COMMITTEE SUBSTITUTE
FOR ORDINANCE NO. 080197
Authorizing the issuance of Water
Revenue Bonds; prescribing the terms, provisions and conditions for the
issuance of bonds and obligations of the City; and authorizing certain actions
and documents and prescribing other matters relating thereto.
WHEREAS, the City of
Kansas City, Missouri (the City), a constitutional charter city and political
subdivision duly organized and existing under the Constitution and laws of the
State of Missouri and the Citys Charter, as amended, approved by the voters
for its government (the Charter), owns and operates a revenue-producing
waterworks system (the System, as hereinafter more fully defined); and
WHEREAS, the
City desires from time to time to issue revenue bonds to make certain
additions, extensions and improvements to the System and is authorized under
the provisions of the Charter to issue and sell revenue bonds for the purpose
of providing funds for such purpose, upon obtaining the required voter approval
and provided that the principal of and interest on such revenue bonds shall be
payable solely from the revenues derived from the operation of the System; and
WHEREAS, the
City further desires from time to time to issue refunding revenue bonds for the
purpose of refunding prior issues of revenue bonds and is authorized under the
provisions of the Charter to issue and sell refunding revenue bonds for the
purpose of providing funds for such purpose, provided that the principal of and
interest on such refunding revenue bonds shall be payable solely from the revenues
derived from the operation of the System; NOW, THEREFORE,
BE IT ORDAINED
BY THE COUNCIL OF KANSAS CITY:
ARTICLE I
DEFINITIONS AND
OTHER PROVISIONS
OF GENERAL
APPLICATION
Section 1.1. Definitions. The following words and terms shall
have the meanings specified below, unless the context clearly requires
otherwise.
Accreted Value
means, with respect to each Capital Appreciation Bond, (i) the initial
principal amount of such Capital Appreciation Bond plus, on the date of
calculation, the interest accrued thereon to such date compounded at the
interest rate thereof on each compounding date contained in such Capital
Appreciation Bond, and (ii) with respect to any calculation on a date other
than a compounding date, the amount determined pursuant to clause (i) above as
of the immediately preceding compounding date plus interest on such amount from
such compounding date to the date of calculation at a rate equal to the
interest rate on such Capital Appreciation Bond.
Accumulation
Payments shall have the meaning ascribed therefor in Section 4.4(f).
Additional
Interest means, for any period during which any Pledged Bonds are owned by
a Credit Facility Provider pursuant to a Credit Facility or Credit Facility
Agreement, the amount of interest accrued on such Pledged Bonds at the Pledged
Bond Rate less the amount of interest which would have accrued during such
period on an equal Principal amount of Bonds at the Bond Rate.
Administrative
Service Fees means fees paid to the general fund of the City for office
space and certain administrative, information technology, accounting and other
support services provided to the System of the City, but which may be used to
pay Principal of and Interest on Senior and Subordinate Bonds if needed.
Annual Budget
means the annual budget of the City relating to the System (which shall include
all costs, obligations and expenses properly allocable to the System), as
amended or supplemented in accordance with established procedures of the City,
adopted or in effect for a particular Fiscal Year.
Auction Rate Bonds means any Bonds which bear interest
at the auction rate determined pursuant to the auction bond provisions set
forth in the Series Ordinance of the City authorizing such Auction Rate Bonds.
Balloon
Bonds means any series of Bonds 25% or more of the Principal of which (i)
is due in any 12-month period or (ii) may, at the option of the Bondholders, be
required to be redeemed, prepaid, purchased directly or indirectly by the City,
or otherwise paid in any 12-month period; provided that, in calculating the
Principal of such Bonds due or required to be redeemed, prepaid, purchased, or
otherwise paid in any 12-month period, such Principal shall be reduced to the
extent that all or any portion of such amount is required to be redeemed or
amortized prior to such 12‑month period.
Balloon
Date means any Principal Maturity Date or Put Date on which more than 25%
of the Principal of related Balloon Bonds mature or are subject to mandatory
redemption or could, at the option of the Bondholders, be required to be
redeemed, prepaid, purchased directly or indirectly by the City, or otherwise
paid.
Beneficial Owner
shall have the meaning specified in Section 2.10.
Bond Counsel
means any firm of nationally recognized bond counsel experienced in matters
relating to tax-exempt financing, appointed by the City.
Bond Ordinance
means this Master Bond Ordinance as it may from time to time be modified,
supplemented or amended by Supplemental Ordinances.
Bond Rate
means the rate of interest per annum payable on specified Bonds other than
Pledged Bonds.
Bond Register
means the books for the registration, transfer and exchange of Bonds maintained
by the Bond Registrar.
Bondholder
means the registered owner of one or more Bonds.
Bonds means
any revenue bonds authorized by and authenticated and delivered pursuant to the
Bond Ordinance, including any Senior Bonds and any Subordinate Bonds.
Business Day
means a day other than a Saturday, Sunday or holiday on which the Paying Agent,
Bond Registrar or applicable Credit Facility Provider is scheduled in the
normal course of its operations to be open to the public for conduct of its
banking operations.
Capital
Appreciation Bonds means Bonds which bear interest which is calculated
based on periodic compounding, payable only at maturity or earlier redemption.
City means
the City of Kansas City, Missouri, and any successors or assigns.
Code
means the Internal Revenue Code of 1986, as amended, and the applicable
regulations of the Treasury Department proposed or promulgated thereunder.
Commitment
when used with respect to Balloon Bonds, means a binding written commitment
from a financial institution, surety or insurance company to refinance such
Bonds on or prior to any Balloon Date thereof, including without limitation any
Credit Facility for such Bonds.
Consulting
Engineer means each independent engineer or engineering firm with experience
in designing and constructing waterworks facilities and retained by the City.
Continuing
Disclosure Agreement means the continuing disclosure agreement relating to
a series of Bonds, as amended from time to time in accordance with its terms.
Costs with
respect to any Project, means the total cost, paid or incurred, to study, plan,
design, finance, acquire, construct, reconstruct, renovate, repair, replace,
equip, install, or otherwise develop such Project and shall include, but shall
not be limited to, the following costs and expenses relating to such Project
and the reimbursement to the City for any such items previously paid by the
City:
(i) the
cost of all lands, real or personal properties, rights, easements, and
franchises acquired;
(ii) the
cost of all machinery and equipment, financing charges, and interest prior to
and during construction and for six months after completion of construction;
(iii) the
cost of the acquisition, construction, reconstruction or installation of such Project;
(iv) the
cost of engineering, architectural, development and supervisory services,
fiscal agents and legal expenses, plans and specifications, and other expenses
necessary or incident to determining the feasibility or practicability of any
Projects, administrative expenses, and such other expenses as may be necessary
or incident to any financing by Bonds;
(v) the
cost of placing such Project in operation;
(vi) the
cost of condemnation of property necessary for such construction and operation;
(vii) costs
of removal associated with retiring an asset;
(viii) any
other costs which may be incident to such Project; and
(iv) Costs
of Issuance.
Costs of
Issuance means issuance costs with respect to the Bonds, including but not
limited to the following: underwriters spread (whether realized directly or
derived through purchase of Bonds at a discount below the price at which they
are expected to be sold to the public), issuers fee on SRF Bonds, management
fee and expenses; Credit Facility fees and Reserve Account Credit Facility
fees; counsel fees (including bond counsel, underwriters counsel, Citys
counsel, as well as any other specialized counsel fees incurred in connection
with the borrowing); financial advisor fees of any financial advisor to the
City incurred in connection with the issuance of the Bonds; initial remarketing
agent fees or auction agent fees; rating agency fees; escrow agent,
verification agent and paying agent fees; accountant fees and other expenses
related to issuance of the Bonds; printing costs (for the Bonds and of the
preliminary and final official statement relating to the Bonds); and fees and
expenses of the City incurred in connection with the issuance of the Bonds.
Council
means the City Council of the City.
Credit Facility
means any letter of credit, insurance policy, guaranty, surety bond, standby
bond purchase agreement, line of credit, revolving credit agreement, or similar
obligation, arrangement, or instrument issued by a bank, insurance company, or
other financial institution which is used by the City to perform one or more of
the following tasks: (i) enhancing the Citys credit by assuring owners of any
of the Bonds that Principal of and interest on such Bonds will be paid promptly
when due; (ii) providing liquidity for the owners of Bonds through undertaking
to cause Bonds to be bought from the owners thereof when submitted pursuant to
an arrangement prescribed by a Series Ordinance; or (iii) remarketing any Bonds
so submitted to the Credit Facility Provider (whether or not the same Credit
Facility Provider is remarketing the Bonds). The term Credit Facility shall
not include a Reserve Account Credit Facility.
Credit Facility
Agreement means an agreement between the City and a Credit Facility
Provider pursuant to which the Credit Facility Provider issues a Credit
Facility and may include the promissory note or other instrument evidencing the
Citys obligations to a Credit Facility Provider pursuant to a Credit Facility
Agreement. The term Credit Facility Agreement shall not include a Reserve
Account Credit Facility Agreement.
Credit Facility
Provider means any issuer of a Credit Facility then in effect for all or
part of the Bonds. The term Credit Facility Provider shall not include any
Reserve Account Credit Facility Provider. Whenever in the Bond Ordinance the
consent of the Credit Facility Provider is required, such consent shall only be
required from the Credit Facility Provider whose Credit Facility is issued with
respect to the series of Bonds for which the consent is required.
Current Interest
Bonds means those Bonds which are not Capital Appreciation Bonds.
Debt Service
Requirement means the total Principal and interest coming due on Senior
Bonds, or all Bonds, as applicable, whether at maturity or upon mandatory
redemption, in any specified period; provided, however, that Debt Service
Requirement with respect to SRF Bonds shall mean the net amount of Principal
and interest coming due on such SRF Bonds after taking into account any SRF
Subsidy (i.e., the amount of anticipated investment earnings which will accrue
on any reserve account relating to the SRF Bonds and which will reduce the debt
service payments of the City with respect to such SRF Bonds). For the purpose
of calculating the Debt Service Requirement on any Bonds Outstanding or
proposed to be issued that bear interest at a Variable Rate, the interest
coming due in any specified future period shall be determined as if the Variable
Rate in effect at all times during such future period equaled the average of
the SIFMA Municipal Bond Index (formerly
BMA Municipal Bond Index) for the prior 5 calendar years, or any successor
index as certified to the City by a Financial Advisor. If making an historical
calculation with respect to Variable Rate Bonds, actual interest rates may be
used. For the purpose of calculating the Debt Service Requirement on any
Auction Rate Bonds that are Outstanding or proposed to be issued, the interest
coming due in any specified future period shall be determined by the Series
Ordinance of the City authorizing such Auction Rate Bonds. For the purpose of
calculating the Debt Service Requirement on any Capital Appreciation Bonds that
are Outstanding or proposed to be issued, the total Principal and interest
coming due in any specified period shall be determined, with respect to such
Capital Appreciation Bonds, by the Series Ordinance of the City authorizing
such Capital Appreciation Bonds. With respect to any Bonds secured by a Credit
Facility, Debt Service Requirement shall also include (i) any upfront or
periodic commission or commitment fee obligations with respect to such Credit
Facility, (ii) the outstanding amount of any Reimbursement Obligation owed to the
applicable Credit Facility Provider and interest thereon, (iii) any Additional
Interest owed on Pledged Bonds to a Credit Facility Provider, and (iv) any
remarketing agent or surveillance fees. With respect to any Hedged Bonds, the
interest on such Hedged Bonds during any Hedge Period and for so long as the
provider of the related Hedge Agreement has not defaulted on its payment
obligations thereunder shall be calculated by adding (x) the amount of interest
payable by the City on such Hedged Bonds pursuant to their terms and (y) the
amount of Hedge Payments payable by the City under the related Hedge Agreement
and subtracting (z) the amount of Hedge Receipts payable by the provider of the
related Hedge Agreement at the rate specified in the related Hedge Agreement;
provided, however, that to the extent that the provider of any Hedge Agreement
is in default thereunder, the amount of interest payable by the City on the
related Hedged Bonds shall be the interest calculated as if such Hedge
Agreement had not been executed. In determining the amount of Hedge Payments
or Hedge Receipts payable or receivable for any future period which are not
fixed throughout the Hedge Period (i.e., which are variable), such Hedge
Payments or Hedge Receipts for any period of calculation (the Determination
Period) shall be computed by assuming that the variables comprising the
calculation (e.g., indices) applicable to the Determination Period are equal to
the average of the actual variables which were in effect (weighted according to
the length of the period during which each such variable was in effect) for the
most recent twelve-month period immediately preceding the date of calculation
for which such information is available (or shorter period if such information
is not available for a twelve-month period). For the purpose of calculating
the Debt Service Requirement on Balloon Bonds (1) which are subject to a
Commitment or (2) which do not have a Balloon Date within 12 months from
the date of calculation, such Bonds shall be assumed to be amortized in
substantially equal annual amounts to be paid for Principal and interest over
an assumed amortization period of 20 years at an assumed interest rate
(which shall be the interest rate certified by a Financial Advisor to be the
interest rate at which the City could reasonably expect to borrow the same
amount by issuing Bonds with the same priority of lien as such Balloon Bonds
and with a 20-year term); provided, however, that if the maturity of such Bonds
(taking into account the term of any Commitment) is in excess of 20 years
from the date of issuance, then such Bonds shall be assumed to be amortized in
substantially equal annual amounts to be paid .for Principal and
interest over an assumed amortization period of years equal to the number of
years from the date of issuance of such Bonds to maturity (including the
Commitment) and at the interest rate applicable to such Bonds. For the purpose
of calculating the Debt Service Requirement on Balloon Bonds (1) which are not
subject to a Commitment and (2) which have a Balloon Date within 12 months from
the date of calculation, the Principal payable on such Bonds on the Balloon
Date shall be calculated as if paid on the Balloon Date. The Principal of and
interest on Bonds and Hedge Payments shall be excluded from the determination
of Debt Service Requirement to the extent that (1) the same were or are
expected to be paid with amounts on deposit on the date of calculation (or Bond
proceeds to be deposited on the date of issuance of proposed Bonds) in the
Project Fund, the Sinking Fund Account or a similar fund for Subordinate Bonds
or (2) cash or non-callable Government Securities are on deposit in an irrevocable
escrow or trust account in accordance with Section 9.1 hereof (or a
similar escrow or trust account for Subordinate Bonds) and such amounts
(including, where appropriate, the earnings or other increment to accrue
thereon) are required to be applied to pay Principal or interest and are
sufficient to pay such Principal or interest. Notwithstanding anything to
contrary stated above, other than with respect to Capital Appreciation Bonds
and SRF Bonds, if making an historical calculation, actual debt service may be
used.
Debt Service
Reserve Requirement means an amount determined from time to time by the
City as a reasonable reserve for the payment of Principal of and interest on
Senior Bonds which are not Senior SRF Bonds. Initially, this amount shall be
the least of (a) 10% of the stated Principal amount of the Senior Bonds which
are not Senior SRF Bonds (determined as of the issue date of each series of
Senior Bonds which are not Senior SRF Bonds), (b) the maximum annual Principal
and interest requirements on the Senior Bonds which are not Senior SRF Bonds
(determined as of the issue date of each series of Senior Bonds which are not
Senior SRF Bonds), or (c) 125% of the average annual Principal and interest
requirements on the Senior Bonds which are not Senior SRF Bonds (determined as
of the issue date of each series of Senior Bonds which are not Senior SRF
Bonds). The City may in its sole discretion reduce this amount from time to
time by Supplemental Ordinance, but in no event may the City reduce this amount
unless each Rating Agency indicates in writing to the City that such reduction
will not, by itself, result in a reduction or withdrawal of its current Rating
on the Senior Bonds. The City may increase this amount from time to time by
Supplemental Ordinance, subject to an opinion of Bond Counsel. If the
aggregate initial offering price of a series of Bonds to the public is less
than 98% or more than 102% of par, such offering price shall be used in lieu of
the stated Principal amount. Notwithstanding the foregoing, the Debt Service
Reserve Requirement, if any, in connection with any Senior SRF Bonds or any
Subordinate Bonds, including Subordinate SRF Bonds, shall be as provided in the
Series Ordinance authorizing the issuance of such Senior SRF Bonds or such
Subordinate Bonds.
Debt Service
Reserve Subaccount means the subaccount by that name within the Sinking
Fund Account established in Article IV.
Director
means, in reference to the Department of Water Services of the City, the
Director of the Department of Water Services of the City or his or her
designee, and in reference to the Department of Finance of the City, the
Director of the Department of Finance of the City or his or her designee, in
each case, such designee shall be designated in accordance with the Citys
Charter.
DTC means
The Depository Trust Company, New York, New York, or its nominee, or its
successors and assigns, or any other depository performing similar functions
under the Bond Ordinance.
Escrow Agent
means, in each case, the escrow agent for each related series of Refunded
Bonds.
Escrow Agreement
means, in each case, the Escrow Deposit Agreement between the City and the
Escrow Agent for each related series of Refunded Bonds.
Event of Default
means any of the events defined as such in Article VII.
Expenses
of Operation and Maintenance means all reasonable and necessary expenses
of operating and maintaining the System, including any ongoing fees associated
with Bonds (but, excluding Administrative Service Fees, capital lease payments,
if any, interest paid on water revenue bonds, depreciation and amortization
charges, any non-cash OPEB Obligations and any other items listed in Section
4.3(a)(2) (11)) pursuant to Section 4.3 of this Bond Ordinance.
Financial
Advisor means an investment banking or financial advisory firm, commercial
bank, or any other Person who or which is appointed by the City for the purpose
of advising the City on questions relating to the availability and terms of
specified types of Bonds and is actively engaged in and, in the good faith
opinion of the City, has a favorable reputation for skill and experience in
underwriting or providing financial advisory services in respect of similar
types of securities.
Fiscal Year
means the 12-month period used by the City for its general accounting purposes,
as it may be changed from time to time. The Fiscal Year at the time this Bond
Ordinance was adopted begins on May 1 and ends on April 30 of the immediately
following calendar year. As of the date hereof, the City has approved an
ordinance which effects a change to the Citys Fiscal Year, to be January 1 to
December 31, beginning January 1, 2011. Pursuant to such ordinance, the Citys
Fiscal Year beginning May 1, 2010 will end December 31, 2010.
Fitch means
Fitch, Inc. or, if such corporation is dissolved or liquidated or otherwise
ceases to perform securities rating services, such other nationally recognized
securities rating agency as may be designated in writing by the City. At the
time this Bond Ordinance was adopted, the notice address of Fitch is One State Street Plaza, New York, New York 10004.
Forecast Period
means a period of two consecutive Fiscal Years commencing with the Fiscal Year
in which any proposed Senior Bonds are to be issued.
Government
Loans means loans to the City by the government of the United States or the State, or by any department, authority or agency of either, for the purpose of
acquiring, constructing, reconstructing, improving, bettering or extending any
part of the System.
Government
Obligations means (a) direct obligations of the United States of America
for the full and timely payment of which the full faith and credit of the
United States of America is pledged or (b) obligations issued by a person
controlled or supervised by and acting as an instrumentality of the United
States of America, the full and timely payment of the principal of and the
interest on which is fully and unconditionally guaranteed as a full faith and
credit obligation of the United States of America (including any securities
described in (a) or (b) issued or held in book-entry form on the books of the
Department of the Treasury of the United States of America), which obligations,
in either case, (i) are not subject to redemption or prepayment prior to
maturity except at the option of the holder of such obligations and (ii) may
include U.S. Treasury Trust Receipts.
Hedge Agreement
means, without limitation, (i) any contract provided by a Qualified Hedge
Provider known as or referred to or which performs the function of an interest
rate swap agreement, currency swap agreement, forward payment conversion
agreement, or futures contract; (ii) any contract provided by a Qualified Hedge
Provider providing for payments based on levels of, or changes or differences
in, interest rates, currency exchange rates, or stock or other indices; (iii)
any contract provided by a Qualified Hedge Provider to exchange cash flows or
payments or series of payments; (iv) any type of contract provided by a
Qualified Hedge Provider called, or designed to perform the function of,
interest rate floors, collars, or caps, options, puts, or calls, to hedge or
minimize any type of financial risk, including, without limitation, payment,
currency, rate, or other financial risk; and (v) any other type of contract or
arrangement provided by a Qualified Hedge Provider that the City determines is
to be used, or is intended to be used, to manage or reduce the cost of any
Bonds, to convert any element of any Bonds from one form to another, to
maximize or increase investment return, to minimize investment return risk, or
to protect against any type of financial risk or uncertainty. Notwithstanding
the foregoing, any Hedge Agreement must comply with the debt policy of the
City.
Hedge Contingency
Payments means amounts payable by the City out of the Revenue Fund
pursuant to any Hedge Agreement as termination payments, fees, expenses and
indemnity payments.
Hedge Payments
means amounts payable by the City pursuant to any Hedge Agreement, other than
Hedge Contingency Payments.
Hedge Period
means the period during which a Hedge Agreement is in effect.
Hedge Receipts
means amounts payable by any provider of a Hedge Agreement pursuant to such
Hedge Agreement, other than termination payments, fees, expenses and indemnity
payments.
Hedged Bonds
means any Bonds for which the City shall have entered into a Hedge Agreement.
Independent
Certified Public Accountant means a certified public accountant, or a firm
of certified public accountants, who or which is independent as that term is
defined in Rule 101 and related interpretations of the Code of Professional
Ethics of the American Institute of Certified Public Accountants, of recognized
standing, who or which does not devote his or its full time to the City (but
who or which may be regularly retained by the City).
Interest Payment
Date means each date on which interest is to become due on any Bonds, as
established in the Series Ordinance for such Bonds.
Investment
Earnings means all interest received on and profits derived from
investments of moneys in all funds and accounts of the City described in Section
4.2 other than all funds and accounts established in connection with
SRF Bonds under the bond ordinance(s) authorizing such SRF Bonds.
Letter of
Representations means the Blanket Issuer Letter of Representations, dated
January 4, 1996, between the City and DTC, as may be supplemented or amended
from time to time.
Maximum Annual
Debt Service means the maximum amount of Debt Service Requirements as
computed for the then current or any future Fiscal Year.
Moodys
means Moodys Investors Service, Inc. or, if such corporation is dissolved or
liquidated or otherwise ceases to perform securities rating services, such
other nationally recognized securities rating agency as may be designated in
writing by the City. At the time this Bond Ordinance was adopted, the notice
address of Moodys is 7 World Trade Center, 250 Greenwich Street, New York, New York 10007.
Net Operating
Revenues means Operating Revenues, after provision for payment of all
Expenses of Operation and Maintenance.
OPEB
Obligations means the amount to which the Citys actual other
post-employment benefits (OPEB) contributions are less than its OPEB cost, or
expense for any Fiscal Year.
Operating
Revenues means all income and revenues derived and accrued by the City
from the ownership and operation of the System, including capital repayments
actually received by the City in connection with improvements to the System,
Investment Earnings and any amounts held in escrow in connection with the
construction of extensions and improvements to the System to be applied during
the period of determination to pay interest on water system revenue bonds, but
excluding any profits or losses on the early extinguishment of debt or on the
sale or other disposition of investments or fixed or capital assets not in the
ordinary course of business.
Other System
Obligations means obligations of any kind, including but not limited to,
Government Loans, general obligation bonds, capital leases, installment
purchase agreements, or notes (but excluding Bonds and related obligations to
Credit Facility Providers, Reserve Account Credit Facility Providers and
Qualified Hedge Providers), incurred or issued by the City to finance or
refinance the cost of acquiring, constructing, reconstructing, improving,
equipping, bettering, or extending any part of the System.
Outstanding
means, when used in reference to Bonds, all Bonds which have been duly
authenticated and delivered under the Bond Ordinance, with the exception of (a)
Bonds in lieu of which other Bonds have been issued under agreement to replace
lost, mutilated, stolen, or destroyed obligations, (b) Bonds surrendered by the
owners in exchange for other Bonds under Section 2.8 or Section 3.4,
and (c) Bonds for the payment of which provision has been made in accordance
with Article IX. In determining the amount of Capital Appreciation
Bonds Outstanding under the Bond Ordinance, the Accreted Value of such Capital
Appreciation Bonds at the time of determination shall be used.
Paying Agent
means the paying agent selected from time to time by the Director of Finance.
Payments
Subaccount means the subaccount by that name within the Sinking Fund
Account established in Article IV.
Permitted
Investments means any of the following securities, if and to the extent
the same are at the time legal for investment of the Citys moneys held in the
funds and accounts referred to in Article IV:
(a) United States Treasury Securities (Bills, Notes, Bonds and Strips). Obligations of the United States government for
which the full faith and credit of the United States are pledged for the
payment of principal and interest.
(b) United States Agency Securities.
Obligations issued or guaranteed by any agency, including government sponsored
enterprises of the United States Government, which at the time of purchase have
a liquid market and a readily determinable market value that are described as
follows:
(i) U.S. Government Agency
Coupon and Zero Coupon Securities.
(ii) U.S. Government Agency
Discount Notes.
(iii) U.S. Government Agency
Callable Securities. Restricted to securities callable at par only.
(iv) U.S. Government Agency
Step-Up Securities. The coupon rate is fixed for an initial term. At
coupon date, the coupon rate rises to a new, higher fixed interest rate.
(v) U.S. Government Agency
Floating Rate Securities. The coupon rate floats off of only one index. Restricted to coupons with no
interim caps that reset at least quarterly.
(vi) U.S. Government Agency Mortgage Backed Securities (MBS, CMO, Pass-Thru Securities). Restricted to securities with final maturities of
five (5) years or less or have the final projected
payment no greater than four (4) years when analyzed in a +300 basis point
interest rate environment. Restricted to obligations of FNMA, FHLMC and GNMA
only.
(c) Repurchase Agreements. Contractual
agreements between the City and commercial banks or primary government
securities dealers, organized under the laws of the United States or any state,
which contractual agreements are continuously and fully secured by any one or
more of the securities described in paragraphs (a) and (b) above and which have
a market value, exclusive of accrued interest, at all times at least equal to
the principal amount of such repurchase agreements. Securities acquired pursuant
to repurchase agreements shall be valued at the lower of the current market
value or the repurchase price thereof set forth in the repurchase agreement.
The Securities Industry and Financial Markets Associations (or any successor
association) guidelines for the Master Repurchase Agreement will be used and
will govern all repurchase agreement transactions. All repurchase agreements
shall result in transfer of legal title to identified securities that are
segregated in a custodial or trust account for the benefit of the Paying Agent
or delivered to the Paying Agent. Repurchase agreement transactions will be
either physical delivery or tri-party.
(d) Bankers Acceptances. Bankers
acceptances issued by domestic commercial banks
possessing the highest rating issued by Moodys or Standard & Poors.
(e) Commercial Paper.
Commercial paper issued by domestic corporations, which has received the
highest rating issued by Moodys or Standard & Poors. Eligible paper is
further limited to issuing corporations that have total assets in excess of
five hundred million dollars ($500,000,000) and are
not listed on Credit Watch with negative implications by any nationally
recognized rating agency at the time of purchase.
(f) Any full faith and credit obligations of the
State of Missouri rated at least A or A2 by Standard &
Poors or Moodys.
(g) Any full faith and credit obligations of any
county in which the City is located rated AA or Aa2
by Standard & Poors or Moodys.
(h) Any full faith and credit obligations of any
school district in Kansas City, Missouri rated AA or Aa2 by Standard & Poors or Moodys.
(i) Any full faith and credit obligations or
revenue bonds of the City of Kansas City, Missouri rated AA or Aa2 by Standard & Poors or Moodys.
(j) Any municipal obligation as
defined in (f), (g), (h) or (i) that is not rated but either pre-refunded or
escrowed to maturity with U.S. Treasury Securities as to both principal and
interest.
(k) Money market mutual funds
registered under the Federal Investment Company Act of 1940, whose shares are
registered under the Federal Securities Act of 1933, rated in either of the two
highest categories by Moodys and Standard & Poors (in either case without
regard to any modifier).
(l) Such other investments not
described above that are allowed pursuant to Missouri law and approved in the
Charter.
References to particular ratings
and rating categories in this definition are applicable only at the time of
purchase of the Permitted Investment.
Person or person
means any individual, corporation, partnership, limited liability company,
joint venture, association, joint stock company, trust, unincorporated
organization, body, authority, government, or agency or political subdivision
thereof.
Pledged Bond
means any Bond purchased and held by a Credit Facility Provider pursuant to a
Credit Facility Agreement. A Bond shall be deemed a Pledged Bond only for the
actual period during which such Bond is owned by a Credit Facility Provider
pursuant to a Credit Facility Agreement.
Pledged Bond
Rate means the rate of interest payable on Pledged Bonds, as may be
provided in a Credit Facility or Credit Facility Agreement.
Pledged Revenues
means Net Operating Revenues, Hedge Receipts, and all moneys paid or required
to be paid into, and all moneys and securities on deposit from time to time in,
the funds and accounts specified in Section 4.2, but excluding any
amounts required in the Bond Ordinance to be set aside pending, or used for,
rebate to the United States government pursuant to Section 148(f) of the
Code, including, but not limited to, amounts in the Rebate Account.
Principal
means (i) with respect to a Current Interest Bond, the principal amount of such
Bond, and (ii) with respect to a Capital Appreciation Bond, the Accreted Value
of such Capital Appreciation Bond.
Principal
Maturity Date means each date on which Principal is to become due on any
Bonds, by maturity or mandatory sinking fund redemption, as established in the
Series Ordinance for such Bonds.
Project
means the acquisition, construction, reconstruction, improvement, betterment,
extension or equipping of the System, in whole or in part, with the proceeds of
a series of Bonds.
Project Fund
means the fund by that name established in Article IV.
Purchase
Contract means the purchase contract between the City and the Underwriter
relating to a series of Bonds.
Put Date
means any date on which a Bondholder may elect to have Balloon Bonds redeemed,
prepaid, purchased directly or indirectly by the City, or otherwise paid.
Qualified Hedge
Provider means an entity whose senior unsecured long term obligations,
financial program rating, counterparty rating, or claims paying ability, or
whose payment obligations under the related Hedge Agreement are absolutely and
unconditionally guaranteed by an entity whose senior unsecured long term
obligations, financial program rating, counterparty rating, or claims paying
ability, meet the requirements of the Citys debt policy which has been adopted
pursuant to the Citys Charter and State law. An entitys status as a Qualified
Hedge Provider is determined only at the time the City enters into a Hedge
Agreement with such entity and shall not be redetermined with respect to that
Hedge Agreement.
Rating means
a rating in one of the categories by a Rating Agency, disregarding pluses,
minuses, and numerical gradations.
Rating
Agencies or Rating Agency means Fitch, Moodys, and Standard &
Poors or any successors thereto and any other nationally recognized credit
rating agency then maintaining a rating on any Bonds at the request of the
City. If at any time a particular Rating Agency does not have a rating
outstanding with respect to the relevant Bonds, then a reference to Rating
Agency or Rating Agencies shall not include such Rating Agency.
Rebate Account
means the account by that name established in Article IV.
Record Date
means, with respect to any semiannual Interest Payment Date, the 15th day of
the calendar month immediately preceding such Interest Payment Date, and any
record dates designated by the City in a Series Ordinance.
Reimbursement
Obligation means the obligation of the City to directly reimburse any
Credit Facility Provider for amounts paid by such Credit Facility Provider
under a Credit Facility, whether or not such obligation to so reimburse is
evidenced by a promissory note or other similar instrument.
Renewal and
Replacement Account means the account by that name established in Article
IV.
Replenishment
Payments shall have the meaning ascribed therefor in Section 4.4(f).
Reserve Account
Credit Facility means any letter of credit, insurance policy, line of
credit, or surety bond, together with any substitute or replacement therefor,
if any, complying with the provisions of the Bond Ordinance, thereby fulfilling
all or a portion of the Debt Service Reserve Requirement.
Reserve Account
Credit Facility Agreement means any agreement between the City and a
Reserve Account Facility Provider relating to the issuance of a Reserve Account
Credit Facility, as such agreement may be amended from time to time.
Reserve Account
Credit Facility Provider means any provider of a Reserve Account Credit
Facility.
Revenue Fund
means the fund by that name established in Article IV.
Senior
Bonds means any Bonds, including Senior SRF Bonds, issued with a right to
payment and secured by a lien on a parity with other Senior Bonds (except with
respect to any Credit Facility which may be available only to one or more
series of Senior Bonds and except that Senior SRF Bonds shall not be secured by
the Debt Service Reserve Subaccount) pursuant to Section 5.3.
Senior Hedge
Agreements means Hedge Agreements relating to Hedged Bonds which are
Senior Bonds.
Senior SRF Bonds
means SRF Bonds which are Senior Bonds.
Series Ordinance
means a bond ordinance or bond ordinances of the City (which may be
supplemented by one or more bond ordinances) to be adopted prior to and
authorizing the issuance and delivery of any series of Bonds. Such a bond
ordinance as supplemented shall establish the date or dates of the pertinent
series of Bonds, the schedule of maturities of such Bonds, whether any such
Bonds will be Capital Appreciation Bonds, the name of the purchaser(s) of such
series of Bonds, the purchase price thereof, the rate or rates of interest to
be borne thereby, whether fixed or variable, the interest payment dates for
such Bonds, the terms and conditions, if any, under which such Bonds may be
made subject to redemption (mandatory or optional) prior to maturity, the form
of such Bonds, and such other details as the City may determine.
Sinking Fund
Account means the account by that name established in Article IV.
SRF Bonds
means such Bonds or other obligations issued in connection with the Citys participation in the Missouri State
Revolving Fund Program of the Missouri Department of Natural Resources and the
State Environmental Improvement and Energy Resources Authority, which SRF Bonds
may be Senior SRF Bonds or Subordinate SRF Bonds.
Standard &
Poors or S&P means Standard & Poors, a division of The
McGraw-Hill Companies, Inc., or, if such corporation is dissolved or liquidated
or otherwise ceases to perform securities rating services, such other
nationally recognized securities rating agency as may be designated in writing
by the City. At the time this Bond Ordinance was adopted, the notice address
of Standard & Poors is 25 Broadway, New York, New York 10004.
State means
the State of Missouri.
Subordinate
Bonds means Bonds, including Subordinate SRF Bonds, issued with a right to
payment from the Pledged Revenues and secured by a lien on the Pledged Revenues
expressly junior and subordinate to the Senior Bonds.
Subordinate Hedge
Agreements means Hedge Agreements relating to Hedged Bonds which are
Subordinate Bonds.
Subordinate SRF
Bonds means SRF Bonds which are Subordinate Bonds.
Supplemental
Ordinance means (a) any Series Ordinance and (b) any modification,
amendment, or supplement to this Bond Ordinance other than a Series Ordinance.
Surplus Account
means the account by that name established in Article IV.
System means
the entire waterworks plant and system owned and operated by the City for the
production, storage, treatment and distribution of water, to serve the needs of
the City and its inhabitants and others, including all appurtenances and
facilities connected therewith or relating thereto, together with all
extensions, improvements, additions and enlargements thereto hereafter made or
acquired by the City. At the discretion of the City there may be excluded from
the System facilities which are hereafter constructed or acquired, connected or
separate from the System, which are not financed with the proceeds of revenue
bonds payable from the revenues of the System, and for which the City maintains
separate and distinct operations, facilities and records, and which if
connected to the System are billed for System use as a customer of the System
in accordance with the ordinances and regulations of the City.
Tax-Exempt Bonds
means any Bonds the interest on which has been determined, in an opinion of
Bond Counsel, to be excludable from the gross income of the owners thereof for
federal income tax purposes.
Term Bonds
means Bonds which mature on one Principal Maturity Date yet a portion of which
are required to be redeemed, prior to maturity, under a schedule of mandatory
redemptions established by the Bond Ordinance.
Underwriter
means the underwriter(s) specified in the Series Ordinance authorizing a series
of Bonds.
U.S. Treasury
Trust Receipts means receipts or certificates which evidence an undivided
ownership interest in the right to the payment of portions of the principal of
or interest on obligations described in clauses (a) or (b) of the term
Government Obligations, provided that such obligations are held by a bank or
trust company organized under the laws of the United States acting as custodian
of such obligations, in a special account separate from the general assets of such
custodian.
Variable Rate
means a rate of interest applicable to Bonds, other than a fixed rate of
interest which applies to a particular maturity of Bonds, so long as that
maturity of Bonds remains Outstanding.
Section
1.2. Construction of Certain Terms. For all purposes of the Bond Ordinance,
except as otherwise expressly provided or unless the context otherwise
requires, the following rules of construction shall apply:
(1) The use of the masculine, feminine, or neuter gender is for
convenience only and shall be deemed and construed to include correlative words
of the masculine, feminine, or neuter gender, as appropriate.
(2) All references in the Bond Ordinance to designated
Articles, Sections, and other subdivisions are to the designated Articles,
Sections, and other subdivisions of the Bond Ordinance. The words herein,
hereof, and hereunder and other words of similar import refer to the Bond
Ordinance as a whole and not to any particular Article, Section, or other
subdivision.
(3) The terms defined in this Article shall have the meanings
assigned to them in this Article and include the plural as well as the
singular.
(4) Whenever an item or items
are listed after the word including, such listing is not intended to be a
listing that excludes items not listed.
(5) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as promulgated by the American Institute of Certified Public
Accountants.
Section 1.3. Table
of Contents; Titles and Headings. The table of contents, the titles of the
articles, and the headings of the sections of the Bond Ordinance are solely for
convenience of reference, are not a part of the Bond Ordinance, and shall not
be deemed to affect the meaning, construction, or effect of any of its
provisions.
Section 1.4. Contents
of Certificates or Opinions. Every certificate or opinion with
respect to the compliance with a condition or covenant provided for in the Bond
Ordinance shall include: (i) a statement that the person or persons making or
giving such certificate or opinion have read such covenant or condition and the
definitions in the Bond Ordinance relating thereto, (ii) a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based,
(iii) a statement that, in the opinion of the signer(s), they have made or
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such covenant or
condition has been complied with, and (iv) a statement as to whether, in the
opinion of the signer(s), such condition or covenant has been complied with.
Any such certificate
or opinion made or given by an official of the City may be based, insofar as it
relates to legal or accounting matters, upon a certificate or an opinion of
counsel or an accountant, which certificate or opinion has been given only
after due inquiry of the relevant facts and circumstances, unless such official
knows that the certificate or opinion with respect to the matters upon which
his certificate or opinion may be based as aforesaid is erroneous or in the
exercise of reasonable care should have known that the same was erroneous. Any
such certificate or opinion made or given by counsel or an accountant may be
based (insofar as it relates to factual matters with respect to information
which is in the possession of an official of the City or any third party) upon
the certificate or opinion of or representations by an official of the City or
any third party on whom counsel or an accountant could reasonably rely unless
such counsel or such accountant knows that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion may be based as aforesaid are erroneous or in the exercise of
reasonable care should have known that the same were erroneous. The same
official of the City, or the same counsel or accountant, as the case may be,
need not certify or opine to all of the matters required to be certified or
opined under any provision of the Bond Ordinance, but different officials,
counsel, or accountants may certify or opine to different matters,
respectively.
ARTICLE II
THE BONDS
Section 2.1. Authorization
and Form of Bonds Generally. The Bonds authorized under the Bond
Ordinance may be issued and sold from time to time in one or more series, shall
be designated City of Kansas City, Missouri Water Revenue Bonds, and shall be
in substantially the form set forth in the related Series Ordinance, but such
variations, omissions, substitutions, and insertions may be made therein, and
such particular series designation, legends, or text may be endorsed thereon,
as may be necessary or appropriate to conform to and as required or permitted
by this Bond Ordinance and any Series Ordinance or as may be necessary or
appropriate to comply with applicable requirements of the Code. The Bonds also
may bear such legend or contain such further provisions as may be necessary to
comply with or conform to the rules and requirements of any brokerage board,
securities exchange, or municipal securities rulemaking board.
Senior Bonds may
be issued from time to time as provided in, and subject to the limitations set
forth in, Article V. Subordinate Bonds may be issued from time to time
as provided in, and subject to the limitations set forth in, Section 5.4.
Unless otherwise
provided in a Series Ordinance, each Bond authenticated prior to the first
Interest Payment Date thereon shall bear interest from its dated date. Each
Bond authenticated on or after the first Interest Payment Date thereon shall
bear interest from the Interest Payment Date thereon next preceding the date of
authentication thereof, unless such date of authentication shall be an Interest
Payment Date to which interest on such Bond has been paid in full or duly
provided for, in which case from such date of authentication; provided that if,
as shown by the records of the Paying Agent, interest on such Bond shall be in
default, such Bond shall bear interest from the date to which interest has been
paid in full on such Bond or, if no interest has been paid on such Bond, its
dated date. Each Bond shall bear interest on overdue Principal at the rate
borne by such Bond until the Principal balance thereof is paid in full.
Unless otherwise
provided in a Series Ordinance, the Bonds shall be issued in fully registered
form in the denomination of $5,000 each or integral multiples thereof and shall
be dated as provided in the pertinent Series Ordinance, except that any Auction
Rate Bonds shall be issued in the denomination of $5,000 and integral multiples
thereof, Capital Appreciation Bond shall be issued in the denomination of
$5,000 maturity amount or integral multiples thereof and any Bonds bearing
interest at a Variable Rate may be issued in the denomination of $100,000 each
or integral multiples of $5,000 in excess thereof.
The Principal of,
premium, if any, and interest on the Bonds shall be payable in any coin or
currency of the United States of America which, at the respective dates of
payment thereof, is legal tender for the payment of public and private debts.
The Bonds and the
Bond Registrars Certificate of Authentication shall be in substantially the
form set forth in the Series Ordinance pursuant to which such series of Bonds
are issued.
Section 2.2. Execution
and Authentication of Bonds. The Bonds shall be executed by the Mayor
and attested by the City Clerk and shall be sealed with the official seal or a
facsimile of the official seal of the City. The facsimile signature of the
Mayor and the City Clerk may be imprinted on the Bonds instead of their manual
signatures. Bonds bearing the manual or facsimile signatures of a person in
office at the time such signature was signed or imprinted shall be fully valid,
notwithstanding the fact that before or after delivery of such Bonds such person
ceased to hold such office.
Until definitive
Bonds are ready for delivery, the City may execute, and upon request of the
City the Bond Registrar shall authenticate and deliver, in lieu of definitive
Bonds, but subject to the same limitations and conditions as definitive Bonds,
temporary printed, engraved, lithographed or typewritten Bonds.
Only such Bonds as
shall be authenticated by the endorsement thereon of a certificate
substantially in the form contained on the form of Bond set forth in the Bond
Ordinance, executed by the Bond Registrar by the manual signature of one of its
authorized signatories, shall be secured by the Bond Ordinance or shall be
entitled to any benefit under the Bond Ordinance. Every such certificate of
the Bond Registrar upon any Bond purporting to be secured by the Bond Ordinance
shall be conclusive evidence that the Bond so certified has been duly issued
under the Bond Ordinance and that the owner is entitled to the benefit of the
Bond Ordinance. It shall not be necessary for the same signatory to sign the
certificate of authentication on all of the Bonds secured under the Bond
Ordinance or on all Bonds of any series.
Section 2.3. Registration
of Bonds. The City shall cause
the Bond Register for the registration and for the transfer of the Bonds as
provided in the Bond Ordinance to be kept by the Bond Registrar. The Bonds
shall be registered as to Principal and interest on the Bond Register upon
presentation thereof to the Bond Registrar which shall make notation of such
registration thereon; provided that the City reserves the right to issue coupon
Bonds payable to bearer whenever to do so would not result in any adverse
federal tax consequences.
Section 2.4. Place
of Payment. The Principal of and
redemption premium, if any, on any Bonds shall be payable to the Bondholder at
the principal payment office of the Paying Agent or at such other office
designated by the Paying Agent for such purpose, upon presentation and
surrender of such Bond. Payment of the interest on each Bond shall be made by
the Paying Agent on each Interest Payment Date to the person appearing as the
registered owner thereof as of the close of business on the Record Date
preceding the Interest Payment Date by check mailed to such registered owner at
its address as it appears on the Bond Register, or at such other address as is
furnished in writing by such registered owner to the Bond Registrar prior to
such Record Date, notwithstanding the cancellation of any such Bonds upon any
exchange or transfer thereof subsequent to the Record Date and prior to such
Interest Payment Date.
Notwithstanding the
foregoing, interest on the Bonds of any series shall be payable to any
registered owner of more than $500,000 in aggregate Principal of the Bonds of
such series by deposit of immediately available funds to the account of such
registered owner maintained with the Paying Agent or transmitted by electronic
transfer to such registered owner at an account maintained at a commercial bank
located within the United States of America, if the Paying Agent receives from
such registered owner written deposit or electronic transfer instructions not
less than 15 days prior to the Record Date preceding the Interest Payment Date
for which the deposit or electronic transfer is requested.
The City may, by
Supplemental Ordinance, provide for other methods or places of payment,
including electronic transfer, as it may deem appropriate for any Bonds.
Section 2.5. Persons
Treated as Owners. The person in
whose name any Bond is registered in the Bond Register shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of either Principal or interest shall be made only to or upon the order
of the registered owner thereof or such registered owners attorney duly
authorized in writing. All such payments shall be valid and effectual to
satisfy and discharge the liability upon such Bond to the extent of the sum or
sums so paid.
Section 2.6. Transfer
and Exchange of Bonds. Bonds may be transferred by surrender
for transfer at the principal corporate trust office of the Bond Registrar or
at such other office designated by the Bond Registrar for such purpose, duly
endorsed for transfer or accompanied by an assignment duly executed by the
registered owner or the registered owners attorney duly authorized in
writing. The City shall cause to be executed and the Bond Registrar shall
authenticate and deliver in the name of the transferee or transferees a new
Bond or Bonds of the same series, maturity, interest rate, aggregate Principal,
and tenor of any authorized denomination or denominations, and bearing numbers
not then outstanding.
Bonds may be
exchanged at the principal corporate trust office of the Bond Registrar or at
such other office designated by the Bond Registrar for such purpose, for a like
aggregate Principal amount of Bonds of other authorized denominations of the
same series, maturity, and interest rate, and bearing numbers not then
outstanding. The City shall cause to be executed and the Bond Registrar shall
authenticate and deliver Bonds which the Bondholder making the exchange is
entitled to receive.
The Bond Registrar
shall not be required to transfer or exchange any Bond after notice calling
such Bond for redemption has been given or during the period of 15 days
(whether or not a Business Day for the Bond Registrar, but excluding the date
of giving such notice of redemption and including such 15th day) immediately
preceding the giving of such notice of redemption.
In
any exchange or registration of transfer of any Bond, the owner of the Bond
shall not be required to pay any charge or fee; provided, however, if and to
whatever extent any tax or governmental charge is at any time imposed on any
such exchange or transfer, the City or the Bond Registrar may require payment
of a sum sufficient for such tax or charge. In
the event any Bondholder fails to provide a correct taxpayer identification
number to the Bond Registrar, the Bond Registrar may impose a charge against
such Bondholder sufficient to pay any governmental charge required to be paid
as a result of such failure. In compliance with Section 3406 of the Code,
such amount may be deducted by the Paying Agent from amounts otherwise payable
to such Bondholder hereunder or under the Bonds.
All Bonds surrendered
for exchange or transfer of registration shall be cancelled and destroyed by
the Bond Registrar in accordance with Section 2.7.
Section 2.7. Destruction
of Bonds. All Bonds paid by the
Paying Agent at maturity or upon redemption prior to maturity shall be
cancelled and delivered to the Bond Registrar for destruction in accordance
with the customary practices of the Bond Registrar and applicable record
retention laws. All Bonds cancelled on account of payment, transfer, or
exchange shall be cancelled and, in accordance with the customary practices of
the Bond Registrar and applicable record retention laws, destroyed by the Bond
Registrar and shall not be reissued.
Section 2.8. Mutilated,
Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen
or destroyed, the City may execute and deliver a new Bond of the same series,
maturity, interest rate, aggregate Principal, and tenor in lieu of and in
substitution for the Bond mutilated, lost, stolen or destroyed. In the case of
any mutilated Bond, however, such mutilated Bond shall first be surrendered to
the Bond Registrar, and, in the case of any lost, stolen or destroyed Bond,
there shall first be furnished to the Bond Registrar evidence satisfactory to
it of the ownership of such Bond and of such loss, theft or destruction,
together with indemnity to the City and the Bond Registrar, satisfactory to
each of them. If any such Bond shall have matured or a redemption date
pertaining to the Bond shall have passed, instead of issuing a new Bond the
City may pay or cause the Paying Agent to pay the Bond. The City, the Bond
Registrar, and the Paying Agent may charge the owner of such Bond with their
reasonable fees and expenses for replacing mutilated, lost, stolen or destroyed
Bonds.
In executing a new
Bond and in furnishing the Bond Registrar with the written authorization to
deliver a new Bond as provided for in this Section, the City may rely
conclusively on a representation of the Bond Registrar that the Bond Registrar
is satisfied with the adequacy of the evidence presented concerning the
mutilation, loss, theft or destruction of any Bond.
Section 2.9. Nonpresentment
of Bonds. If any Bond is not
presented for payment when the Principal thereof becomes due at maturity, if
funds sufficient to pay such Bond have been made available to the Paying Agent,
all liability of the City to the registered owner thereof for the payment of
such Bond shall forthwith cease, determine and be completely discharged, and
thereupon it shall be the duty of the Paying Agent to hold such funds, without
liability for interest thereon, for the benefit of the registered owner of such
Bond, who shall thereafter be restricted exclusively to such funds for any
claim of whatever nature on his part under the Bond Ordinance or on, or with
respect to, said Bond. If any Bond is not presented for payment within two
years following the date when such Bond becomes due at maturity, the Paying Agent
shall repay to the City the funds theretofore held by it for payment of such
Bond, and such Bond shall, subject to the defense of any applicable statute of
limitation, thereafter be an unsecured obligation of the City, and the
registered owner thereof shall be entitled to look only to the City for
payment, and then only to the extent of the amount so repaid to it by the
Paying Agent, and the City shall not be liable for any interest thereon and
shall not be regarded as a trustee of such money.
Section 2.10. DTC
Book-Entry. Unless otherwise provided in a
Series Ordinance, the Bonds shall be initially issued in the name of Cede &
Co., as nominee for DTC, as registered owner of the Bonds, and held in the
custody of DTC or the Paying Agent as its Fast Agent. A single certificate
will be issued and delivered to DTC or the Paying Agent as its Fast Agent for
each maturity of the Bonds. The actual purchasers of the Bonds (the Beneficial
Owners) will not receive physical delivery of Bond certificates except as
provided herein. Beneficial Owners are expected to receive a written
confirmation of their purchase providing details of each Bond acquired. For so
long as DTC shall continue to serve as securities depository for the Bonds as
provided herein, all transfers of beneficial ownership interests will be made
by book-entry only, and no investor or other party purchasing, selling, or
otherwise transferring beneficial ownership of Bonds is to receive, hold, or
deliver any Bond certificate.
For every transfer
and exchange of the Bonds, the Beneficial Owner may be charged a sum sufficient
to cover such Beneficial Owners allocable share of any tax, fee, or other
governmental charge that may be imposed in relation thereto.
Bond certificates are
required to be delivered to and registered in the name of the Beneficial Owner
under the following circumstances:
(a) DTC
determines to discontinue providing its service with respect to a series of
Bonds (such a determination may be made at any time by giving 30 days notice
to the City and the Bond Registrar and discharging its responsibilities with
respect thereto under applicable law), or
(b) DTC
participants with a majority position in the Bonds (other than SRF Bonds)
determine that continuation of the system of book-entry transfers through DTC
(or a successor securities depository) is not in the best interests of the
Beneficial Owners.
The City and the Bond
Registrar will recognize DTC or its nominee as the Bondholder for all purposes,
including notices and voting.
The City and the Bond
Registrar covenant and agree, so long as DTC shall continue to serve as
securities depository for the Bonds, to meet the requirements of DTC with
respect to required notices and other provisions of the Letter of
Representations.
The Bond Registrar is
authorized to rely conclusively upon a certificate furnished by DTC and
corresponding certificates from DTC participants and indirect participants as
to the identity of, and the respective Principal of Bonds beneficially owned
by, the Beneficial Owner or Beneficial Owners.
If at any time DTC
ceases to hold the Bonds, a Supplemental Ordinance amending the relevant
provisions of this Bond Ordinance shall be adopted and thereafter all
references in this Bond Ordinance to DTC in connection with the Bonds shall be
of no further force or effect.
ARTICLE III
REDEMPTION OF
BONDS
Section 3.1. Optional
and Mandatory Redemption of Bonds. The Bonds shall be subject to redemption
as provided in the Series Ordinance pursuant to which such series of Bonds are
issued.
Section 3.2. Notice
of Redemption. Unless waived by
any registered owner of Bonds to be redeemed and except as may be otherwise
provided in a Series Ordinance, official notice of any such redemption shall be
given by the Bond Registrar on behalf of the City by mailing a copy of an official
redemption notice by first class mail, at least 30 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 Bond Registrar.
All official notices
of redemption shall be dated, shall contain the complete official name of the
Bond issue, and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the interest rate (unless such Bonds are Auction Rate Bonds
or bear interest at a Variable Rate) and maturity date of the Bonds being
redeemed;
(4) if less than all the Outstanding Bonds are to be redeemed,
the Bond numbers, and, where part of the Bonds evidenced by one Bond
certificate are being redeemed, the respective Principal amounts of such Bonds
to be redeemed;
(5) 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 such date; and
(6) the place where such Bonds are to be surrendered for payment
of the redemption price (which place of payment shall be the principal payment
office of the Paying Agent or at such other office designated by the Paying
Agent for such purpose) and the name, address, and telephone number of a person
or persons at the Paying Agent who may be contacted with respect to the
redemption.
Any notice of optional redemption of
any Bonds may specify that the redemption is contingent upon the deposit of
moneys with the Paying Agent in an amount sufficient to pay the redemption
price (which price shall include the redemption premium, if any) of all the
Bonds or portions of Bonds which are to be redeemed on that date.
Not later than the
redemption date, the City shall deposit with the Paying Agent 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.
In addition to the
official notice described above, further notice shall be given by the Bond
Registrar as set forth below:
(1) Each further notice of redemption given shall contain the
information required above for an official notice of redemption plus: (i) the
CUSIP numbers of all Bonds being redeemed; (ii) the date of issue of the Bonds
as originally issued; (iii) the rate of interest borne by each Bond being
redeemed (unless the Bonds are Auction Rate Bonds or bear interest at a
Variable Rate); (iv) the maturity date of each Bond being redeemed; and (v) any
other descriptive information needed to identify accurately the Bonds being
redeemed.
(2) Each further notice of redemption shall be sent at least 35
days (or such other number of days as may be specified in a Series Ordinance)
before the redemption date by electronic transmission, registered or certified
mail, or overnight delivery service, as determined by the Bond Registrar, to
all registered securities depositories then in the business of holding substantial
amounts of obligations of the types comprising the Bonds and to one or more
national information services that disseminate notices of redemption of
obligations such as the Bonds.
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.
Not less than 60 days
after the redemption date, the Bond Registrar shall send a second copy of the
official notice of redemption to the registered owner of any Bond or Bonds to
be redeemed if, by such date, such registered owner has not surrendered its
Bond or Bonds for redemption. Such notice shall be sent by registered or
certified mail, with a return receipt requested.
For
so long as DTC is effecting bookentry transfers of the Bonds, the Bond
Registrar shall provide the notices specified in this Section to DTC. It is
expected that DTC shall, in turn, notify its participants and that the
participants, in turn, will notify or cause to be notified the Beneficial
Owners. Any failure on the part of DTC or a participant, or failure on the
part of a nominee of a Beneficial Owner of a Bond (having been mailed notice
from the Bond Registrar, a participant or otherwise) to notify the Beneficial
Owner of the Bond so affected, shall not affect the validity of the redemption
of such Bond.
Any defect in any
notice of redemption shall not affect the validity of proceedings for
redemption of the Bonds.
Section 3.3. Notice
to Bond Registrar; Bond Registrar Shall Give Notice of Redemption. Notice of redemption of Bonds to be
redeemed shall be given by the Bond Registrar for and on behalf of the City
whenever either: (i) such redemption is required to be made under the Series
Ordinance for such Bonds, or (ii) such redemption is permitted to be made under
the terms of such Bonds and the City requests that such redemption be made. In
case of any redemption at the election of the City, the City shall, at least 45
days prior to the redemption date (unless a shorter notice shall be
satisfactory to the Bond Registrar) give written notice to the Bond Registrar directing
the Bond Registrar to call Bonds for redemption and give notice of redemption
and specifying the redemption date, the principal amount and maturities of
Bonds to be called for redemption, the applicable redemption price or prices
and the provision or provisions of this Bond Ordinance pursuant to which such
Bonds are to be called for redemption.
Section 3.4. Effect
of Notice of Redemption. Official notice of redemption having
been given in the manner and under the conditions provided in this Article and
moneys for payment of the redemption price being held by the Paying Agent as
provided in the Bond Ordinance, the Bonds or portions of Bonds called for
redemption shall, on the redemption date designated in such notice, become and
be due and payable at the redemption price provided for redemption of such
Bonds or portions of Bonds on such date, and from and after such date interest
on the Bonds or portions of Bonds called for redemption shall cease to accrue,
such Bonds or portions of Bonds shall cease to be entitled to any lien,
benefit, or security under the Bond Ordinance, and the owners of such Bonds or
portions of Bonds shall have no rights in respect thereof except to receive
payment of the redemption price thereof. Upon surrender for partial redemption
of any Bond, there shall be prepared for and delivered to the registered owner
a new Bond or Bonds of the same series, maturity, and interest rate in the
amount of the unpaid Principal.
Section 3.5. Redemption
Among Series. Subject to the
redemption provisions of any Series Ordinance, the City in its discretion may
redeem the Bonds of any series, or a portion of the Bonds of any such series,
before it redeems the Bonds of any other series. Within any particular series,
any redemption of Bonds shall be effected in the manner provided in this Bond
Ordinance and in any Series Ordinance.
Section 3.6. Selection
of Bonds to be Redeemed. If less than all of the Bonds of like maturity
of any series shall be called for redemption, the particular Bonds, or portions
of Bonds, to be redeemed shall be selected by the City. The portion of any
Bond of a denomination of more than $5,000 to be redeemed shall be in the
Principal amount of $5,000 or an integral multiple of $5,000 in excess thereof,
and, in selecting portions of such Bonds for redemption, the City shall treat
each such Bond as representing that number of Bonds which is obtained by
dividing the Principal of such Bond to be redeemed in part by $5,000; provided,
however, that with respect to Variable Rate Bonds, the portion of any such Bond
of a denomination of more than $100,000 to be redeemed shall be in the
Principal amount of $100,000 or an integral multiple of $5,000 in excess
thereof, and, in selecting portions of such Bonds for redemption, the City
shall treat each such Bond as representing that number of Bonds which is
obtained by dividing the Principal of such Bond to be redeemed in part by
$100,000 or $5,000 or an integral multiple of $5,000 in excess thereof, and
with respect to Auction Rate Bonds the portion of any such Bond of a
denomination of more than $5,000 to be redeemed shall be in the Principal
amount of $5,000 or an integral multiple thereof, and, in selecting portions of
such Bonds for redemption, the City shall treat each such Bond as representing
that number of Bonds which is obtained by dividing the Principal of such Bond
to be redeemed in part by $5,000 or an integral multiple thereof.
Section 3.7. Purchase
in Open Market. Nothing herein
contained shall be construed to limit the right of the City to purchase with
any excess moneys in the Payments Subaccount (i.e., moneys not needed in the
then current Fiscal Year to pay Principal of and interest on any Senior Bonds)
and for Sinking Fund Account purposes, any Senior Bonds in the open market at a
price not exceeding the callable price. Any such Senior Bonds so purchased
shall not be reissued and shall be cancelled.
ARTICLE IV
PLEDGED REVENUES
AND FLOW OF FUNDS
Section 4.1. Pledge
of Revenues; Limited Obligations. Subject only to the rights of the City
to apply amounts as provided in this Article IV and to Section 12.4
hereof, all Pledged Revenues shall be and are hereby pledged to the prompt
payment of the Principal of, premium, if any, and interest on the Bonds. Such
moneys and securities shall immediately be subject to the lien of this pledge
for the benefit of the Bondholders without any physical delivery thereof or
further act, and the lien of this pledge shall be valid and binding against the
City and against all other persons having claims against the City, whether such
claims shall have arisen in tort, contract, or otherwise, and regardless of
whether such persons have notice of the lien of this pledge. This pledge shall
rank superior to all other pledges which may hereafter be made of any of the
Pledged Revenues, except for pledges of the Pledged Revenues hereafter made by
the City in the Hedge Agreements to secure Hedge Payments, which may rank on a
parity with this pledge as to the related Hedged Bonds. The lien of the pledge
made in this Section 4.1 does not secure any obligation of the City
other than the Bonds.
The Bonds shall be
limited obligations of the City as provided therein payable solely from the
Pledged Revenues. The Bonds and the interest thereon shall not constitute a
general or moral obligation of the City nor a debt, indebtedness, or obligation
of, or a pledge of the faith and credit of, the City or the State or any
political subdivision thereof, within the meaning of any constitutional,
statutory or charter provision whatsoever. Neither the full faith and credit
nor the taxing power of the City, the State, or any political subdivision
thereof is pledged to the payment of the Principal of, premium, if any, or
interest on the Bonds or other costs incident thereto. The City has no
authority to levy any taxes to pay the Bonds. Neither the members of the
Council nor any person executing the Bonds shall be liable personally on the
Bonds by reason of the issuance thereof.
Section 4.2. Funds
and Accounts. The City hereby
establishes or ratifies the establishment of the following funds and accounts,
and the moneys deposited in such funds and accounts shall be held in trust for
the purposes set forth in the Bond Ordinance:
4.2.1. City of Kansas City, Missouri Waterworks Revenue Fund (the Revenue Fund).
4.2.2. City
of Kansas City, Missouri Waterworks Sinking Fund Account in the Revenue Fund
(the Sinking Fund Account), and within said Sinking Fund Account, a
Payments Subaccount and a Debt Service Reserve Subaccount.
4.2.3. City of Kansas City, Missouri Waterworks Renewal and Replacement Account in the Revenue
Fund (the Renewal and Replacement Account).
4.2.4. City of Kansas City, Missouri Waterworks Rebate Account in the Revenue Fund (the Rebate
Account).
4.2.5.
City of Kansas City, Missouri Waterworks Project Fund (the Project Fund).
4.2.6.
City of Kansas City, Missouri Waterworks Surplus Account in the Revenue Fund
(the Surplus Account).
Each account listed
above shall be held within the fund under which it is created. All funds and
accounts listed above are further described in this Article, except for the
Rebate Account as further described in Article VI. The City reserves
the right, in its sole discretion, to create additional subaccounts or to
abolish any subaccounts within any account from time to time.
Section
4.3. Revenue Fund.
(a) The
City shall deposit and continue to deposit into the Revenue Fund all Operating
Revenues and any extraordinary revenues from the sale of assets not in the
ordinary course of business, from time to time as and when received. Moneys in
the Revenue Fund shall be applied by the City from time to time to the
following purposes and, prior to the occurrence and continuation of an Event of
Default, in the following order of priority:
(1)
to pay Expenses of Operation and Maintenance;
(2) to deposit into the Sinking Fund
Account the amounts required by Section 4.4;
(3)
to deposit into the Rebate Account the amounts required by Section
6.11;
(4) to make Replenishment Payments to the
Debt Service Reserve Subaccount in accordance with Section 4.4(f), and
to pay to any Credit Facility Provider any amounts due under a Credit Facility
Agreement, including Additional Interest;
(5) to pay any amounts due any Reserve
Account Credit Facility Provider pursuant to the Reserve Account Credit
Facility Agreement;
(6) to deposit the amounts required to be
deposited into the funds and accounts created by any Series Ordinance
authorizing the issuance of Subordinate Bonds, for the purpose of paying
Principal of (whether at maturity, upon mandatory redemption or as otherwise
required by a Series Ordinance relating to Subordinate SRF Bonds) and interest
on Subordinate Bonds, making Hedge Contingency Payments under Senior Hedge
Agreements, making Hedge Payments and making Hedge Contingency Payments under
Subordinate Hedge Agreements, and accumulating reserves for such payments;
(7) to make Accumulation Payments to the
Debt Service Reserve Subaccount in accordance with Section 4.4(f);
(8) to pay any amounts required to be paid
with respect to any Other System Obligations, subject to annual appropriation;
(9)
to pay Administrative Service Fees;
(10) to deposit to the Renewal and
Replacement Account an amount determined by the Operating and Capital Reserves
Policy established and approved by the Water Services Department and the City
Council, as may be amended from time to time, to be applied in accordance with Section
4.5 hereof; and
(11)
to deposit any remaining amount in the Surplus Account.
(b) Any money
withdrawn from the funds and accounts described in clause (6) of Section 4.3(a)
for use in making payments described in said clause (6) shall be released from
the lien of the Bond Ordinance. If at any time the amounts in any account of
the Sinking Fund Account are less than the amounts required by the Bond
Ordinance, and there are not on deposit in the Renewal and Replacement Account
or the Surplus Account available moneys sufficient to cure any such deficiency,
then the City shall withdraw from the funds and accounts of the City relating
to Subordinate Bonds which are not Subordinate SRF Bonds and deposit in such
account of the Sinking Fund Account, as the case may be, the amount necessary
(or all the moneys in such funds and accounts, if less than the amount
required) to make up such deficiency.
Section
4.4. Sinking Fund Account.
(a) Payments
Subaccount-General. Sufficient moneys shall be paid in periodic
installments from the Revenue Fund into the Payments Subaccount for the purpose
of paying the Principal of and interest (excluding Additional Interest) on the
Senior Bonds as they become due and payable and for the purpose of making Hedge
Payments under Senior Hedge Agreements. Amounts held in the Payments
Subaccount shall be used solely to pay interest (excluding Additional Interest)
and Principal of the Senior Bonds as the same become due and payable (whether
at maturity or upon redemption) and to pay Hedge Payments under Senior Hedge
Agreements when due. Amounts held in the Payments Subaccount shall not be used
to pay Additional Interest.
(b) Interest.
Except as otherwise provided in any Series Ordinance authorizing Senior SRF
Bonds, on or before the first day of each month, commencing 6 months prior to
each Interest Payment Date for Senior Bonds (or, in the case of Senior Bonds
that are Auction Rate Bonds or are bearing interest at a Variable Rate, on or before
the Business Day preceding each Interest Payment Date), the City shall deposit
in the Payments Subaccount an amount which, together with any other moneys
already on deposit therein and available to make such payment and, in the case
of Senior SRF Bonds, anticipated investment earnings on reserve funds held by a
bond trustee relating to such Senior SRF Bonds, is not less than 1/6th
of the amount of interest (excluding Additional Interest) coming due on such
Senior Bonds on the next succeeding Interest Payment Date. The City shall also
deposit and continue to deposit all Hedge Receipts under Senior Hedge
Agreements in the Payments Subaccount from time to time as and when received.
(c) Principal.
Except as otherwise provided in any Series Ordinance authorizing Senior SRF
Bonds, on or before the first day of each month, commencing 12 months prior to
each Principal Maturity Date for Senior Bonds, the City shall deposit in the
Payments Subaccount an amount which, together with any other moneys already on
deposit therein and available to make such payment, is not less than 1/12th
of the Principal coming due on such Senior Bonds on the next succeeding
Principal Maturity Date.
(d) Hedge
Payments. On or before the 30th day preceding each payment date for Hedge
Payments under Senior Hedge Agreements, the City shall deposit in the Payments
Subaccount an amount which, together with any other moneys already on deposit
therein and available to make such payment, is not less than such Hedge
Payments coming due on such payment date.
(e) Application
of Moneys in Payments Subaccount. No further payments need be made into
the Payments Subaccount whenever the amount available in the Payments
Subaccount, if added to the amount then in the Debt Service Reserve Subaccount
(without taking into account any amount available to be drawn on any Reserve
Account Credit Facility), is sufficient to retire all Senior Bonds then
Outstanding and to pay all unpaid interest accrued and to accrue prior to such
retirement. No moneys in the Payments Subaccount shall be used or applied to
the optional purchase or redemption of Senior Bonds prior to maturity unless:
(i) provision shall have been made for the payment of all of the Senior Bonds;
or (ii) such moneys are applied to the purchase and cancellation of Senior
Bonds which are subject to mandatory redemption on the next mandatory
redemption date, which falls due within 12 months, such Senior Bonds are
purchased at a price not more than would be required for mandatory redemption,
and such Senior Bonds are cancelled upon purchase; or (iii) such moneys are
applied to the purchase and cancellation of Senior Bonds at a price less than
the amount of Principal which would be payable on such Senior Bonds, together
with interest accrued through the date of purchase, and such Senior Bonds are
cancelled upon purchase; or (iv) such moneys are in excess of the then required
balance of the Payments Subaccount and are applied to redeem a part of the
Senior Bonds Outstanding on the next succeeding redemption date for which the
required notice of redemption may be given.
(f) Debt
Service Reserve Subaccount. There shall be deposited into the Debt
Service Reserve Subaccount the amounts specified in Series Ordinances with
respect to Senior Bonds. Notwithstanding the foregoing, there shall be no
deposit into the Debt Service Reserve Subaccount with respect to any SRF Bonds
nor shall the Debt Service Reserve Subaccount secure any SRF Bonds. After the
issuance of any Senior Bonds, the increase in the amount of the Debt Service
Reserve Requirement resulting from the issuance of such Senior Bonds shall be
accumulated, to the extent not covered by deposits from Bond proceeds or funds
on hand, over a period not exceeding 61 months from the date of delivery
of such Senior Bonds in monthly deposits (Accumulation Payments), none of
which is less than 1/60 of the amount to be accumulated. The balance of the
Debt Service Reserve Subaccount shall be maintained at an amount equal to the
Debt Service Reserve Requirement (or such lesser amount that is required to be
accumulated in the Debt Service Reserve Subaccount in connection with the
periodic accumulation to the Debt Service Reserve Requirement after the
issuance of Senior Bonds or upon the failure of the City to provide a
substitute Reserve Account Credit Facility in certain events). There shall be
transferred from the Revenue Fund on a pro rata basis (1) to the Debt Service
Reserve Subaccount the amount necessary to restore, as further described below,
the amount of cash and securities in the Debt Service Reserve Subaccount to an
amount equal to the difference between (a) the Debt Service Reserve Requirement
(or such lesser monthly amount that is required to be deposited into the Debt
Service Reserve Subaccount after the issuance of Senior Bonds or upon the
failure of the City to provide a substitute Reserve Account Credit Facility in
certain events) and (b) the portion of the required balance of the Debt Service
Reserve Subaccount satisfied by means of a Reserve Account Credit Facility, and
(2) to any Reserve Account Credit Facility Provider the amount necessary to
reinstate any Reserve Account Credit Facility which has been drawn down.
Whenever for any
reason the amount in the Payments Subaccount is insufficient to pay all
interest or Principal becoming due on the Senior Bonds and all Hedge Payments
coming due pursuant to Senior Hedge Agreements within the next seven days (or,
in the case of Senior Bonds that are Auction Rate Bonds or are bearing interest
at a Variable Rate, on the next Business Day), the City shall make up any
deficiency by transfers first from the Surplus Account, second from
the Renewal and Replacement Account and third from the funds and
accounts of the City relating to Subordinate Bonds which are not Subordinate
SRF Bonds. Whenever, on the date that such interest, Principal or Hedge
Payments on Senior Hedge Agreements is due, there are insufficient moneys in
the Payments Subaccount available to make such payment, the City shall, without
further instructions, apply so much as may be needed of the moneys in the Debt
Service Reserve Subaccount to prevent default in the payment of such interest,
Principal or Hedge Payments on Senior Hedge Agreements, with priority to
interest payments. Whenever by reason of any such application or otherwise
(other than required Accumulation Payments), the amount remaining to the credit
of the Debt Service Reserve Subaccount is less than the amount then required to
be in the Debt Service Reserve Subaccount, such deficiency shall be remedied in
not more than twenty-four (24) equal monthly deposits (Replenishment
Payments) from the Revenue Fund, commencing not later than the first day
of the month immediately succeeding the date when the amount then required to
be in the Debt Service Reserve Subaccount dropped below the Debt Service
Reserve Requirement.
The City may elect to
satisfy in whole or in part the Debt Service Reserve Requirement by means of a
Reserve Account Credit Facility, subject to the following requirements: (A)
the Reserve Account Credit Facility Provider must, at the time of issuance, be
rated in one of the two highest rating categories by Standard & Poors and
Moodys and, if rated by A.M. Best & Company, must also be rated in one of
the two highest rating categories by A.M. Best & Company; (B) the City
shall not secure any obligation to the Reserve Account Credit Facility Provider
by a lien equal to or superior to the lien granted to the related series of
Senior Bonds; (C) each Reserve Account Credit Facility shall have a term of at
least one (1) year (or, if less, the remaining term of the related series of
Senior Bonds) and shall entitle the City to draw upon or demand payment and
receive the amount so requested in immediately available funds on the date of
such draw or demand; (D) the Reserve Account Credit Facility shall permit a
drawing by the City for the full stated amount in the event (i) the Reserve
Account Credit Facility expires or terminates for any reason prior to the final
maturity of the related series of Senior Bonds, and (ii) the City fails to
satisfy the Debt Service Reserve Requirement by the deposit to the Debt Service
Reserve Subaccount of cash, obligations, a substitute Reserve Account Credit
Facility, or any combination thereof, on or before the date of such expiration
or termination; (E) if all of the Ratings issued by any Rating Agency to the
Reserve Account Credit Facility Provider are withdrawn or reduced below the
lowest Rating assigned to the related series of Senior Bonds, immediately prior
to such action by the Rating Agency, the City shall provide a substitute
Reserve Account Credit Facility rated at least as high as the highest rating on
the Senior Bonds, within sixty (60) days after such rating change, and, if no
substitute Reserve Account Credit Facility is obtained by such date, shall fund
the Debt Service Reserve Requirement in not more than thirty-six (36) equal
monthly deposits commencing not later than the first day of the month
immediately succeeding the date representing the end of such sixty (60) day
period; (F) if the Reserve Account Credit Facility Provider commences any
insolvency proceedings or is determined to be insolvent or fails to make payments
when due on its obligations, the City shall provide a substitute Reserve
Account Credit Facility within sixty (60) days thereafter, and, if no
substitute Reserve Account Credit Facility is obtained by such date, shall fund
the Debt Service Reserve Requirement in not more than thirty-six (36) equal
monthly deposits commencing not later than the first day of the month
immediately succeeding the date representing the end of such sixty (60) day
period; and (G) the prior written consent of the Credit Facility Provider, as
to the provider and the structure of the Reserve Account Credit Facility, shall
be obtained by the City. If the events described in either clauses (E) or (F)
above occur, the City shall not relinquish the Reserve Account Credit Facility
at issue until after the Debt Service Reserve Requirement is fully satisfied by
the provision of cash, obligations, or a substitute Reserve Account Credit
Facility or any combination thereof. Any amount received from the Reserve
Account Credit Facility shall be deposited directly into the Payments
Subaccount, and such deposit shall constitute the application of amounts in the
Debt Service Reserve Subaccount. Repayment of any draw-down on the Reserve
Account Credit Facility (other than repayments which reinstate the Reserve
Account Credit Facility) and any interest or fees due the Reserve Account
Credit Facility Provider under such Reserve Account Credit Facility shall be
secured by a lien on the Pledged Revenues subordinate to payments into the
Sinking Fund Account and the Rebate Account and payments to any Credit Facility
Provider securing Senior Bonds.
Any such Reserve
Account Credit Facility shall be pledged to the benefit of the owners of all of
the Senior Bonds and all Qualified Hedge Providers of Senior Hedge Agreements.
The City reserves the right, if it deems it necessary in order to acquire such
a Reserve Account Credit Facility, to amend the Bond Ordinance without the
consent of any of the owners of the Bonds in order to grant to the Reserve Account
Credit Facility Provider such additional rights as it may demand, provided that
such amendment shall not, in the written opinion of Bond Counsel filed with the
City, impair or reduce the security granted to the owners of Senior Bonds or
any of them.
Section 4.5. Renewal
and Replacement Account. Except
as otherwise provided in this section, all sums accumulated and retained in the
Renewal and Replacement Account shall be used to meet the costs of capital
improvements to the System, necessary to keep the same in good operating
condition or as is required by any governmental agency having jurisdiction over
the System, and such sums may be encumbered by an estimation and appropriation
ordinance of the City Council to accomplish the same. All unencumbered sums
accumulated and retained in the Renewal and Replacement Account, if any, shall
be used first to prevent a default in the payment of interest on or Principal
of the Senior Bonds when due and then shall be applied by the City from time to
time, as and when the City shall determine, to the following purposes and,
prior to the occurrence and continuation of an Event of Default, in the order
of priority determined by the City in its sole discretion: (a) to maintain and
improve the System as described above and (b) to pay Principal of and Interest
on Bonds and Other System Obligations. No moneys credited to the Renewal and
Replacement Account shall ever be directed or applied to the general
governmental or municipal functions of the City so long as any of the Bonds
remain Outstanding. The total amount of money credited to the Renewal and
Replacement Account shall not exceed the maximum amount established by the
Operating and Capital Reserves Policy approved by the Water Services Department
and the City Council, as may be amended from time to time.
Section 4.6 Surplus
Account. In addition to the deposits to be made to the Surplus Account
pursuant to Section 4.3, the City shall deposit in the Surplus Account
all termination payments received under any Hedge Agreements. All sums
accumulated and retained in the Surplus Account shall be used first to prevent
a default in the payment of interest on or Principal of the Senior Bonds when
due and then shall be applied by the City from time to time, as and when the
City shall determine, to the following purposes and, prior to the occurrence
and continuation of an Event of Default, in the order of priority determined by
the City in its sole discretion: (a) for the purposes for which moneys held in
the Revenue Fund may be applied under Section 4.3, (b) to pay any
amounts which may then be due and owing under any Hedge Agreement (including
termination payments, fees, expenses, and indemnity payments), (c) to pay any
governmental charges and assessments against the System or any part thereof
which may then be due and owing, (d) to make acquisitions, betterments,
extensions, repairs, or replacements or other capital improvements (including
the purchase of equipment) to the System deemed necessary by the City
(including payments under contracts with vendors, suppliers, and contractors
for the foregoing purposes), (e) to acquire Senior Bonds by redemption or by
purchase in the open market at a price not exceeding the callable price as
provided and in accordance with the terms and conditions of the Bond Ordinance,
which Senior Bonds may be any of the Senior Bonds, prior to their respective
maturities, and when so used for such purposes the moneys shall be withdrawn
from the Surplus Account and deposited into the Payments Subaccount for the
Senior Bonds to be so redeemed or purchased and (f) for any other purpose of
the City. Payments for the purposes set forth in clause (e) of the preceding
sentence are not required payments described in Section 6.1.2(d). No
moneys credited to the Surplus Account shall ever be directed or applied to the
general governmental or municipal functions of the City so long as any of the
Bonds remain Outstanding.
Section 4.7. Deposits
and Security of Funds and Accounts. All moneys in the funds and accounts
established under the Bond Ordinance, except those funds and accounts created
by a Series Ordinance in connection with the issuance of SRF Bonds, shall be
held by the City in one or more Depositories qualified for use by the City.
Uninvested moneys shall, at least to the extent not guaranteed by the Federal
Deposit Insurance Corporation, be secured to the fullest extent required by the
laws of the State for the security of public funds.
Section 4.8. Investment
of Moneys. Moneys in the funds
and accounts established under the Bond Ordinance, except those funds and
accounts created by a Series Ordinance in connection with the issuance of SRF
Bonds, shall be invested and reinvested in Permitted Investments bearing
interest at the highest rates reasonably available (except to the extent that a
restricted yield is required or advisable under Section 148 of the Code) and
containing such maturities as are deemed suitable by the City; provided,
however, that without the prior written consent of the Credit Facility
Provider, investments of moneys in the Debt Service Reserve Subaccount shall
not have maturities extending beyond five years. Investment of moneys in funds
and accounts created by a Series Ordinance in connection with the issuance of
SRF Bonds shall be as set forth in such Series Ordinance.
Unless otherwise
specified in a Series Ordinance authorizing the issuance of a series of Bonds,
Investment Earnings in each fund and account (except the Debt Service Reserve
Subaccount) shall be retained therein. Investment Earnings from the investment
of moneys in the Debt Service Reserve Subaccount shall be retained in the Debt
Service Reserve Subaccount at all times the balance is less than the Debt
Service Reserve Requirement; thereafter and at all times the balance of the
Debt Service Reserve Subaccount is equal to or greater than the Debt Service
Reserve Requirement, such Investment Earnings shall be deposited in the
Payments Subaccount.
The Series Ordinance
authorizing the issuance of any Subordinate Bonds shall specify any maturity
limitations and allocations of Investment Earnings on investments of moneys in
the funds and accounts relating to such Subordinate Bonds.
Moneys in each of
such funds shall be accounted for as a separate and special fund apart from all
other City funds, provided that investments of moneys therein may be made in a
pool of investments together with other moneys of the City so long as
sufficient Permitted Investments in such pool, not allocated to other
investments of contractually or legally limited duration, are available to meet
the requirements of the foregoing provisions.
Section 4.9. Valuation
of Investments. All investments
made under the Bond Ordinance shall, for purposes of the Bond Ordinance, be
valued at fair market value on the 45th day (or the next succeeding Business
Day if such 45th day is not a Business Day) prior to each Interest Payment
Date. The valuation of the investment of moneys in funds and accounts created
by a Series Ordinance in connection with the issuance of SRF Bonds shall be as
set forth in such Series Ordinance.
Section 4.10. Application
of Excess in Sinking Fund Account. Whenever at the end of each Fiscal Year
the amount of moneys in any subaccount of the Sinking Fund Account exceeds the
amount then currently required to be held therein, the excess shall be applied
in accordance with Section 4.3 hereof.
Section 4.11. Disposition
of Moneys After Payment of Bonds. Any amounts remaining in any fund or
account established under the Bond Ordinance after payment in full of the
Principal of, redemption premium, if any, and interest on the Bonds (or after
provision for payment thereof has been made), the fees, charges, and expenses of
the Paying Agent and Bond Registrar, all amounts owing to any Credit Facility
Provider, any Reserve Account Credit Facility Provider, and any Qualified Hedge
Provider, and all other amounts required to be paid under the Bond Ordinance
(including amounts required to be paid into the Rebate Account), shall be
promptly paid to the City. All amounts remaining in funds and accounts created
by a Series Ordinance in connection with the issuance of SRF Bonds, after the
payment in full thereof as provided in such Series Ordinance, shall be paid as
set forth in such Series Ordinance.
ARTICLE V
SENIOR BONDS AND
SUBORDINATE BONDS
Section 5.1. No
Prior Lien Bonds nor Senior Bonds Except as Permitted in the Bond Ordinance. All Senior Bonds shall have complete
parity of lien on the Pledged Revenues despite the fact that any of the Senior
Bonds may be delivered at an earlier date than any other of the Senior Bonds.
The City may issue Senior Bonds in accordance with the Bond Ordinance, but the
City shall issue no other obligations of any kind or nature payable from or
enjoying a lien on the Pledged Revenues or any part thereof having priority
over or, except as permitted in the Bond Ordinance, on a parity with the Senior
Bonds.
Section 5.2. Refunding
Bonds. Any or all of the Senior
Bonds may be refunded prior to maturity, upon redemption in accordance with
their terms, or with the consent of the owners of such Senior Bonds, and the
refunding Bonds so issued shall constitute Senior Bonds, if:
5.2.1. The
City shall have obtained a report from an Independent Certified Public
Accountant or a Financial Advisor demonstrating that the refunding will reduce
the total debt service payments on Outstanding Senior Bonds on a present value
basis.
5.2.2. As
an alternative to, and in lieu of, satisfying the requirements of Section
5.2.1, all Outstanding Senior Bonds are being refunded under arrangements
which immediately result in making provision for the payment of the refunded
Bonds.
5.2.3. The
requirements of Sections 5.3.6 and 5.3.7 are met with respect to
such refunding Bonds.
Section 5.3. Senior
Bonds. Bonds (including
refunding Bonds which do not meet the requirements of Section 5.2) may
also be issued on a parity with other Senior Bonds pursuant to a Series
Ordinance, and the Bonds so issued shall constitute Senior Bonds, if all
of the following conditions are satisfied:
5.3.1. There
shall have been filed with the City either:
(a) a
report by a Consulting Engineer or an Independent Certified Public Accountant
to the effect that the historical Net Operating Revenues, adjusted to exclude
any revenues or expenses resulting from a gain or loss, or mark-to-market
change to any Hedge Agreement, for the most recent available annual audit for
the Fiscal Year prior to the issuance of the proposed Senior Bonds were equal
to at least (i) 125% of the Maximum Annual Debt Service Requirement on all
Senior Bonds which will be Outstanding immediately after the issuance of the
proposed Senior Bonds and (ii) 115% of the Maximum Annual Debt Service
Requirement on all Bonds and Other System Obligations which will be Outstanding
immediately after the issuance of the proposed Senior Bonds, or
(b) a
report by a Consulting Engineer or an Independent Certified Public Accountant
to the effect that the forecasted Net Operating Revenues for each Fiscal Year
in the Forecast Period are expected to equal at least (i) 125% of the Maximum
Annual Debt Service Requirement on all Senior Bonds which will be Outstanding
immediately after the issuance of the proposed Senior Bonds and (ii) 115% of
the Maximum Annual Debt Service Requirement on all Bonds and Other System
Obligations which will be Outstanding immediately after the issuance of the
proposed Senior Bonds.
The
report that is required by Section 5.3.1(a) may contain pro forma
adjustments to historical Net Operating Revenues equal to 100% of the increased
annual amount attributable to any revision in the schedule of rates, fees, and
charges for the services, facilities, and commodities furnished by the System,
adopted prior to the date of delivery of the proposed Senior Bonds (which date
of adoption may be in the Fiscal Year in which the Senior Bonds are issued) not
fully reflected in the historical Net Operating Revenues actually received
during the most recent Fiscal Year for which an annual audit is available.
Such pro forma adjustments shall be based upon a report of a Consulting
Engineer as to the amount of Operating Revenues which would have been received
during such period had the new rate schedule been in effect throughout such
period.
The
report that is required by Section 5.3.1(b) may not take into
consideration any rate schedule to be imposed in the future, unless such rate
schedule has been adopted by ordinance of the Council. Such rate schedule
adopted by ordinance may contain, however, future effective dates.
For
any Fiscal Year of less than 12 months the preceding calculations may be
adjusted to reflect a Maximum Annual Debt Service Requirement that is prorated
over the actual number of months in such Fiscal Year.
5.3.2. The
City shall have received, at or before issuance of the Senior Bonds, a report
from a Consulting Engineer or an Independent Certified Public Accountant to the
effect that the payments required to be made into each subaccount of the
Sinking Fund Account have been made and the balance in each subaccount of the
Sinking Fund Account is not less than the balance required by the Bond
Ordinance as of the date of issuance of the proposed Senior Bonds.
5.3.3. Except
with respect to Senior SRF Bonds, the Series Ordinance authorizing the proposed
Senior Bonds must require (i) that the amount to be accumulated and maintained
in the Debt Service Reserve Subaccount be increased to not less than 100% of
the Debt Service Reserve Requirement computed on a basis which includes all
Senior Bonds which will be Outstanding immediately after the issuance of the
proposed Senior Bonds and (ii) that the amount of such increase be deposited in
such account on or before the date and at least as fast as specified in Section
4.4(f).
5.3.4. The
Series Ordinance authorizing the proposed Senior Bonds must require the
proceeds of such proposed Senior Bonds to be used solely to make capital
improvements to the System, to fund interest on the proposed Senior Bonds and
certain other allowable fees, to acquire existing or proposed waterworks
utilities, to refund other obligations issued for such purposes (whether or not
such refunding Bonds satisfy the requirements of Section 5.2), and to
pay expenses incidental thereto and to the issuance of the proposed Senior
Bonds.
5.3.5. If
any Senior Bonds are Auction Rate Bonds or would bear interest at a Variable
Rate, the Series Ordinance under which such Senior Bonds are issued shall
provide a maximum rate of interest per annum which such Senior Bonds may bear.
5.3.6. The
Director of Finance or the Director of Water Services shall have certified, by
written certificate dated as of the date of issuance of the Senior Bonds, that
the City is in compliance with all requirements of the Bond Ordinance.
5.3.7. The City shall have received an opinion of
Bond Counsel, dated as of the date of issuance of the Senior Bonds, to the
effect that the Series Ordinance and any related Supplemental Ordinance
authorizing the issuance of Senior Bonds have been duly adopted by the City.
Section
5.4. Subordinate Bonds.
(a) Bonds
may also be issued on a subordinate basis to the Senior Bonds pursuant to a
Series Ordinance, and the Bonds so issued shall constitute Subordinate Bonds,
if all of the following conditions are satisfied:
(1) There
shall have been filed with the City either:
(i) a report by a Consulting Engineer or an Independent
Certified Public Accountant to the effect that the historical Net Operating
Revenues, adjusted to exclude any revenues or expenses resulting from a gain or
loss, or mark-to-market change to any Hedge Agreement, for the most recent
available annual audit for the Fiscal Year prior to the issuance of the
proposed Subordinate Bonds were equal to at least (i) 115% of the Maximum
Annual Debt Service Requirement on all Senior Bonds which will be Outstanding
immediately after the issuance of the proposed Subordinate Bonds and (ii) 110%
of the Maximum Annual Debt Service Requirement on all Bonds and Other System
Obligations which will be Outstanding immediately after the issuance of the
proposed Subordinate Bonds, or
(ii) a report by a Consulting Engineer or an Independent
Certified Public Accountant to the effect that the forecasted Net Operating
Revenues for each Fiscal Year in the Forecast Period are expected to equal at
least (i) 115% of the Maximum Annual Debt Service Requirement on all Senior
Bonds which will be Outstanding immediately after the issuance of the proposed
Subordinate Bonds and (ii) 110% of the Maximum Annual Debt Service Requirement
on all Bonds and Other System Obligations which will be Outstanding immediately
after the issuance of the proposed Subordinate Bonds.
The report that
is required by Section 5.4(a)(1)(i) may contain pro forma adjustments to
historical Net Operating Revenues equal to 100% of the increased annual amount
attributable to any revision in the schedule of rates, fees, and charges for
the services, facilities, and commodities furnished by the System, adopted
prior to the date of delivery of the proposed Subordinate Bonds and not fully
reflected in the historical Net Operating Revenues actually received during the
most recent Fiscal Year for which an annual audit is available. Such pro forma
adjustments shall be based upon a report of a Consulting Engineer as to the
amount of Operating Revenues which would have been received during such period
had the new rate schedule been in effect throughout such period.
The report that
is required by Section 5.4(a)(1)(ii) may not take into
consideration any rate schedule to be imposed in the future, unless such rate
schedule has been adopted by ordinance of the Council. Such rate schedule
adopted by ordinance may contain, however, future effective dates.
For any Fiscal
Year of less than 12 months the preceding calculations may be adjusted to
reflect a Maximum Annual Debt Service Requirement that is prorated over the
actual number of months in such Fiscal Year.
(2) The
Series Ordinance authorizing the Subordinate Bonds shall provide that such
Subordinate Bonds shall be junior and subordinate in lien and right of payment
to all Senior Bonds Outstanding at any time.
(3) The Series Ordinance authorizing the Subordinate Bonds shall
establish funds and accounts for the moneys to be used to pay debt service on
the Subordinate Bonds, to pay Hedge Payments under Subordinate Hedge Agreements,
and to provide reserves therefor.
(4) The requirements of Sections 5.3.4, 5.3.6, and 5.3.7
are met with respect to such Subordinate Bonds (as if such Bonds constituted
Senior Bonds).
(b) In the
event of any insolvency or bankruptcy proceedings, and any receivership,
liquidation, reorganization, or other similar proceedings in connection
therewith, relative to the City or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution, or other winding up of the City, whether or not involving
insolvency or bankruptcy, the owners of all Senior Bonds then Outstanding and
related Qualified Hedge Providers shall be entitled to receive payment in full
of all Principal and interest due on all such Senior Bonds in accordance with
the provisions of the Bond Ordinance and related Hedge Payments in accordance
with the provisions of the Senior Hedge Agreements before the owners of the
Subordinate Bonds or related Qualified Hedge Providers are entitled to receive
any payment from the Pledged Revenues or the amounts held in the funds and
accounts created under the Bond Ordinance on account of Principal of, premium,
if any, or interest on the Subordinate Bonds or Hedge Payments under
Subordinate Hedge Agreements.
(c) In the
event that any of the Subordinate Bonds are declared due and payable before
their expressed maturities because of the occurrence of an Event of Default
(under circumstances when the provisions of paragraph (b) are not be
applicable), no owners of Subordinate Bonds or related Qualified Hedge
Providers may receive any accelerated payment from the Pledged Revenues or the
amounts held in the funds and accounts created under the Bond Ordinance of
Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge
Payments under Subordinate Hedge Agreements, until the owners of all Senior
Bonds Outstanding and related Qualified Hedge Providers have received timely
payments when due of all Principal of and interest on all such Senior Bonds and
all Hedge Payments under related Senior Hedge Agreements.
(d) If any
Event of Default shall have occurred and be continuing (under circumstances
when the provisions of paragraph (b) are not applicable), the owners of all
Senior Bonds then Outstanding and related Qualified Hedge Providers shall be
entitled to receive payment in full of all Principal and interest then due on
all such Senior Bonds and all Hedge Payments under related Senior Hedge
Agreements before the owners of the Subordinate Bonds or related Qualified
Hedge Providers are entitled to receive any Payment from the Pledged Revenues
or the amounts held in the funds and accounts created under the Bond Ordinance
of Principal of, premium, if any, or interest on the Subordinate Bonds or Hedge
Payments under Subordinate Hedge Agreements.
(e) No owner
of Senior Bonds or any related Qualified Hedge Provider shall be prejudiced in
its right to enforce subordination of the Subordinate Bonds and Subordinate
Hedge Agreements by any act or failure to act on the part of the City.
(f) The
obligations of the City to pay to the owners of the Subordinate Bonds the
Principal of, premium, if any, and interest thereon in accordance with their
terms and to pay Hedge Payments to related Qualified Hedge Providers in
accordance with the terms of the Subordinate Hedge Agreements shall be
unconditional and absolute. Nothing in the Bond Ordinance shall prevent the
owners of the Subordinate Bonds or related Qualified Hedge Providers from
exercising all remedies otherwise permitted by applicable law or under the Bond
Ordinance or the Subordinate Hedge Agreements upon default thereunder, subject
to the rights contained in the Bond Ordinance of the owners of Senior Bonds and
related Qualified Hedge Providers to receive cash, property, or securities otherwise
payable or deliverable to the owners of the Subordinate Bonds and related
Qualified Hedge Providers, and any Series Ordinance authorizing Subordinate
Bonds may provide that, insofar as a trustee or paying agent for the
Subordinate Bonds is concerned, the foregoing provisions shall not prevent the
application by such trustee or paying agent of any moneys deposited with such
trustee or paying agent for the purpose of the payment of or on account of the
Principal of, premium, if any, and interest on such Subordinate Bonds and Hedge
Payments under Subordinate Hedge Agreements if such trustee or paying agent did
not have knowledge at the time of such application that such payment was
prohibited by the foregoing provisions.
(g) Any
series of Subordinate Bonds and related Subordinate Hedge Agreements may have
such rank or priority with respect to any other series of Subordinate Bonds and
related Subordinate Hedge Agreements as may be provided in the Series Ordinance
authorizing such series of Subordinate Bonds and may contain such other
provisions as are not in conflict with the provisions of the Bond Ordinance.
Section 5.5. Accession
of Subordinate Bonds and Related Subordinate Hedge Agreements to Senior Status. By proceedings authorizing all or any
Subordinate Bonds, the City may provide for the accession of such Subordinate
Bonds and related Subordinate Hedge Agreements to the status of parity with the
Senior Bonds and related Senior Hedge Agreements if, as of the date of
accession, the conditions of Section 5.3.1(a), 5.3.6, and 5.3.7
are satisfied, on a basis which includes all Outstanding Senior Bonds and such
Subordinate Bonds, and if on the date of accession:
5.5.1. the
Debt Service Reserve Subaccount contains an amount equal to the Debt Service
Reserve Requirement computed on a basis which includes all Outstanding Senior
Bonds and such Subordinate Bonds (but which excludes, in the case of both
Outstanding Senior Bonds and such Subordinate Bonds, any SRF Bonds); and
5.5.2. the
Payments Subaccount contains the amount which would have been required to be
accumulated therein on the date of accession if the Subordinate Bonds had originally
been issued as Senior Bonds.
Section 5.6. Adoption
of Proceedings. The City shall
adopt a Series Ordinance authorizing the issuance of any additional Bonds and
reciting that the requirements of this Article have been satisfied, and shall
set forth in such proceedings, among other things, the date or-dates
such additional Bonds shall bear and the rate or rates of interest, interest
payment date or dates, maturity date or dates, and redemption provisions with
respect to such additional Bonds and any other matters applicable to such
additional Bonds as the City may deem advisable.
Any such Series
Ordinance shall restate and reaffirm, by reference, all of the applicable
terms, conditions and provisions of the Bond Ordinance not modified by the
Series Ordinance.
Section 5.7. Proceedings
Authorizing Additional Bonds. No Series Ordinance authorizing the
issuance of additional Bonds as permitted under this Article shall conflict
with the terms and conditions of the Bond Ordinance, except to the extent that
the Series Ordinance is adopted for one of the purposes set forth in Section
10.1 and complies with the provisions of Section 10.1 for the
adoption of Supplemental Ordinances without the consent of Bondholders.
Section 5.8. Applicability
to Additional Bonds. The provisions of the Bond Ordinance
shall be construed as including and being applicable to any future series of
Bonds, and any such Bonds shall be treated as if they had been pursuant to the
terms of this Bond Ordinance.
Section 5.9. Credit
Facilities and Hedge Agreements. In connection with the issuance of any
Bonds under the Bond Ordinance, the City may obtain or cause to be obtained one
or more Credit Facilities providing for payment of all or a portion of the
Principal of, premium, if any, or interest due or to become due on such Bonds,
providing for the purchase of such Bonds by the Credit Facility Provider, or providing
funds for the purchase of such Bonds by the City. In connection therewith the
City shall enter into Credit Facility Agreements with such Credit Facility
Providers providing for, among other things, (i) the payment of fees and
expenses to such Credit Facility Providers for the issuance of such Credit
Facilities; (ii) the terms and conditions of such Credit Facilities and the
Bonds affected thereby; and (iii) the security, if any, to be provided for the
issuance of such Credit Facilities. The City may secure any Credit Facility by
an agreement providing for the purchase of the Bonds secured thereby with such
adjustments to the rate of interest, method of determining interest, maturity,
or redemption provisions as are specified by the City in the applicable Series
Ordinance. The City may in a Credit Facility Agreement agree to directly
reimburse such Credit Facility Provider for amounts paid under the terms of
such Credit Facility, together with interest thereon; provided, however, that
no Reimbursement Obligation shall be created for purposes of the Bond Ordinance
until amounts are paid under such Credit Facility. Any such Reimbursement
Obligation shall be deemed to be a part of the Bonds to which the Credit
Facility relates which gave rise to such Reimbursement Obligation, and
references to Principal and interest payments with respect to such Bonds shall
include Principal and interest (except for Additional Interest and Principal
amortization requirements with respect to the Reimbursement Obligation that are
more accelerated than the amortization requirements for the related Bonds,
without acceleration) due on the Reimbursement Obligation incurred as a result
of payment of such Bonds with the Credit Facility. All other amounts payable
under the Credit Facility Agreement (including any Additional Interest and
Principal amortization requirements with respect to the Reimbursement
obligation that are more accelerated than the amortization requirements for the
related Bonds, without acceleration) shall be fully subordinate to the payment
of debt service on the related class of Bonds. Any such Credit Facility shall
be for the benefit of and secure such Bonds or portion thereof as specified in
the applicable Series Ordinance.
In connection with
the issuance of any Bonds or at any time thereafter so long as such Bonds
remain Outstanding, the City may enter into Hedge Agreements with Qualified
Hedge Providers, and no other providers, with respect to any Bonds. The City
shall authorize the execution, delivery, and performance of each Hedge
Agreement in a Supplemental Ordinance, in which it shall designate the related
Hedged Bonds. The Citys obligation to pay Hedge Payments may be secured by a
pledge of, and lien on, the Pledged Revenues on a parity with the lien created
by Section 4.1 to secure the related Hedged Bonds, or may be
subordinated in lien and right of payment to the payment of the Bonds, as
determined by the City.
Section 5.10. Other
Obligations. The City expressly
reserves the right, at any time, to adopt one or more other bond ordinances and
reserves the right, at any time, to issue any other obligations not secured by
the amounts pledged under the Bond Ordinance.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Rate
Covenant. Except as otherwise
provided in Section 6.4, the City shall continuously own, control,
operate, and maintain the System in an efficient and economical manner and on a
revenue producing basis and shall at all times prescribe, fix, maintain, and
collect rates, fees, and other charges for the services, facilities, and
commodities furnished by the System fully sufficient at all times to:
6.1.1. provide
for 100% of the Expenses of Operation and Maintenance; and
6.1.2. produce
Net Operating Revenues, adjusted to exclude any revenues or expenses resulting
from a gain or loss, or mark-to-market change to any Hedge Agreement, in each
Fiscal Year which, together with Investment Earnings:
(a) will
equal at least 125% of the Debt Service Requirement on all Senior Bonds then
Outstanding for the year of computation and 115% of the Debt Service Requirement
on all Bonds and Other System Obligations then Outstanding for the Fiscal Year
of computation; and
(b) will
enable the City to make all required payments, if any, into the Debt Service
Reserve Subaccount and the Rebate Account and to any Credit Facility Provider,
any Reserve Account Credit Facility Provider, and any Hedge Payments; and
(c) will
enable the City to make all payments, if any, required by the Operating and
Capital Reserves Policy established and approved by the Water Services
Department and the City Council, as may be amended from time to time; and
(d) will
remedy all deficiencies in required payments into any of the funds and accounts
established under the Bond Ordinance from prior Fiscal Years.
If the City fails to
prescribe, fix, maintain, and collect rates, fees, and other charges, or to
revise such rates, fees, and other charges, in accordance with the provisions
of this Section, the owners of not less than 25% in aggregate Principal of the
Bonds then Outstanding, without regard to whether any Event of Default shall
have occurred, may institute and prosecute in any court of competent jurisdiction
an appropriate action to compel the City to prescribe, fix, maintain, or
collect such rates, fees, and other charges, or to revise such rates, fees, and
other charges, in accordance with the requirements of this Section.
Section 6.2. Maintenance
of the System in Good Condition. The City covenants that it will enforce
reasonable rules and regulations governing the System and the operation
thereof, that it will operate the System in an efficient and economical manner
and will at all times maintain the System in good repair and in sound operating
condition, that it will make all necessary repairs, renewals, and replacements
to the System, and that it will comply with all valid acts, rules, regulations,
orders, and directions of any legislative, executive, administrative, or
judicial body applicable to the System and the Citys operation thereof.
Section 6.3. Insurance. With respect to the System, the City
will carry adequate public liability, fidelity and property insurance, such as
is maintained by similar utilities as the System.
The City shall
indemnify itself against the usual hazards incident to the construction of any
Project, and without in any way limiting the generality of the above, shall:
(a) require each construction contractor and each subcontractor to furnish a
bond, or bonds, of such type and in amounts adequate to assure the faithful
performance of their contracts and the payment of all bills and claims for
labor and material arising by virtue of such contracts; and (b) require each
construction contractor or the subcontractor to maintain at all times until the
completion and acceptance of the Project adequate compensation insurance for
all of their employees and adequate public liability and property damage
insurance for the full and complete protection of the City from any and all
claims of every kind and character which may arise by virtue of the operations
under their contracts, whether such operations be by themselves or by anyone
directly or indirectly for them, or under their control.
All such policies
shall be for the benefit of and made payable to the City and shall be on
deposit with the City; provided, however, the City may elect to be a
self-insurer with respect to any risks for which insurance is required under
this Section 6.3. The cost of such insurance may be paid as an Expense
of Operation and Maintenance.
All moneys received
for losses under any such insurance policies, except public liability policies,
are hereby pledged by the City as security for the Bonds until and unless such
proceeds are paid out in making good the loss or damage in respect of which
such proceeds are received, either by repairing the property damaged or
replacing the property destroyed or by depositing the same in the Renewal and
Replacement Account. Adequate provision for making good such loss and damage
shall be made within 120 days from the date of the loss. Insurance
proceeds not used in making such provision shall be deposited in the Surplus
Account on the expiration of such 120-day period. Such insurance proceeds
shall be payable to the City by appropriate clause to be attached to or
inserted in the policies.
Section 6.4. No
Sale, Lease or Encumbrance; Exceptions. Except as expressly permitted in the
Bond Ordinance, the City irrevocably covenants, binds, and obligates itself not
to sell, lease, encumber, or in any manner dispose of the System as a whole or
in part until all of the Bonds and all interest thereon shall have been paid in
full or provision for payment has been made in accordance with Article IX.
The City shall have
and hereby reserves the right to sell, lease, or otherwise dispose of any of
the property comprising a part of the System in the following manner, if any
one of the following conditions exists: (i) such property is not necessary for
the operation of the System; (ii) such property is not useful in the operation
of the System; (iii) such property is not profitable in the operation of the
System; or (iv) the disposition of such property will be advantageous to the
System and will not adversely affect the security for the Bondholders. Other
than as set forth in Section 4.3(a) hereof, all proceeds of any such
sale, lease or other disposition shall be deposited in the Surplus Account.
Prior to any such
sale, lease or other disposition, there shall be filed with the City: (i) an
opinion of Bond Counsel to the effect that such sale, lease or other
disposition will not adversely affect the extent to which interest on any
Tax-Exempt Bonds is excluded from gross income for federal income tax purposes
(provided that such opinion shall not be required if the Director of Water
Services determines that such portion of the System was not financed with the
proceeds of any Tax-Exempt Bonds); and (ii) an opinion of a Consulting Engineer
or an Independent Certified Public Accountant expressing the view that such
sale, lease or other disposition will not result in any diminution of Net
Operating Revenues to the extent that in any future Fiscal Year the Net
Operating Revenues will be less than (A) 125% of the Maximum Annual Debt
Service Requirement on all Senior Bonds to be Outstanding after such sale,
lease or other disposition or (B) 115% of the Maximum Annual Debt Service
Requirement on all Bonds and Other System Obligations to be Outstanding after
such sale, lease or other disposition. In reaching this conclusion, the
Consulting Engineer or the Independent Certified Public Accountant, as
applicable, shall take into consideration such factors as he or she may deem
significant, including (i) anticipated diminution of Operating Revenues, (ii)
anticipated increase or decrease in Expenses of Operation and Maintenance
attributable to the sale, lease or other disposition, and (iii) reduction in the
annual Debt Service Requirement attributable to the application of the proceeds
of such sale, lease or other disposition to the provision for payment of Bonds
theretofore Outstanding. Such sale, lease or other disposition may include a
partial interest in a waterworks facility owned or to be owned in whole or in
part by the City.
The City reserves the
right to transfer the System as a whole to any political subdivision or
authority or agency of one or more political subdivisions of the State to which
may be delegated the legal authority to own and operate the System, or any
portion thereof, on behalf of the public, and which undertakes in writing,
filed with the City, the Citys obligations under the Bond Ordinance, provided
that there shall be first filed with the City: (i) an opinion of Bond Counsel
to the effect that such sale will not adversely affect the extent to which
interest on any Tax-Exempt Bonds is excluded from gross income for federal
income tax purposes; and (ii) an opinion of a Consulting Engineer or an
Independent Certified Public Accountant expressing the view that such transfer
will not result in any diminution of Net Operating Revenues to the extent that
in any future Fiscal Year the Net Operating Revenues will be less than (A) 125%
of the Maximum Annual Debt Service Requirement on all Senior Bonds to be
Outstanding after such transfer or (B) 115% of the Maximum Annual Debt Service
Requirement on all Bonds and Other System Obligations to be Outstanding after
such transfer. In reaching this conclusion, the Consulting Engineer or
Independent Certified Public Accountant, as applicable, shall take into
consideration such factors as he or she may deem significant, including any
rate schedule adopted by the transferee political subdivision, authority, or
agency.
Upon receipt of an
opinion of Bond Counsel to the effect that such action will not adversely
affect the extent to which interest on any Tax-Exempt Bonds is excluded from
gross income for federal income tax purposes, the City may enter into such
management contracts and sale/leaseback agreements as the City may deem
appropriate, and such management contracts and sale/leaseback agreements shall
not constitute a sale, lease or other disposition within the meaning of this
Section.
Section 6.5. No
Impairment of Rights. The City
shall not enter into any contract or contracts, nor take any action, the
results of which might materially impair the rights of the Bondholders.
Section 6.6. Satisfaction
of Liens. The City will from
time to time duly pay and discharge or cause to be paid and discharged all
taxes, assessments, and other governmental charges, if any, lawfully imposed
upon the System or any part thereof or upon the Pledged Revenues, as well as
any lawful claims for labor, materials, or supplies which if unpaid might by
law become a lien or charge upon the System or the Pledged Revenues or any part
thereof or which might impair the security of the Bonds, except when the City
in good faith contests its liability to pay the same.
Section
6.7. Enforcement of Charges and Connections. Except as otherwise determined in
accordance with City policy and provided that such action or inaction will not
materially impair the rights of the Bondholders, the City shall compel the
prompt payment of rates, fees, and charges imposed for service rendered on
every lot or parcel connected with the System, and to that end will vigorously
enforce all of the provisions of any resolution or ordinance of the City having
to do with waterworks connections and with waterworks charges, and all of the
rights and remedies permitted the City under law. The City by this Section
expressly covenants and agrees that such charges will be enforced and promptly
collected to the full extent permitted by law, including the requirement for
the making of reasonable deposits by customers of the System to the extent
required by the City and the discontinuation of services to any premises
delinquent in the payment of such charges.
None of the
facilities or services afforded by the System will be furnished to any user
without a reasonable charge being made therefore, except as otherwise provided for the Parks
and Recreation Department in the Code of Ordinances..
Section
6.8. Payments. All payments
becoming due on the Bonds for Principal and interest shall be made by the City
from the Pledged Revenues or, at the Citys option, other legally available
funds to the owners thereof when due in full, and all reasonable and authorized
charges made by the Bond Registrar and any Paying Agent shall be paid by the
City when due.
Section 6.9. No
Loss of Lien on Revenues. The City shall not do, or omit to do, or
permit to be done or to be omitted any matter or thing whatsoever whereby the
lien of the Bond Ordinance on the Pledged Revenues or any part thereof might or
could be lost or impaired.
Section 6.10. Annual
Budget and Annual Financial Report. The City agrees to adopt an Annual
Budget for the System for each Fiscal Year in compliance with the Charter and
the rate covenants as stated in Section 6.1. The annual financial
report relating to the Citys finances, required by Section 96, Article IV, of
the Charter, shall contain complete statements covering the results of the
years operations and the financial condition of the System. Said statements
shall bear the certificate of the firm of certified public accountants making
the annual audit. A copy of each such annual report will be filed with the City
Clerk and will be open for public inspection, and a copy will be forwarded
promptly without cost to the manager of the underwriting group purchasing the
Bonds.
Section 6.11. Tax
Provisions; Rebate Account. The City recognizes that the purchasers
and owners of Tax-Exempt Bonds will have accepted the Tax-Exempt Bonds on, and
paid for the Tax-Exempt Bonds a price which reflects, the understanding that
interest on such Tax-Exempt Bonds is not included in the gross income of the
owners of the Tax-Exempt Bonds for federal income tax purposes under laws in
force at the time the Tax-Exempt Bonds shall have been delivered.
The City shall take
any and all action which may be required from time to time in order to assure
that interest on the Tax-Exempt Bonds shall remain excludable from the gross
income of the owners of the Tax-Exempt Bonds for federal income tax purposes
and shall refrain from taking any action which would adversely affect such
status.
Prior to or
contemporaneously with delivery of each series of Tax-Exempt Bonds, the
Director of Finance shall execute a certificate, in form satisfactory to Bond
Counsel, on behalf of the City respecting the investment of the proceeds of
such series of Tax-Exempt Bonds. Such certificate shall be a representation
and certification of the City, and an executed copy thereof shall be delivered
to the Bond Registrar. The City shall not knowingly invest or participate in
the investment of any moneys held under the Bond Ordinance if such investment
would cause interest on any Tax-Exempt Bonds to become included in gross income
for federal income tax purposes.
The Director of
Finance may also execute and deliver, on behalf of the City: (i) such
agreements, filings, and other writings as may be necessary or desirable to
cause or bind the City to comply with any requirements for rebate under Section
148(f) of the Code, or (ii) such certificate or other writing as may be
necessary or desirable to qualify for exemption from such rebate requirements.
The City shall
calculate, from time to time, as required in order to comply with the
provisions of Section 148(f) of the Code, the amounts required to be rebated
(including penalties) to the United States and shall deposit or cause to be
deposited into the Rebate Account any and all of such amounts promptly
following a determination of any such amount.
The City shall keep
all moneys held in the Rebate Account invested in Permitted Investments. To
the extent and at the times required in order to comply with Section 148(f) of
the Code, the City may withdraw funds from the Rebate Account for the purpose
of making rebate payments (including penalties) to the United States as required by Section 148(f) of the Code. Except as otherwise specifically provided
in this Section, moneys in the Rebate Account may not be withdrawn from the
Rebate Account for any other purpose.
All
earnings on investments held in the Rebate Account shall be retained in the
Rebate Account and shall become part of the Rebate Account. Moneys held in the
Rebate Account, including the Investment Earnings thereon, if any, shall not be
subject to a pledge in favor of the owners of the Bonds under the Bond
Ordinance and may not be used to pay amounts due on the Bonds or under any
Credit Facility Agreements or Hedge Agreements or amounts required for the
operation, maintenance, enlargement, or extension of the System.
The City shall have
the right to create special accounts, from time to time, in the Rebate Account
as it may deem desirable.
If the City has filed
all reports required to be filed with the United States pursuant to Section
148(f) of the Code and has made all payments required to be made to the United
States pursuant to Section 148(f) of the Code, then all moneys or investments
remaining in the Rebate Account may be used by the City for any lawful purpose.
The City may employ
any rebate analyst or other expert to perform any of the Citys duties with
respect to the Rebate Account, other than payment of moneys into the Rebate
Account.
The City hereby
covenants and agrees that it will not use or permit any use of the proceeds of
the sale of any Tax-Exempt Bonds, or any other moneys arising out of the
ownership or operation of the System or otherwise, or use or permit the use of
any of the facilities being financed or refinanced thereby or any other portion
of the System, which would cause any Tax-Exempt Bonds or any portion thereof to
be private activity bonds within the meaning of Section 141 of the Code.
The covenants,
certifications, representations, and warranties contained in this Section shall
survive payment in full or provision for payment in full of the Tax-Exempt
Bonds.
Section 6.12. Payments
to City Must be in Money. The City shall require all payments to
be made to the City for service charges of the System to be made in lawful
moneys of the United States of America.
Section 6.13. Designation
of Paying Agent and Bond Registrar. The Director of Finance shall designate
the Paying Agent for the payment of principal of and interest on the Bonds and
bond registrar with respect to the registration, transfer and exchange of Bonds
(in such capacity, the Bond Registrar); provided, however, that in connection
with the issuance of any SRF Bonds, the City shall appoint such Paying Agent
designated by the issuer of the SRF Bonds.
The City will at
all times maintain a Paying Agent meeting the qualifications herein described
for the performance of the duties hereunder. The City reserves the right to
appoint a successor Paying Agent by (1) filing with the bank or trust company
then performing such function a certified copy of the proceedings giving notice
of the termination of such bank or trust company and appointing a successor,
and (2) causing notice to be given by first class mail to each Bondowner. No
resignation or removal of the Paying Agent shall become effective until a
successor has been appointed and has accepted the duties of the Paying Agent.
Every Paying
Agent appointed hereunder shall at all times be (1) a commercial banking
association or corporation or trust company located in the State of Missouri
organized and in good standing and doing business under the laws of the United
States of America or of the State of Missouri and subject to supervision or
examination by federal or state regulatory authority and (2) shall have a
reported capital (exclusive of borrowed capital) plus surplus of not less than
$100,000,000 or consideration may be given by the City to a bank not meeting
this amount if the bank submits an acceptable form of guarantee for its
financial obligations to the City. If such
institution publishes reports of conditions at least annually pursuant to law
or regulation, then for the purposes of this Section the capital and surplus of
such institution shall be deemed to be its capital and surplus as set forth in
its most recent report of condition so published.
The
Paying Agent shall be paid in accordance with its proposal for fees and
expenses submitted to the Director of Finance as an operating expense of the
System.
Section 6.14. Authorization
of Continuing Disclosure Agreement. The City covenants and agrees to enter
into a Continuing Disclosure Agreement for the benefit of the Bondholders or
similar undertaking, if necessary, intended to satisfy the ongoing disclosure
requirements of Securities and Exchange Commission Rule 15c2-12. The Director
of Finance is authorized to enter in a Continuing Disclosure Agreement
substantially in the form on file with the office of the Director of Finance,
with such changes therein as he or she deems necessary or desirable.
ARTICLE VII
EVENTS OF DEFAULT
AND REMEDIES
Section 7.1. Events
of Default. An Event of
Default shall mean the occurrence of any one or more of the following:
7.1.1. failure
to pay the Principal or redemption price of any Bond when the same shall become
due and payable, either at maturity or by proceedings for redemption or
otherwise; or
7.1.2. failure
to pay any installment of interest on any Bond when and as such installment of
interest shall become due and payable; or
7.1.3. default
shall be made by the City in the performance of any obligation in respect to
the Debt Service Reserve Subaccount and such default shall continue for 30 days
thereafter; or
7.1.4. the
City shall (1) admit in writing its inability to pay its debts generally as
they become due, (2) file a petition in bankruptcy or take advantage of any
insolvency act, (3) make an assignment for the benefit of its creditors, (4)
consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or (5) be adjudicated a bankrupt; or
7.1.5. a
court of competent jurisdiction shall enter an order, judgment, or decree
appointing a receiver of the System or any of the funds or accounts established
in Article IV or Article XI, or of the whole or any substantial
part of the Citys property, or approving a petition seeking reorganization of
the City under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or the State, and such order, judgment,
or decree shall not be vacated or set aside or stayed within 60 days from the
date of the entry thereof; or
7.1.6. under
the provisions of any other law for the relief or aid of debtors, any court of
competent jurisdiction shall assume custody or control of any of the funds or
accounts established in Article IV or Article XI, or of the whole
or any substantial part of the Citys property, and such custody or control
shall not be terminated or stayed within 60 days from the date of assumption of
such custody or control; or
7.1.7. the
City shall fail to perform any of the other covenants, conditions, agreements,
and provisions contained in the Bonds or in the Bond Ordinance (other than in Section 6.14)
on the part of the City to be performed, and such failure shall continue for
90 days after written notice specifying such failure and requiring it to
be remedied shall have been given to the City by the owners of not less than,
or a Credit Facility Provider securing not less than, 25% in aggregate
Principal of the Bonds then Outstanding; provided, however, if the failure
stated in such notice can be corrected, but not within such 90-day period, the
City shall have 180 days after such written notice to cure such default if
corrective action is instituted by the City within such 90-day period and
diligently pursued until the failure is corrected; or
7.1.8. (a) an Event of Default relating to the
non-payment of the Principal or redemption price or installment of interest
shall occur under any Series Ordinance; or
(b) an Event of Default, other than as
described in Section 7.1.8(a), shall occur under any Series Ordinance; or
7.1.9. failure
by any Credit Facility Provider to pay the purchase price of Bonds under any
Credit Facility then in effect; or
7.1.10. delivery
to the City by a Credit Facility Provider of written notice stating that an
Event of Default has occurred under any Credit Facility Agreement; or
7.1.11. delivery
to the City by a Qualified Hedge Provider of written notice stating that an
Event of Default has occurred under any Senior Hedge Agreement.
Section 7.2. Remedies.
(a) Upon the
happening and continuance of any Event of Default specified in Section
7.1.1, 7.1.2 or 7.1.8(a) as to any Senior Bond, then and in every
such case, upon the written declaration of the owners of more than 50% in
aggregate Principal of all Senior Bonds then Outstanding (other than Senior
Bonds secured by a Credit Facility), the Principal of all Senior Bonds then
Outstanding (other than Senior Bonds secured by a Credit Facility) shall become
due and payable immediately, together with the interest accrued thereon to the
date of such acceleration, at the place of payment provided therein, and
interest on such Senior Bonds shall cease to accrue after the date of such
acceleration, anything in the Bond Ordinance or in the Senior Bonds to the
contrary notwithstanding. With respect to any Senior Bonds secured by a Credit
Facility, only the applicable Credit Facility Provider may give written demand
to declare the Principal of and accrued interest on such Senior Bonds to be
immediately due and payable.
Upon the
happening and continuance of any Event of Default specified in Section
7.1.9, then and in every such case, upon the written declaration of the
owners of more than 50% in aggregate Principal of the Senior Bonds of the
affected series then Outstanding, the Principal of all Senior Bonds of the
affected series then Outstanding shall become due and payable immediately,
together with the interest accrued thereon to the date of such acceleration, at
the place of payment provided therein, and interest on the Senior Bonds of the
affected series shall cease to accrue after the date of such acceleration,
anything in the Bond Ordinance or in the Senior Bonds of the affected series to
the contrary notwithstanding.
Upon the
happening and continuance of any Event of Default specified in Section
7.1.10, then and in every such case, upon the written demand of the
applicable Credit Facility Provider, the Principal of all Senior Bonds of the
affected series then Outstanding shall become due and payable immediately,
together with the interest accrued thereon to the date of such acceleration, at
the place of payment provided therein, and interest on the Senior Bonds of the
affected series shall cease to accrue after the date of such acceleration,
anything in the Bond Ordinance or in the Senior Bonds of the affected series to
the contrary notwithstanding.
Upon the
happening and continuance of any Event of Default specified in Section
7.1.11, then and in every such case, upon the written declaration of the
owners of more than 50% in aggregate Principal of the Senior Bonds of the
affected series then Outstanding, the Principal of all Senior Bonds of the
affected series then Outstanding shall become due and payable immediately,
together with the interest accrued thereon to the date of such acceleration, at
the place of payment provided therein, and interest on the Senior Bonds of the
affected series shall cease to accrue after the date of such acceleration,
anything in the Bond Ordinance or in the Senior Bonds of the affected series to
the contrary notwithstanding. Notwithstanding the foregoing, with respect to
any Senior Bonds secured by a Credit Facility, only the applicable Credit
Facility Provider may give written demand to declare the Principal of and
accrued interest on such Senior Bonds to be immediately due and payable.
Upon
any declaration of acceleration under the Bond Ordinance, the City shall
immediately draw under the applicable Credit Facility to the extent permitted
by the terms thereof that amount which, together with other amounts on deposit
under the Bond Ordinance, shall be sufficient to pay the Principal of and
accrued interest on the related Senior Bonds so accelerated.
The above provisions,
however, are subject to the condition that if, after the Principal of the
Senior Bonds shall have been so accelerated, all arrears of interest upon such
Bonds, and interest on overdue installments of interest at the rate on such
Bonds, shall have been paid by the City, the Principal of such Bonds which has
matured (except the Principal of any Bonds not then due by their terms except
as provided above) have been paid, and the City shall also have performed all
other things in respect to which it may have been in default under the Bond
Ordinance, and, if applicable, each Credit Facility Provider shall have
reinstated the Credit Facility in the full amount available to be drawn
thereunder by written notice to the City, then, in every such case, the owners
of more than 50% in aggregate Principal of all Senior Bonds then Outstanding by
written notice to the City, may waive such default and its consequences and
such waiver shall be binding upon the City and upon all owners of the Bonds;
but no such waiver shall extend to or affect any subsequent default or impair
any right or remedy consequent thereon. Notwithstanding the foregoing, as long
as the applicable Credit Facility Provider shall not then continue to dishonor
draws under the Credit Facility, no Event of Default with respect to the
related Senior Bonds may be waived without the express written consent of such
Credit Facility Provider.
(b) Upon the
happening and continuance of any Event of Default, any owner of Bonds then
Outstanding affected by the Event of Default or a duly authorized agent for
such owner may proceed to protect and enforce its rights and the rights of the
owners of Bonds by such of the following remedies as it shall deem most
effectual to protect and enforce such rights:
(1) by mandamus or other suit, action, or proceeding at law or in
equity, enforce all rights of the owners of Bonds, including the right to
require the appointment of a receiver for the System or to exercise any other
right or remedy provided by the Constitution and laws of the State and the
Charter and to require the City to perform any other covenant or agreement
contained in the Bond Ordinance;
(2) by action or suit in equity, require the City to account as
if it were the trustee of an express trust for the owners of the Bonds;
(3) by action or suit in equity, enjoin any acts or things which
may be unlawful or in violation of the rights of the owners of the Bonds; or
(4) by pursuing any other available remedy at law or in equity or
by statute.
In the enforcement of
any remedy under the Bond Ordinance, owners of Senior Bonds shall be entitled
to sue for, enforce payment on, and receive any and all amounts then or during
any default becoming, and at any time remaining, due from the City for
Principal, redemption premium, interest, or otherwise, under any provision of
the Bond Ordinance or of the Senior Bonds, and unpaid, with interest on overdue
payments at the rate or rates of interest specified in such Senior Bonds,
together with any and all costs and expenses of collection and of all
proceedings under the Bond Ordinance and under such Senior Bonds, without
prejudice to any other right or remedy of the owners of Senior Bonds, and to
recover and enforce a judgment or decree against the City for any portion of
such amounts remaining unpaid, with interest, costs, and expenses, and to
collect from any moneys available for such purpose, in any manner provided by
law, the moneys adjudged or decreed to be payable.
If no Senior Bonds
are then Outstanding or if no Event of Default with respect to any Senior Bonds
has then occurred and is continuing, in the enforcement of any remedy under the
Bond Ordinance, owners of Subordinate Bonds shall be entitled to sue for,
enforce payment on, and receive any and all amounts then or during any default
becoming, and at any time remaining, due from the City for Principal,
redemption premium, interest, or otherwise, under any provision of the Bond
Ordinance or of the Subordinate Bonds, and unpaid, with interest on overdue
payments at the rate or rates of interest specified in such Subordinate Bonds,
together with any and all costs and expenses of collection and of all proceedings
under the Bond Ordinance and under such Subordinate Bonds, without prejudice to
any other right or remedy of the owners of Subordinate Bonds, and to recover
and enforce a judgment or decree against the City for any portion of such
amounts remaining unpaid, with interest, costs, and expenses, and to collect
from any moneys available for such purpose, in any manner provided by law, the
moneys adjudged or decreed to be payable. Nothing in this paragraph is
intended to diminish the rights of the owners of Subordinate Bonds described in
clauses (1) through (4) of subsection (b) of this Section.
Section 7.3. Remedies
Cumulative. No remedy conferred
upon or reserved to the Bondholders is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under the Bond Ordinance or
now or hereafter existing at law or in equity or by statute.
Section 7.4. Waiver
of Default. No delay or omission
of any Bondholder to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default, or an acquiescence therein, and every
power and remedy given by the Bond Ordinance to the Bondholders may be
exercised from time to time and as often as may be deemed expedient.
Section 7.5. Application
of Moneys After Default. If an Event of Default occurs and shall
not have been remedied, the City or a receiver appointed for the purpose shall
apply all Pledged Revenues as follows and in the following order of priority:
7.5.1. Expenses
of Receiver and Paying Agent and Bond Registrar - to the payment of the
reasonable and proper charges, expenses, and liabilities of any receiver and
the Paying Agent and Bond Registrar under the Bond Ordinance;
7.5.2. Expenses
of Operation and Maintenance and Renewals and Replacements - to the payment
of all reasonable and necessary Expenses of Operation and Maintenance and
necessary renewals and replacements to the System;
7.5.3. Principal
or Redemption Price, Interest, and Hedge Payments Relating to Senior Bonds
- to the payment of the interest and Principal or redemption price then due on
the Senior Bonds and Hedge Payments then due under Senior Hedge Agreements, as
follows:
(a) Unless
the Principal of all the Senior Bonds shall have become due and payable, all
such moneys shall be applied as follows:
first:
To the payment to the persons entitled thereto of all installments of interest
then due on the Senior Bonds, in the order of the maturity of such installments
(with interest on defaulted installments of interest at the rate or rates borne
by the Senior Bonds with respect to which such interest is due, but only to the
extent permitted by law), and, if the amount available shall not be sufficient
to pay in full any particular installment, then to the payment ratably,
according to the amounts due on such installment, to the persons entitled
thereto, without any discrimination or preference. If some of the Senior Bonds
bear interest payable at different intervals, and if at any time moneys from
the Debt Service Reserve Subaccount must be used to pay any such interest, the
moneys in the Debt Service Reserve Subaccount shall be applied (to the extent
necessary) to the payment of all interest becoming due on the dates upon which
such interest is payable to and including the next Interest Payment Date.
After such date, moneys in the Debt Service Reserve Subaccount plus any other
moneys available in the Payments Subaccount shall be set aside for the payment
of interest on Senior Bonds of each class (a class consisting of all Senior
Bonds payable as to interest on the same dates) pro rata among Senior Bonds of
the various classes on a daily basis so that there shall accrue to each owner
of a Senior Bond throughout each Fiscal Year the same proportion of the total
interest payable to such owner of a Senior Bond as shall so accrue to every
other owner of a Senior Bond during such Fiscal Year. As to any Capital
Appreciation Bond which is a Senior Bond, such interest shall accrue on the
Accreted Value of such Bond and be set aside on a daily basis until the next
compounding date for such Bonds, whereupon it shall be paid to the owner of
such Bond as interest on a defaulted obligation and only the unpaid portion of
such interest (if any) shall be treated as Principal of such Bond.
second:
To the payment of the Hedge Payments due under any Senior Hedge Agreements
pursuant to their terms.
third:
To the payment to the persons entitled thereto of the unpaid Principal of any
of the Senior Bonds which shall have become due at maturity or upon mandatory
redemption prior to maturity (other than Senior Bonds called for redemption for
the payment of which moneys are held pursuant to the provisions of Article
IX), in the order of their due dates, with interest upon such Senior Bonds
from the respective dates upon which they became due, and, if the amount
available shall not be sufficient to pay in full Senior Bonds due on any
particular date, together with such interest, then to the payment first of such
interest, ratably according to the amount of such interest due on such date,
and then to the payment of such Principal, ratably according to the amount of
such Principal due on such date, to the persons entitled thereto without any
discrimination or preference. If some of the Senior Bonds mature (including
mandatory redemption prior to maturity as a maturity) upon different dates, and
if at any time moneys from the Debt Service Reserve Subaccount must be used to
pay any such Principal becoming due, the moneys in the Debt Service Reserve
Subaccount not required to pay interest under paragraph first above
shall be applied (to the extent necessary) to the payment of all Principal
becoming due on the dates upon which such Principal is payable to and including
the final annual Principal Maturity Date. After such date, moneys in the Debt
Service Reserve Subaccount not required to pay interest plus any other moneys
available in the Payments Subaccount shall be set aside for the payment of
Principal of Senior Bonds of each class (a class consisting of all Senior Bonds
payable as to Principal on the same date) pro rata among Senior Bonds of the
various classes which mature or must be redeemed pursuant to mandatory
redemption prior to maturity throughout each Fiscal Year in such proportion of
the total Principal payable on each such Senior Bond as shall be equal among
all classes of Senior Bonds maturing or subject to mandatory redemption within
such Fiscal Year. The Accreted Value of a Capital Appreciation Bond which is a
Senior Bond (except for interest which shall have been paid under paragraph first
above) shall be treated as Principal for purposes of this paragraph third.
fourth:
To the payment of the redemption premium on and the Principal of any Senior
Bonds called for optional redemption pursuant to their terms.
(b) If
the Principal of all the Senior Bonds shall have become due and payable, all
such moneys shall be applied to the payment of the Principal and interest then
due and unpaid upon the Senior Bonds, with interest thereon as aforesaid, and
due and unpaid Hedge Payments under Senior Hedge Agreements, without preference
or priority of Principal over interest or Hedge Payments or of interest over
Principal or Hedge Payments, or of Hedge Payments over Principal or interest,
or of any installment of interest over any other installment of interest, or of
any Senior Bond over any other Senior Bonds, or of any such Hedge Payment over
any other such Hedge Payment, ratably, according to the amounts due
respectively for Principal, interest, and Hedge Payments, to the persons
entitled thereto without any discrimination or preference.
7.5.4. Principal
or Redemption Price, Interest, and Hedge Payments Relating to Subordinate Bonds
and Hedge Contingency Payments - to the payment of the interest and
Principal or redemption price then due on the Subordinate Bonds, Hedge
Contingency Payments and Hedge Payments then due under Subordinate Hedge
Agreements, as follows:
(a) Unless
the Principal of all the Subordinate Bonds shall have become due and payable,
all such moneys shall be applied as follows:
first:
To the payment to the persons entitled thereto of all installments of interest
then due on the Subordinate Bonds, in the order of the maturity of such
installments (with interest on defaulted installments of interest at the rate
or rates borne by the Subordinate Bonds with respect to which such interest is
due, but only to the extent permitted by law), and, if the amount available
shall not be sufficient to pay in full any particular installment, then to the
payment ratably, according to the amounts due on such installment, to the
persons entitled thereto, without any discrimination or preference. If some of
the Subordinate Bonds bear interest payable at different intervals or upon
different dates and if at any time moneys from the Debt Service Reserve Subaccount
must be used to pay any such interest, the moneys in the Debt Service Reserve
Subaccount shall be applied (to the extent necessary) to the payment of all
interest becoming due on the dates upon which such interest is payable to and
including the next succeeding semiannual Interest Payment Date. After such
date, moneys in the Debt Service Reserve Subaccount plus any other moneys
available in the Payments Subaccount shall be set aside for the payment of
interest on Subordinate Bonds of each class (a class consisting of all
Subordinate Bonds payable as to interest on the same dates) pro rata among
Subordinate Bonds of the various classes on a daily basis so that there shall
accrue to each owner of a Subordinate Bond throughout each Fiscal Year the same
proportion of the total interest payable to such owner of a Subordinate Bond as
shall so accrue to every other owner of a Subordinate Bond during such Fiscal
Year. As to any Capital Appreciation Bond which is a Subordinate Bond, such
interest shall accrue on the Accreted Value of such Bond and be set aside on a
daily basis until the next compounding date for such Bonds, whereupon it shall
be paid to the owner of such Bond as interest on a defaulted obligation and
only the unpaid portion of such interest (if any) shall be treated as Principal
of such Bond.
second:
To the payment of the Hedge Payments due under any Subordinate Hedge Agreements
pursuant to their terms.
third:
To the payment of Hedge Contingency Payments, if any, due under any Senior Hedge
Agreements pursuant to their terms and to the persons entitled thereto of the
unpaid Principal of any of the Subordinate Bonds which shall have become due at
maturity or upon mandatory redemption prior to maturity (other than Subordinate
Bonds called for redemption for the payment of which moneys are held pursuant
to the provisions of Article IX), in the order of their due dates, with
interest upon such Subordinate Bonds from the respective dates upon which they
became due, and, if the amount available shall not be sufficient to pay in full
such Hedge Contingency Payments and Subordinate Bonds due on any particular
date, together with such interest, then to the payment first of such Hedge
Contingency Payments and interest, ratably according to the amount of such
interest and Hedge Contingency Payments due on such date, and then to the
payment of such Principal, ratably according to the amount of such Principal
due on such date, to the persons entitled thereto without any discrimination or
preference. If some of the Subordinate Bonds mature (including mandatory
redemption prior to maturity as a maturity) upon a different date or dates and
if at any time moneys from the Debt Service Reserve Subaccount must be used to
pay any such Principal becoming due, the moneys in the Debt Service Reserve
Subaccount not required to pay interest under paragraph first above
shall be applied (to the extent necessary) to the payment of all Principal
becoming due on the dates upon which such Principal is payable to and including
the final annual Principal Maturity Date. After such date, moneys in the Debt
Service Reserve Subaccount not required to pay interest plus any other moneys
available in the Payments Subaccount shall be set aside for the payment of
Principal of Subordinate Bonds of each class (a class consisting of all
Subordinate Bonds payable as to Principal on the same date) pro rata among
Subordinate Bonds of the various classes which mature or must be redeemed
pursuant to mandatory redemption prior to maturity throughout each Fiscal Year
in such proportion of the total Principal payable on each such Subordinate Bond
as shall be equal among all classes of Subordinate Bonds maturing or subject to
mandatory redemption within such Fiscal Year. The Accreted Value of a Capital
Appreciation Bond which is a Subordinate Bond (except for interest which shall
have been paid under paragraph first above) shall be treated as
Principal for purposes of this paragraph third.
fourth:
To the payment of Hedge Contingency Payments, if any, due under any Subordinate
Hedge Agreements pursuant to their terms.
fifth:
To the payment of the redemption premium on and the Principal of any
Subordinate Bonds called for optional redemption pursuant to their terms.
(b) If the
Principal of all the Subordinate Bonds shall have become due and payable, all
such moneys shall be applied to the payment of the Principal and interest then
due and unpaid upon the Subordinate Bonds, with interest thereon as aforesaid,
and due and unpaid Hedge Contingency Payments and Hedge Payments under
Subordinate Hedge Agreements, without preference or priority of Principal over
interest, Hedge Contingency Payments or Hedge Payments or of interest over
Principal, Hedge Contingency Payments or Hedge Payments, or of Hedge
Contingency Payments over Principal, Hedge Payments or interest, or of Hedge
Payments over Principal, interest or Hedge Contingency Payments, or of any
installment of interest over any other installment of interest, or of any
Subordinate Bond over any other Subordinate Bonds, or of any such Hedge
Contingency Payment or any other such Hedge Contingency Payment or of any such
Hedge Payment over any other such Hedge Payment, ratably, according to the
amounts due respectively for Principal, interest, Hedge Contingency Payments
and Hedge Payments, to the persons entitled thereto without any discrimination
or preference.
Section 7.6. Rights
of Credit Facility Provider. Notwithstanding any other provision of
the Bond Ordinance, in the event that the City shall draw under a Credit
Facility any amount for the payment of Principal of or interest on any Bonds,
then upon such payment the related Credit Facility Provider shall succeed to
and become subrogated to the rights of the recipients of such payments and such
Principal or interest shall be deemed to continue to be unpaid and Outstanding
for all purposes and shall continue to be fully secured by the Bond Ordinance
until the Credit Facility Provider, as successor and subrogee, has been paid
all amounts owing in respect of such subrogated payments of Principal and
interest. Such rights shall be limited and evidenced by having the City note
the Credit Facility Providers rights as successor and subrogee on its records,
and the City shall, upon request, deliver to the Credit Facility Provider (i)
in the case of interest on the Bonds, an acknowledgment of the Credit Facility
Providers ownership of interest to be paid on the Bonds specifying the amount
of interest owed, the period represented by such interest, and the CUSIP
numbers of the Bonds on which such interest is owed and (ii) in the case of
Principal of the Bonds, either the Bonds themselves duly assigned to the Credit
Facility Provider or new Bonds registered in the name of the Credit Facility
Provider or in such other name as the Credit Facility Provider shall specify.
Whenever moneys become available for the payment of any interest then overdue,
the Credit Facility Provider shall be treated as to interest owed to it as and
as if it had been the Bondholder of the Bonds upon which such interest is
payable on any special record date therefor.
Section 7.7. No
Obligation to Levy Taxes. Nothing contained in the Bond Ordinance
shall be construed as imposing on the City any duty or obligation to levy any
taxes either to meet any obligation incurred herein or to pay the Principal of
or interest on the Bonds.
ARTICLE VIII
BOND OWNERSHIP
Section 8.1. Manner
of Evidencing Ownership of Bonds. Any request, direction, or other
instrument required by the Bond Ordinance to be signed or executed by
Bondholders may be in any number of counterparts or writings of similar tenor
and may be signed or executed by such Bondholders in person or by agent appointed
in writing. Proof of the execution of any such request, direction, or other
instrument, or of the writing appointing such agent and of the ownership of
Bonds, if made in the following manner, shall be sufficient for any purpose of
the Bond Ordinance.
The fact and date of
the execution by any person of any such writing may be proved by the
certificate of any officer in any jurisdiction, who, by the laws thereof, has
power to take acknowledgments within such jurisdiction, to the effect that the
person signing such writing acknowledged before him the execution thereof, or
by an affidavit of a witness to such execution; provided that the execution of
the form of assignment on each Bond may be guaranteed only by an eligible
guarantor institution as defined by SEC Rule 17Ad-15 or any similar rule which
the Bond Registrar deems applicable. The fact of ownership of the Bonds by any
Bondholder, the amount and issue numbers of such Bonds, and the date of
ownership shall be proved by the Bond Register.
Section 8.2. Call
of Meetings of Bondholders. The City or the owners of not less than
25% in aggregate Principal of the Bonds Outstanding of either the Senior Bonds
or the Subordinate Bonds may at any time call a meeting of the Bondholders.
ARTICLE IX
DEFEASANCE
Section 9.1. Defeasance. Except as otherwise provided in any
Series Ordinance with respect to Bonds secured by a Credit Facility, Bonds for
the payment or redemption of which sufficient moneys or sufficient Government
Obligations shall have been deposited with the Paying Agent (whether upon or
prior to the maturity or the redemption date of such Bonds) shall be deemed to
be paid and no longer Outstanding under the Bond Ordinance; provided, however,
that if such Bonds are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been duly given as provided in Article III or
firm and irrevocable arrangements shall have been made for the giving of such
notice; and, provided, further, that Bonds that are Auction Rate Bonds or are
bearing interest at a Variable Rate shall not be deemed to have been paid and
discharged within the meaning of this Section unless the interest rate payable
on such Bonds is calculated at the maximum interest rate specified for such
Bonds to the earlier of the first tender or redemption date. Government
Obligations shall be considered sufficient for purposes of this Article IX
only: (i) if such Government Obligations are not callable by the issuer of the
Government Obligations prior to their stated maturity, and (ii) if such
Government Obligations fall due and bear interest in such amounts and at such
times as will assure sufficient cash to pay currently maturing interest and to
pay Principal and redemption premiums, if any, when due on the Bonds without
rendering the interest on any Tax-Exempt Bonds includable in gross income of
any owner thereof for federal income tax purposes.
The City may at any
time surrender to the Bond Registrar for cancellation by it any Bonds
previously authenticated and delivered under the Bond Ordinance which the City
may have acquired in any manner whatsoever. All such Bonds, upon such
surrender and cancellation, shall be deemed to be paid and retired.
ARTICLE X
SUPPLEMENTAL
ORDINANCES
Section 10.1. Supplemental
Ordinances Not Requiring Consent of Bondholders. The City, from time to time and at any
time, subject to the conditions and restrictions in the Bond Ordinance, may
adopt one or more Supplemental Ordinances which thereafter shall form a part of
the Bond Ordinance, for any one or more or all of the following purposes:
10.1.1. To
add to the covenants and agreements of the City in the Bond Ordinance other
covenants and agreements thereafter to be observed or to surrender, restrict,
or limit any right or power reserved in the Bond Ordinance to or conferred upon
the City (including but not limited to the right to issue Senior Bonds);
10.1.2. To
make such provisions for the purpose of curing any ambiguity, or of curing,
correcting, or supplementing any defective provision contained in the Bond
Ordinance, or in regard to matters or questions arising under the Bond
Ordinance, as the City may deem necessary or desirable and not inconsistent
with the Bond Ordinance;
10.1.3. To
subject to the lien and pledge of the Bond Ordinance additional revenues,
receipts, properties, or other collateral;
10.1.4. To
evidence the appointment of a successor to any Paying Agent;
10.1.5. To
modify, amend, or supplement the Bond Ordinance in such manner as to permit the
qualification of the Bond Ordinance under the Trust Indenture Act of 1939 or
any federal statute hereinafter in effect, and similarly to add to the Bond
Ordinance such other terms, conditions, and provisions as may be permitted or
required by such Trust Indenture Act of 1939 or any similar federal statute;
10.1.6. To
make any modification or amendment of the Bond Ordinance required in order to
make any Bonds eligible for acceptance by DTC or any similar holding
institution or to permit the issuance of any Bonds or interests therein in
book-entry form;
10.1.7. To
modify any of the provisions of the Bond Ordinance in any respect if such
modification shall not become effective until after the Bonds Outstanding
immediately prior to the effective date of such Supplemental Ordinance shall
cease to be Outstanding and if any Bonds issued contemporaneously with
or after the effective date of such Supplemental Ordinance shall contain a
specific reference to the modifications contained in such subsequent
proceedings;
10.1.8. Subject
to the provisions of Article XI, to modify the provisions of the Bond
Ordinance with respect to the disposition of any moneys remaining in the
Project Fund upon the completion of any Project;
10.1.9. To
increase the size or scope of the System, to add other utilities to the System,
to create additional subaccounts or to abolish any subaccounts within any
account, or to change the amount of the Debt Service Reserve Requirement, but
not below the amount specified in such definition;
10.1.10. To
modify the Bond Ordinance to permit the qualification of any Bonds for offer or
sale under the securities laws of any state in the United States of America;
10.1.11. To
modify the Bond Ordinance to provide for the issuance of Senior Bonds or
Subordinate Bonds, and such modification may deal with any subjects and make
any provisions which the City deems necessary or desirable for that purpose;
10.1.12. To
make such modifications in the provisions of the Bond Ordinance as may be
deemed necessary by the City to accommodate the issuance of Bonds which (i) are
Auction Rate Bonds, (ii) are Capital Appreciation Bonds (including, but not
limited to, provisions for determining the Debt Service Requirement for such
Capital Appreciation Bonds and for treatment of Accreted Value in making such
determination) or (iii) bear interest at a Variable Rate; and
10.1.13. To
modify any of the provisions of the Bond Ordinance in any respect (other than a
modification of the type described in Section 10.2 requiring the
unanimous written consent of the Bondholders); provided that for (i) any Outstanding
Bonds which are assigned a Rating and which are not secured by a Credit
Facility providing for the payment of the full amount of Principal and interest
to be paid thereon, each Rating Agency shall have given written notification to
the City that such modification will not cause the then applicable Rating on
any Bonds to be reduced or withdrawn, and (ii) any Outstanding Bonds which are
secured by Credit Facilities providing for the payment of the full amount of
the Principal and interest to be paid thereon, each Credit Facility Provider
shall have consented in writing to such modification.
Any Supplemental
Ordinance authorized by the provisions of this Section may be adopted by the
City without the consent of or notice to the owners of any of the Bonds at the
time Outstanding, notwithstanding any of the provisions of Section 10.2.
Any Supplemental
Ordinance of the City may modify the provisions of the Bond Ordinance in such a
manner, and to such extent and containing such provisions, as the City may deem
necessary or desirable to effect any of the purposes stated above.
As used in this
Section, the term modify shall mean modify, amend, or supplement and the
term modification shall mean modification, amendment, or supplement.
Section 10.2. Supplemental
Ordinances Requiring Consent of Bondholders. With the consent (evidenced as provided
in Article VIII) of the owners of not less than a majority in aggregate
Principal of the Outstanding Bonds of each class (senior and subordinate),
voting separately by class, the City may from time to time and at any time
adopt a Supplemental Ordinance for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Bond
Ordinance or of any Supplemental Ordinance; provided, however, that no such
Supplemental Ordinance shall: (1) extend the maturity date or due date of any
mandatory sinking fund redemption with respect to any Bond Outstanding under
the Bond Ordinance; (2) reduce or extend the time for payment of Principal of,
redemption premium, or interest on any Bond Outstanding under the Bond
Ordinance; (3) reduce any premium payable upon the redemption of any Bond under
the Bond Ordinance or advance the date upon which any Bond may first be called
for redemption prior to its stated maturity date; (4) give to any Senior Bond
or Senior Bonds (or related Hedge Payments) a preference over any other Senior
Bond or Senior Bonds (or related Hedge Payments); (5) permit the creation of
any lien or any other encumbrance on the Pledged Revenues having a lien equal
to or prior to the lien created under the Bond Ordinance for the Senior Bonds;
(6) reduce the percentage of owners of senior or subordinate classes of Bonds
required to approve any such Supplemental Ordinance; or (7) deprive the owners
of the Bonds of the right to payment of the Bonds or from the Pledged Revenues,
without, in each case, the consent of the owners of all the affected Bonds then
Outstanding. No amendment may be made under this Section which affects the
rights or duties of any Credit Facility Provider securing any of the Bonds or
any Qualified Hedge Provider under any Hedge Agreement without its written
consent.
If the City intends
to enter into or adopt any Supplemental Ordinance as described in this Section,
the City shall mail, by registered or certified mail, to the registered owners
of the Bonds at their addresses as shown on the Bond Register, a notice of such
intention along with a description of such Supplemental Ordinance not less than
30 days prior to the proposed effective date of such Supplemental Ordinance.
The consents of the registered owners of the Bonds need not approve the
particular form of wording of the proposed Supplemental Ordinance, but it shall
be sufficient if such consents approve the substance thereof. Failure of the
owner of any Bond to receive the notice required in the Bond Ordinance shall
not affect the validity of any Supplemental Ordinance if the required number of
owners of the Bonds of each class shall provide their written consent to such
Supplemental Ordinance.
Notwithstanding any
provision of the Bond Ordinance to the contrary, upon the issuance of a Credit
Facility to secure any Bonds and for the period in which such Credit Facility
is outstanding, the Credit Facility Provider may have the consent rights of the
owners of the Bonds which are secured by such Credit Facility pertaining to
some or all of the amendments or modifications of the Bond Ordinance, to the
extent provided in the applicable Series Ordinance. Notwithstanding the
foregoing, if a Credit Facility Provider is granted the consent rights of the
owners of any Bonds in a Series Ordinance and refuses to exercise such consent
rights, either affirmatively or negatively, then the registered owners of the
Bonds secured by the related Credit Facility may exercise such consent rights.
Section 10.3. Notice
of Supplemental Ordinances. The City shall cause the Bond Registrar
to mail a notice by registered or certified mail to the registered owners of
all Bonds Outstanding, at their addresses shown on the Bond Register or at such
other address as has been furnished in writing by such registered owner to the
Bond Registrar, setting forth in general terms the substance of any
Supplemental Ordinance which has been: (i) adopted by the City pursuant to Section
10.1 or (ii) approved by Bondholders or any Credit Facility Provider and
adopted by the City pursuant to Section 10.2.
ARTICLE XI
PROJECT FUND
Section 11.1. Project
Fund.
(a) Moneys
in the Project Account for each Project shall be used solely for the purpose of
paying part of the cost of that Project as hereinbefore provided, in accordance
with the plans therefor and heretofore approved by the Council of the City and
on file in the office of the Director of the Department of Water Services,
including any alterations in or amendments to said plans deemed advisable by
the Director of the Department of Water Services and approved by the Council of
the City.
(b) Moneys in
the Costs of Issuance Account shall be used solely for the purpose of paying
the costs and expenses incident to the issuance of the Bonds upon certification
thereof by the Director of Finance. Unless a later date is specified in the
Series Ordinance authorizing a series of Bonds, on the latest to occur of (i)
the payment in full of such amounts (as certified by the Director of Finance)
or (ii) the date which is six months following the date on which the Bonds are
issued and authenticated, any moneys remaining in the Costs of Issuance Account
shall be transferred to the Project Account and applied in accordance with the
provisions of this Section.
Section 11.2. Purposes
of Payments. Moneys in each
separate account in the Project Fund shall be used for the payment or
reimbursement of the Costs of the Project for which such account was
established as provided in this Article XI.
Section 11.3. Documentation
of Payments. Withdrawals from
the Project Fund shall be made only when authorized by the Council and only on
duly authorized and executed warrants or vouchers therefor prepared in
accordance with procedures issued by the Director of the Department of Water
Services that such payment is being made for a purpose within the scope of this
Bond Ordinance and that the amount of such payment represents only the contract
price of the property, equipment, labor, materials or service being paid for
or, if such payment is not being made pursuant to an express contract, that
such payment is not in excess of the reasonable value thereof.
Section 11.4. Funds
Remaining on Completion of Projects. Upon completion of a Project, any
surplus moneys remaining in the respective Project Account and not required for
the payment of unpaid costs thereof shall be deposited in the Payments
Subaccount. Any surplus credited to the Payments
Subaccount shall be applied by the
Paying Agent as directed by the City solely to the payment of principal of,
redemption premium, if any, and interest on the related series of Bonds through
the payment or redemption thereof at the earliest date permissible under the
terms of the Bond Ordinance. The balance transferred to the Payments
Subaccount may first be used to pay any principal payment on the related series
of Bonds coming due in that current bond year. If the balance transferred is
greater than the current bond year principal payment, the excess shall be used
to optionally call Bonds for redemption. Any Bonds purchased by the Paying
Agent pursuant to this provision with moneys from the Payments Subaccount will
be deemed cancelled.
ARTICLE XII
MISCELLANEOUS
PROVISIONS
Section 12.1. Severability. In case any one or more of the
provisions of the Bond Ordinance or of the Bonds shall for any reason be held
to be illegal or invalid, such illegality or invalidity shall not affect any
other provision of the Bond Ordinance or of the Bonds, but the Bond Ordinance
and the Bonds shall be construed and enforced as if such illegal or invalid
provision had not been contained therein. In case any covenant, stipulation,
obligation, or agreement contained in the Bonds or in the Bond Ordinance shall
for any reason be held to be unenforceable or in violation of law, then such
covenant, stipulation, obligation, or agreement shall be deemed to be the
covenant, stipulation, obligation, or agreement of the City to the full extent
that the power to incur such obligation or to make such covenant, stipulation,
or agreement shall have been conferred on the City by law.
Section 12.2. Requests
of City. Whenever any action is
to be taken by the Paying Agent at the request of the City under the Bond
Ordinance, if no other means of authenticating such request is required, such
request shall be evidenced by a written instrument signed by the Director of
Finance and City Clerk or by such other City official or employee (one or more)
as may from time to time be designated in writing by the Director of Finance
and City Clerk. A duly certified copy of such designation must be filed with
the Paying Agent.
Section 12.3. Payments
Due on Saturdays, Sundays, etc. Whenever a date upon which a payment is
to be made under the Bond Ordinance falls on a date which is not a Business
Day, such payment may be made on the next succeeding Business Day without
interest for the intervening period.
Section 12.4. Applicable
Provisions of Law. The Bond Ordinance shall be governed by
and construed and enforced in accordance with the laws of the State and the
Charter.
Section 12.5. Repeal
of Conflicting Ordinances and Resolutions. Any and all ordinances and resolutions,
or parts of ordinances or resolutions, if any, in conflict with the Bond
Ordinance are hereby repealed.
Section 12.6. No
Individual Responsibility of Officers of City. No stipulations, obligations, or agreements of any member
of the Council or of any officer of the City shall be deemed to be
stipulations, obligations, or agreements of any such trustee or officer in his
or her individual capacity.
Section 12.7. Governing
Law. This Master Bond Ordinance
shall be governed by and construed in accordance with the applicable laws of
the State.
Section 12.8. Effective Date. This Ordinance shall take effect and be in full
force ten (10) days after its passage.
_____________________________________________
Approved
as to form and legality:
___________________________________
Alan
Holtkamp
Assistant City Attorney