or retirement of such Fixed Rate Bonds on
the date specified in the ordinance authorizing such Fixed Rate Bonds; and
(c) with respect to all other series of Parity Bonds, other than
Fixed Rate Bonds, Original Issue Discount Bonds or Capital Appreciation
Bonds, specifically including but not limited to Balloon Maturity Bonds and
Parity Bonds bearing variable rates of interest, an amount for any period
equal to the amount which would have been payable for principal and
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CombÍned Utility System Revenue Bonds, Seríes 2OO9
interest on such Parity Bonds during such period computed on the
assumption that the amount of Parity Bonds as of the date of such
computation would be amortized (1) in accordance with the mandatory
redemption provisions, if any, set forth in the ordinance authorizing the
issuance of such Parity Bonds, or if mandatory redemption provisions are
not provided, during a period commencing on the date of computation and
ending on the earlier of (i) the date 30 years after the date of issuance or
(ii) the final maturity (2) at an interest rate equal to the yield to maturity
set forth in the 40-Bond Index published in the edition of The Bond Buyer
(or comparable publication or such other similar index selected by the City)
and published within ten days prior to the date of calculation or, if such
calculation is being made in connection with the certificate required by
Section 10 hereof, then within ten days of such certificate, (3) to provide
for essentially level annual debt service of principal and interest over such
period.
Debt Service shall be net of any interest funded out of Bond
proceeds. Debt Service shall include reimbursement obligations to
providers of Credit Facilities to the extent authorized by ordinance. It is
the City's intent that regularly scheduled payments to be made by or
received by the City under ParÍty Derivative Products shall be added to and
deducted from, respectively, Debt Service with respect to Parity Bonds
associated with such Parity Derivative Product, to the extent authorized by
ordinance.
Debt Service Offset means receipts of the City that are not included
in Revenue of the System and that are legally available to pay debt service
on Parity Bonds, including without limitation federal interest subsidy
payments pledged to pay Debt Service Offsets, designated as such by the
Designated Representative.
Deslgnated Representative means the Mayor of the City and any
successor to the functions of such office.
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Combined Utility System Revenue Bonds, Serres 2OO9
DIC means The Depository Trust Company, New York, New York, a
limited purpose trust company organized under the laws of the State of
New York, as depository for the Bonds pursuant to Section 4 hereof.
Finance Director means the Finance Director of the City, or any
successor to the functions of the Finance Director.
Fitch means Fitch, Inc., organized and existing under the laws of the
State of Delaware, its successors and their assigns, and, if such
organization shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, Fitch shall be deemed to refer to
any other nationally recognized securities rating agency (other than S&P or
Moody's) designated by the Finance Director.
Fixed Rate Bonds mean those Parity Bonds other than Capital
Appreciation Bonds, Original Issue Discount Bonds or Balloon Maturity
Bonds issued under an ordinance in which the rate of interest on such
Parity Bonds is fixed and determinable through their final maturity or for a
specified period of time. If so provided in the ordinance authorizing their
issuance, Parity Bonds may be deemed to be Fixed Rate Bonds for only a
portion of their term.
Future Parity Bonds mean any combined utility system revenue
bonds which the City may hereafter issue having a lien upon the Revenue
of the System for the payment of the principal thereof and interest thereon
equal to the lien upon the Revenue of the System of the Bonds.
Government Loans mean loans to the City from the Public Works
Trust Fund and any other subordinate lien revenue loans received by the
City in the future from the State of Washington or the United States of
America.
Government Obligations has the meaning given such term in chapter
39.53 RCW, as such chapter may be hereafter amended or restated.
Insurer means the municipal bond insurance company, if ãñy,
selected and designated by the Designated Representative, pursuant to
Section 15(b) of this ordinance, or any successor thereto or assignee
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Combined Utility System Revenue Bonds, Series 2OOg
thereof, as issuer of a Bond Insurance Policy for all or a poftion of one or
more series of Bonds.
Letter of Representations mean the Blanket Issuer Letter of
Representations from the City to DTC.
Maximum Annual Debt Service means highest dollar amount of
Annual Debt Service in any fiscal year or Base Period for all outstanding
Parity Bonds and/or for all subordinate lien evidences of indebtedness
secured by Revenue of the System, as the context requires.
Moody's means Moody's Investors Service, its successors and their
assigns, and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, Moody's shall be
deemed to refer to any other nationally recognized securities rating agency
(other than S&P and Fitch) designated by the Finance Director.
MSRB means the Municipal Securities Rulemaking Board or any
successors to its functions.
Net Proceeds, when used with reference to the Bonds, means the
principal amount of the Bonds, plus accrued interest and original issue
premium, if any, and less original issue discount and proceeds, if any,
deposited in the Reserve Account.
Net Revenue means Revenue of the System less Costs of
Maintenance and Operation.
Original Issue Discount Bonds mean Parity Bonds which are sold at
an initial public offering price of less than 95o/o of their face value and
which are specifically designated as Original Issue Discount Bonds in the
ordinance authorizing their issuance.
Other Derivative Product means a payment agreement entered into
in connection with one or more series of Parity Bonds between the City and
a counterparty permitted under chapter 39.96 RCW, as amended from time
to time, or any successor statute, which is not a Parity Derivative Product.
Parity Bonds means the Bonds and any Future Parity Bonds.
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Combined Utility System Revenue Bonds, Serres 2OOg
Parity Derivative Product means a payment agreement between the
City and a counterparty satisfying the requirements of chapter 39.96 RCW,
as amended from time to time, or any successor statute, obligating the
City to make regularly scheduled payments to the counterparty on a parity
with the payment of debt service on Parity Bonds.
Parity Requirement means Net Revenues equal to or greater than:
(a) L2Oo/o of Maximum Annual Debt Service for all Parity Bonds
computed by deducting from Annual Debt Service the Annual Debt Service
for each series or issue of Parity Bonds that is covered by ULID
Assessments and any Debt Service Offsets, and
(b) 100o/o of Maximum Annual Debt Service for all subordinate
lien evidences of indebtedness secured by Revenue of the System.
In determining the amount of Annual Debt Service "covered by ULID
Assessments", Annual Debt Service for each future year is reduced by the
dollar amount of ULID Assessments projected to be received during such
future year, and the remaining outstanding ULID Assessments are
assumed to be paid in the remaining number of annual installments with
no prepayments.
Private Person means any natural person engaged in a trade or
business or any trust, estate, partnership, association, company or
corporation.
Private Person Use means the use of property in a trade or business
by a Private Person if such use is other than as a member of the general
public. Private Person Use includes ownership of the property by the
Private Person as well as other arrangements that transfer to the Private
Person the actual or beneficial use of the property (such as a lease,
management or incentive payment contract or other special arrangement)
in such a manner as to set the Private Person apart from the general
public. Use of property as a member of the general public includes
attendance by the Private Person at municipal meetings or business rental
of propefty to the Private Person on a day-to-day basis if the rental paid by
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Combined Utility System Revenue Bonds, Seríes 2OOg
such Private Person is the same as the rental paid by any Private Person
who desires to rent the property. Use of property by nonprofit community
groups or community recreational groups is not treated as Private Person
Use if such use is incidental to the governmental uses of property, the
property is made available for such use by all such community groups on
an equal basis and such community groups are charged only a de minímis
fee to cover custodial expenses.
Project Funds mean the Water Project Fund, the Sewer and Drainage
Project Fund of the City.
Projects mean those projects specified in Appendix A and authorized
in Section 2 of this ordinance.
Qualified Insurance means any non-cancelable municipal bond
insurance policy or surety bond issued by any insurance company licensed
to conduct an insurance business in any state of the United States (or by a
service corporation acting on behalf of one or more such insurance
companies) which insurance company or companies, as of the time of
issuance of such policy or surety bond, are rated in one of the two highest
Rating Categories by any Rating Agency.
Qualified Letter of Credit means any irrevocable letter of credit
issued by a financial institution for the account of the City on behalf of
registered owners of the Bonds, which institution maintains an office,
agency or branch in the United States and as of the time of issuance of
such letter of credit, is rated in one of the two highest Rating Categories by
any Rating Agency.
Rate Covenant means Net Revenue in each fiscal year at least equal
to L20o/o of the amounts required in such fiscal year to be paid as
scheduled debt service (principal and interest) on all Parity Bonds,
subtracting from scheduled debt service (1) the amount of ULID
Assessments collected in such year and (2) Debt Service Offsets.
Furthermore, in determining compliance with the Rate Covenant, Net
Revenues are subject to adjustment to reflect the following:
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Combined Utility System Revenue Bonds, Series 2OOg
(a) It is the intent of the City that regularly scheduled net
payments under Parity Derivative Products be reflected in the calculation of
debt service with respect to the associated Parity Bonds and not as
adjustments to Revenue or Costs of Maintenance and Operation; and
(b) Revenue and Costs of Maintenance and Operation may be
adjusted, regardless of then applicable generally accepted accounting
principles, for certain items (e.9., to omit unrealized gains or losses in
investments) to reflect more fairly the System's annual operating
performance.
Rating Agency means Moody's, S&P or Fitch.
Rating Category means the generic rating categories of the Rating
Agency, without regard to any refinement or gradation of such rating
category by a numerical modifier or otherwise.
Registrar means the fiscal agency of the State of Washington, for
the purposes of registering and authenticating the Bonds, maintaining the
Bond Register, effecting transfer of ownership of the Bonds, and paying the
principal of, premium, if any, and interest on the Bonds.
Registered Owner means the person named as the registered owner
of a Bond in the Bond Register. For so long as the Bonds are held in book-
entry only form, DTC shall be deemed to be the sole Registered Owner.
Reserve Account means the Debt Service Reserve Account
maíntained within the Bond Fund.
Reserve Requiremenf is the dollar amount to be calculated with
respect to all Covered Bonds and separately with respect to other Parity
Bonds.
(a) With respect to Covered Bonds, the Reserve Requirement
shall be equal to the least of:
(1) Maximum Annual Debt Service for Covered Bonds,
(2) LOo/o of the initial principal amount of Covered Bonds of
each series, and
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Combined Utility System Revenue Bonds, Series 2OOg
(3) L25o/o of average annual debt service for Covered
Bonds; provided, however, that the dollar amount required to be
contributed, if any, as a result of the issuance of a series of Future Parity
Bonds shall not be greater than the Tax Maximum. If the dollar amount
required to be contributed at the time of issuance of a series exceeds the
Tax Maximum, then the amount required to be contributed shall be equal
to the Tax Maximum.
(b) With respect to other series of Parity Bonds, the Reserve
Requirement shall be equal to the amount specified in the ordinance
authorizing the issuance of that series of Parity Bonds.
The Reserve Requirement shall be adjusted accordingly and remain
in effect until the earlier of (1) at the City's option, a payment of principal
of Parity Bonds or (2) the issuance of a subsequent series of Future Parity
Bonds (when the Reserve Requirement shall be re-calculated).
Revenue Fund means, collectively, Water Fund and the Sewerage
Fund, each maintained by the City, and shall also include any other fund of
the City into which the Revenue of the System is deposited.
Revenue of the System or Revenue means all of the earnings and
revenues received by the City from the maintenance and operation of the
System and connection and capital improvement charges collected for the
purpose of defraying the cost of capital facilities of the System, including
investment earnings, but excluding government grants, proceeds from the
sale of System property, City taxes collected by or through the System,
principal proceeds of bonds and earnings or proceeds from any
investments in a trust, defeasance or escrow fund created to defease or
refund System obligations (until commingled with other earnings and
revenues of the System) or held in a special account for the purpose of
paying a rebate to the United States Government under the Code,
Revenue of the System shall also include any federal or state
reimbursements of operating expenses to the extent such expenses are
included as Costs of Maintenance and Operation; provided, howeve4, that
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Combined Utility System Revenue Bonds, Serr'es 2OOg
Revenue of the System shall not include ULID Assessments. Amounts
withdrawn from the Coverage Stabilization Account shall increase Revenue
for the period in which they are withdrawn, and amounts deposited in the
Coverage Stabilization Account shall reduce Revenue for the period during
which they are deposited, Credits to or from the Coverage Stabilization
Account that occur within 90 days after the end of a fiscal year may be
treated as occurring within such fiscal year.
Rule means the SEC's Rule 15c2-12 under the Securities Exchange
Act of 1934, as the same may be amended from time to time.
S&P means Standard & Poor's Ratings Services, a Standard & Poor's
Financial Services LLC business, a New York corporation, its successors and
their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, S&P
shall be deemed to refer to any other nationally recognized securities
rating agency (other than Moody's and Fitch) designated by the Finance
Director.
SEC means the Securities and Exchange Commission.
System means, for so long as any of the Parity Bonds are
outstanding: (a) the water collection and distribution system of the City,
as it now exists and including all additions, betterments and extensions at
any time made; (b) the sanitary sewage collection and disposal system of
the City, as it now exists and including all additions, betterments and
extensions at any time made; (c) the storm and surface water utility of the
City, as it now exists and including all additions, betterments and
extensions at any time made; and (d) any other system or utility, that may
lawfully be combined with the foregoing.
Tax Maximuln means the maximum dollar amount permitted by the
Internal Revenue Code of 1986, as amended, including applicable
regulations thereunder, to be allocated to a bond reserve account from
bond proceeds without requiring a balance to be invested at a restricted
yield.
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CombÍned Utility System Revenue Bonds, Series 2OOg
Taxable Bonds means any Bonds determined to be issued on a
taxable basis, including any Build America Bonds, pursuant to
Section 15(a) of this ordinance.
Tax-Exempt Bonds means any Bonds determined to be issued on a
tax-exempt basis pursuant to Section 15(a) of this ordinance.
Term Bonds means any Bonds designated as term bonds in the Bond
Purchase Contract that are payable as to principal, in part, by mandatory
sinking fund redemptions prior to their stated maturities.
ULID means a utility local improvement district of the City. The City
does not currently have any existing utility local improvement districts.
ULID Assessmenfs means the assessments levied in all ULIDs, the
assessments in which are payable into the Bond Fund, and shall include
installments thereof and interest and any penalties thereon.
Underwriters mean Piper Jaffray & Co., Barclays Capital Inc. and
Siebert Brandford Shank & Co., LLC.
Rules of Interoretation. In this ordinance, unless the context
otherwise requires:
(a) The terms "herebyr" "hereofr" "heretor" "herein, "hereunder"
and any similar terms, as used in this ordinance, refer to this ordinance as
a whole and not to any particular article, section, subdivision or clause
hereof, and the term "hereafter" shall mean after, and the term
"heretofore" shall mean before, the date of this ordinance;
(b) Words of the masculine gender shall mean and include
correlative words of the feminine and neuter genders and words importing
the singular number shall mean and include the plural number and vice
versa;
(c) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations and other
legal entities, including public bodies, as well as natural persons;
(d) Any headings preceding the text of the several sections of this
ordinance, and any table of contents or marginal notes appended to copies
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Combined Utility System Revenue Bonds, Series 2OOg
hereof, shall be solely for convenience of reference and shall not constitute
a part of this ordinance, nor shall they affect íts meaning, construction or
effect;
(e) All references herein to "articles," "sections" and other
subdivisions or clauses are to the corresponding articles, sections,
subdivisions or clauses hereof:
(f) Words importing the singular number include the plural
number and vice versa.
SECTION 2, - Findings and Purposes: Plan of Additions and
Betterments to the System, The Council hereby finds that it is in the best
interest of the City and its ratepayers to combine its water collection and
distribution system, the sanitary sewage collection and disposal system,
and the storm and surface water utility for purposes of paying debt service
on Parity Bonds and meeting Parity Bond covenants. "System" shall
hereafter have the meaning for such term set forth in Section 1 of this
ordinance.
The City Council hereby finds that the public interest, welfare and
convenience require the construction, acquisition and installation of certain
improvements to the System, including but not limited to the
improvements listed in Appendix A attached hereto and incorporated
herein by this reference (together, the "Projects") and that said
improvements are legally required and/or economically sound, and will
contribute to the conduct of the business of the System in an efficient
manner.
The City shall provide all equipment, connections and appurtenances
together with all work as may be incidental and necessary to complete the
Projects. The Project facilities shall be integrated into the System as
required to provide a fully operational facility.
The City may make such changes in or additions to the Projects or in
the construction or design of other facilities of the System as may be found
necessary or desirable. Implementation or completion of any specified
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Combined Utility System Revenue Bonds, Serr'es 2OOg
improvement shall not be required if the City Council determines that, due
to substantially changed circumstances, it has become advisable or
impractical. If the Projects have either been completed, or its completion
duly provided for, or their completion found to be impractical, the City may
apply the Bond proceeds or any poftion thereof to other improvements to
the System, as the City Council in its discretion shall determine. In the
event that the proceed of sale of the Bonds, plus any other moneys of the
City legally available, are insufficient to accomplish all of the Projects
provided by this section, the City shall use the available funds for paying
the cost of those improvements for which the Bonds were approved,
deemed by the City Council most necessary and to the best interest of the
City.
The City shall acquire by purchase, lease or condemnation, all
property, both real and personal, or any interest therein, or rights-of-way
and easements that may be found necessary to acquire, construct and
install the Projects.
The estimated cost of this plan of additions and betterments and all
costs incidental thereto (including costs of issuance of the Bonds and
funding of the Reserve Requirement), is hereby declared to be as nearly as
practicable the sum of $175,000,000, a portion of which shall be provided
out of the proceeds of the sale of the Bonds.
SECTION 3, - Authorization and Description of Bonds. The City
shall now issue and sell one or more series of combined utility system
revenue bonds in the aggregate principal amount of not to exceed
$25,000,000 (the "Bonds") for the purpose of paying a portion of the costs
of the Project and paying the costs of issuance of the Bonds.
The Bonds shall be designated as the "City of Kent, Washington
Combined Utility System Revenue Bonds, Series 2009" and with the
additional designation of "Taxable" for any series of Taxable Bonds. At the
written direction of the Designated Representative, the Registrar shall
designate a particular principal amount of Bonds as a series. A series of
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Combined Utìlity System Revenue Bonds, Series 2OOg
Bonds shall be identified by the year of issue and sequential letters (e.9.
Series 20094, Series 20098). Upon such designation, such Bonds shall be
a series for the purposes of this ordinance, unless and until consolidated or
changed to another series designation by written direction of the
Designated Representative. The Bonds of each series shall be dated as of
their date of original issuance and delivery; shall be fully registered as to
both principal and interest; shall be in the denomination of $5,000 each, or
any integral multiple thereof within a series and maturity, provided that no
Bond shall represent more than one series and maturity; shall be
numbered separately in such manner and with any additional designation
as the Registrar deems necessary for purposes of identification; shall bear
interest from their date payable semiannually on the interest payment
dates set forth in the Bond Purchase Contract; and shall mature in the
years and in the principal amounts as set forth and approved in the Bond
Purchase Contract executed by the Designated Representative pursuant to
Section 15(a) of this ordinance.
The Bonds shall be obligations only of the Bond Fund and shall be
payable and secured as provided herein. The Bonds do not constitute an
indebtedness or general obligation of the City within the meaning of the
constitutional provisions and limitations of the State of Washington.
SECTION 4, - Registration Exchange and Payments.
(a) Registrar/Bond Register. The City hereby adopts the system
of registration and transfer for the Bonds approved by the Washington
State Finance Committee from time to time through the appointment of
state fiscal agencies. The City shall cause a bond register to be maintained
by the Registrar. So long as any Bonds remain outstanding, the Registrar
shall make all necessary provisions to permit the exchange or registration
of transfer of Bonds at its principal corporate trust office. The Registrar is
authorized, on behalf of the City, to authenticate and deliver Bonds
transferred or exchanged in accordance with the provisions of such Bonds
and this ordinance and to carry out all of the Registrar's powers and duties
L7
Combined UtÍlìty System Revenue Bonds, Series 2OO9
under this ordinance. The Registrar shall be responsible for its
representations contained in the Certificate of Authentication on the Bonds.
(b) Registered Ownership. The City and the Registrar, each in its
discretion, ffiây deem and treat the Registered Owner of each Bond as the
absolute owner thereof for all purposes (except as provided in Section 18
of this ordinance), and neither the City nor the Registrar shall be affected
by any notice to the contrary. Payment of any such Bond shall be made
only as described in Section 4(g) hereof, but such Bond may be transferred
as herein provided. All such payments made as described in Section 4(g)
shall be valid and shall satisfy and discharge the liability of the City upon
such Bond to the extent of the amount or amounts so paid.
(c) DTC Acceptance/Letter of Representations. To induce DTC to
accept the Bonds as eligible for deposit at DTC, the City has executed and
delivered to DTC a Letter of Representations.
Neither the City nor the Registrar will have any responsibility or
obligation to DTC participants or the persons for whom they act as
nominees (or any successor depository) with respect to the Bonds in
respect of the accuracy of any records maintained by DTC (or any
successor depository) or any DTC participant, the payment by DTC (or any
successor depository) or any DTC participant of any amount in respect of
the principal of or interest on Bonds, any notice which is permitted or
required to be given to Registered Owners under this ordinance (except
such notices as shall be required to be given by the City to the Registrar or
to DTC (or any successor depository), or any consent given or other action
taken by DTC (or any successor depository) as the Registered Owner. For
so long as any Bonds are held in fully-immobilized form hereunder, DTC or
its successor depository shall be deemed to be the Registered Owner for all
purposes hereunder (except for purposes of Section 18 of this ordinance),
and all references herein to the Registered Owners shall mean DTC (or any
successor depository) or its nominee and shall not mean the owners of any
beneficial interest in such Bonds.
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Combined Utility System Revenue Bonds, Serr'es 2OOg
If any Bond shall be duly presented for payment and funds have not
been duly provided by the City on such applicable date, then interest shall
continue to accrue thereafter on the unpaid principal thereof at the rate
stated on such Bond until such Bond is paid.
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of
"CEDE & Co.", as nominee of DTC, with one Bond maturing on each of the
maturity dates for each series of thg Bonds in a denomination
corresponding to the total principal therein designated to mature on such
date. Registered ownership of such immobilized Bonds, or any portions
thereof, may not thereafter be transferred except (A) to any successor of
DTC or its nominee, provided that any such successor shall be qualified
under any applicable laws to provide the service proposed to be provided
by it; (B) to any substitute depository appointed by the Designated
Representative pursuant to subsection (2) below or such substitute
depository's successor; or (C) to any person as provided in subsection (4)
below.
(2) 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 Finance Director to discontinue the system of book
entry transfers through DTC or its successor (or any substitute depository
or its successor), the Finance Director may hereafter 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.
(3) In the case of any transfer pursuant to clause (A) or (B)
of subsection (1) above, the Registrar shall, upon receipt of all outstanding
Bonds, together with a written request on behalf of the Finance Director,
issue a single new Bond for each series and maturity then outstanding,
registered in the name of such successor or such substitute depository, or
their nominees, as the case may be, all as specified in such written request
of the Finance Director.
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Combined Utility System Revenue Bonds, Series 2OO9
(4) In the event that (A) DTC or its successor (or substitute
deposítory or its successor) resigns from its functions as depository, and
no substitute depository can be obtained, or (B) the Finance Director
determines that it is in the best interest of the beneficial owners of the
Bonds that such owners be able to obtain such Bonds in the form of Bond
certificates, the ownership of such Bonds may then be transferred to any
person or entity as herein provided, and shall no longer be held in
fully-immobilized form. The Finance Director shall deliver a written request
to the Registrar, together with a supply of definitive Bonds, to issue Bonds
as herein provided in any authorized denomination. Upon receipt by the
Registrar of all then outstanding Bonds together with a written request on
behalf of the Finance Director to the Registrar, new Bonds shall be issued
in the appropríate denominations and registered in the names of such
persons as are requested in such written request.
(e) Registratíon of Transfer of Ownership or Exchange; Change in
Denominations. The transfer of any Bond may be registered and Bonds
may be exchanged, but no transfer of any such Bond shall be valid unless
such Bond is surrendered to the Registrar with the assignment form
appearing on such Bond duly executed by the Registered Owner or such
Registered Owner's duly authorized agent in a manner satisfactory to the
Registrar. Upon such surrender, the Registrar shall cancel the surrendered
Bond and shall authenticate and deliver, without charge to the Registered
Owner or transferee therefor, a new Bond (or Bonds at the option of the
new Registered Owner) of the same date, series, maturity and interest rate
and for the same aggregate principal amount in any authorized
denomination, naming as Registered Owner the person or persons listed as
the assignee on the assignment form appearing on the surrendered Bond,
in exchange for such surrendered and cancelled Bond. Any Bond may be
surrendered to the Registrar and exchanged, without charge, for an equal
aggregate principal amount of Bonds of the same date, series, maturity
and interest rate, in any authorized denomination. The Registrar shall not
20
Combined UtilitV System Revenue Bonds, Serres 2OOg
be obligated to register the transfer or to exchange any Bond during the
15 days preceding any interest payment or principal payment date any
such Bond is to be redeemed.
(f) Registrar's Ownership of Bonds. The Registrar may become
the Registered Owner of any Bond with the same rights it would have if it
were not the Registrar, and to the extent permitted by law, may act as
depository for and permit any of its officers or directors to act as member
of, or in any other capacity with respect to, any committee formed to
protect the right of the Registered Owners of Bonds.
(g) Place and Medium of Payment, The 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 calculated on the basis of a 360-
day year and twelve 30-day months. For so long as all Bonds are in
fully-immobilized form, such payments of principal and interest thereon
shall be made as provided in the operational arrangements of DTC as
referred to in the Letter of Representations.
In the event that the Bonds are no longer in fully-immobilized form,
interest on the Bonds shall be paid by check or draft mailed to the
Registered Owners of the Bonds at the addresses for such Registered
Owners appearing on the Bond Register on the 15th day of the month
preceding the interest payment date. Principal of the Bonds shall be
payable upon presentation and surrender of such Bonds by the Registered
Owners at the principal office of the Registrar.
SECTION 5, - Redemption and Purchase.
(a) Mandatory Redemptíon of Term Bonds and Optíonal
Redemption, if any. The Bonds may be called for redemption at any time
prior to scheduled maturity under terms approved by the Designated
Representative in the Bond Purchase Contract pursuant to Section 15(a) of
this ordinance.
(b) Purchase of Bonds for Retirement. The City reserves the right
to use at any time any surplus Revenue of the System available after
2L
Combined Utility System Revenue Bonds, Seríes 2OOg
providing for the payments required by paragraphs First, through Fifth of
Section 6 of this ordinance, or other available funds, to purchase for
retirement any of the Bonds at any price deemed reasonable by the City.
(c) Effect of Purchase. To the extent that the City shall have
purchased any Balloon Maturity Bonds or Term Bonds since the last
scheduled mandatory redemption of such Balloon Maturity Bonds, the City
may reduce the principal amount of such Balloon Maturity Bonds or Term
Bonds to be redeemed in like principal amount. Such reduction may be
applied in the year specified by the Finance Director.
(d) Selection of Bonds for Redemption. Except to the extent that
another method is prescribed in the Bond Purchase Contract, as long as the
Bonds are held in book-entry only form, the maturities of the Bonds to be
redeemed shall be selected by the City and, within a series and maturity,
the selection of the Bonds of such series to be redeemed shall be made in
accordance with the operational arrangements in effect at DTC. If the
Bonds are no longer held in uncertificated form, the selection of such
Bonds to be redeemed shall be made as provided in this subsection (d). If
the City redeems at any one time fewer than all of the Bonds having the
same maturity date, the pafticular Bonds or portions of Bonds of such
maturity to be redeemed shall be selected randomly or as otherwise
specified in the Bond Purchase Contract (or in such other manner
determined by the Registrar) in increments of $5,000. In the case of a
Bond of a denomination greater than $5,000, the City and Registrar shall
treat each Bond as representing such number of separate Bonds each of
the denomination of $5,000 as is obtained by dividing the actual principal
amount of such Bond by $5,000. If Bonds are called for optional
redemption, portions of the principal amount of such Bonds, in installments
of $5,000 or any integral multiple of $5,000, ffiây be redeemed. If less
than all of the principal amount of any Bond is redeemed, upon surrender
of such Bond at the principal office of the Registrar, there shall be issued to
the Registered Owner, without charge therefor, for the then unredeemed
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Combined Utility System Revenue Bonds, Serr'es 2OOg
balance of the principal amount thereof, a new Bond or Bonds, at the
option of the Registered Owner, of like series, maturity and interest rate in
any denomination authorized by this ordinance.
(e) Notice of Redemption.
(1) Official Notice. Unless waived by any owner of Bonds to
be redeemed, official notice of any such redemption (which notice may be
conditional) shall be given by the Registrar on behalf of the City by mailing
a copy of an official redemption notice by first class mail at least 15 days
and not more than 60 days prior to the date fixed for redemption to the
Registered Owner of the Bond or Bonds to be redeemed at the address
shown on the Bond Register or at such other address as is furnished in
writing by such Registered Owner to the Registrar, All official notices of
redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
(C) if fewer than all outstanding Bonds are to be
redeemed, the identification by series and maturity (and, in the case of
partial redemption, the respective principal amounts) of the Bonds to be
redeemed,
(D) that on the redemption date the redemption price
will become due and payable upon each such Bond or portion thereof called
for redemption, and that interest thereon shall cease to accrue from and
after said date, and
(E) the place where such Bonds are to be
surrendered for payment of the redemption price, which place of payment
shall be the principal office of the Registrar.
On or prior to any redemption date, the City shall deposit with the
Registrar an amount of money sufficient to pay the redemption price of all
the Bonds or portions of Bonds which are to be redeemed on that date,
unless the redemption notice specified a conditional redemption and the
condition was not fulfilled.
23
Comtbined Utility System Revenue Bonds, Seríes 2OOg
(2) Effect of Notice; Bonds Due. Official notice of
redemption having been given as aforesaid, the Bonds or poftions of Bonds
so to be redeemed shall, on the redemption date, become due and payable
at the redemption price therein specified, and from and after such date
(unless the City shall default in the payment of the redemption price) such
Bonds or portions of Bonds shall cease to bear interest. Upon surrender of
such Bonds for redemption in accordance with said notice, such Bonds shall
be paid by the Registrar at the redemption price. Installments of interest
due on or prior to the redemption date shall be payable as herein provided
for payment of interest. Upon surrender for any partial redemption of any
Bond, there shall be prepared for the Registered Owner a new Bond or
Bonds of the same series and maturity in the amount of the unpaid
principal. All Bonds which have been redeemed shall be canceled and
destroyed by the Registrar and shall not be reissued. The City will not
provide notices of redemption to beneficial owners of any Bond, and notice
to DTC in accordance with this section shall constitute sufficient notice.
(3) Additional Notice. In addition to the foregoing notice,
further notice shall be given by the City as set out below, but no defect in
said further notice nor any failure to give all or any portion of such further
notice shall in any manner defeat the effectiveness of a call for redemption
if notice thereof is given as above prescribed. Each further notice of
redemption given hereunder shall contain the information required above
for an official notice of redemption plus (A) the CUSIP numbers of all Bonds
being redeemed; (B) the date of issue of the Bonds as originally issued;
(C) the rate of interest borne by each Bond being redeemed; (D) the
maturity date of each Bond being redeemed; and (E) any other descriptive
information needed to identify accurately the Bonds being redeemed. Each
further notice of redemption may be sent at least 15 days before the
redemption date to the each party entitled to receive notice pursuant to
Section 18, and to the Underwriter or to its business successor, if any, and
to such persons and with such additional information as the Finance
24
Combined Utility System Revenue Bonds, Series 2OOg
Director shall deem appropriate, but such mailings shall not be a condition
precedent to the redemption of such Bonds.
(4) CUSIP Numbers. Upon the payment of the redemption
price of Bonds being redeemed, each check or other transfer of funds
issued for such purpose shall bear the CUSIP number identifying, by issue
and maturity, the Bonds being redeemed with the proceeds of such check
or other transfer.
(5) Amendment of Notice Provisions. The foregoing notice
provisions of this Section 5, including but not limited to the information to
be included in redemption notices and the persons designated to receive
notices, may be amended by additions, deletions and changes in order to
maintain compliance with duly promulgated regulations and
recommendations regarding notices of redemption of municipal securities,
SECTTON 6, _Þartant ta Ft tn¡'l , Drinrifrt llnnlì¡alían aF Datt^nrrı'
Coverage Stabilization Account' Contract Resource Obligations.
(a) Revenue Fund. All Revenue of the System shall be deposited
in the Revenue Fund (the "Revenue Fund"). The City maintains the
Revenue Fund as a separate enterprise fund of the City. Notwithstanding
the foregoing, the Finance Director may maintain such separate funds and
accounts in such names and under such additional designations as shall be
required to comply with the City practices and/or uniform system of
accounting established by the State Auditor from time to time.
(b) Priority of Applicatíon of Revenue of the System. The
Revenue Fund shall be held separate and apart from all other funds and
accounts of the City and the Revenue of the System deposited in such
Fund shall be used only for the following purposes and in the following
order of priority:
First, to pay the Costs of Maintenance and Operation of the
System;
Second, to pay the interest on any Parity Bonds, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified
25
Combined Utility System Revenue Bonds, Serr-es 2OOg
Insurance if the Qualified Letter of Credit or Qualified Insurance secures
the payment of interest on Parity Bonds and the ordinance authorizing such
Parity Bonds provides for such reimbursement and, without duplication, to
make regularly scheduled payments due with respect to any Parity
Derivative Product;
Third, to pay the principal of any Parity Bonds, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified
Insurance if the Qualified Letter of Credit or Qualified Insurance secures
the payment of principal of Parity Bonds and the ordinance authorizing
such Parity Bonds provides for such reimbursement;
Fourth, to make all payments required to be made into the
Reserve Account for Covered Bonds and to any reserve account created in
the future for the payment of debt service on Future Parity Bonds,
including reimbursements to the issuer of a Qualified Letter of Credit or
Qualified Insurance if the Qualified Letter of Credit or Qualified Insurance
has been issued to fund the Reserve Requirement and/or the reserve
requirement(s) for any Future Parity Bonds and the ordinance authorizing
such Parity Bonds provides for such reimbursement;
Fifth, to make all payments required to be made into any
revenue bond redemption fund or revenue warrant redemption fund and
debt service fund or reserve account created to pay and secure the
payment of the principal of and interest on Government Loans and any
other revenue bonds or revenue warrants of the City having a lien upon the
Revenue of the System junior and inferior to the lien thereon for the
payment of the principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding
revenue bonds or revenue warrants of the City, to make necessary
additions, betterments, improvements and repairs to or extensions and
replacements of the System, or
Seventh, for any other lawful City purposes.
26
Combined UtÍlitV System Revenue Bonds, Seríes 2OOg
The City may transfer any money from any funds or accounts of the
System legally available therefor, except bond redemption funds, refunding
escrow funds or defeasance funds, to meet the required payments to be
made into the Bond Fund.
Notwithstanding the foregoing, the obligations of the City to make
nonscheduled payments under a Parity Derivative Product (i.e,, any
termination payment or other fees) and/or make any payment pursuant to
an Other Derivative Product may be payable from Revenue of the System
available after Sixth above, as set forth in such Parity Derivative Product or
Other Derivative Product.
(c) Coverage Stabilization Account. The Finance Director is
hereby authorized to create a Coverage Stabilization Account within the
Revenue Fund. The City hereby determines that the maintenance of a
Coverage Stabilization Account will moderate fluctuations in Net Revenues
and help to alleviate the need for short-term rate adjustments. Money in
the Coverage Stabilization Account will be transferred as determined from
time to time by the City. The City may make payments into the Coverage
Stabilization Account from the Revenue Fund at any time. Money in the
Coverage Stabilization Account may be withdrawn at any time and used for
the purpose for which the Revenue of the System may be used. Amounts
withdrawn from the Coverage Stabilization Account shall increase Revenue
of the System for the period in which they are withdrawn, and amounts
deposited in the Coverage Stabilization Account shall reduce Revenue of
the System for the period during which they are deposited, Credits to or
from the Coverage Stabilization Account that occur within 90 days after the
end of a fiscal year may be treated as occurring within such fiscal year.
Earnings on the Coverage Stabilization Account shall be credited to the
Revenue Fund.
(d) Contract Resource Obligations. The City may at any time
enter into one or more contracts or other obligations for the acquisition,
from facilities to be constructed, of water, sewer or storm water supply,
27
Combined Utility System Revenue Bonds, Serr-es 2OOg
transmission, treatment or other commodity or service relating to the
System. The City may determine that such contract or other obligation is a
Contract Resource Obligation, and may provide that all payments under
that Contract Resource Obligation (including payments prior to the time
that water, sewer or storm water supply, transmission, treatment or other
commodity or service is being provided, or during a suspension or after
termination of supply or service) shall be Costs of Maintenance and
Operation if the following requirements are met at the time such Contract
Resource Obligation is entered into:
(1) The City shall not be in default with respect to any obligations
of it under this ordinance.
(2) There shall be on file a certificate of a Consultant stating that
(A) the payments to be made by the City in connection with the Contract
Resource Oblígation are reasonable for the supply, transmission, treatment
or other service rendered; (B) the source of any new supply, and any
facilities to be constructed to provide the supply, transmission, treatment
or other service, are sound from a water, sewer or storm 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 or other service no later than a
date set forth in the Consultant's certification; and (C) the Net Revenue
(fufther adjusted by the Consultant's estimate of the payments to be made
in accordance with the Contract Resource Obligation) for the five fiscal
years following the year in which the Contract Resource Obligation is
incurred, as such Net Revenue is estimated by the Consultant (with such
estimate based on such factors as he or she considers reasonable), will be
at least equal to the Parity Requirement.
Payments required to be made under Contract Resource Obligations
shall not be subject to acceleration.
Nothing in this Section 6(d) shall be deemed to prevent the City
from entering into other agreements for the acquisition of water supply,
28
Combined Utility System Revenue Bonds, Series 2OOg
transmission, treatment or other commodity or service from existing
facilities and from treating those payments as Costs of Maintenance and
Operation of the System so long as such service is actually being supplied.
Nothing in this Section 6(d) shall be deemed to prevent the City from
entering into other agreements for the acquisition of water, sewer or storm
water supply, transmission, treatment 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 Net
Revenue subordinate to that of Parity Bonds.
SECTION 7, - Bond Fund and Reserve Account The Finance
Director is hereby authorized to establish the City of Kent Revenue Bond
Fund for the payment of the debt service on all Parity Bond (the "Bond
Fund"). The Finance Director is also hereby authorized to establish the
Debt Service Reserve Account (the "Reserve Account") within the Bond
Fund as a common reserve, securing the repayment of the Bonds and any
Future Parity Bonds that are designated as Covered Bonds in the ordinance
authorizing their issuance (inclusively, "Covered Bonds").
(a) Payments into Bond Fund. The Bond Fund shall be
maintained for the purpose of paying the principal of and interest on all
Parity Bonds.
As long as any Parity Bond remains outstanding, the City hereby
irrevocably obligates and binds itself to set aside and pay from the
Revenue Fund into the Bond Fund those amounts necessary, together with
such other funds as are on hand and available in the Bond Fund, to pay the
interest or principal and interest next coming due on outstanding Parity
Bonds and to pay regularly scheduled net payments on Parity Derivative
Products. Such payments from the Revenue Fund to the Bond Fund shall
be made in a fixed amount without regard to any fixed proportion following
the closing and delivery of the Bonds on or before each date on which an
installment of interest or principal and interest falls due on Parity Bonds
equal to the installment of interest or principal and interest,
29
Combined Utility System Revenue Bonds, Series 2OOg
The Finance Director is hereby authorized and directed and the City
hereby obligates and binds itself to set aside and pay into the Bond Fund
all ULID Assessments as the same are collected.
(b) Payments into Reserve Account. The Reserve Account shall
be maintained for the purpose of securing the payment of the principal of
and interest on all Covered Bonds, The City covenants and agrees that
within three years from and after the closing and delivery of the Bonds, it
shall establish and thereafter at all times shall maintain an amount in the
Reserve Account at least equal to the Reserve Requirement, except for
withdrawals therefrom authorized hereinafter, for so long as any Covered
Bonds remain outstanding. The Reserve Requirement may be maintained
by deposits of cash, a Qualified Letter of Credit or Qualified Insurance, or a
combination of the foregoing. In computing the amount on hand in the
Reserve Account, Qualified Insurance and/or a Qualified Letter of Credit
shall be valued at the face amount thereof, and all other obligations
purchased as an investment of moneys therein shall be valued at cost. As
used herein, the term "cash" shall include U.S. currency, cash equivalents
and evidences thereof, including demand deposits, certified or cashier's
check; and the deposit to the Reserve Account may be satisfied initially by
the transfer of qualified investments to such account. Upon the closing
and delivery of the Bonds, the City will deposit cash into the Reserve
Account in an amount equal to one-twelfth of the Reserve Requirement for
the Covered Bonds and thereafter shall deposit the remainder of the
Reserve Requirement in approximately equal quarterly installments so that
on the date that is three years from the date of issuance of the Bonds
there will have been deposited into the Reserve Account an amount that,
together with the money already on deposit therein, will be at least equal
to the Reserve Requirement. Such quarterly payments into the Reserve
Account shall be made not later than January 1, April 1, July I, and
October 1 of each year, commencing January L,20L0.
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Combined Utility System Revenue Bonds, Serr'es 2OOg
In the event the City issues any Future Parity Bonds that are
Covered Bonds, it will provide in the ordinance authorizing the issuance of
the same for payment into the Reserve Account out of proceeds of such
Future Parity Bonds, Revenue of the System or ULID Assessments (or, at
the option of the City, out of any other funds on hand and legally available
therefor) approximately equal quarterly installments so that by the date
that is three years from the date of issuance of such Future Parity Bonds
there will have been deposited into the Reserve Account an amount that,
together with the money already on deposit therein, will be at least equal
to the Reserve Requirement. Such quarterly payments into the Reserve
Account shall be made not later than January 1, April 1, July L, and
October 1 of each year.
If the balances on hand in the Reserve Account are sufficient to
satisfy the Reserve Requirement, interest earnings shall be applied as
provided in the following sentences, Whenever there is a sufficient amount
in the Bond Fund, including the Reserve Account to pay the principal of and
interest on all outstanding Covered Bonds, the money in the Reserve
Account may be used to pay such principal and interest. As long as the
money left remaining on deposit in the Reserve Account is equal to the
Reserve Requirement, money in the Reserve Account may be transferred
to the Bond Fund and used to pay the principal of and interest on Covered
Bonds as the same becomes due and payable, The City also may transfer
out of the Reserve Account any money required in order to prevent any
Parity Bonds from becoming "arbitrage bonds" under the Code.
If a deficiency in the Bond Fund for the payment of debt service on
Covered Bonds shall occur, such deficiency shall be made up from the
Reserve Account by the withdrawal of cash therefrom for that purpose and
by the sale or redemption of obligations held in the Reserve Account, in
such amounts as will provide cash in the Reserve Account sufficient to
make up any such deficiency with respect to Covered Bonds, and if a
deficiency still exists immediately prior to an interest payment date and
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Combined Utility System Revenue Bonds, Serres 2OOg
after the withdrawal of cash, the City shall then draw from any Qualified
Letter of Credit or Qualified Insurance for Covered Bonds in sufficient
amount to make up the deficiency. Such draw shall be made at such times
and under such conditions as the agreement for such Qualified Letter of
Credit or such Qualified Insurance shall provide.
In making the payments and credits to the Reserve Account required
by this Section 7(b), to the extent that the City has obtained Qualified
Insurance or a Qualified Letter of Credit for specific amounts required
pursuant to this section to be paid out of the Reserve Account such
amounts so covered by Qualified Insurance or a Qualified Letter of Credit
shall be credited against the amounts required to be maintained in the
Reserve Account by this Section 7(b) to the extent that such payments and
credits to be made are insured by an insurance company, or guaranteed by
a letter of credit from a financíal institution.
Any deficiency created in the Reserve Account by reason of any such
withdrawal shall then be made up within three years of the date of
withdrawal from Net Revenues or from ULID Assessments (or out of any
other moneys on hand legally available for such purpose), in equal
quarterly installments on each January L, April 1, July 1 and October 1,
after making necessary provision for the payments required to be made
into the Bond Fund within such year.
Any Qualified Letter of Credit or Qualified Insurance shall not be
cancelable on less than 30 days' notice to the City, In the event of any
cancellation, the Reserve Account shall be funded as if the Covered Bonds
that remain outstanding had been issued on the date of such notice of
cancellation.
In the event that the City elects to meet the Reserve Requirement
through the use of a Qualified Letter of Credit, Qualified Insurance or other
equivalent credit enhancement device, the City may contract with the
entity providing such Qualified Letter of Credit, Qualified Insurance or other
equivalent credit enhancement device that the City's reimbursement
32
Combined Utility System Revenue Bonds, Series 2OOg
obligation, if any, to such entity shall be made from payments of principal
and interest on Covered Bonds from the City subject only to the prior lien
thereon for the payments required hereunder to be made to registered
owners of Parity Bonds.
(c) Priority of Lien of Payments into Bond Fund and Reserve
Account. The amounts so pledged to be paid into the Bond Fund and the
Reserve Account from the Revenue Fund and from ULID Assessments are
hereby declared to be a prior lien and charge upon the Revenue of the
System and ULID Assessments superior to all other charges of any kind or
nature whatsoever except the Costs of Maintenance and Operation of the
System, and except that the amounts so pledged are of equal lien to the
charges upon such Revenue of the System and ULID Assessments for the
payment of the principal of and interest on any Future Parity Bonds.
(d) Application and Investment of Moneys in the Bond Fund and
Reserve Account. Money in the Bond Fund and Reserve Account may be
kept in cash or invested as permitted by law. Investments in the Bond
Fund shall mature prior to the date on which such money shall be needed
for required interest or principal payments (for investments in the Bond
Fund) or having a guaranteed redemption price prior to maturity.
Investments in the Reserve Account shall mature not later than the last
maturity of any then outstanding Parity Bonds.
(e) Sufficlency of Revenues. The City Council hereby finds that in
fixing the amounts to be paid into the Bond Fund and the Reserve Account
out of the Revenue of the System, it has exercised due regard for the
Costs of Maintenance and Operation and has not obligated the City to set
aside and pay into the Bond Fund and the Reserve Account a greater
amount of such Revenue than in its judgment will be available over and
above the Costs of Maintenance and Operation.
33
Combined Utility System Revenue Bonds, Serres 2OO9
SECTION 8. - Specífic Covenants.
(a) Rate Covenant. The City will establish, maintain and collect
such rates and charges for service of its System for so long as any Bonds
are outstanding as will maintain the Rate Covenant.
(b) System Maintenance. The City will at all times maintain and
keep the System in good repair, working order and condition, and also will
at all times operate such utility and the business in connection therewith in
an efficient manner and at a reasonable cost.
(c) Disposal of Properties. The City will not mortgage, sell, lease,
or in any manner encumber or dispose of all or substantially all the
propefty of the System (voluntarily or involuntarily), unless provision is
made for payment into the Bond Fund of a sum sufficient to pay the
principal of, premium, if any, and interest on all outstanding bonds payable
therefrom, nor will it moftgage, sell, lease, or in any manner encumber or
dispose of (including but not limited to a disposition by transfer to another
public or private organization) voluntarily or involuntarily any part of the
System that is used, useful and material to the operation of the System
unless
(1) the City ceftifies, based upon reasonable expectations,
that the remaining assets of the System shall be sufficient to continue
regular operations of the City on a financially sound basis for a period of at
least five years and
(2) provision is made for replacement thereof or for
payment into the Bond Fund of the total amount of revenue received which
shall not be less than an amount which shall bear the same ratio to the
amount of outstanding Parity Bonds as the greater of
(A) the Net Revenue available for Debt Service for
such outstanding Parity Bonds for the 12 months preceding such sale,
lease, encumbrance or disposal from the portion of the System sold,
leased, encumbered or disposed of bears to the Net Revenue available for
34
Combined UtilitV System Revenue Bonds, Series 2OOg
Debt Service for such Parity Bonds from the entire System for the same
period;
(B) the Revenue of the System for the 12 months
preceding such sale, lease, encumbrance or disposal from the portion of
the System sold, leased, encumbered or disposed of bears to the Revenue
of the System for the same period;
(C) the proportion of assets (on a depreciated basis)
allocable to the assets being sold, leased, encumbered or disposed of bears
to the total assets of the System; or
(D) the proportion of customers of the City allocable
to the assets being sold, leased, encumbered or disposed of bears to the
total number of customers of the System,
provided, however, that the City may dispose of any portion of the facilities
of the System up to an aggregate of ten percent of the book value of the
total assets of the System without the requirement for any deposit to the
Bond Fund as hereinabove provided.
Any such moneys so paid into the Bond Fund shall be used to retire
such outstanding Parity Bonds at the earliest possible date. Any money
received by the City as condemnation awards, insurance proceeds or the
proceeds of sale, if not deposited to the Bond Fund, shall be used for the
replacement of facilities of the System.
(d) Books and Records. The City will, while any of the Bonds
remains outstanding, keep proper and separate accounts and records in
which complete and separate entries shall be made of all transactions
relating to the System, and it will furnish the original purchaser or
purchasers of the Bonds or any subsequent owner or owners thereof, at
the written request of such owner or owners, complete operating and
income statements of the System in reasonable detail covering any fiscal
year, showing the financial condition of the water and sewer departments
and compliance with the terms and conditions of this ordinance, not more
than 150 days after the close of such fiscal year, and it will grant any
35
Combined Utility System Revenue Bonds, SerÍes 2OOg
owner or owners of at least 25olo of the outstanding Bonds the right at all
reasonable times to inspect the entire System and all records, accounts
and data of the City relating thereto. Upon request of any owner of any of
said Bonds, it will also furnish to such owner a copy of the most recently
completed audit of the City's accounts by the State Auditor of Washington
or independent certified public accountant.
(e) No Free Service. The City will not furnish water or sanitary
sewerage disposal service to any customer whatsoever free of charge
(except to aid the poor or infirm, to provide for resource conservation or to
provide for the proper handling of hazardous materials) and will promptly
take legal action to enforce collection of all delinquent accounts.
(fl Property Insurance. The City will at all times carry fire and
extended coverage and such other forms of insurance on the buildings,
equipment, facilities and properties of the System, if such insurance is
obtainable at reasonable rates and upon reasonable conditions, against
such risks, in such amounts, and with such deductibles as the City Council
shall deem necessary for the protection of the System and the owners of
all outstanding Parity Bonds.
(g) Liability Insurance. The City will at all times keep and arrange
to keep in full force and effect policies of public liability and property
damage insurance which will protect the City against anyone claiming
damages of any kind or nature arising out of the operation of the System,
if such insurance is obtainable at reasonable rates and upon reasonable
conditions, in such amounts and with such deductibles as the City Council
shall deem necessary for the protection of the City and the owners of the
outstanding Parity Bonds.
(h) Delinquencies of Accounts. The City will, on or before March 1
of each calendar year, determine all accounts that are delinquent and will
take all necessary action to enforce payment of any such delinquencies.
(i) ULID Assessmenfs. All ULID Assessments shall be paid into
the Bond Fund and shall be used to pay and secure the payment of the
36
Combined Utility System Revenue Bonds, Series 2OOg
principal of and interest on the Bonds and Future Parity Bonds. Nothing in
this ordinance or this section shall be construed to prohibit the City from
issuing water, sewer or water and sewer revenue bonds junior in lien to the
Bonds and pledging as security for their payment assessments levied in
any ULID which may have been specifically created to pay paft of the cost
of improvements to the System for which those junior lien bonds were
specifically issued.
SECTION 9. - Tax Covenants
(a) Tax-Exemption. The City covenants that it will not take or
permit to be taken on its behalf any action that would adversely affect the
exemption from federal income taxation of the interest on the Tax-Exempt
Bonds and will take or require to be taken such acts as may reasonably be
within its ability and as may from time to time be required under applicable
law to continue the exemption from federal income taxation of the interest
on the Tax-Exempt Bonds.
(b) Arbitrage Covenant Without limiting the generality of the
foregoing, the City covenants that it will not take any action or fail to take
any action with respect to the proceeds of sale of the Bonds or any other
funds of the City which may be deemed to be proceeds of the Bonds
pursuant to Section 148 of the Code and the regulations promulgated
thereunder which, if such use had been reasonably expected on the date of
delivery of the Bonds to the initial purchasers thereof, would have caused
the Bonds as "arbitrage bonds" within the meaning of such term as used in
Section 148 of the Code.
The City represents that it has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect that it is an
issuer whose arbitrage certifications may not be relied upon. The City will
comply with the requirements of Section 148 of the Code and the
applicable regulations thereunder throughout the term of the Bonds.
(c) Private Person tJse Limitation for Bonds. The City covenants
that for as long as the Bonds are outstanding, it will not permit:
37
Combined Utility System Revenue Bonds, Serres 2OOg
(1) More than 10o/o of the Net Proceeds of the Bonds to be
used for any Private Person Use; and
(2) More than 10o/o of the principal or interest payments on
the Bonds in a Bond Year to be directly or indirectly: (A) secured by any
interest in property used or to be used for any Private Person Use or
secured by payments in respect of property used or to be used for any
Private Person Use, or (B) derived from payments (whether or not made to
the City) in respect of property, or borrowed money, used or to be used for
any Private Person Use.
The City further covenants that, if:
(3) More than five percent of the Net Proceeds of the Bonds
are to be used for any Private Person Use; and
(4) More than five percent of the principal or interest
payments on the Bonds in a Bond Year are (under the terms of this
ordinance or any underlying arrangement) directly or indirectly:
(A) secured by any interest in property used or to be
used for any Private Person Use or secured by payments in respect of
property used or to be used for any Private Person Use, or
(B) derived from payments (whether or not made to
the City) in respect of property, oF borrowed money, used or to be used for
any Private Person Use,
then, (i) any Private Person Use of the projects described in subsection (3)
hereof or Private Person Use payments described in subsection (4) hereof
that is in excess of the five percent limitations described in such
subsections (3) or (4) will be for a Private Person Use that is related to the
state or local governmental use of the Projects, and (ii) any Private Person
Use will not exceed the amount of Net Proceeds of the Bonds used for the
state or local governmental use portion of the project to which the Private
Person Use of such portion of the Projects relates. The City further
covenants that it will comply with any limitations on the use of the projects
by other than state and local governmental users that are necessary, in the
38
Combined Utility System Revenue Bonds, Series 2OOg
opinion of its bond counsel, to preserve the tax exemption of the interest
on the Bonds. The covenants of this section are specified solely to assure
the continued exemption from regular income taxation of the interest on
the Bonds.
(d) Designation under Section 265(b) of the Code, The City
hereby designates the Tax-Exempt Bonds as "qualified tax-exempt
obligations" within the meaning of Section 265(b)(3) of the Code. The City
does not anticipate issuing more than $30,000,000 of tax-exempt
obligations during 2009 (excluding oblígations permitted by the Code to be
excluded for purposes of the City's qualification as a qualifíed small issuer).
(e) Modification of Tax Covenants. The provisions of this section
may be modified or eliminated without any requirement for formal
amendment thereof upon receipt of an opinion of the City's bond counsel
that such modification or elimination will not adversely affect the treatment
of interest on any Bonds.
SECTION 70, - Issuance of Future Parity Bonds,
(a) Conditions upon the Issuance of Future Parity Bonds. As long
as any of the Bonds remain outstanding, the City hereby fufther covenants
and agrees that it will not issue any Future Parity Bonds except that the
City hereby reserves the right to issue additional combined utility system
revenue bonds, which shall constitute a charge and lien upon the Revenue
of the System equal to the lien thereon of the Bonds. Except as provided
in subsection (b) below, the City shall not issue any series of Future Parity
Bonds or incur any additional indebtedness with a parity lien or charge on
Net Revenues (i.e., on a parity of lien with Parity Bonds at the time
outstanding) unless:
(1) the City shall not have been in default of its Rate
Covenant for the immediately preceding fiscal year;
(2) The ordinance authorizing the issuance of such Future
Parity Bonds shall include the covenants provided in Section 8(b) hereof
39
Combined Utility System Revenue Bonds, Series 2OOg
and provide that the Reserve Requirement shall be funded no later than
three years from the date of delivery of the Future Parity Bonds; and
(3) there shall have been filed a certificate (prepared as
described in subsection (c) or (d) below) demonstrating fulfillment of the
Parity Requirement, commencing with the first full fiscal year following the
date on which any portion of interest on the series of Future Parity Bonds
then being issued no longer will be paid from the proceeds of such series of
Future Parity Bonds.
(b) No Certificate Required. The certificate described in the
foregoing subsection (aX3) shall not be required as a condition to the
issuance of Future Parity Bonds:
(1) if the Future Parity Bonds being issued are for the
purpose of refunding at or prior to their maturity any part or all of the then
outstanding Parity Bonds for debt service savings, and if the Finance
Director provides a provides a certificate stating that upon the issuance of
such Future Parity Bonds (i) total debt service on all Parity Bonds
(including the refunding bonds but not including the bonds to be refunded
thereby) will decrease, and (ii) the Annual Debt Service for each year that
any Parity Bonds (including the refunding bonds proposed to be issued) will
be outstanding will not increase by more than $5,000 by reason of the
issuance of such Future Parity Bonds; or
(2) if the Future Parity Bonds are being issued to pay costs
of construction of facilities of the System for which Future Parity Bonds
have been issued previously and the principal amount of such Future Parity
Bonds being issued for completion purposes does not exceed an amount
equal to an aggregate of 15olo of the principal amount of Future Parity
Bonds theretofore issued for such facilities and reasonably allocable to the
facilities to be completed as shown in a written certificate of the Finance
Director, and there is delivered a Designated Representative's certificate
stating that the nature and purpose of such facilities has not materially
changed.
40
Combined Utility System Revenue Bonds, Series 2OOg
(c) Certificate of the City Wíthout A Consultant. If required
pursuant to the foregoing subsection (a)(3), a certificate may be delivered
by the City (executed by the Finance Director) without a Consultant if Net
Revenues for the Base Period (confirmed by an audit) conclusively
demonstrate that the Parity Requirement will be fulfilled commencing with
the first full fiscal year following the date on which any portion of interest
on the series of Future Parity Bonds then being issued will not be paid from
the proceeds of such series of Future Parity Bonds.
(d) Certificate of a Consultant. Unless compliance with the
requirements of subsection (a)(3) have been otherwise satisfied (as
provided ¡n (b) or (c) above), compliance with the Parity Requirement shall
be demonstrated conclusively by a certificate of a Consultant.
In making the computations of Net Revenues for the purpose of
certifying compliance with the Parity Requirement, the Consultant shall use
as a basis the Net Revenues (which may be based upon unaudited financial
statements of the City if the audit has not yet been completed) for the
Base Period. Such Net Revenues shall be determined by adding the
following:
(1) The historical net revenue of the City for the Base
Period being issued as determined by a Consultant.
(2) The net revenue derived from those customers of the
City that have become customers during such 12-month period or
thereafter and prior to the date of such certificate, adjusted to reflect a full
year's net revenue from each such customer to the extent such net
revenue was not included in (1) above.
(3) The estimated annual net revenue to be derived from
any person, firm, association, private or municipal corporation under any
executed contract for service, which net revenue was not included in any of
the sources of net revenue described in this subsection (d).
(4) The estimated annual net revenue to be derived from
the operation of any additions or improvements to or extensions of the City
4T
CombÍned Utitity System Revenue Bonds, Serres 2OOg
under construction but not completed at the time of such certificate and
not being paid for out of the proceeds of sale of such Future Parity Bonds
being issued, and which net revenue is not otherwise included in any of the
sources of net revenue described in this subsection (d).
(5) The estimated annual net revenue to be derived from
the operation of any additions and improvements to or extensions of the
City being paid for out of the proceeds of sale of such Bonds being issued.
In the event the City will not derive any revenue as a result of the
construction of the additions, improvements or extensions being made or
to be made to the System within the provisions of subparagraphs (4) and
(5) immediately above, the estimated normal Costs of Maintenance and
Operation (excluding any transfer of money to other funds of the City and
license fees, taxes and payments in lieu of taxes payable to the City) of
such additions, improvements and extensions shall be deducted from
estimated annual net revenue.
The words "historical net revenue" or "net revenue" as used in this
subsection (d) shall mean the Revenue or any part or parts thereof less the
normal expenses of maintenance and operation of the System or any part
or parts thereof, but before depreciation.
Such "historical net revenue" or "net revenue" shall be adjusted to
reflect the rates and charges effective on the date of such certificate if
there has been any change in such rates and charges during or after such
12-consecutive-month period.
(e) Subordinate Lien Obligations. Nothing herein contained shall
prevent the City from issuing revenue bonds or other obligations which are
a charge upon the Revenue of the System junior or inferior to the
payments required by this ordinance to be made out of such Revenue to
pay and secure the payment of any outstanding Parity Bonds. Such junior
or inferior obligations shall not be subject to acceleration. This prohibition
against acceleration shall not be deemed to prohibit mandatory tender or
other tender provisions with respect to variable rate obligations or to
42
Combined Utility System Revenue Bonds, Series 2OOg
prohibit the payment of a termination amount with respect to an Other
Derivative Product or a Parity Derivative Product.
(f) Refunding Obligations. Nothing herein contained shall prevent
the City from issuing revenue bonds to refund maturing Parity Bonds for
the payment of which moneys are not otherwise available.
SECTION 77. - Form of Bonds. The Bonds shall be in substantially
the following form, with appropriate or necessary insertions, depending
upon the omissions and variations as permitted or required hereby:
UNITED STATES OF AMERICA
No.- $-
STATE OF WASHINGTON
CITY OF KENT
COMBTNED UTILITY SYSTEM REVENUE BOND, SERTES 2009[_] ITAXABLE]
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The City of Kent, Washington, a municipal corporation organized and
existing under and by virtue of the laws of the State of Washington (herein
called the "City") hereby acknowledges itself to owe and for value received
promises to pay, but only from the sources and as hereinafter provided, to
the Registered Owner identified above, or registered assigns, on the
Maturity Date identified above, the Principal Amount indicated above and
to pay interest thereon from 2009, or the most
recent date to which interest has been paid or duly provided for, at the
Interest Rate set forth above, payable on December 1, 2OO9, and
semiannually thereafter on the first days of each June and December until
such principal sum is paid or payment has been duly provided for.
Both principal of and interest on this bond are payable in lawful
money of the United States of America. Interest and principal shall be paid
as provided in the Blanket Issuer Letter of Representations (the "Letter of
Representations") by the City to The Depository Trust Company ("DTC").
The fiscal agency of the State of Washington has been appointed by the
City as the authenticating agent, paying agent and registrar for the bonds
of this issue (the "Registrar"). Capitalized terms used in this bond that are
not specifically defined have the meanings given such terms in Ordinance
No. _ of the City (the "Bond Ordinance"). Reference is made to the
Bond Ordinance and any and all modifications and amendments thereto for
43
Combined UtilitV System Revenue Bonds, Series 2OOg
a description of the nature and extent of the security for the bonds of this
issue, the funds or revenues pledged, and the terms and conditions upon
which such bonds are issued.
This bond is one of an authorized issue of bonds of the
date and tenor except as to number, amount, rate of interest
maturity in the aggregate principal amount of
of bonds is authorized by the Bond Ordinance for the purposes
capital improvements to the combined water and sewer system
City of like
and date of
This issue
of financing
of the City.
This bond and the bonds of this issue are payable solely from the
special funds of the City defined as the "Bond Fund" in the Bond Ordinance.
The City has irrevocably obligated and bound itself to pay into the Bond
Fund out of the Revenue of the System or from such other moneys as may
be provided therefor certain amounts necessary to pay and secure the
payment of the principal and interest on such bonds. The bonds of this
issue are not general obligations of the City.
[The bonds of this issue have been designated by the City as
"qualified tax-exempt obligations" for investment by financial institutions
under Section 265(b) of the Internal Revenue Code of 1986.1 The bonds of
this issue are not private activity bonds.
The bonds of this issue are issued under and in accordance with the
provisions of the Constitution and applicable statutes of the State of
Washington and duly adopted ordinances of the City. The City hereby
covenants and agrees with the owner of this bond that it will keep and
perform all the covenants of this bond and of the Bond Ordinance to be by
it kept and performed, and reference is hereby made to the Bond
Ordinance for a complete statement of such covenants.
The City does hereby pledge and bind itself to set aside from the
Revenue Fund out of the revenue of the System and to pay into the Bond
Fund and the Reserve Account the various amounts required by the Bond
Ordinance to be paid into and maintained in such Fund and account, all
within the times provided by the Bond Ordinance. To the extent more
particularly provided by the Bond Ordinance, the amounts so pledged to be
paid from the Revenue Fund out of the revenue of the System into the
Bond Fund and the account therein shall be a lien and charge thereon
equal in rank to the lien and charge upon said revenue of the Outstanding
Parity Bonds and the amounts required to pay and secure the payment of
revenue bonds of the City hereafter issued on a parity with the bonds of
this issue and superior to all other liens and charges of any kind or nature
except the Costs of Maintenance and Operation of the System.
The pledge of Revenue of the System and other obligations of the
City under the Bond Ordinance may be discharged at or prior to the
44
Combined Utility System Revenue Bonds, Seríes 2OOg
matur¡ty or redemption of the bonds of this issue upon the making of
provision for the payment thereof on the terms and conditions set forth in
the Bond Ordinance.
The bonds of this issue are subject to redemption prior to their
stated maturities in accordance with the terms set forth in the Bond
Ordinance.
This bond shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Bond Ordinance until the
Certificate of Authentication hereon shall have been manually signed by the
Registrar.
It is hereby certified that all acts, conditions, and things required by
the Constitution and statutes of the State of Washington to exist, to have
happened, been done, and performed precedent to and in the issuance of
this bond have happened, been done, and performed.
IN WITNESS WHEREOF, the City of Kent, Washington has caused
this bond to be signed with the facsimile or manual signature of the Mayor,
to be attested by the facsimile or manual signature of the City Clerk and
the seal of the City to be impressed, imprinted or otherwise reproduced
hereon, all as of this day of 2009.
CITY OF KENT, WASHINGTON
lsEALl
By /s/ facsimile or manual
Mayor
ATTEST:
/s/ facsimile or manual
Clerk
The Registrar's certificate authentication on the Bonds shall be in
substantially the following form:
45
CombÍned Utility System Revenue Bonds, Seríes 2OOg
CERTIFICATE OF AUTH ENTICATION
Date of Authentication: _, 2009
This bond is one of the bonds described in the within-mentioned
Bond Ordinance and is one of the Combined Utility System Revenue Bonds,
Series 2009[_] [Taxable], dated
Washíngton.
2009 of the City of Kent,
WASHINGTON STATE FISCAL
AGENCY, Registrar
By
sECrroN t2. - Execution or Bonds. rhe ;:Ï:;"; :::":.".".
on behalf of the City with the manual or facsimile signature of the Mayor,
shall be attested by the manual or facsimile signature of the Clerk, and the
seal of the City shall be impressed, imprinted or otherwise reproduced
thereon,
Only such Bonds as shall bear thereon a Certificate of Authentication
in the form hereinbefore recited, manually executed by the Registrar, shall
be valid or obligatory for any purpose or entitled to the benefits of this
ordinance. Such Ceftificate of Authentication shall be conclusive evidence
that the Bonds so authenticated have been duly executed, authenticated,
and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds
shall cease to be an officer or officers of the City before the Bonds so
signed shall have been authenticated or delivered by the Registrar, or
issued by the City, such Bonds shall be valid nevertheless and may be
issued by the City with the same effect as though the persons who had
executed such Bonds had not ceased to be such officers.
SECTION 73, - Defeasance. In the event that money and/or
Governmental Obligations maturing at such time or times and bearing
interest to be earned thereon in amounts sufficient to redeem and retire
any bonds payable out of the Bond Fund in accordance with their terms are
46
Combined Utility System Revenue Bonds, Series 2OOg
irrevocably set aside in a special account to effect such redemption and
retirement, then no further payments need be made into the Bond Fund for
the payment of the principal of and interest on such Bonds and the owner
of such Bonds shall cease to be entitled to any lien, benefit or security of
this ordinance except the right to receive the funds so set aside and
pledged, and such Bonds shall be deemed not to be outstanding
hereunder.
Within 45 days of any defeasance of Bonds, the City shall provide
notice of defeasance of Bonds to Registered Owners of Bonds being
defeased and to each pafty entitled to receive notice under Section 18 of
this ordinance.
SECTION 74, - Lost or Destroyed Bonds. In case any Bonds shall
be lost, stolen or destroyed, the Registrar may authenticate and deliver a
new Bond or Bonds of like amount, date and tenor to the owner thereof
upon the owner's paying the expenses and charges of the Registrar and
the City in connection therewith and upon his filing with the Registrar and
the City evidence satisfactory to both that such Bond or Bonds were
actually lost, stolen or destroyed and of his ownership thereof, and upon
furnishing the City and the Registrar with indemnity satisfactory to both.
SECTION 75. - Sale of Bonds; Bond Insurance.
(a) Sale of Bonds. The Bonds shall be sold in one or more series
at negotiated sale to the Underwriters pursuant to the terms of the Bond
Purchase Contract. The Designated Representative is hereby authorized to
negotiate terms for the purchase of the Bonds and execute the Bond
Purchase Contract, with such terms as are approved by such person
pursuant to this section and consistent with this ordinance. The
Underwriters have advised the City Council that market conditions are
fluctuating and, as a result, the most favorable market conditíons may
occur on a day other than a regular meeting date of the City Council. The
City Council has determined that it would be in the best interest of the City
47
Combined UtilÍty System Revenue Bonds, Series 2OOg
to delegate to the Designated Representative for a limited time the
authority to determine whether the Bonds shall be issued and sold in one
or more series, determine whether any or all of the Bonds shall be issued
as Tax-Exempt Bonds or as Taxable Bonds, approve the final interest rates,
aggregate principal amount, principal amounts of each maturity of the
Bonds and redemption rights. The Designated Representative is hereby
authorized to determine whether the Bonds shall be issued and sold in one
or more series, determine whether any or all of the Bonds shall be issued
as Tax-Exempt Bonds or as Taxable Bonds, approve the final interest rates,
aggregate principal amount, princípal maturities and redemption rights for
the Bonds in the manner provided hereafter so long as (a) the aggregate
principal amount of the Bonds does not exceed $25,000,000; and (b) the
true interest cost for the Bonds (in the aggregate) does not exceed 7.00o/o.
In determining the number of series, tax designation, whether or not
to proceed with bond insurance and determining the final interest rates,
aggregate principal amounts, principal maturities and redemption rights,
the Designated Representative, in consultation with City staff, shall take
into account those factors that, in his judgment, will result in the lowest
true interest cost on the Bonds to their maturity, including, but not limited
to current financial market conditions and current interest rates for
obligations comparable in tenor and quality to the Bonds. Subject to the
terms and conditions set forth in this Section 15, the Designated
Representative is hereby authorized to execute the final form of the Bond
Purchase Contract, upon the Designated Representative's approval of the
number of series, tax designation, final interest rates, aggregate principal
amount, principal maturities and redemption rights set forth therein.
Following the execution of the Bond Purchase Contract, the Designated
Representative shall provide a report to the City Council, describing the
final terms of the Bonds approved pursuant to the authority delegated in
this section. The authority granted to the Designated Representative by
this Section 15 shall expire 120 days after the effective date of this
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Combined Utility System Revenue Bonds, Serr'es 2OOg
ordinance. If a Bond Purchase Contract for the Bonds has not been
executed within 120 days after the effective date of this ordinance, the
authorization for the issuance of the Bonds shall be rescinded, and the
Bonds shall not be issued nor their sale approved unless such Bonds shall
have been re-authorized by ordinance of the City Council. The ordinance
re-authorizing the issuance and sale of such Bonds may be in the form of a
new ordinance repealing this ordinance in whole or in part or may be in the
form of an amendatory ordinance approving a bond purchase contract or
establishing terms and conditions for the authority delegated under this
Section 15.
Upon the passage and approval of this ordinance, the proper officials
of the City including the Designated Representative, are authorized and
directed to undertake all action necessary for the prompt execution and
delivery of the Bonds to the Underwriter thereof and further to execute all
closing certificates and documents required to effect the closing and
delivery of the Bonds in accordance with the terms of the Bond Purchase
Contract.
The Designated Representative is authorized to ratify and to approve
for purposes of the Rule, on behalf of the City, the Official Statement (and
any Preliminary Official Statement) (both as defined in the Bond Purchase
Contract) relating to the issuance and sale of the Bonds and the
distribution of the Official Statement pursuant thereto with such changes, if
any, as may be deemed by him or her to be appropriate.
(b) Bond Insurance Polícy. The Designated Representative is
hereby further authorized and directed to solicit proposals from municipal
bond insurance companies for the issuance of a Bond Insurance Policy. In
the event that the Designated Representative receives multiple proposals,
the Designated Representative may select the proposal having the lowest
cost and resulting in an overall lower interest cost with respect to the
Bonds. The Designated Representative may execute a commitment
received from the Insurer selected by the Designated Representative. The
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Combined Utility System Revenue Bonds, Series 2OOg
City Council further authorizes and directs all proper officers, agents,
attorneys and employees of the City to cooperate with the Insurer in
preparing such additional agreements, certificates, and other
documentation on behalf of the City as shall be necessary or advisable in
providing for the Bond Insurance Policy.
SECTION 76, - Application of Bond Proceeds, The proceeds of the
Bonds shall be deposited in the Project Funds in the amounts specified in
the closing memorandum prepared in connection with the issuance of the
Bonds. Such proceeds shall be used to pay the costs of or reimbursement
for the costs of the Projects and costs of issuance of the Bonds. The
Finance Director shall invest money in the Project Funds in such obligations
as may now or hereafter be permitted to cities of the State by law and
which will mature prior to the date on which such money shall be needed.
Upon completion of the Projects, Bond proceeds (including interest
earnings thereon) may be used for other approved capital projects of the
System or shall be transferred to the Bond Fund.
The City may deposit proceeds of the Bonds or other available funds
of the City in the Reserve Fund to meet the requirements of Section 8
hereof, or alternatively, may acquire Qualified Insurance or a Qualified
Letter of Credit to satisfy such requirement.
SECTION 77, - Derivative Products. The City hereby reserves the
right to enter into Parity Derivative Products and Other Derivative
Products. The City may amend this ordinance to accommodate new or
modified definitions of Debt Service in connection with a Parity Derivative
Product, to implement the City's intent that regularly scheduled payments
made by or received by the City in connection with a Parity Derivative
Product be added to or deducted from, respectively, Debt Service on such
Parity Bonds. The City may amend this ordinance to reflect the lien
position and priority of any payments made in connection with a Parity
Derivative Product; provided, however, that any lien to secure regularly
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Combined UtilÍty System Revenue Bonds, Serr'es 2OOg
scheduled payments made in connection with a Parity Derivative Product
may not be prior to the lien of the Parity Bonds and that any lien to secure
nonregularly scheduled payments under Parity Derivative Products must be
subordinate to the lien of Parity Bonds. If the City enters into a Parity
Derivative Product, the City shall not be required to satisfy the conditions
set forth in Section 10 of this ordinance with respect to the Parity
Derivative Product provided that the conditions set forth in Section 10 of
this ordinance are satisfied with respect to the associated Parity Bonds.
Each Parity Derivative Product shall set forth the manner in which the
City's and its counterparty's payments are to be calculated and a schedule
of payment dates.
SECTION 78. - Undertaking to Provide Ongoing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's
written undertaking for the benefit of the owners of the Bonds as required
by Section (bX5) of the Rule.
(b) Financial Statements/Operating Data. The City agrees to
provide or cause to be provided to the Municipal Securities Rulemaking
Board ("MSRB'), the following annual financial information and operating
data for the prior fiscal year (commencing in 2010 for the fiscal year ended
December 31, 2009):
1. Annual financial statements, which statements may or
may not be audited, showing ending fund balances for the System
prepared in accordance with the Budget Accounting and Reporting System
prescribed by the Washington State Auditor pursuant to RCW 43.09.2OO;
2. The principal amount of Parity Bonds;
3. Debt service coverage for Parity Bonds;
4. Rates for the System; and
5. Number of customers of the System.
Items 2-5 shall be required only to the extent that such information is not
included in the annual financial statements of the City.
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Combined Utility System Revenue Bonds, Serres 2OO9
The information and data described above shall be provided on or
before nine months after the end of the City's fiscal year. The City's
current fiscal year ends December 31. The City may adjust such fiscal year
by providing written notice of the change of fiscal year to the MSRB. In
lieu of providing such annual financial information and operating data, the
City may cross-reference to other documents available to the public on the
MSRB's internet website and, if such document is a final official statement
within the meaning of the Rule, available from the MSRB.
If not provided as part of the annual financial information discussed
above, the City shall provide the City's audited annual financial statement
prepared in accordance with the Budgeting Accounting and Reporting
System prescribed by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute) when and if available to the
MSRB.
(c) Material Events. The City agrees to provide or cause to be
provided, in a timely manner to the MSRB notice of the occurrence of any
of the following events with respect to the Bonds, if material:
. Principal and interest payment delinquencies;
. Non-payment related defaults;
. Unscheduled draws on debt service reserves reflecting financial
difficulties;
. Unscheduled draws on credit enhancements reflecting financial
difficulties;
o Substitution of credit or liquidity providers, or their failure to
perform;
. Adverse tax opinions or events affecting the tax-exempt status of
the Tax-Exempt Bonds;
. Modifications to the rights of Bond owners;
o Bond calls (optional, contingent or unscheduled Bond calls other
than scheduled sinking fund redemptions for which notice is given
pursuant to Exchange Act Release 3a-23856);
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Combined Utility System Revenue Bonds, Series 2OO9
o Defeasances;
. Release, substitut¡on or sale of propefty securing repayment of
the Bonds; and
r Rating changes.
Solely for purposes of disclosure, and not intending to modify this
undertaking, the City advises that no debt service reserves or propefty
secures payment of the Bonds.
(d) Notification Upon Failure to Provide Financial Data. The City
agrees to provide or cause to be provided, in a timely manner, to the
MSRB notice of its failure to provide the annual financial information
described in Subsection (b) above on or prior to the date set forth in
Subsection (b) above.
(e) EMMA; Format for Filings with the MSRB. Until otherwise
designated by the MSRB or the SEC, any information or notices submitted
to the MSRB in compliance with the Rule are to be submitted through the
MSRB's Electronic Municipal Market Access system ("EMMA"), currently
located at www,emma.msrb.org (which is not incorporated into this
ordinance by reference). All notices, financial information and operating
data required by this undertaking to be provided to the MSRB must be in
an electronic format as prescribed by the MSRB. All documents provided to
the MSRB pursuant to this undertaking must be accompanied by identifying
information as prescribed by the MSRB,
(f) Termination/Modification. The City's obligations to provide
annual financial information and notices of material events shall terminate
upon the legal defeasance, prior redemption or payment in full of all of the
Bonds. Any provision of this section shall be null and void if the City
(1) obtains an opinion of nationally recognized bond counsel to the effect
that the portion of the Rule that requires that provision is invalid, has been
repealed retroactively or otherwise does not apply to the Bonds and
(2) notifies the MSRB of such opinion and the cancellation of this section.
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Combined Utility System Revenue Bonds, Seríes 2OOg
The City may amend this section with an opinion of nationally
recognized bond counsel in accordance with the Rule. In the event of any
amendment of this section, the City shall describe such amendment in the
next annual report, and shall include a narrative explanation of the reason
for the amendment and its impact on the type (or in the case of a change
of accounting principles, on the presentation) of financial information or
operating data being presented by the City. In addition, if the amendment
relates to the accounting principles to be followed in preparing financial
statements, (i) notice of such change shall be given in the same manner as
for a material event under Subsection (c) and (ii) the annual report for the
year in which the change is made shall present a comparison (in narrative
form and also, if feasible, in quantitative form) between the financial
statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
(g) Bond Owner's Remedies Under Thís Section. The right of any
bondowner or beneficial owner of Bonds to enforce the provisions of this
section shall be limited to a right to obtain specific enforcement of the
City's obligations under this section, and any failure by the Cíty to comply
with the provisions of this undertaking shall not be an event of default with
respect to the Bonds. For purposes of this section, "beneficial owner"
means any person who has the power/ directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bonds,
including persons holding Bonds through nominees or depositories.
SECTION 79, - Severability. If any one or more of the covenants or
agreements provided in this ordinance to be performed on the part of the
City shall be declared by any court of competent jurisdiction to be contrary
to law, then such covenant or covenants, agreement or agreements, shall
be null and void and shall be deemed separable from the remaining
covenants and agreements of this ordinance and shall in no way affect the
validity of the other provisions of this ordinance or of the Bonds.
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Combined Utility System Revenue Bonds, Serr'es 2OOg
ç4FT{S# AO, - FffepfiyS, Qgtp, Thls ordlnance shall take effect and
be In force from and after lts pas$age and five days followlng lts publication
as required by law.
coCIKËf MAYÕR
A
RENDA JAqOBER,RK
PASSED:
APPROVEÞ:
PUBLISHËÞ:
APPROVHÞ AS TO RM
K&L GATE
Speclal Co nsel and Bond Counsel
#- day of August, 2009,
"ry day ofAugust, z0o9.
- 8. day of August, ?009.
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Combined UtÍlity System Revenue Bonds' Series 2AOg
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APPENDIX A
Projects
Green River levees repair and replacement - series of levee
improvements to increase flood protection.
Storm drainage improvements, diversion to GRNRA project -
diversion of stormwater from the S. 228th St. system upstream of
76th Ave. S., into the GRNRA. Improvement of the water quality in
Mill Creek, and flood control.
Mill Creek restoration, Smith to James Street, and James to
Chandler Bay Drive - restoration and flood protection of Mill Creek in
the vicinity of James Street.
Upper Mill Creek diversion to detention dam, East of 104th Avenue
Southeast, and outlet modifications project - increase the storage of
the detention dam, update the outlet structure, and improve the fish
passage system along the diversion.
Mill Creek Culverts Replacement, Relocation/Restoratíon, 76th
Avenue Corridor Project - removal of sediment in Mill Creek, expand
the capacity of the creek, and improve the riparian stream buffer.
Pump Station Improvement at James St and Mill Creek Project -
improve floodwater containment along Mill Creek.
Soos Creek (Soosette Creek/I44th Ave SE culvert replacement)
Project - replace a culveft to improve streamflow and decrease
roadway flooding.
Mill Creek improvements - Stormwater drainage facility
improvements within the Mill Creek drainage system.
National Pollutant Discharge Elimination System ('NPDES') Phase II
Permit - implementing the various provisions of the permit, which
includes monitoring activities related to the permit, public
involvement/education, grant preparation, illicit discharge detection
and overall water quality program within the City.
GRNRA outlet and maintenance improvements project -
Improvements along the outlet to improve flood control along
Mill Creek and improve downstream water quality.
SE 256th St., 116th to Kent Kangley, stormwater project - addition
of a curb and gutter, stormwater pipe, detention facilities and water
quality facilities for the widening of the street.
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Combined Utility System Revenue Bonds, Serres 2OOg
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a S 224th Street Extension stormwater project - addition of a curb and
gutter, stormwater pipe, detention and water quality facilities for the
widening of street.
Springwood Apartments, Smith and Lincoln stormwater projects -
Replacement of stormwater pipes that have been damaged and risk
a potential flood hazard.
Miscellaneous drainage improvements - stormwater capital projects
designed by City Engineering staff.
Riverview Park project - a new side channel adjacent to the main
stem of the Green River.
Drainage infrastructure replacements - replacement of storm water
conveyances, failing p¡pe sections, and catch basins.
Miscellaneous wetland facility upgrade projects - maintenance,
repair, and replacement of wetlands.
Roadway drainage improvements - stormwater conveyance,
detention and water quality systems necessary for projects within
the City's Transportation Improvement Program.
Miscellaneous Habitat Improvements - acquisition of properties
containing critical areas and their buffers.
North Fork Meridian Valley Creek restoration, South 236th Place
culvert project - replacement of an undersized culvert to provide the
necessary flow capacity and meet fish passage requirements.
Storm drainage improvements, South 196th and 84th Avenue
Project - replacement of a deficient storm conveyance system and
update of a stormwater pump system.
Mill Creek trunk stormwater drainage, restoration at senior center,
Titus project - flood system improvement on Mill Creek between
Titus Avenue and Smith Street.
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Combined Utility System Revenue Bonds, Seríes 2OOg
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CERTIFICATION
I, the undersigned, City Clerk of the City of Kent, Washington (the
"City"), hereby certify as follows:
1. The attached copy of Ordinance No. (the "Ordinance")
is a full, true and correct copy of an ordinance duly passed at a regular
meeting of the City Council of the City held at the regular meeting place
thereof on August 4, 2009, as that ordinance appears on the minute book
of the City; and the Ordinance will be.in full force and effect after
publication in the City's official newspaper; and
2. A quorum of the members of the City Council was present
throughout the meetíng 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 4th day of
August, 2009.
CITY OF KENT, WASHINGTON
Ø./*-/*bo/'**t
Brend¡ftacober, City Clerk
srATE OF WASHTNGTON, COUNTY OF KING )AFFIDAVIT OF PLIBLICATIONPUBLIC NOTICELinda M Mills, being first duly sworn on oath that she is the LegalAdvertising Representative of theI(ent Reportera bi-weekly newspaper, which newspaper is a legal newspaper ofgeneral circulation and is now and has been for more than six monthsprior to the date of publication hereinafter referred to, publishedin the English language continuously as a bi-weekly newspaper inKing Count¡ Washington. The Kent Reporter has been approvedas a Legal Newspaper by order of the Superior Court of the State of'Washington for King County.The notice in the exact form annexed was published in regularissues of the Kent Reporter (and not in supplement form) which wasregularly distributed to its subscribers during the below stated period.The annexed notice, a:Public Noticewas published on August 8, 2009.The full amount of the fee charged for said foregoing publication isthe sum of $101.50.CITY OF KENTNOTICE OF ORDINANCESPASSED BYTHECITY COUNCILThe following is a summary ofordinances passeci by the KentCity Council on August 4, 2009:ORDINANCE NO.3925AN ORDINANCE of the CityCouncil of the City of Kent,Washington. approvin-e cenainadditions, betterments andimprovements to the City'sWaterworks Utility: authorizingthe issuance of one or moreseries of combined utility systemrevenue bonds of the City in theaggregate principal amount ofnot to exceed $25,000,000 to paythe costs of said improvemenfs;delegating authority to approvethe final terms of the bonds;and reserving the right to issuerevenue bonds on a parity withthe bonds upon compliance withcertain conditions.Effective Date: August 13,2009OR"DINÁ,NCE NO.3926AN ORDINANCE of the CityCouncil of the City of Kent,Washington, amending Title 2of the Kent City Code, entitled'Administration and Personnel",to reorganize City departments,offices, and boards.Effective Date: September 3,2009Each ordinance will take effect30 days from the date of passage,unless subjected to referendum orvetoed by the Mayor, or unlessotherwise noted. A copy of thecomplete text of any ordinancewill be mailed upon request to theCity Clerk.Brenda Jacober, CMC,City ClerkPublished in the Kent Reporteron August 8, 2009. #256882.-ãbhzza4?íindaM. MillsLegal Advertising Representative, Kent ReporterSubscribed and sworn to me this 10th day of August 20091nP. O. Number:'Washingtonfor the State of Washington, Residing