Legislation Text

COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 041202

Authorizing the issuance, sale and delivery of Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2004H of the City of Kansas City, Missouri in an amount not to exceed $10,500,000.00 for the purpose of extending and improving the City's Sanitary Sewer System; prescribing the form and details of the Bonds and the agreements made by the City to facilitate and protect their payment; and authorizing a nointerest loan from The Water and Wastewater Loan Revolving Fund or The Water and Wastewater Loan Fund of the State of Missouri and prescribing other related matters.

WHEREAS, the City of Kansas City, Missouri (the "City") is a political subdivision and constitutional charter city, organized and existing under the constitution and laws of the State of Missouri; and

WHEREAS, the City now owns and operates a revenue producing sewerage system, consisting of sanitary sewers, stormwater sewers and combined sewers, serving the City, its inhabitants and others within its service area, including connected and related appurtenances and facilities and extensions, improvements, additions and enlargements made or acquired by the City after the date of this Ordinance (the "Combined System"); and

WHEREAS, the City desires to extend and improve the Sanitary Sewer System (as defined herein) to be financed in whole or in part by the issuance, pursuant to this Ordinance, of its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2004H in an amount not to exceed $10,500,000.00 (with any additional identifiers as provided in this Ordinance and the below defined Terms Ordinance, the "Bonds"), in the Original Principal Amount as set forth in the Terms Ordinance; and

WHEREAS, to provide the most cost effective financing of the extensions and improvements to the Sanitary Sewer System the City desires to participate in the Missouri Leveraged State Water Pollution Control Revolving Fund Program (the "SRF Program") of the Missouri Department of Natural Resources ("DNR") and the State Environmental Improvement and Energy Resources Authority (the "Authority"); and

WHEREAS, under the provisions of Chapter 250 of the Revised Statutes of Missouri (the "Act"), the City is authorized to issue and sell revenue bonds for the purpose of paying all or part of the cost of extending and improving the Sanitary Sewer System, with the cost of operation and maintenance of the Sanitary Sewer System and the principal of and interest on revenue bonds payable solely from the Net Sanitary Sewer Revenues (as defined below); and

WHEREAS, pursuant to the Act, a special bond election was duly held in the City on November 4, 1997, on the following question:

QUESTION NO. 2

Shall the City of Kansas City, Missouri, issue and sell wastewater revenue bonds in the principal amount of $125,000,000.00 for the purpose of extending and improving the sewerage system of the City including, without limitation (1) reduction or elimination of sewer overflows and backups, (2) compliance with current and future federal and state regulations, (3) rehabilitation of combined sewers to reduce or eliminate overflows and flooding, (4) completion of the City's interceptor sewer system, (5) acquisition of necessary property interests, and (6) rehabilitation of existing aged sewage treatment and pumping facilities, with the principal and interest of said bonds to be payable solely from the revenues derived by the City from the operation of its sewerage system, including all future improvements and extensions thereto?

and it was found and determined that more than a majority of the qualified electors of the City voting on the question had voted in favor of the issuance of said revenue bonds for the purpose aforesaid, the vote on said question having been 24,776 votes for said question to 14,045 votes against said question; and

WHEREAS, the Council (the "Governing Body") of the City has caused plans and specifications for extensions and improvements to the Sanitary Sewer System and a cost estimate to be made by the Consulting Engineer (as defined below); and

WHEREAS, the plans and specifications and the cost estimate are accepted and approved and are on file in the office of the City Clerk, the amount of the estimated cost being not less than the Original Principal Amount; and

WHEREAS, $98,950,000 of the bonds so authorized have been issued (the Series 1998A Bonds, the Series 1999A Bonds, the Series 2000A Bonds, the Series 2000B Bonds, the Series 2001B Bonds, the Series 2002D Bonds, the Series 2002J Bonds and the Series 2004A Bonds as defined below) and the City finds and determines that it is necessary and advisable and in the best interest of the City and of its inhabitants to issue the Bonds in the Original Principal Amount; and

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1992B, dated June 1, 1992, in the original principal amount of $1,265,000, of which $765,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1992B Bonds"), authorized by Committee Substitute for Ordinance No. 920636 passed on June 4, 1992 and Ordinance No. 920681 passed on June 11, 1992 (as amended, collectively, the "Series 1992B Ordinance"); and

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1995A, dated April 1, 1995, in the original principal amount of $18,000,000, of which $14,340,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1995A Bonds"), authorized by Committee Substitute for Ordinance No. 950353 passed on April 13, 1995, and Ordinance No. 950516 passed on April 20, 1995, (as amended, collectively, the "Series 1995A Ordinance"); and

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1996A, dated April 1, 1996, in the original principal amount of $24,000,000, of which $17,285,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1996A Bonds"), authorized by Committee Substitute for Ordinance No. 960253 passed on March 28, 1996 and Ordinance No. 960440 passed on April 18, 1996, (as amended, collectively, the "Series 1996A Ordinance"); and

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1997A, dated April 24, 1997, in the original principal amount of $22,235,000, of which $15,570,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1997A Bonds"), authorized by Ordinance No. 970285 passed on March 27, 1997 and Ordinance No. 970478 passed on April 10, 1997, (as amended, collectively, the "Series 1997A Ordinance"); and

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1998A, dated April 1, 1998, in the original principal amount of $9,200,000, of which $7,605,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1998A Bonds," together with the Series 1992B Bonds, the Series 1995A Bonds, the Series 1996A Bonds and the Series 1997A Bonds, collectively referred to herein as the "Outstanding Senior Bonds"), and authorized by Ordinance No. 980253 passed on March 26, 1998 and Ordinance No. 980417 passed on April 9, 1998 (collectively, the "Series 1998A Ordinance," together with the Series 1992B Ordinance, the Series 1995A Ordinance, the Series 1996A Ordinance and the Series 1997A Ordinance, collectively referred to herein as the "Outstanding Senior Bond Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 1999A, dated June 1, 1999, in the original principal amount of $6,000,000, of which $5,080,000 remains outstanding as of the date of passage of this Ordinance (the "Series 1999A Bonds"), authorized by Ordinance No. 990589 passed on May 6, 1999 and Ordinance No. 990750 passed on May 20, 1999, (collectively, the "Series 1999A Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2000A, dated April 1, 2000, in the original principal amount of $13,000,000, of which $10,770,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2000A Bonds,") authorized by Ordinance No. 000309 passed on March 9, 2000 and Ordinance No. 000415 passed on March 23, 2000, (collectively, the "Series 2000A Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2000B, dated November 1, 2000, in the original principal amount of $11,750,000, of which $9,710,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2000B Bonds,") authorized by Ordinance No. 001386 passed on October 26, 2000 and Ordinance No. 001492 passed on November 2, 2000, (collectively, the "Series 2000B Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Refunding Revenue Bonds, Series 2001A, dated August 1, 2001, in the original principal amount of $14,055,000, of which $8,025,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2001A Bonds,") authorized by Ordinance No. 011035 passed on July 26, 2001, and Ordinance No. 011199 passed on August 16, 2001, (collectively, the "Series 2001A Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2001B, dated November 1, 2001, in the original principal amount of $17,000,000, of which $15,580,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2001B Bonds,") authorized by Ordinance No. 011446, as amended, passed on October 25, 2001 and Ordinance No. 011565 passed on November 1, 2001, (collectively, the "Series 2001B Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds, Series 2002D-1, dated May 1, 2002, in the original principal amount of $9,000,000, of which $9,000,000 remains outstanding as of the date of passage of this Ordinance, and its Taxable Sanitary Sewer System Revenue Bonds, Series 2002D-2, dated May 1, 2002, in the original principal amount of $3,000,000, of which $2,375,000 remains outstanding as of the date of passage of this Ordinance (collectively, the "Series 2002D Bonds") authorized by Committee Substitute for Ordinance No. 020418, passed on April 25, 2002, and Ordinance No. 020604 passed on May 9, 2002 (collectively, the "Series 2002D Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds (State Revolving Fund Program), Series 2002J, dated November 7, 2002, in the original principal amount of $10,000,000, of which $9,320,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2002J Bonds"), and authorized by Ordinance No. 021206 passed on October 10, 2002, and Ordinance No. 021304 passed on October 24, 2002, (collectively, the "Series 2002J Ordinance"); and

WHEREAS, the City has issued its Sanitary Sewer System Revenue Bonds, Series 2004A, dated April 1, 2004, in the original principal amount of $20,000,000, of which $20,000,000 remains outstanding as of the date of passage of this Ordinance (the "Series 2004A Bonds," together with the Series 1999A Bonds, the Series 2000A Bonds, the Series 2000B Bonds, the Series 2001A Bonds, the Series 2001B Bonds, the Series 2002D Bonds and the Series 2002J Bonds, collectively referred to herein as the "Outstanding Parity Bonds"), and authorized by Ordinance No. 040249 passed on March 18, 2004, and Ordinance No. 040378 passed on April 1, 2004 (collectively, the "Series 204A Ordinance," together with the Series 1999A Ordinance, the Series 2000A Ordinance, the Series 2000B Ordinance, the Series 2001A Ordinance, the Series 2001B Ordinance, the Series 2002D Ordinance, the Series 2002J Ordinance and this Ordinance, collectively referred to herein as the "Outstanding Parity Bond Ordinance"); and

WHEREAS, a portion of the proceeds of the Bonds will be applied to pay and retire in full the $10,000,000 interim loan which the City received from DNR (the "Loan") for the improvements to the Sanitary Sewer System which are being funded on a long-term basis with proceeds of the Bonds; and

WHEREAS, the City, upon the issuance of the Bonds, will not have outstanding any other bonds or other obligations payable from the Net Sanitary Sewer Revenues other than the Outstanding Senior Bonds, the Outstanding Parity Bonds and the Bonds; and

WHEREAS, under the provisions of the Outstanding Senior Bond Ordinance and the Outstanding Parity Bond Ordinance the City may issue additional bonds payable out of the Net Sanitary Sewer Revenues that are junior and subordinate to the Outstanding Senior Bonds and that are on a parity with the Outstanding Parity Bonds, in each case only if certain conditions are met; and

WHEREAS, it is hereby found and determined that it is necessary and advisable and in the best interest of the City and its inhabitants that revenue bonds be issued and secured in the form and manner provided in this Ordinance, subject to the Terms Ordinance and the conditions of the Outstanding Senior Bond Ordinance and the Outstanding Parity Bond Ordinance; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF KANSAS CITY:

ARTICLE I

DEFINITIONS

Section 101. Definitions of Words and Terms. Capitalized words and terms not otherwise defined in this Ordinance have the meanings set forth in the Purchase Agreement (defined below). In addition to the foregoing and words and terms defined in the Recitals and elsewhere in this Ordinance, capitalized words and terms have the following meanings in this Ordinance:

"Administrative Fee Calculation Date" means the Business Day preceding each January 1, commencing on the Business Day preceding January 1, 2006.

"Administrative Fee" means the fee payable to DNR equal to 0.714% of the outstanding principal amount of the Revolving Fund Loan on each Administrative Fee Calculation Date.

"Administrative Service Fees" means that portion of the Current Sanitary Sewer Expenses paid to the general fund of the City for office space and certain administrative, data processing, accounting and other support services provided to the Sanitary Sewer System of the City.

"Authority Bonds" means the Water Pollution Control and Drinking Water Revenue Bonds (State Revolving Funds Programs) Series 2004C of the Authority.

"Authority Program Bonds" means the Authority Bonds and any other bonds of the Authority issued under the SRF Program, all or a portion of the proceeds of which are loaned to the City pursuant to the SRF Program.

"Authorized Representative" means the representative of the City designated by the City in accordance with the Regulations.

"Bondowner" means the Authority or its assigns.

"Bond Register" means the books for the registration, transfer and exchange of Bonds kept at the office of the Paying Agent.

"Combined System" means the Citys Sanitary Sewer System and the Citys stormwater sewer system, serving the City, its inhabitants and others, including connected and related appurtenances and facilities and extensions, improvements, additions and enlargements hereafter made or acquired by the City.

"Combined System Revenue Fund" refers to and identifies the Sewer Fund and the stormwater fund as a single combined fund for purposes of this Ordinance, as ratified and confirmed by Section 401.

"Combined System Revenues" means all income and revenues derived by the City from the Combined System, including any amounts deposited in the Combined System Revenue Fund, 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.

"Consultant" means the Consulting Engineer, an independent certified public accountant or a firm of independent certified public accountants.

"Consulting Engineer" means any independent engineer or engineering firm with experience in designing and constructing wastewater treatment, sanitary sewerage or water pollution control facilities or, if applicable, water production and transmission facilities, and retained by the City.

"Current Sanitary Sewer Expenses" means all reasonable and necessary expenses of ownership, operation, maintenance and repair of the Sanitary Sewer System and keeping the Sanitary Sewer System in good repair and working order, determined in accordance with generally accepted accounting principles, including current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, costs of materials and supplies, Paying Agent fees and expenses, annual audits, periodic Consultant's reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, shortterm obligations incurred and payable within a particular Fiscal Year, obligations incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the ownership and operation of the Sanitary Sewer System, but excluding capital lease payments, if any, interest paid on Sanitary Sewer System Revenue Bonds and depreciation and amortization charges (including payments into the Sanitary Sewer Depreciation and Replacement Account).

"Defeasance Securities" means:

(a) Federal Securities;

(b) obligations of the Resolution Funding Corporation or any successor, but only if the use of the obligations to pay and discharge Bonds pursuant to Article XI will cause the discharged Bonds to be rated in the highest longterm rating category by the Rating Agency; or

(c) obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any state that:

(i) are not callable at the option of the obligor prior to maturity or for which irrevocable instructions have been given by the obligor to call on the date specified in the instructions, and

(ii) are fully secured as to principal, redemption premium and interest by a fund, consisting of cash or Federal Securities, that:

(A) may be applied only to the payment of principal, redemption premium and interest on the obligations, and

(B) is sufficient, as verified by a nationally recognized independent certified public accountant, to pay the principal, redemption premium and interest on the obligations.

Director means, in reference to the Department of Water Services of the City, the Director or any Deputy Director of the Department of Water Services of the City, and in reference to the Department of Finance of the City, the Director or any Acting Director of the Department of Finance of the City.

"Federal Securities" means any direct obligation of, or obligation the timely payment of the principal of and interest on which is unconditionally guaranteed by, the United States of America and backed by its full faith and credit.

"Interest Payment Date" means each January 1 and July 1, commencing July 1, 2005.

"Net Sanitary Sewer Revenues" means Sanitary Sewer Revenues less Current Sanitary Sewer Expenses.

"Net Sanitary Sewer Revenues Available for Debt Service" means, for the period of determination, Sanitary Sewer Revenues less Current Sanitary Sewer Expenses.

"Ordinance" means this Ordinance as from time to time amended in accordance with its terms.

"Original Principal Amount" means the original principal amount of the Bonds as set forth in the Terms Ordinance.

"Outstanding" means, as of the date of determination, all Bonds issued and delivered under this Ordinance, except:

(1) Bonds cancelled by the Paying Agent or delivered to the Paying Agent for cancellation;

(2) Bonds for the payment of the principal or redemption price of and interest on which money or Defeasance Securities are held under Section 1101;

(3) Bonds in exchange for which, or in lieu of which, other Bonds have been registered and delivered pursuant to this Ordinance; and

(4) Bonds allegedly mutilated, destroyed, lost, or stolen and paid under Section 208.

"Owner" means the Bondowner.

"Outstanding Parity Bonds" means collectively, the Series 1999A Bonds, the Series 2000A Bonds, the Series 2000B Bonds, the Series 2001A Bonds, the Series 2001B Bonds, the Series 2002D Bonds, the Series 2002J Bonds, the Series 2004A Bonds and the Bonds.

"Outstanding Parity Bond Ordinance" means collectively, the Series 1999A Ordinance, the Series 2000A Ordinance, the Series 2000B Ordinance, the Series 2001A Ordinance, the Series 2001B Ordinance, the Series 2002D Ordinance, the Series 2002J Ordinance, the Series 2004A Ordinance and this Ordinance.

"Outstanding Senior Bonds" means collectively, the Series 1992B Bonds, the Series 1995A Bonds, the Series 1996A Bonds, the Series 1997A Bonds and the Series 1998A Bonds.

"Outstanding Senior Bond Ordinance" means collectively, the Series 1992B Ordinance, the Series 1995A Ordinance, the Series 1996A Ordinance, the Series 1997A Ordinance and the Series 1998A Ordinance.

"Parity Bonds" means the Outstanding Parity Bonds and any parity bonds issued under Article IX payable from the Net Sanitary Sewer Revenues on a parity basis with the Bonds.

"Parity Ordinances" means the Outstanding Parity Bond Ordinance and the Ordinances under which any other Parity Bonds are issued.

Permitted Investments means any of the following securities, if and to the extent the same are at the time legal for investment of the moneys held in the funds and accounts listed in Section 401 hereof:

(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. Govt. Agency Coupon and Zero Coupon Securities. Bullet coupon bonds with no embedded options.

(ii) U.S. Govt. Agency Discount Notes. Purchased at a discount with maximum maturities of one (1) year.

(iii) U.S. Govt. Agency Callable Securities. Restricted to securities callable at par only with maximum final maturities of five (5) years.

(iv) U.S. Govt. 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. Restricted to securities with maximum final maturities of three (3) years.

(v) U.S. Govt. 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. Govt. Agency Mortgage Backed Securities (MBS, CMO, Pass-Thru Securities). Restricted to securities with final maturities of three (3) years or less or have the final projected payment no greater than three (3) 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 Bond Market Associations 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 Investor Services, Inc. or Standard and Poors Corporation.

(e) Commercial Paper. Commercial paper issued by domestic corporations, which has received the highest rating issued by Moodys Investor Services, Inc. or Standard and Poors Corporation. 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 and 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 and Poors or Moodys.

(h) Any full faith and credit obligations of any school district in Kansas City, Missouri rated AA or Aa2 by Standard and 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 and 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.

References to particular ratings and rating categories in this definition are applicable only at the time of purchase of the Permitted Investment.

"Purchase Agreement" means the Purchase Agreement dated as of December 1, 2004, by and among the City, the Authority and DNR.

"Record Date" means the 15th day (whether or not a Business Day) of the calendar month next preceding the applicable Interest Payment Date.

"Revolving Fund Agreement" means the Revolving Fund Agreement dated as of December 1, 2004, by and among the City, the Authority and DNR.

"Revolving Fund Loan" means the nointerest loan to the City by DNR from The Water and Wastewater Loan Revolving Fund or The Water and Wastewater Loan Fund under the Revolving Fund Agreement.

"Sanitary Sewer Depreciation and Replacement Account" means the fund or account created or ratified and confirmed by Section 401.

"Sanitary Sewer Revenues" means all income and revenues derived by the City from the Sanitary Sewer System, determined in accordance with generally accepted accounting principles, including any amounts deposited in the Sewer Fund of the Combined System Revenue Fund, but excluding any profits or losses on the early extinguishment of debt or the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business.

"Sanitary Sewer Surplus Account" means the fund or account created or ratified and confirmed by Section 401.

"Sanitary Sewer System or System means the Citys sanitary sewerage system, including sanitary sewers, combined sewers, lift and pumping stations, treatment plants, with the appurtenances necessary, useful and convenient for the collection, treatment, purification and disposal of the sewage and shall include any part of the system located outside of the corporate limits of the City, and shall also include all extensions and improvements in and to the system hereafter made or acquired by the City, wherever located.

Sanitary Sewer System Revenue Bonds means collectively the Outstanding Senior Bonds, the Bonds, Parity Bonds and all other revenue bonds which are payable from the Net Sanitary Sewer Revenues.

"Sewer Fund" means the fund or account created or ratified and confirmed by Section 401.

"SRF Program" means, collectively, the SRF Drinking Water Program and the Missouri Leveraged State Water Pollution Control Revolving Fund Program.

"SRF Program Bonds" means the Outstanding Senior Bonds, the Outstanding Parity Bonds (other than the Series 2001A Bonds, the Series 2002D Bonds and the Series 2004A Bonds), the Bonds and any other Sanitary Sewer System Revenue Bonds issued in connection with the City's participation in the SRF Program.

"SRF Subsidy" means the amount of investment earnings which will accrue on the Reserve Account during each Fiscal Year (taking into account scheduled transfers from the Reserve Account which will occur upon the payment of principal on the Authority Program Bonds and assuming that the construction for the applicable project has been completed), if the Reserve Security is equal to the Reserve Percentage of the principal amount of the SRF Program Bonds outstanding, the Reserve Account is invested in an investment agreement at a fixed interest rate during the calculation period and earnings are reduced by the Administrative Fee payable to DNR. Administrative Fee, Reserve Account, Reserve Percentage and Reserve Security as used in this definition have the respective meanings set forth in the bond indentures for the applicable Authority Program Bonds.

"State" means the State of Missouri.

"Surplus Account" means the fund or account created or ratified and confirmed by Section 401.

"Terms Certificate" means the Terms Certificate of the City, dated the date of passage of this Ordinance, related to a purchase contract for the Authority Bonds.

"Terms Ordinance" means an ordinance of the City adopted prior to the issuance of the Bonds, which establishes the principal amounts, maturities, interest rates and sinking fund redemption provisions for the Bonds.

"Trustee" means the trustee acting at any time as Trustee under the Indenture.

Section 102. Additional Provisions; Certain Terms and Provisions Not Applicable Under Certain Circumstances . References in this Ordinance to the following words and terms are applicable only if the Authority purchases the Bonds:

Administrative Fee Calculation Date Purchase Agreement

Administrative Fee Revolving Fund Loan

Authority Revolving Fund Agreement

Authority Bonds SRF Program

Authority Program Bonds SRF Program Bonds

Bondowner SRF Subsidy

DNR Terms Certificate

Trustee

The provisions of Sections 210(b), 211, 403, 501, 502, 602 and 701(a) are applicable only if the Authority purchases the Bonds.

ARTICLE II

aUTHORIZATION OF BONDS

Section 201. Authorization of Bonds . The Bonds are authorized and directed to be issued in the Original Principal Amount for the purposes of this Ordinance.

Section 202. Security for Bonds .

(a) The Bonds are special, limited obligations of the City payable solely from, and secured by a pledge of, the Net Sanitary Sewer Revenues. The taxing power of the City is not pledged to the payment of the Bonds. The Bonds do not constitute a general obligation of the City or an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction.

(b) The Bonds are junior and subordinate to the Outstanding Senior Bonds with respect to payment of principal and interest from the Net Sanitary Sewer Revenues. The Bonds are not payable from the Combined System Revenues derived from the stormwater portion of the Combined System. In the event of any default in the payment of the Outstanding Senior Bonds, the Combined System Revenues will be applied solely to the payment of the principal of and interest on the Outstanding Senior Bonds until the default is cured. The Bonds are issued on a parity with the Outstanding Parity Bonds.

Section 203. Description of Bonds . The Bonds consist of fully registered bonds without coupons, numbered from R1 consecutively upward, in the denomination of $1,000 or any integral multiple of $1,000. The Bonds will be issued in substantially the form as follows with appropriate insertions and deletions as are approved by the Director of Finance, which approval will be conclusively evidenced by the Director of Finance's signature on the Bonds, and will be registered, transferred and exchanged as provided in Section 206. The Bonds are dated the Dated Date as set forth on the Bonds. The Bonds become due on the dates and in the principal amounts (subject to optional and mandatory redemption prior to maturity as provided in Article III) and bear interest at the annual rates set forth in the Terms Ordinance. Interest is computed on the basis of a 360day year of twelve 30day months from the Dated Date or from the most recent Interest Payment Date to which interest has been paid or provided for and is payable on each Interest Payment Date:

FORM OF BOND

[THIS BOND IS TRANSFERABLE ONLY TO ANY SUCCESSOR TO THE

STATE ENVIRONMENTAL IMPROVEMENT AND ENERGY

RESOURCES AUTHORITY OR ITS ASSIGNS]

UNITED STATES OF AMERICA

STATE OF MISSOURI

Registered Registered

No. R $________

CITY OF KANSAS CITY, MISSOURI

SANITARY SEWER SYSTEM REVENUE BOND

(STATE REVOLVING FUND PROGRAM)

SERIES 2004H

Interest Rates Maturity Dates Dated Date

See Schedule I See Schedule I December 9, 2004

REGISTERED OWNER: STATE ENVIRONMENTAL IMPROVEMENT AND ENERGY

RESOURCES AUTHORITY

PRINCIPAL AMOUNT: **_____________________ DOLLARS**

THE CITY OF KANSAS CITY, MISSOURI, a city and political subdivision of the State of Missouri (the "City"), for value received, hereby promises to pay to the Owner shown above, or registered assigns, the Principal Amount shown above in installments in the amounts and on the Maturity Dates referenced above, and to pay interest thereon at the annual Interest Rates referenced above (computed on the basis of a 360day year of twelve 30day months), payable semiannually on January 1 and July 1 in each year, commencing July 1, 2005 (each an "Interest Payment Date"), from the Dated Date shown above or from the most recent Interest Payment Date to which interest has been paid or duly provided for until the Principal Amount has been paid.

The principal of and redemption premium, if any, on this Bond will be paid at maturity or upon earlier redemption to the person in whose name this Bond is registered at the maturity or redemption date, upon presentation and surrender of this Bond at the principal payment office of UMB BANK, N.A. in the City of St. Louis, Missouri (the "Paying Agent"). The interest payable on this Bond on any Interest Payment Date will be paid to the person in whose name this Bond is registered on the registration books maintained by the Paying Agent at the close of business on the Record Date. The Record Date is the fifteenth day (whether or not a business day) of the calendar month next preceding the Interest Payment Date. The principal of and redemption premium, if any, and interest on the Bonds is payable by electronic transfer in immediately available federal funds to a bank in the continental United States of America pursuant to instructions from the Owner received by the Paying Agent prior to the Record Date. The principal of, redemption premium, if any, and interest on this Bond is payable in lawful money of the United States of America.

This Bond is one of a duly authorized series of bonds of the City designated "Sanitary Sewer System Revenue Bonds (State Revolving Fund Program) Series 2004H" aggregating the principal amount of $10,500,000 (the "Bonds"), issued by the City for the purpose of extending and improving the City's Sanitary Sewer System (the "Sanitary Sewer System"), under the authority of and in full compliance with Chapter 250 of the Revised Statutes of Missouri and pursuant to an election duly held in the City and Ordinance No. ______ and Ordinance No. __________ adopted by the governing body of the City (the "Ordinance").

Certain Bonds are subject to mandatory redemption and payment prior to maturity pursuant to the mandatory redemption requirements of the Ordinance, at a redemption price equal to 100% of the principal amount plus accrued interest to the redemption date.

At the option of the City, certain Bonds may be called for redemption and payment prior to maturity in whole or in part on any date with the consent of the Bondowner, as provided in the Ordinance.

Bonds will be optionally redeemed in part in integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner) from the maturities selected by the City with the prior written consent of the Bondowner. Upon redemption, the sinking fund redemption amounts for each maturity will be proportionately reduced, subject to rounding to integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner). The City will give written notice to the Paying Agent, as trustee (the "Trustee"), designating the amount of each maturity redeemed and the reduction in each sinking fund installment, subject to verification by the Trustee. In exercising its option to redeem the Bonds, the City will deposit with the Paying Agent, in addition to the principal of, premium, if any, and interest on the Bonds, an additional premium equal to 30days' interest on the Bonds to be redeemed for an additional 30day period.

If all of the Bonds are held by the Bondowner, no notice of the mandatory sinking fund redemption of Bonds is required to be given. If the Bonds are held by any Owner other than the Bondowner or if Bonds are being optionally redeemed, notice of redemption will be given, unless waived, by mailing a redemption notice by registered or certified mail at least 45 days prior to the date fixed for redemption, to the Owner of each Bond to be redeemed at the address shown on the Bond Register. If notice of redemption has been given or waived, the Bonds or portions of Bonds called for redemption will become due and payable on the redemption date at the redemption price specified in the notice. From and after the redemption date the Bonds called for redemption will cease to bear interest date unless the City defaults in the payment of the redemption price.

The Bonds are limited obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the Net Sanitary Sewer Revenues (as defined in the Ordinance). The taxing power of the City is not pledged to the payment of the Bonds either as to principal or interest. The Bonds do not constitute a general obligation of the City or an indebtedness of the City within the meaning of any constitutional or statutory provision, limitation or restriction. Under the conditions set forth in the Ordinance, the City has the right to issue additional parity bonds payable from, and secured by, the Net Sanitary Sewer Revenues.

The Bonds are junior and subordinate to the Outstanding Senior Bonds with respect to payment of principal and interest from the Net Sanitary Sewer Revenues. The Bonds are not payable from the stormwater portion of the Combined System Revenues (as defined in the Ordinance). In the event of any default in the payment of the Outstanding Senior Bonds, the Combined System Revenues will be applied solely to the payment of the principal of and interest on the Outstanding Senior Bonds until the default is cured. The Bonds are issued on a parity with respect to payment of principal and interest from the Net Sanitary Sewer Revenues and in all other respects with the Outstanding Parity Bonds (as defined in the Ordinance).

The City covenants with the Owner of this Bond to keep and perform all covenants and agreements contained in the Ordinance, and the City will fix, establish, maintain and collect rates, fees and charges for the use and services furnished by or through the Sanitary Sewer System to produce Sanitary Sewer Revenues sufficient to pay the operation and maintenance costs of the Sanitary Sewer System, pay the principal of and interest on the Bonds and provide reasonable and adequate reserve funds. Reference is made to the Ordinance for a description of the agreements made by the City with respect to the collection, segregation and application of the Sanitary Sewer Revenues, the nature and extent of the security for the Bonds, the rights, duties and obligations of the City with respect to the Bonds, and the rights of the Owners.

The Bonds are issuable in the form of fully registered Bonds without coupons in the denomination of $1,000 or any integral multiple of $1,000.

This Bond may be transferred or exchanged, as provided in the Ordinance, only upon the registration books kept for that purpose at the abovementioned office of the Paying Agent. Upon surrender of any Bond at the principal payment office of the Paying Agent, the Paying Agent will transfer or exchange the Bond for a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount as the Bond which was presented for transfer or exchange. All Bonds presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Owner or by the Owner's authorized agent. All Bonds presented for transfer or exchange must be surrendered to the Paying Agent for cancellation. For every exchange or transfer of Bonds the City or the Paying Agent may levy a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid for the exchange or transfer. The charge must be paid by the person requesting the exchange or transfer. Payment of the charge is a condition precedent to the exchange or transfer.

This Bond will not be valid or be entitled to any security or benefit under the Ordinance until the Certificate of Authentication has been executed by the Paying Agent.

IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to the issuance of the Bonds have existed, happened and been performed in due time, form and manner as required by law, and that before the issuance of the Bonds, provision has been duly made for the collection, segregation and application of the income and revenues of the Sanitary Sewer System as provided in the Ordinance.

IN WITNESS WHEREOF, the City of Kansas City, Missouri, has executed this Bond by causing it to be signed by the manual or facsimile signature of its Mayor, attested by the manual or facsimile signature of its City Clerk, and countersigned by the manual or facsimile signature of its Director of Finance, with its official seal affixed or imprinted and has caused this Bond to be dated the Dated Date shown above.

CITY OF KANSAS CITY, MISSOURI

By: ___________________________________

Mayor

(SEAL)

ATTEST:

___________________________________

City Clerk

COUNTERSIGNED

___________________________________

Director of Finance

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Bonds of the issue described in the withinmentioned Ordinance.

Registration Date:

UMB BANK, N.A., Paying Agent

Authorized Signatory

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RECORD OF PRINCIPAL PAYMENTS AND PREPAYMENTS

Under the provisions of the Ordinance, payments of the principal installments of this Bond and partial prepayments of the principal of this Bond may be made directly to the Bondowner without surrender of this Bond to the Paying Agent. Accordingly, any purchaser or other transferee of this Bond should verify with the Paying Agent the principal of this Bond outstanding prior to any purchase or transfer, and the records of the Paying Agent are conclusive.

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ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

UMB BANK, N.A.

Print or Type Name of Transferee

the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints UMB Bank, N.A. agent to transfer the within Bond on the registration books kept by the Paying Agent, with full power of substitution in the premises.

STATE ENVIRONMENTAL IMPROVEMENT

AND ENERGY RESOURCES AUTHORITY

Dated: By:

Charles D. Banks, Chairman

NOTICE: The signature to this assignment must correspond with the name of the Owner as it appears upon the face of the within Bond in every particular.

Signature Guaranteed By:

Authorized Signatory

UMB Bank, N.A.

NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution as defined by SEC Rule 17Ad15 (17 CFR 240.17Ad15).

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SCHEDULE I TO

CITY OF KANSAS CITY, MISSOURI

SANITARY SEWER SYSTEM REVENUE BOND

(STATE REVOLVING FUND PROGRAM)

SERIES 2004H

[insert Maturity Schedule from Terms Ordinance]

Section 204. Designation of Paying Agent . The Trustee is designated as the City's paying agent for the payment of the Bonds and bond registrar for the registration, transfer and exchange of Bonds (the "Paying Agent"). The Paying Agent will not be paid any additional fees for its services under this Ordinance.

Section 205. Method and Place of Payment of Bonds .

(a) Payment of the Bonds will be made with any coin or currency that is legal tender for the payment of debts due the United States of America on the payment date.

(b) Each payment of principal of and redemption premium, if any, on each Bond will be made at maturity or upon earlier redemption to the Owner shown in the Bond Register, upon presentation and surrender of the Bond at the principal payment office of the Paying Agent. The interest on the Bonds will be paid on each Interest Payment Date to the person in whose name this Bond is registered on the registration books maintained by the Paying Agent at the close of business on the Record Date. The principal of and redemption premium, if any, and interest on the Bonds is payable by electronic transfer in immediately available federal funds to a bank in the continental United States of America pursuant to instructions from any Owner received by the Paying Agent prior to the Record Date.

(c) The Paying Agent will keep a record of payment of principal of, redemption premium, if any, and interest on all Bonds and, at least annually at the request of the City, will forward a copy or summary of the record of payments to the City.

Section 206. Registration, Transfer and Exchange of Bonds .

(a) The City will cause the Paying Agent to keep the Bond Register. Each Bond when issued will be registered in the name of the Owner on the Bond Register. Bonds will be transferred and exchanged only upon the Bond Register.

(b) Upon surrender of any Bond at the principal office of the Paying Agent, the Paying Agent will transfer or exchange the Bond for a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount as the Bond which was presented for transfer or exchange. All Bonds presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Owner or by the Owner's authorized agent. All Bonds presented for transfer or exchange must be surrendered to the Paying Agent for cancellation.

(c) For every exchange or transfer of Bonds the City or the Paying Agent may levy a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid for the exchange or transfer. The charge must be paid by the person requesting the exchange or transfer. Payment of the charge is a condition precedent to the exchange or transfer.

(d) The City and the Paying Agent will treat the person in whose name any Bond is registered as the absolute owner of the Bond, whether or not payment of the Bond is overdue, for the purpose of receiving payment of the principal of, redemption premium, if any, and interest on the Bond and for all other purposes. All payments made to any Owner or upon the Owner's order will be valid and effectual to satisfy and discharge the City's liability for payment of the Bond to the extent of the sum or sums paid. Neither the City nor the Paying Agent will be affected by any notice to the contrary.

(e) At reasonable times and under reasonable rules established by the Paying Agent, the Owners of 25% or more in principal amount of the Outstanding Bonds, or their representative designated in a manner satisfactory to the Paying Agent, may inspect and copy the Bond Register.

Section 207. Execution, Authentication and Delivery of Bonds .

(a) Each Bond must be signed by the manual or facsimile signature of the Mayor, attested by the manual or facsimile signature of the City Clerk and countersigned by the Director of Finance, and have the official seal of the City affixed or imprinted. If any officer whose manual or facsimile signature appears on any Bond ceases to be an officer before the delivery of any Bond signed by the officer, the manual or facsimile signature on the Bond will be valid and sufficient for all purposes of this Ordinance. References throughout to the Director of Finance shall include any Acting Director of Finance.

(b) The Mayor, the City Clerk and the Director of Finance are directed to prepare and execute the Bonds as specified in this Article, and when executed, to deliver the Bonds to the Paying Agent for authentication. Upon authentication, the Paying Agent will deliver the Bonds to the Bondowner, upon payment of the purchase price for the Bonds.

(c) Each Bond will be authenticated by any authorized officer or employee of the Paying Agent. No Bond is entitled to any security or benefit under this Ordinance or be valid or obligatory for any purpose until authenticated by the Paying Agent.

Section 208. Mutilated, Destroyed, Lost and Stolen Bonds .

(a) If (i) any mutilated Bond is surrendered to the Paying Agent, or the City and the Paying Agent receive evidence to their satisfaction of the mutilation, destruction, loss or theft of any Bond, and (ii) there is delivered to the City and the Paying Agent security or indemnity as required by them, in the absence of notice to the City or the Paying Agent that the Bond has been acquired by a bona fide purchaser, the City will execute and the Paying Agent will register and deliver, in exchange for or in lieu of any mutilated, destroyed, lost or stolen Bond, a new Bond of the same maturity and of like tenor and principal amount. If the Bond has become or is about to become due, the City may pay the Bond instead of issuing a new Bond.

(b) Upon the issuance of any new Bond under this Section, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge imposed and any other expenses (including the fees and expenses of the Paying Agent) connected with the issuance of the Bond.

(c) Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Bond will constitute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost or stolen Bond is enforceable by anyone at any time, and will be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds.

Section 209. Cancellation and Destruction of Bonds Upon Payment . All Bonds which have been paid or redeemed or which have otherwise been surrendered to the Paying Agent, either at or before maturity, will be cancelled immediately upon the payment or redemption and the Paying Agent's receipt of the Bonds. Cancelled Bonds will be periodically destroyed by the Paying Agent in accordance with the customary practice of the Paying Agent and applicable retention laws.

Section 210. Sale of the Bonds; Authorization and Execution of Documents; Professional Services..

(a) The sale of the Bonds in accordance with the terms of the Notice of Bond Sale dated November 1, 2004, is approved. The Director of Finance is authorized to approve the award of the Bonds for the best bid received in accordance with the Notice of Bond Sale.

(b) The City is authorized to enter into the Purchase Agreement and the Revolving Fund Agreement, in substantially the forms presented to the City. The Director of Finance is authorized to execute the Purchase Agreement, the Revolving Fund Agreement and the Terms Certificate for and on behalf of and as the act and deed of the City, with changes approved by the Director of Finance, which approval will be conclusively evidenced by the Director of Finance's signature. The Mayor and the Director of Finance are further authorized and directed to execute other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance. The City Clerk is authorized and directed to attest the execution of the Purchase Agreement and the Revolving Fund Agreement and any other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance, the Terms Ordinance and the Terms Certificate.

(c) The City has selected, and by this Ordinance retains, Gilmore & Bell, P.C., Kansas City, Missouri, and The Martinez Law Firm LLC, Kansas City, Missouri, as co-bond counsel in connection with the issuance of the Bonds.

Section 211. Administrative Fee and Other Fees; Revolving Fund Loan .

(a) Subject to Section 202, the City will pay to the Trustee for deposit in the Administrative Expense Fund, within 30 days after receipt of a statement from the Trustee (i) the Administrative Fee, (ii) the City's Allocable Portion of the Master Trustee's Disclosure Fee, and (iii) the City's Allocable Portion of the Trustee's Fee.

(b) The City is authorized to receive the Revolving Fund Loan under the terms of the Revolving Fund Agreement. By this Ordinance, the City assigns the proceeds of the Revolving Fund Loan, as and when received, to the Authority.

aRTICLE III

REDEMPTION OF BONDS

Section 301. Mandatory Sinking Fund Redemption . The Term Bonds in the Terms Ordinance will be redeemed in part on the dates and in the principal amounts in the Terms Ordinance, at a redemption price equal to the percentage(s) set forth therein of the principal amount redeemed plus accrued interest to the redemption date.

Section 302. Optional Redemption . At the option of the City, certain Bonds may be called for redemption and payment prior to maturity in whole or in part on the dates and at the redemption prices set forth in the Terms Ordinance. Bonds will be optionally redeemed in part in integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner) from the maturities selected by the City with the prior written consent of the Bondowner. Upon redemption, the sinking fund redemption amounts for each Term Bond in the Terms Ordinance will be proportionately reduced (unless otherwise directed by the City with the prior written consent of the Bondowner), subject to rounding to integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner). The City will give written notice to the Trustee designating the amount of each maturity redeemed and the reduction in each sinking fund redemption amount, subject to verification by the Trustee. In exercising its option to redeem the Bonds, the City will deposit with the Paying Agent, prior to the redemption date, an additional premium equal to 30days interest on the Bonds to be redeemed.

Section 303. Selection of Bonds to Be Redeemed . If all Outstanding Bonds are held by the Bondowner, the redemption of the Bonds in part will be reflected in the records maintained by the Paying Agent. If the Bonds are held by any Owner other than the Bondowner, the City, with the prior written consent of the Paying Agent and the Owners, will establish procedures for the selection of Bonds upon partial redemption.

Section 304. Notice and Effect of Call for Redemption .

(a) If all Outstanding Bonds are held by the Bondowner, no notice of the mandatory sinking fund redemption of Bonds is required to be given. If the Bonds are held by any Owner other than the Bondowner or if Bonds are being optionally redeemed, notice of redemption will be given in the manner described below. Unless waived by any Owner of Bonds to be redeemed, the Paying Agent, on behalf of the City, will give notice by mailing a redemption notice by registered or certified mail, at least 45 days prior to the date fixed for redemption, to the Owner of Bonds to be redeemed at the address shown on the Bond Register.

(b) All redemption notices will be dated and include the following information:

(1) the redemption date,

(2) the redemption price, consisting of the principal amount, redemption premium, if any, and interest to the redemption date,

(3) if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed,

(4) a statement that on the redemption date the redemption price will become due and payable upon each Bond or portion of a Bond called for redemption, and that interest ceases to accrue on the redeemed amount from and after the redemption date, and

(5) the address of the principal office of the Paying Agent where the Bonds must be surrendered for payment of the redemption price.

(c) If notice of redemption has been given or waived, the Bonds or portions to be redeemed will become due and payable on the redemption date at the redemption price specified in the notice. From and after the redemption date (unless the City defaults in the payment of the redemption price), the called Bonds will cease to bear interest. Upon the surrender of Bonds for payment of the redemption price in accordance with the notice, the Paying Agent will pay the redemption price to the applicable Owners. Upon the Paying Agent's receipt of any Bond being partially redeemed, the Paying Agent will prepare a new Bond or Bonds of the same maturity in the amount of the unpaid principal.

aRTICLE IV

ratification OF FUNDS AND ACCOUNTS

Section 401. Ratification of Funds and Accounts .

(a) The separate funds and accounts ratified and confirmed by the Series 1992 Ordinance and redesignated the Combined Sewer System Revenue Fund (the "Combined System Revenue Fund") and the Combined System Surplus Account (the "Combined System Surplus Account"), are ratified and confirmed.

(b) The separate accounts created or acknowledged by the Outstanding Senior Bond Ordinance are hereby acknowledged.

(1) The Series 1998A Reserve Account, the Series 1997A Reserve Account, the Series 1996A Reserve Fund, the Series 1995A Reserve Fund and the Series 1992B Reserve Account are collectively the "Outstanding Senior Bond Debt Service Reserve Account"; and

(2) The Series 1998A Interest Account, the Series 1998A Principal Account, the Series 1998A Debt Service Account, the Series 1997A Interest Account, the Series 1997A Principal Account, the Series 1997A Debt Service Account, the Series 1996A Interest Account, the Series 1996A Principal Account, the Series 1996A Debt Service Fund, the Series 1995A Interest Account, the Series 1995A Principal Account, the Series 1995A Debt Service Fund, the Series 1992B Interest Account, the Series 1992B Principal Account and the Series 1992B Debt Service Account are collectively the "Outstanding Senior Bond Debt Service Account".

(c) The separate accounts and funds created or acknowledged by the Outstanding Parity Bond Ordinance are hereby acknowledged.

Section 402. Administration of Funds and Accounts .

(a) The Combined System Revenue Fund, the Combined System Surplus Account and the Combined System Depreciation and Replacement Account will be maintained and administered by the City while any of the Bonds, the Outstanding Senior Bonds and the Outstanding Parity Bonds are Outstanding.

(b) The separate funds and accounts created or acknowledged under the Outstanding Senior Bond Ordinance will be maintained and administered by the City while the applicable series of bonds, for which such funds and accounts were created, are Outstanding, all in accordance with the terms of the Outstanding Senior Bond Ordinance.

(c) The Sewer Fund, the Sanitary Sewer Depreciation and Replacement Account and the Sanitary Sewer Surplus Account, each within the Combined System Revenue Fund, will be maintained and administered by the City while any of the Bonds and the Outstanding Parity Bonds are Outstanding.

(d) The other separate funds and accounts created or acknowledged under the Outstanding Parity Bond Ordinance will be maintained and administered by the City while the applicable series of bonds, for which such funds and accounts were created, are Outstanding, all in accordance with the terms of the Outstanding Parity Bond Ordinance.

Section 403. Acknowledgment of Accounts .

(a) The City acknowledges the creation of the following accounts for the City held by the Trustee under the Indenture:

(1) Construction Account;

(2) Reserve Account;

(3) State Match Portion Debt Service Account;

(4) Leveraged Portion Debt Service Account;

(5) Principal Account; and

(6) Interest Account.

(b) The City further acknowledges that certain amounts will be transferred to the Costs of Issuance Fund and the Administrative Expense Fund under the Indenture in satisfaction of certain City obligations under this Ordinance, the Purchase Agreement and the Revolving Fund Agreement.

ARTICLE V

aPPLICATION OF BOND PROCEEDS

Section 501. Disposition of Bond Proceeds . The proceeds received from the sale of the Bonds, including any premium and accrued interest, will be deposited simultaneously with the delivery of the Bonds, as follows:

(1) into the Costs of Issuance Fund an amount equal to the Costs of Issuance in the Terms Ordinance;

(2) into the Interest Account the accrued interest, if any, on the Bonds; and

(3) into the Construction Account the remaining proceeds of the Bonds.

Section 502. Assignment and Application of Moneys in the Construction Account .

(a) By this Ordinance, the City assigns the proceeds of the Bonds held in the Construction Account to the Bondowner to secure the City's obligations under this Ordinance. Moneys in the Construction Account will be disbursed to the City for the sole purpose of paying the cost of extending and improving the Sanitary Sewer System in accordance with the plans and specifications prepared by the Consulting Engineer, previously approved by the City and DNR and on file in the office of the City Clerk, including any alterations in or amendments to the plans and specifications approved by the City and DNR with the advice of the Consulting Engineer. A portion of the moneys in the Construction Account will be applied to the repayment of the Loan.

(b) Requisitions will be submitted for withdrawals from the Construction Account in accordance with Article III of the Purchase Agreement.

aRTICLE VI

aPPLICATION OF REVENUES

Section 601. Combined System Revenue Fund and Sewer Fund .

(a) The City covenants and agrees that prior to the termination of Section 601A, all Combined System Revenues will be deposited into the Combined System Revenue Fund when received. The Combined System Revenues will be segregated from all other moneys, revenues, funds and accounts of the City.

(b) All moneys deposited in the Combined System Revenue Fund will be designated as having been derived from the ownership and operation of either the stormwater sewers portion of the Combined System or the Sanitary Sewer System. All Sanitary Sewer Revenues will be deposited in the Sewer Fund. All revenues of the stormwater sewers portion of the Combined System will be transferred to the stormwater fund.

(c) From and after the termination of Section 601A, the Sewer Fund will be administered and applied solely for the purposes and in the manner provided in this Ordinance and any Parity Ordinance.

Section 601A. Application of Moneys Under Outstanding Senior Bond Ordinance.

(a) The provisions of this Section 601A will remain in effect as long as the Outstanding Senior Bonds remain outstanding within the meaning of the Outstanding Senior Bond Ordinance.

(b) Prior to the payment in full of the Outstanding Senior Bonds, the City will apply moneys in the Sewer Fund on the first day of each month, the amounts required by the Outstanding Senior Bond Ordinance in the order as follows: first, the estimated cost of operating and maintaining the Combined System during the ensuing 30-day period (after the application of moneys in the stormwater fund to the operation and maintenance of the stormwater sewers portion of the Combined System), second, to the Outstanding Senior Bond Debt Service Account, and third, to the Outstanding Senior Bond Debt Service Reserve Account.

(c) If moneys in the Sewer Fund are not sufficient to make the transfers described in clauses SECOND and THIRD of paragraph (b), the City will apply moneys in the stormwater fund.

Section 602. Application of Moneys in Sanitary Sewer System Funds and Accounts .

(a) After the application of moneys under Section 601A, the City will apply moneys in the Sewer Fund on the dates, in the amounts and in the order as follows:

(1) after the termination of Section 601A, on the first day of each month the estimated cost of operating and maintaining the Sanitary Sewer System during the month;

(2) on the 25th day of each month, on a parity basis, (i) to the Outstanding Parity Bond Debt Service Account, on a parity basis, the amount required under the Outstanding Parity Bond Ordinance for the next succeeding month, and (ii) the following amounts to the Trustee for credit to the Interest Account and the Principal Account:

(A) on January 25, 2005 to and including June 25, 2005, to the Interest Account 1/6 of the amount of interest on the Bonds due on July 1, 2005 less accrued interest, if any, deposited to the Interest Account; and on July 25, 2005 and thereafter 1/6 of the amount of interest due on the Bonds on the next Interest Payment Date, with these monthly payments to be reduced as follows:

(I) the balance in the State Match Portion Debt Service Account and the Leveraged Portion Debt Service Account on an Interest Payment Date after the payment of the principal of and interest due on the Authority Bonds on the Interest Payment Date will be credited against the next succeeding monthly payment or payments; and

(II) the projected investment earnings on the Construction Account and the Reserve Account for the current Interest Period and actual investment earnings for the prior Interest Period reduced by estimated earnings for the preceding Interest Period that were previously credited, as set forth in the Trustee's semiannual notice to the City, will be credited in equal installments against the monthly payments due prior to the next Interest Payment Date; and

(B) on January 25, 2005, and each monthly payment date thereafter, to the Principal Account 1/12 of the amount of principal due on the Bonds on January 1, 2006; and on January 25, 2006, and on each monthly payment date thereafter to the Principal Account 1/12 of the amount of principal due on the Bonds on the next succeeding principal payment date, whether at maturity or upon mandatory sinking fund redemption. If the Initiation of Operation specified in the certificate delivered by the City under Section 3.5 of the Purchase Agreement is earlier than the expected Initiation of Operation on the City's signature page to the Purchase Agreement, (i) the first monthly installment of principal will be paid no later than the monthly payment date which is not more than 12 months after the Initiation of Operation, and (ii) on the monthly payment date which is not more than 20 years after the Initiation of Operation, all remaining unpaid principal installments will be paid;

(3) on the dates required by Section 211(a), to the Trustee, for deposit to the Administrative Expense Fund, the amount required to pay the Administrative Fee, the City's Allocable Portion of the Trustee's Fee and the City's Allocable Portion of the Master Trustee's Disclosure Fee;

(4) on the first day of each month, on a parity basis, (i) to the Outstanding Parity Bond Debt Service Reserve Account as required by the Outstanding Parity Bond Ordinance and, (ii) in the event the Trustee has withdrawn moneys from the Reserve Account (other than investment earnings or the amount transferred from the Reserve Account upon the payment of principal on the Bonds), to the Reserve Account all available moneys until the Reserve Account has been replenished pursuant to the Indenture;

(5) on the first day of each month the remaining balance to the Sanitary Sewer Surplus Account.

(b) Except as provided in Section 603, moneys in the Sanitary Sewer Depreciation and Replacement Account will be used by the City for the purpose of making replacements and repairs to the Sanitary Sewer System in order to keep the Sanitary Sewer System in good repair and working order and to assure the continued effective and efficient operation of the Sanitary Sewer System. This provision will not be construed to modify any more restrictive provision of the Outstanding Parity Bond Ordinance for the use of moneys in the Sanitary Sewer Depreciation and Replacement Account.

(c) Moneys in the Sanitary Sewer Surplus Account are to be expended for the following purposes as determined by the City:

(1) paying the cost of the operation, maintenance and repair of the Sanitary Sewer System to the extent necessary after the application of the moneys held in the Sanitary Sewer Depreciation and Replacement Account;

(2) paying the cost of extending, enlarging or improving the Sanitary Sewer System;

(3) preventing default in, anticipating payments into or increasing the amounts in the accounts confirmed or established in Section 401, the Principal Account, the Interest Account, the Reserve Account or the Sanitary Sewer Depreciation and Replacement Account, or establishing or increasing the amount of any debt service account or debt service reserve account created by the City for the payment of any Sanitary Sewer System Revenue Bonds subsequently issued;

(4) redeeming and paying prior to maturity, or, at the option of the City, purchasing in the open market at the best price obtainable not exceeding the call price (if any bonds are callable), the Bonds, the Outstanding Senior Bonds (with the prior written consent of DNR), the Outstanding Parity Bonds or any other Sanitary Sewer System Revenue Bonds of the City hereafter issued under the conditions hereinafter specified and standing on a parity with the Bonds, including principal, redemption premium, if any, and interest;

(5) making payments on capital lease obligations; or

(6) any other lawful purpose in connection with the operation of the Sanitary Sewer System and beneficial to the Sanitary Sewer System.

(d) No moneys derived by the City from the Sanitary Sewer System will be diverted to the general governmental or municipal functions of the City.

Section 603. Deficiency of Payments into Funds and Accounts .

(a) If the Sanitary Sewer Revenues are insufficient to make any payment on any date specified in this Article, the City will make good the amount of the deficiency by making additional payments out of the first available Sanitary Sewer Revenues for application in the order specified in Section 602.

(b) If the moneys in the Outstanding Senior Bond Debt Service Account, the Outstanding Senior Bond Debt Service Reserve Account, the Outstanding Parity Bond Debt Service Account, the Outstanding Parity Bond Debt Service Reserve Account, the Principal Account, the Interest Account or the Reserve Account are not sufficient to pay the principal of and interest on the Outstanding Senior Bonds, the Outstanding Parity Bonds and the Bonds as and when the same become due, the City will apply moneys in the Sanitary Sewer Surplus Account and the Depreciation and Replacement Account first to the Outstanding Senior Bond Debt Service Account and the balance on a proportionate basis (based upon the outstanding principal amounts of the Bonds and the Outstanding Parity Bonds) to the Principal Account, the Interest Account and the Outstanding Parity Bond Debt Service Account to prevent any default in the payment of the principal of and interest on the Outstanding Senior Bonds, the Bonds and the Outstanding Parity Bonds.

Section 604. Transfer of Funds to Paying Agent . The Director of Finance is authorized and directed to make the payments to the Principal Account and the Interest Account as provided in Section 602, and, to the extent necessary to prevent a default in the payment of the Bonds, from the Reserve Account, the Sanitary Sewer Surplus Account and the Sanitary Sewer Depreciation and Replacement Account as provided in Sections 602 and 603, sums sufficient to pay the Bonds when due, and to forward amounts to the Paying Agent in a manner which ensures the Paying Agent will have sufficient available funds on or before the second Business Day immediately preceding the dates when payments on the Bonds are due. Upon the payment of all principal and interest on the Bonds, the Paying Agent will return any excess funds to the City. Except as otherwise provided in the Indenture, all moneys deposited by the City with the Paying Agent are subject to the provisions of this Ordinance.

ARTICLE VII

DE POSIT AND INVESTMENT OF MONEYS

Section 701. Investment of Moneys .

(a) Moneys in the Interest Account, the Principal Account, the Construction Account, the State Match Portion Debt Service Account, the Leveraged Portion Debt Service Account and the Reserve Account are assigned by the City to the Authority to secure the City's obligations under this Ordinance. The City acknowledges that moneys in the Interest Account, the Principal Account, the State Match Portion Debt Service Account, the Leveraged Portion Debt Service Account and the Reserve Account will be invested by the Authority, subject to the Arbitrage Instructions, in Investment Securities in accordance with Section 4.9 of the Indenture. Moneys in the Construction Account will be invested by the Trustee at the written direction of the City, subject to the Arbitrage Instructions, in Investment Securities which constitute Permitted Investments as defined herein, in accordance with Section 4.9 of the Indenture. Moneys in each of the other funds and accounts created or ratified and confirmed by this Ordinance may be invested by the City in obligations as may be permitted by law, but no investment will be made for a period extending longer than the date when the moneys invested may be needed. All earnings on any investments held in any fund or account will accrue to the applicable fund or account. Earnings on moneys in the Interest Account, the Principal Account, the Construction Account, the State Match Portion Debt Service Account, the Leveraged Portion Debt Service Account and the Reserve Account will be transferred or applied by the Trustee in accordance with Article IV of the Indenture. In determining the amount held in any fund or account under this Ordinance, obligations will be valued at the lower of cost or market value. If the amount in any fund or account held within the treasury of the City is greater than the required amount, the City may transfer the excess to the Sewer Fund.

(b) If the Outstanding Senior Bonds and the Outstanding Parity Bonds are outstanding, any investments of moneys in the funds and accounts referred to in Section 401 made pursuant to this Section are subject to the applicable restrictions in the Outstanding Senior Bond Ordinance and the Outstanding Parity Bond Ordinance.

ARTICLE VIII

PARTICULAR COVENANTS OF THE CITY

Section 801. Efficient and Economical Operation . The City will continuously own and will operate the Sanitary Sewer System in an efficient and economical manner and will keep and maintain the Sanitary Sewer System in good repair and working order.

Section 802. Rate Covenant . The City will fix, establish, maintain and collect rates and charges for the use and services furnished by or through the Sanitary Sewer System to produce income and revenues sufficient to (a) pay the costs of the operation and maintenance of the Sanitary Sewer System; (b) pay the principal of and interest on the Bonds as and when due; (c) enable the City to have in each Fiscal Year Net Sanitary Sewer Revenues Available for Debt Service plus Administrative Service Fees of not less than 110% of the amount required to be paid by the City in the Fiscal Year on account of both principal of and interest on all Sanitary Sewer System Revenue Bonds at the time outstanding, plus capital lease payments, if any, provided that interest on any SRF Program Bonds will be reduced by the SRF Subsidy, if any; and (d) provide reasonable and adequate reserves for the payment of the Bonds and the interest thereon and for the protection and benefit of the Sanitary Sewer System as provided in this Ordinance. The City will require the prompt payment of accounts for service rendered by or through the Sanitary Sewer System and will promptly take whatever action is legally permissible to enforce and collect delinquent charges.

Section 803. Reasonable Charges for all Services . None of the facilities or services provided by the Sanitary Sewer System will be furnished to any user without a reasonable charge being made therefor.

Section 804. Annual Budget . Prior to the commencement of each Fiscal Year, the City will cause a budget setting forth the estimated receipts and expenditures of the Sanitary Sewer System for the next succeeding Fiscal Year to be prepared and filed with the City Clerk. The City Clerk, within 30 days after the end of the current Fiscal Year, will mail a copy of the budget to the Bondowner. The City Clerk will provide a copy of the budget to the Trustee upon request. The annual budget will be prepared in accordance with the laws of the State.

Section 805. Annual Audit .

(a) Promptly after the end of each Fiscal Year, the City will cause an audit of the Sanitary Sewer System for the preceding Fiscal Year to be made by a certified public accountant or firm of certified public accountants employed for that purpose and paid from the Sanitary Sewer Revenues. The annual audit will cover in reasonable detail the operation of the Sanitary Sewer System during the Fiscal Year.

(b) Within 180 days after the end of the City's Fiscal Year, a copy of the annual audit will be filed in the office of the City Clerk, and a duplicate copy of the audit will be mailed to the Bondowner and the Trustee. The annual audit will be open to examination and inspection during normal business hours by any taxpayer, any user of the services of the Sanitary Sewer System, any Owner of the Bonds, or anyone acting for or on behalf of the taxpayer, user or Owner.

(c) As soon as possible after the completion of the annual audit, the City will review the annual audit, and if the annual audit reveals any breach of this Ordinance, the City agrees to promptly cure the breach.

Section 806. Performance of Duties . The City will faithfully and punctually perform all duties and obligations with respect to the operation of the Sanitary Sewer System now or hereafter imposed upon the City by the Constitution and laws of the State and the provisions of this Ordinance.

Section 807. Tax Covenants .

(a) The City will comply with all applicable provisions of the Code, including Sections 103 and 141 through 150, necessary to maintain the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes. The City will not use or permit the use of any proceeds of the Bonds or any other funds of the City, nor take or permit any other action, or fail to take any action, which would adversely affect the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes. The City will adopt ordinances or resolutions and take other actions necessary to comply with the Code and with other applicable future law, in order to ensure that the interest on the Authority Bonds will remain excluded from federal gross income.

(b) The City (1) will use the proceeds of the Bonds as soon as practicable for the purposes for which the Bonds are issued, and (2) will not invest or directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City in any manner, or take or omit to take any action, that would cause the Authority Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code.

(c) The City will not use any portion of the proceeds of the Bonds, including any investment income earned on the proceeds, directly or indirectly, (1) in a manner that would cause any Bond to be a "private activity bond" within the meaning of Section 141(a) of the Code, or (2) to make or finance a loan to any person.

(d) The City will pay to the Trustee, for deposit to the Interest Account and subsequent transfer as provided in the Indenture, an amount equal to arbitrage rebate and the costs incurred in connection with determining arbitrage rebate, at the times required by the Arbitrage Instructions. The provisions of this paragraph will survive the payment in full or defeasance of the Bonds.

ARTICLE IX

aDDITIONAL BONDS

Section 901. Prior Lien Bonds . Except as provided in Section 904, the City will not issue any debt obligations payable out of the Net Sanitary Sewer Revenues which are superior in lien, security or otherwise to the Bonds.

Section 902. Parity Lien Bonds or Obligations .

(a) The City will not issue any additional bonds or other longterm obligations payable out of the Net Sanitary Sewer Revenues which stand on a parity or equality with the Bonds unless the following conditions are met:

(1) the City is not in default in the payment of principal or interest on the Bonds or any Parity Bonds or in making any deposit into the funds and accounts under this Ordinance or any Parity Ordinance; and

(2) the City provides to the Bondowner and the Trustee a certificate showing either of the following:

(A) the average annual Net Sanitary Sewer Revenues Available for Debt Service plus Administrative Service Fees as set forth in the two most recent annual audits for Fiscal Years preceding the issuance of additional bonds, are at least 110% of the average annual debt service on the Sanitary Sewer System Revenue Bonds (excluding subordinate revenue bonds or obligations), including the additional bonds proposed to be issued, to be paid out of the Net Sanitary Sewer Revenues in all succeeding Fiscal Years. Interest to be paid on any SRF Program Bonds may be reduced by the SRF Subsidy, if any. In determining Net Sanitary Sewer Revenues Available for Debt Service, the City may rely on a certificate of the Consultant to add the additional Net Sanitary Sewer Revenues Available for Debt Service which would have resulted if the rate increase had been in effect for the entire period to the audited Net Sanitary Sewer Revenues Available for Debt Service if the City has made any increase in rates for the use and services of the Sanitary Sewer System and the increase has not been in effect during all of the two Fiscal Years for which annual audits are available; or

(B) the estimated average annual Net Sanitary Sewer Revenues Available for Debt Service plus Administrative Service Fees for the two Fiscal Years immediately following the Fiscal Year in which the improvements to the Sanitary Sewer System being financed by the additional bonds are to be in commercial operation, as certified by the Consultant, is at least 110% of the average annual debt service on the Sanitary Sewer System Revenue Bonds (excluding subordinate revenue bonds or obligations), including the additional bonds proposed to be issued, to be paid out of the Net Sanitary Sewer Revenues Available for Debt Service in succeeding Fiscal Years following the commencement of commercial operation of the improvements. Interest to be paid on any SRF Program Bonds may be reduced by the SRF Subsidy, if any. In determining the amount of estimated Net Sanitary Sewer Revenues Available for Debt Service for the purpose of this subsection, the Consultant may adjust the estimated net income and revenues by adding the estimated increase in Net Sanitary Sewer Revenues Available for Debt Service resulting from any increase in rates for the use and services of the Sanitary Sewer System approved by the City.

(b) If the conditions set forth in this Section are satisfied, the City (i) may issue additional revenue bonds or other obligations of the City on a parity with the Bonds and that enjoy complete equality of the lien on the Net Sanitary Sewer Revenues with the Bonds, (ii) may make equal provision for paying the additional revenue bonds or other obligations from the Sewer Fund, and (iii) may secure the additional revenue bonds or other obligations by funding reasonable Sanitary Sewer System debt service accounts and debt service reserve accounts from the Net Sanitary Sewer Revenues.

Section 903. Junior Lien Bonds . Nothing in this Article prohibits or restricts the right of the City to issue additional revenue obligations, including revenue bonds, for the purpose of extending, improving, enlarging, repairing or altering the Sanitary Sewer System, or refunding obligations issued for such purpose, that are subordinate to the Bonds if at the time of the issuance of the additional revenue obligations the City is not in default in the performance of any covenant or agreement in this Ordinance. If the City is in default in paying either interest on or principal of the Bonds, or if the Reserve Account is not fully funded pursuant to the Indenture, the City shall not make any payments on the subordinate revenue obligations until the default is cured. Subject to the limitations in this Section, the City may make provision for paying the principal of and interest on the subordinate revenue bonds or obligations from moneys in the Sewer Fund.

Section 904. Refunding Bonds .

(a) The City may, without complying with the provisions of Section 902, refund any of the Bonds or any Parity Bonds in a manner which provides debt service savings to the City, and the refunding bonds so issued will be on a parity with any of the Bonds or any Parity Bonds that are not refunded. If the Bonds are refunded in part and the refunding bonds bear a higher average rate of interest or become due on a date earlier than that of the Bonds which are refunded, the City must obtain the prior written consent of the Bondowner and DNR to the issuance of the refunding bonds.

(b) The Citymay refund any of the Outstanding Senior Bonds in a manner which provides debt service savings to the City in each subsequent Fiscal Year, and the refunding bonds so issued may have a priority lien on the Net Sanitary Sewer System Revenues.

ARTICLE X

dEFAULT AND REMEDIES

Section 1001. Event of Default . If (i) the City defaults in the payment of the principal of or interest on any of the Bonds, or (ii) the City or its Governing Body or any of its officers, agents or employees fails or refuses to comply with any provision of this Ordinance, the Constitution or statutes of the State, the Purchase Agreement or the Revolving Fund Agreement and default continues for a period of 60 days after written notice specifying the nonpayment default has been given to the City by the Trustee, the Authority, DNR or the Owner of any Bond then Outstanding, at any time thereafter and while the default continues, the City shall pay to DNR the penalties assessed by DNR in accordance with the Regulations. The penalties will be assessed as a reduction in the credit provided in Section 602(a)(2)(A).

Section 1002. Remedies .

(a) The provisions of this Ordinance constitute a contract between the City and the Owners of the Bonds. The Owner or Owners of not less than 10% in principal amount of the Bonds at the time Outstanding have the right for the equal benefit and protection of all Owners of Bonds similarly situated:

(1) by any proceeding at law or in equity to enforce the rights of the Owner or Owners against the City and its officers, agents and employees, and to compel the performance by the City of its duties and obligations under this Ordinance, the Constitution and the laws of the State;

(2) by any proceeding at law or in equity to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and

(3) by any proceeding at law or in equity to enjoin any act or thing which is unlawful or in violation of the rights of the Owners of the Bonds.

(b) Any amounts paid on the Bonds to the Owners will be applied first to interest and second to principal, to the extent due and payable.

Section 1003. Limitation on Rights of Bondowners . No Owner has any right in any manner whatever by the Owner's action to affect, disturb or prejudice the security granted and provided for in, or enforce any right under, this Ordinance, except in the manner provided in this Ordinance. All proceedings at law or in equity will be for the equal benefit of all Owners.

Section 1004. Remedies Cumulative . No remedy conferred upon the Owners is intended to be exclusive of any other remedy. Each remedy is in addition to every other remedy and may be exercised without exhausting any other remedy conferred under this Ordinance. No waiver by any Owner of any default or breach of duty or contract of the City under this Ordinance will affect any subsequent default or breach of duty or contract by the City or impair any rights or remedies thereon. No delay or omission of any Owner to exercise any right or power accruing upon any default will impair any right or power or will be construed to be a waiver of any default. Every substantive right and every remedy conferred upon the Owners of the Bonds by this Ordinance may be enforced and exercised from time to time and as often as may be expedient. If any Owner discontinues any proceeding or the decision in the proceeding is against the Owner, the City and the Owners of the Bonds will be restored to their former positions and rights under this Ordinance.

Section 1005. No Obligation to Levy Taxes . Nothing in this Ordinance imposes any duty or obligation on the City to levy any taxes either to meet any obligation incurred under this Ordinance or to pay the principal of or interest on the Bonds.

ARTICLE XI

DEFEASANCE

Section 1101. Defeasance . When all of the Bonds have been paid and discharged, the provisions of this Ordinance (other than Section 807) will terminate. Bonds will be treated as paid and discharged within the meaning of this Ordinance if the City has deposited with the Paying Agent, or other bank or trust company authorized to do business in the State, having full trust powers and meeting the requirements of a successor Trustee under the Indenture, (i) moneys and noncallable Defeasance Securities which, together with interest to be earned, as evidenced by the written report of an independent certified public accountant, will be sufficient for the payment of the principal and redemption premium, if any, of and interest to accrue on the Bonds to the date of maturity or redemption, plus an additional premium on Bonds being optionally redeemed equal to interest that would otherwise accrue on the Bonds for an additional 30day period, and (ii) an opinion of Bond Counsel, addressed to the Authority and the Trustee, that providing for the payment of the Bonds by depositing moneys or Defeasance Securities with the Paying Agent in accordance with this Section will not cause the interest on the Authority Bonds to be included in gross income for federal income tax purposes. If any Bonds will be redeemed prior to maturity, the City must have given irrevocable instructions to the Paying Agent to redeem the Bonds. Any moneys and obligations which at any time are deposited with the Paying Agent or other bank by or on behalf of the City, for the purpose of paying and discharging any of the Bonds, are assigned, transferred and set over in trust for the applicable Owners, and the moneys and obligations are irrevocably appropriated to the payment and discharge of the applicable Bonds.

ARTICLE XII

AMENDMENTS

Section 1201. Amendments .

(a) The provisions of this Article are not applicable to the Terms Ordinance.

(b) Any provision of the Bonds or of this Ordinance may be amended by an Ordinance with the written consent of the Authority and the Trustee. Consent must be evidenced by an instrument executed by the Authority and the Trustee, acknowledged or proved in the manner of a deed to be recorded, and filed with the City Clerk. In addition, the prior written consent of the Bondowner and DNR is required for any amendment which would:

(1) extend the maturity of any payment of principal or interest on any Bond;

(2) reduce the amount of principal or interest payable on any Bond; or

(3) permit the priority of any Bond over any other Bond.

(c) No amendment will be effective until (i) the City has delivered to the Bondowner, the Trustee and DNR an opinion of Bond Counsel stating that the amendment is permitted by this Ordinance and the Act, complies with their respective terms, is valid and binding upon the City in accordance with its terms and does not adversely affect the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes, and (ii) the City Clerk has on file a copy of the amendment and all required consents.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

Section 1301. Further Authority . The officers of the City, including the Mayor, the City Manager, the City Treasurer, the Director of Finance and the City Clerk, are authorized and directed to execute all documents and take the actions as are necessary or advisable in order to carry out and perform the purposes of this Ordinance and to make ministerial changes in the documents approved by this Ordinance which they may approve. The execution of any document or taking of any related action constitutes conclusive evidence of the necessity or advisability of the action or change.

Section 1302. Severability . If any section or other part of this Ordinance is for any reason held invalid, the invalidity will not affect the validity of the other provisions of this Ordinance.

Section 1303. Governing Law . This Ordinance is governed by and will be construed in accordance with the laws of the State.

Section 1304. Effective Date . This Ordinance will take effect and be in full force and effect ten days after its passage.

_____________________________________________

Approved as to form and legality:

Heather A. Brown

Assistant City Attorney

CERTIFICATE

I, the undersigned, City Clerk of the City of Kansas City, Missouri, hereby certify that attached to this Certificate is a true and correct copy of Ordinance No. ________ passed by the City at a special meeting held, after proper notice, on November 4, 2004; that the Ordinance has not been amended and is in full force and effect as of this date; and that the Ordinance is on file in my office.

WITNESS my hand this _____ day of ___________, 2004.

(SEAL)

City Clerk