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Legislation #: 980253 Introduction Date: 3/12/1998
Type: Ordinance Effective Date: 4/5/1998
Sponsor: None
Title: Authorizing the issuance of Sewerage System Revenue Bonds, Series 1998A, of the City of Kansas City, Missouri, for the purpose of extending and improving the City´s sewerage system; prescribing the form and details of said Bonds and the covenants and agreements made by the City to facilitate and protect the payment thereof; providing for the collection, segregation and application of the revenues of the sewerage system of the City for the purpose of paying the cost of operation and maintenance of said system, paying the principal of and interest on said Bonds, and providing reasonable and adequate reserve funds; and authorizing a non bearing loan from The Water and Wastewater Loan Fund of the State of Missouri and prescribing other matters relating thereto.

Legislation History
DateMinutesDescription
3/12/1998

Prepare to Introduce

3/12/1998

Referred Finance & Administration Committee

3/18/1998

Do Pass

3/19/1998

Assigned to Third Read Calendar

3/26/1998

Passed


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ORDINANCE NO. 980253

 

Authorizing the issuance of Sewerage System Revenue Bonds, Series 1998A, of the City of Kansas City, Missouri, for the purpose of extending and improving the City's sewerage system; prescribing the form and details of said Bonds and the covenants and agreements made by the City to facilitate and protect the payment thereof; providing for the collection, segregation and application of the revenues of the sewerage system of the City for the purpose of paying the cost of operation and maintenance of said system, paying the principal of and interest on said Bonds, and providing reasonable and adequate reserve funds; and authorizing a non‑interest bearing loan from The Water and Wastewater Loan Fund of the State of Missouri and prescribing other matters relating thereto.

 

WHEREAS, the City of Kansas City, Missouri (the "City"), is a 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 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 "System"); and

 

WHEREAS, the City desires to make extensions and improvements to the System to be financed in whole or in part by the issuance, pursuant to this Ordinance, of its Sewerage System Revenue Bonds, Series 1998A (with any additional identifiers as provided in this Ordinance and in the below defined Terms Ordinance, the "Bonds") in the Original Principal Amount as set forth in the Terms Ordinance; and

 

WHEREAS, the City is authorized under the provisions of Chapter 250 of the Revised Statutes of Missouri (the "Act") to issue and sell revenue bonds for the purpose of paying all or part of the cost of extending and improving the System, with the cost of operation and maintenance of the System and the principal of and interest on revenue bonds payable solely from the 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 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, none of the bonds so authorized have been issued 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 Refunding and Improvement Revenue Bonds, Series 1992, dated March 1, 1992, in the original principal amount of $37,340,000.00, of which $22,895,000.00 remains outstanding as of the date of passage of this Ordinance (the "Series 1992A Bonds"), authorized by Committee Substitute for Ordinance No. 911537 passed on January 30, 1992 (the "Series 1992A Ordinance"); 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 $1,265,000.00, of which $1,115,000.00 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 Committee Substitute for Ordinance No. 920681 passed on June 11, 1992 (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 $18,000,000.00, of which $17,850,000.00 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 Committee Substitute for Ordinance No. 950516 passed on April 20, 1995 (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 $24,000,000.00, of which $22,520,000.00 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 Committee Substitute for Ordinance No. 960440 passed on April 18, 1996 (the "Series 1996A Ordinance"); and

 

WHEREAS, the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1997A, dated April 1, 1997, in the original principal amount of $22,235,000.00, of which $21,605,000.00 remains outstanding as of the date of passage of this Ordinance (the "Series 1997A Bonds," the Series 1992A Bonds, the Series 1992B Bonds, the Series 1995A Bonds, the Series 1996A Bonds and the Series 1997A Bonds collectively referred to herein as the "Outstanding Parity Bonds"), authorized by Ordinance No. 970285 passed on March 27, 1997 and Ordinance No. 970478 passed on April 10, 1997 (the "Series 1997A Ordinance," the Series 1992A Ordinance, the Series 1992B Ordinance, the Series 1995A Ordinance, the Series 1996A Ordinance and the Series 1997A Ordinance collectively referred to herein as the "Outstanding Parity Bond Ordinance"); and

 

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

 

WHEREAS, under the provisions of the Outstanding Parity Bond Ordinance the City may issue additional bonds payable out of the Revenues 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 and be sold to the Authority under the SRF Program, subject to the conditions of the Outstanding Parity Bond Ordinance; NOW, THEREFORE,

 

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

ARTICLE I ARTICLE I

 

DEFINITIONS 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 Calculation Date" means the Business Day preceding each January 1, commencing on the Business Day preceding January 1, 2000.

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

 

"Authority" means the State Environmental Improvement and Energy Resources Authority.

 

"Authority Bonds" means the Water Pollution Control Revenue Bonds (State Revolving Fund Program - Master Trust) Series 1998A 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.

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

 

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

 

"Current Expenses" means all reasonable and necessary expenses of ownership, operation, maintenance and repair of the System and keeping the 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, short-term 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 System, but excluding interest paid on System Revenue Bonds, depreciation and amortization charges (including payments into the Depreciation and Replacement Account), and all general administrative expenses of the City not related to the operation of the System.

 

"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 long-term 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.

 

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

 

"DNR" means the Missouri Department of Natural Resources.

 

"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 January 1, 1999.

 

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

 

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

 

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

 

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

 

(1) Bonds canceled 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.

 

"Parity Bonds" means the Bonds, the Outstanding Parity Bonds and any parity bonds issued under Section 902 payable from the Revenues on a parity basis with the Bonds.

 

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

 

"Purchase Agreement" means the Purchase Agreement dated as of April 1, 1998, 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.

 

"Revenues" means all income and revenues derived by the City from the System, including investment and rental income, net proceeds from business interruption insurance, sales tax revenues which have been annually appropriated by the City or which are limited solely to the payment of improvements to or expenses of the System and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Revenue Bonds, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business.

 

"Revolving Fund Loan" means the no-interest loan to the City by DNR from the Wastewater Loan Fund under the Revolving Fund Agreement.

"Revolving Fund Agreement" means the Revolving Fund Agreement dated as of April 1, 1998, by and among the City, the Authority and DNR.

 

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

 

"SRF Program" means the Missouri Leveraged State Water Pollution Control Revolving Fund Program of DNR and the Authority.

 

"SRF Program Bonds" means the Bonds and any other 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 or Reserve Fund 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 or the Reserve Fund 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 Fund, 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.

 

"System Revenue Bonds" means collectively the Bonds, the Parity Bonds and all other revenue bonds which are payable from the Revenues.

 

"Terms Certificate" means the Terms Certificate of the City, dated the date of adoption 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 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 not applicable if the Authority does not purchase the Bonds:

 

Administrative Calculation Date Authority

Administrative Fee Authority Bonds

Authority Program Bonds

Bondowner

DNR

 

Purchase Agreement Revolving Fund Loan

Revolving Fund Agreement

SRF Program

SRF Program Bonds

 

SRF Subsidy Trustee

Terms Certificate

 

The provisions of Sections 210(b), 211, 403, 501, 502, 602 and 701(a) are not applicable if the Authority does not purchase the Bonds.

ARTICLE II ARTICLE II

 

AUTHORIZATION OF BONDS 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 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 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 R-1 consecutively upward, in the denomination of $1,000.00 or any integral multiple of $1,000.00. The Bonds will be issued in substantially the form of Section 203A (with the parenthetical reference set forth in the form of Bond if the Bonds are purchased by the Authority) 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 established by the Terms Ordinance. Interest is computed on the basis of a 360-day year of twelve 30-day 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.

 

Section 203A. Form of Bond. The Bonds will be in substantially the following form, with appropriate insertions and deletions as are approved by the Director of Finance, which approval will be conclusively evidenced by the Director or Finance's signature on the Bond:

 

UNITED STATES OF AMERICA

STATE OF MISSOURI

 

Registered Registered

No. R-_____ $________

 

CITY OF KANSAS CITY, MISSOURI

 

SEWERAGE SYSTEM REVENUE BOND

[(STATE REVOLVING FUND PROGRAM)]

SERIES 1998A

 

Interest Rate Maturity Date Dated Date

April 1, 1998

 

REGISTERED OWNER:

 

PRINCIPAL AMOUNT: **_____________________ DOLLARS**

 

 

THE CITY OF KANSAS CITY, MISSOURI, a constitutional charter 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 on the Maturity Date shown above, and to pay interest thereon at the annual Interest Rate referenced above (computed on the basis of a 360-day year of twelve 30-day months), payable semiannually on January 1 and July 1 in each year, commencing January 1, 1999 (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 office of STATE STREET BANK AND TRUST COMPANY OF MISSOURI, 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 by check or draft mailed by the Paying Agent 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 "Sewerage System Revenue Bonds [(State Revolving Fund Program)] Series 1998A" aggregating the principal amount of $__________ (the "Bonds"), issued by the City for the purpose of extending and improving its sewerage system (together with all future improvements and extensions, the "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 an ordinance 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 30-days' interest on the Bonds to be redeemed for an additional 30-day period.

 

The Paying Agent will give notice of redemption, 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 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, statutory or charter 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 Revenues.

 

The Bonds are issued on a parity with respect to payment of principal and interest from the 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 System to produce Revenues sufficient to pay the operation and maintenance costs of the 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 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 above-mentioned office of the Paying Agent. 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. 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 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.

 

CERTIFICATE OF AUTHENTICATION CITY OF KANSAS CITY, MISSOURI

 

This Bond is one of the Bonds

of the issue described in the

within-mentioned Ordinance. By _____________________________

Mayor

Registration Date: _________________

 

STATE STREET BANK AND TRUST

COMPANY OF MISSOURI, N.A.,

Paying Agent (Seal)

 

ATTEST:

 

 

By _____________________ ________________________________

Authorized Signatory City Clerk

 

COUNTERSIGNED

 

 

_____________________________

Director of Finance

 

===============================================

 

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.

 

===============================================

===============================================

 

ASSIGNMENT

 

 

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

 

_____________________________________________________________

Print or Type Name of Transferee

 

the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints State Street Bank and Trust Company of Missouri, 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.

 

_______________________________________

 

Dated: ________ By: ___________________________________

___________________________________

 

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 Officer

State Street Bank and Trust Company

of Missouri, N.A.

 

 

NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution as defined by SEC Rule 17Ad-15 (17 CFR 240.17Ad-15).

 

 

===============================================

 

 

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) The principal of and redemption premium, if any, payable on each Bond will be made at maturity or upon earlier redemption to the Owner shown in the Bond Register at the maturity or optional redemption date of each Bond, upon presentation and surrender of the Bond at the principal office of the Paying Agent. The interest payable on each Bond on any Interest Payment Date will be made by check or draft mailed by the Paying Agent to the address of the Owner shown in the Bond Register. 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 and attested by the manual or facsimile signature of the City Clerk, 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.

 

(b) The Mayor and the City Clerk 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 canceled immediately upon the payment or redemption and the Paying Agent's receipt of the Bonds. Canceled Bonds will be periodically destroyed by the Paying Agent. The Paying Agent will execute a certificate in duplicate describing the destroyed Bonds and file an executed counterpart of the certificate with the City.

 

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

 

(a) The sale of the Bonds in accordance with the terms of the Notice of Bond Sale dated March 26, 1998 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 Governing Body. 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 or 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.

 

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 ARTICLE III

 

REDEMPTION OF BONDS

 

Section 301. Mandatory Sinking Fund Redemption. The Term Bonds defined 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 100% 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 $5,000.00 (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 specified in the Terms Ordinance 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 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 30-days' 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 each 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 created in, or ratified and confirmed by, the Series 1992A Ordinance known respectively as the:

 

(1) Sewer Fund (herein referred to as the "Sewer Fund");

 

(2) Sewerage System Depreciation and Replacement Account (herein referred to as the "Depreciation and Replacement Account");

 

(3) Kansas City Sewerage System Refunding and Improvement Revenue Bonds, Series 1992, Bond Reserve Account (the "Series 1992A Reserve Account");

 

(4) Kansas City Sewerage System Refunding and Improvement Revenue Bonds, Series 1992, Principal and Interest Account (the "Series 1992A Debt Service Account"); and

 

(5) Kansas City Sewerage System Refunding and Improvement Revenue Bonds, Series 1992, Surplus Account (herein referred to as the "Surplus Account");

 

are ratified and confirmed.

 

(b) The separate accounts acknowledged under Section 503 of the Series 1992B Ordinance are acknowledged:

 

(1) Construction Account;

 

(2) Reserve Account (the "Series 1992B Reserve Account");

 

(3) Debt Service Account (the "Series 1992B Debt Service Account");

 

(4) Principal Account (the "Series 1992B Principal Account"); and

 

(5) Interest Account (the "Series 1992B Interest Account").

 

(c) The separate accounts held under Section 503 of the Series 1995A Ordinance are acknowledged:

 

(1) Construction Loan Fund;

 

(2) Reserve Fund (the "Series 1995A Reserve Fund");

 

(3) Debt Service Fund (the "Series 1995A Debt Service Fund");

 

(4) Principal Account (the "Series 1995A Principal Account"); and

 

(5) Interest Account (the "Series 1995A Interest Account").

 

(d) The separate accounts held under Section 503 of the Series 1996A Ordinance are acknowledged:

 

(1) Construction Loan Fund;

 

(2) Reserve Fund (the "Series 1996A Reserve Fund");

 

(3) Debt Service Fund (the "Series 1996A Debt Service Fund");

 

(4) Principal Account (the "Series 1996A Principal Account"); and

 

(5) Interest Account (the "Series 1996A Interest Account").

 

(e) The separate accounts held under Section 403 of the Series 1997A Ordinance are acknowledged:

 

(1) Sewer System Project Account;

(2) Sewer System Reserve Account (the "Series 1997A Reserve Account," the Series 1997A Reserve Account, the Series 1992A Reserve Account, the Series 1992B Reserve Account, the Series 1995A Reserve Fund and the Series 1997A Reserve Fund are collectively the "Outstanding Parity Bond Reserve Account";

 

(3) Sewer System Debt Service Account (the "Series 1997A Debt Service Account");

 

(4) Sewer System Principal Account (the "Series 1997A Principal Account"); and

 

(5) Sewer System Interest Account (the "Series 1997A Interest 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 Debt Service Account, the Series 1992B Principal Account, the Series 1992B Interest Account and the Series 1992A Debt Service Account are collectively the "Outstanding Parity Bond Debt Service Account), the Public Works Principal Account and the Public Works Interest Account.

 

Section 402. Administration of Funds and Accounts. The funds and accounts described in subparagraphs (a)(1), (2) and (5) of Section 401 will be maintained and administered by the City while any of the Bonds and the Outstanding Parity Bonds are Outstanding. The funds and accounts referred to in subparagraphs (a)(3) and (4) of Section 401 will be maintained and administered by the City while any of the Series 1992A Bonds remain Outstanding and unpaid. The accounts referred to in paragraph (b) of Section 401 will be maintained and administered while any of the Series 1992B Bonds remain Outstanding and unpaid. The accounts referred to in paragraph (c) of Section 401 will be maintained and administered while any of the Series 1995A Bonds remain Outstanding and unpaid. The accounts referred to in paragraph (d) of Section 401 will be maintained and administered while any of the Series 1996A Bonds remain Outstanding and unpaid. The accounts referred to in paragraph (e) of Section 401 will be maintained and administered while any of the Series 1997A Bonds remain Outstanding and unpaid.

 

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) Debt Service Account;

(4) Principal Account; and

 

(5) 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 ARTICLE V

 

APPLICATION OF BOND PROCEEDS 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 not to exceed $275,000 for Costs of Issuance as approved by the Director of Finance;

 

(2) Into the Interest Account the accrued interest 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) Moneys in the Construction Account will be disbursed to the City for the sole purpose of paying the cost of extending and improving the System in accordance with the plans and specifications prepared by the Consulting Engineer, previously approved by the Governing Body and DNR and on file in the office of the City Clerk, including any alterations in or amendments to the plans and specifications deemed advisable by the Consulting Engineer and approved by the Director of Water Services of the City and DNR.

 

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

 

 

ARTICLE VI ARTICLE VI

 

APPLICATION OF REVENUES APPLICATION OF REVENUES

 

Section 601. Sewer Fund. The City covenants and agrees that from and after the delivery of the Bonds, all Revenues derived and collected by the City will be deposited into the Sewer Fund when received. The Revenues will be segregated from all other moneys, revenues, funds and accounts of the City. 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 602. Application of Moneys in Funds and Accounts.

 

(a) The City will apply moneys in the Sewer Fund on the dates, in the amounts and in the order as follows:

 

(1) On the first day of each month to the Operation and Maintenance Account an amount sufficient to pay the estimated cost of operating and maintaining the System during the ensuing 30-day period;

 

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

 

(A) on May 25, 1998 to and including December 25, 1998, to the Interest Account 1/8 of the amount of interest on the Bonds due on January 1, 1999 less accrued interest deposited to the Interest Account; and on January 25, 1998 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 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 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, 1999 and each monthly payment date thereafter, to the Principal Account 1/12 of the 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, to the Outstanding Parity Bond Debt Service Reserve Account as required by the Outstanding Parity Bond Ordinance and, 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; and

 

(5) On the first day of each month the remaining balance to the Surplus Account.

 

(b) If the amount in the Sewer Fund is not sufficient to make the payments at the time required to be made by the City to the Interest Account, the Principal Account and the Outstanding Parity Bond Debt Service Account, the City will apply the remaining balance in the Sewer Fund 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.

 

(c) If the amount in the Sewer Fund is not sufficient to make the payments at the time required to be made by the City to the Reserve Account and to the Outstanding Parity Bond Debt Service Reserve Account, the City will divide the balance in the Sewer Fund between the Reserve Account and the Outstanding Parity Bond Debt Service Reserve Account on a proportionate basis (based upon the outstanding principal amounts of the Bonds and the Outstanding Parity Bonds).

 

(d) Moneys in the Surplus Account are to be expended for the following purposes as determined by the Governing Body:

 

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

 

(2) Paying the cost of extending, enlarging or improving the System;

 

(3) Preventing default in, anticipating payments into or increasing the amounts in the accounts confirmed or established in Section 402, the Principal Account, the Interest Account, the Reserve Account or the Depreciation and Replacement Account, or establishing or increasing the amount of any principal and interest account or debt service reserve account created by the City for the payment of any System Revenue Bonds subsequently issued; or

 

(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 Parity Bonds or any other 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.

 

(e) All amounts paid and credited to the Operation and Maintenance Account will be expended solely for the purpose of paying the Current Expenses of the System.

 

(f) No moneys derived by the City from the 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 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 Revenues for application in the order specified in Section 602.

 

(b) If the moneys in 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 Parity Bonds and the Bonds as and when the same become due, the City will apply moneys in the Surplus Account 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 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 and the debt service accounts as provided in Section 602, and, to the extent necessary to prevent a default in the payment of the System Revenue Bonds, from the debt service reserve accounts, the Reserve Account and the Surplus Account as provided in Sections 602 and 603, sums sufficient to pay the System Revenue 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 ARTICLE VII

 

DEPOSIT AND INVESTMENT OF MONEYS DEPOSIT AND INVESTMENT OF MONEYS

 

Section 701. Investment of Moneys.

 

(a) Moneys in the Interest Account, the Principal Account, the Debt Service Account and the Reserve Account are assigned by the City to the Authority to secure the City's obligations under this Ordinance and the City acknowledges that moneys in the Interest Account, the Principal Account, the 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 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. 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 Parity Bonds are outstanding, any investments made pursuant to this Section are subject to the applicable restrictions in the Outstanding Parity Bond Ordinance.

 

ARTICLE VIII ARTICLE VIII

 

PARTICULAR COVENANTS OF THE CITY PARTICULAR COVENANTS OF THE CITY

 

Section 801. Efficient and Economical Operation. The City will continuously own and will operate the System in an efficient and economical manner and will keep and maintain the 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 System to produce income and revenues sufficient to (a) pay the costs of the operation and maintenance of the 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 Revenues Available for Debt Service 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 System Revenue Bonds at the time outstanding, 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 System as provided in this Ordinance. The City will require the prompt payment of accounts for service rendered by or through the 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 System will be furnished to any user (excepting the City itself) without a reasonable charge being made therefor. If the income and revenues derived by the City from the System are insufficient to pay the reasonable expenses of operation and maintenance of the System and the principal of and interest on the Bonds when due, the City will pay into the Sewer Fund a fair and reasonable payment in accordance with effective applicable rates and charges for all services or other facilities furnished to the City or any of its departments by the System.

 

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 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 and the Trustee. 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 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 Revenues. The annual audit will cover in reasonable detail the operation of the 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 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 Governing Body 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 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 expects that more than 75% of the proceeds of the Bonds will be expended for "construction" as that term is used in Section 148(f)(4)(C)(iv) of the Code.

 

(d) 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.

 

(e) 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 ARTICLE IX

 

ADDITIONAL BONDS 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 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 long-term obligations payable out of the Revenues of the System 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 the 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 Revenues Available for Debt Service as set forth in the last available annual audits for the two Fiscal Years immediately preceding the issuance of additional bonds, are at least 110% of the average annual debt service on the System Revenue Bonds, including the additional bonds proposed to be issued, to be paid out of the Net Revenues Available for Debt Service in succeeding Fiscal Years. Interest to be paid on any SRF Program Bonds may be reduced by the SRF Subsidy, if any. If the City has made any increase in rates for the use and services of the System and the increase has not been in effect during all of the two Fiscal Years for which annual audits are available, the City may add the additional Net Revenues Available for Debt Service which would have resulted if the rate increase been in effect for the entire period to the audited Net Revenues Available for Debt Service; or

 

(B) The estimated average annual Net Revenues Available for Debt Service for the two Fiscal Years immediately following the Fiscal Year in which the improvements to the 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 System Revenue Bonds, including the additional bonds proposed to be issued, to be paid out of the Net 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 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 Revenues Available for Debt Service resulting from any increase in rates for the use and services of the 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 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 System debt service accounts and debt service reserve accounts from the 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 System, 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, 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. The City may, without complying with the provisions of Section 902, refund any of the 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 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.

 

ARTICLE X ARTICLE X

 

DEFAULT AND REMEDIES 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 non-payment 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 ARTICLE XI

 

DEFEASANCE 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 located in the State, having full trust powers and meeting the requirements of a successor Trustee under the Indenture, (i) moneys and non-callable 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 30-day 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 ARTICLE XII

 

AMENDMENTS 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 ARTICLE XIII

 

MISCELLANEOUS PROVISIONS 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.

 

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Approved as to form and legality:

 

 

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Assistant City Attorney