922 Water Revenue BondsCITY OF YELM
WATER REVENUE BONDS, 2010
ORDINANCE NO. 922
AN ORDINANCE OF THE CITY OF YELM, WASHINGTON,
AUTHORIZING CERTAIN ADDITIONS AND BETTERMENTS
TO THE WATER UTILITY OF THE CITY; AUTHORIZING
THE ISSUANCE OF WATER REVENUE BONDS OF THE
CITY TO PAY THE COSTS OF SAID IMPROVEMENTS IN
THE AGGREGATE PRINCIPAL AMOUNT OF $10,965,000;
FIXING THE DATE, FORM, TERMS, MATURITIES AND
COVENANTS OF THE BONDS; APPROVING A PURCHASE
CONTRACT FOR THE BONDS; AND RESERVING THE
RIGHT TO ISSUE REVENUE BONDS ON A PARITY WITH
THE BONDS HEREIN AUTHORIZED UPON COMPLIANCE
WITH CERTAIN CONDITIONS.
Approved: AUGUST 24, 2010
Prepared by:
K&L GATES LLP
Seattle, Washington
CITY OF YELM, WASHINGTON
ORDINANCE NO. 922
TABLE OF CONTENTS*
Page
Section 1. Definitions .............................................................................................................2
Section 2. Compliance with Parity Conditions .................................................................... 14
Section 3. Findings and Purposes; Plan of Additions and Betterments to the System ........ 14
Section 4. Authorization of Bonds ....................................................................................... 16
Section 5. Description of the Bonds .................................................................................... 16
Section 6 Place and Medium of Payment ........................................................................... 17
Section 7. Registration ......................................................................................................... 18
Section 8. Redemption and Purchase ................................................................................... 22
Section 9. Revenue Fund and Priority of Application of Revenue ...................................... 27
Section 10. Bond Fund and Reserve Fund ............................................................................. 28
Section 11. Specific Covenants .............................................................................................. 33
Section 12. Tax Covenants .................................................................................................... 36
Section 13. Issuance of Future Parity Bonds ......................................................................... 39
Section 14. Form of Bonds .................................................................................................... 43
Section 15. Execution of Bonds ............................................................................................. 45
Section 16. Defeasance .......................................................................................................... 45
Section 17. Lost or Destroyed Bonds .................................................................................... 46
Section 18. Sale of Bonds ...................................................................................................... 46
Section 19. Disposition of Bond Proceeds ............................................................................. 47
Section 20. Undertaking to Provide Ongoing Disclosure ...................................................... 47
Section 21. Effective Date ..................................................................................................... 51
* This Table of Contents and the cover page are not a part of this ordinance; they are included for
convenience of the reader only.
ORDINANCE NO. 922
AN ORDINANCE OF THE CITY OF YELM, WASHINGTON,
AUTHORIZING CERTAIN ADDITIONS AND BETTERMENTS
TO THE WATER UTILITY OF THE CITY; AUTHORIZING
THE ISSUANCE OF WATER REVENUE BONDS OF THE
CITY TO PAY THE COSTS OF SAID IMPROVEMENTS IN
THE AGGREGATE PRINCIPAL AMOUNT OF $10,965,000;
FIXING THE DATE, FORM, TERMS, MATURITIES AND
COVENANTS OF THE BONDS; APPROVING A PURCHASE
CONTRACT FOR THE BONDS; AND RESERVING THE
RIGHT TO ISSUE REVENUE BONDS ON A PARITY WITH
THE BONDS HEREIN AUTHORIZED UPON COMPLIANCE
WITH CERTAIN CONDITIONS.
WHEREAS, the City of Yelm, Washington (the "City") operates a water utility system
(hereinafter further defined as the "System"); and
WHEREAS, the System is in need of certain upgrades and improvements (as further
defined herein, the "Project"); and
WHEREAS, it appears to be in the best interests of the City and its ratepayers that bonds
be issued to pay for such improvements; and
WHEREAS, the City has issued its Water Revenue Bonds, 2003 under date of May 5,
2003 (the ``2003 Bonds") in the original principal amount of $2,295,000 pursuant to Ordinance
No. 776 (the "2003 Bond Ordinance") and currently outstanding in the principal amount of
$1,870,000 and having a final maturity of December 1, 2022; and
WHEREAS, in order to finance the Project, the City is proposing to issue water revenue
bonds on a parity of lien with the 2003 Bonds; and
WHEREAS, the 2003 Bond Ordinance authorizes the City to issue revenue bonds in the
future having a parity lien on net revenues of the System upon compliance with the teens and
conditions set forth in the 2003 Bond Ordinance, and said conditions will be met with respect to
the bonds authorized herein; and
WHEREAS, Martin Nelson & Co., Inc., Seattle, Washington, has submitted to the
Council an offer to purchase the bonds authorized herein in accordance with the terms of this
ordinance and this offer is acceptable to the Council;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YELM,
WASHINGTON, DO ORDAIN as follows:
Section 1. Definitions. As used in this ordinance the following definitions shall
apply unless a different meaning clearly appears from the context:
Accreted Value means (1) with respect to any Capital Appreciation Bonds, as of any date
of calculation, the sum of the amount set forth in the ordinance authorizing their issuance as the
amount representing the initial principal amount of such Capital Appreciation Bonds plus the
interest accumulated, compounded and unpaid thereon as of the most recent compounding date,
or (2) with respect to Original Issue Discount Bonds, as of the date of calculation, the amount
representing the initial public offering price of such Original Issue Discount Bonds plus the
amount of discounted principal which has accreted since the date of issue. In each case the
Accreted Value shall be determined in accordance with the provisions of the ordinance
authorizing the issuance of such Balloon Maturity Bonds.
Annual Debt Service means the total amount of Debt Service for any Parity Bond or
series of Parity Bonds or other evidences of indebtedness payable from Revenue of the System in
any fiscal year or Base Period.
Balloon Maturity Bonds means any evidences of indebtedness of the City payable from
Revenue of the System which are so designated in the ordinance pursuant to which such
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indebtedness is incurred. The 2003 Bonds maturing in the year 2022 are Balloon Maturity
Bonds and the Bonds maturing in the years 2028, 2031, 2035 and 2040 are Balloon Maturity
Bonds.
Base Period means any consecutive 12-month period selected by the City out of the
30-month period next preceding the date of issuance of an additional series of Future Parity
Bonds.
Beneficial Owner means the person who has the power, directly or indirectly, to vote or
consent with respect to, or to dispose of ownership of, any Bond, including a person holding a
Bond through nominees or depositories.
Bond Fund means the special fund of the City authorized to be created by Section 10 of
this ordinance.
Bond Register means the books or records maintained by the Bond Registrar containing
the name and mailing address of the owner of each Bond or nominee of such owner and the
principal amount and number of Bonds held by each owner or nominee.
Bond Registrar means the fiscal agency of the State of Washington in either Seattle,
Washington, or New York, New York, for the purposes of registering and authenticating the
Bonds, maintaining the Bond Register, effecting transfer of ownership of the Bonds, and paying
the principal of, premium, if any, and interest on the Bonds.
Bonds means the $10,965,000 par value of the City of Yelm, Washington, Water
Revenue Bonds, 2010 authorized to be issued pursuant to this ordinance.
Capital Appreciation Bonds means any Future Parity Bonds all or a portion of the
interest on which is compounded, accumulated and payable only upon redemption or on the
maturity date of such Capital Appreciation Bonds. If so provided in the ordinance authorizing
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their issuance, Future Parity Bonds maybe deemed to be Capital Appreciation Bonds for only a
portion of their term. On the date on which Future Parity Bonds no longer are Capital
Appreciation Bonds, they shall be deemed outstanding in a principal amount equal to their
Accreted Value.
City means the City of Yelm, a municipal corporation of the State of Washington.
City Representative means the Mayor or the City Administrator or such other official or
employee of the City designated in writing by either of the foregoing.
Code means the United States Internal Revenue Code of 1986, as amended, together with
all applicable rulings and regulations heretofore or hereafter promulgated thereunder.
Consultant means at any time an independent municipal financial consultant appointed
by the City to perform the duties of the Consultant as required by this ordinance. For the
purposes of delivering any certificate required by Section 13 hereof and making the calculation
required by Section 13 hereof, the term Consultant shall also include any independent public
accounting firm or licensed professional engineer (not then employed by the City as an
employee) appointed by the City to make such calculation or to provide such certificate.
Costs of'Maintenance and Operation means all reasonable expenses incurred by the City
in causing the System of the City to be operated and maintained in good repair, working order
and condition, but shall not include any payments for debt service or into reserve funds,
depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or
capital additions or capital replacements to the System.
Council means the City Council as the general legislative authority of the City as the
same shall be duly and regularly constituted from time to time.
Debt Service means, for any period of time,
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(a) with respect to any outstanding Original Issue Discount Bonds or Capital
Appreciation Bonds which are not designated as Balloon Maturity Bonds in the ordinance
authorizing their issuance, the principal amount thereof shall be equal to the Accreted Value
thereof maturing or scheduled for redemption in such period, and the interest payable during
such period;
(b) with respect to any outstanding Fixed Rate Bonds, an amount equal to (1) the
principal amount of such Fixed Rate Bonds due or subject to mandatory redemption during such
period and for which no sinking fund installments have been established, (2) the amount of any
payments required to be made during such period into any sinking fund established for the
payment of any such Fixed Rate Bonds, plus (3) all interest payable during such period on any
such outstanding Fixed Rate Bonds and with respect to Fixed Rate Bonds with mandatory
sinking fund requirements, calculated on the assumption that mandatory sinking fund
installments will be applied to the redemption or retirement of such Fixed Rate Bonds on the date
specified in the ordinance authorizing such Fixed Rate Bonds; and
(c) with respect to all other series of Parity Bonds, other than Fixed Rate Bonds,
Original Issue Discount Bonds or Capital Appreciation Bonds, specifically including but not
limited to Balloon Maturity Bonds and Parity Bonds bearing variable rates of interest, an amount
for any period equal to the amount which would have been payable for principal and interest on
such Parity Bonds during such period computed on the assumption that the amount of Parity
Bonds as of the date of such computation would be amortized (A) in accordance with the
mandatory redemption provisions, if any, set forth in the ordinance authorizing the issuance of
such Parity Bonds, or if mandatory redemption provisions are not provided, during a period
commencing on the date of computation and ending on the date 30 years after the date of
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issuance (B) at an interest rate equal to the yield to maturity set forth in the 40-Bond Index
published in the edition of The Bond Buyer (or comparable publication or such other similar
index selected by the City) and published within ten days prior to the date of calculation or, if
such calculation is being made in connection with the certificate required by Section 13 hereof,
then within ten days of such certificate, (C) to provide for essentially level annual debt service of
principal and interest over such period.
Debt Service shall be net of any interest funded out of Parity Bond proceeds. Debt Service shall
include reimbursement obligations to providers of Qualified Insurance or Qualified Letter of
Credit to the extent authorized by ordinance. From and after the New Date (absent a written
election by the City Representative to the contrary), the Debt Service shall be calculated net of
any federal subsidy legally available to pay the principal of or interest on Parity Bonds in the
year of calculation.
City Representative means the City Administrator or any official or employee of the City
designated in writing byher/him.
DTC means The Depository Trust Company, New York, New York, a limited purpose
trust company organized under the laws of the State of New York, as depository for the Bonds
pursuant to Section 5 hereof.
Fixed Rate Bonds means those Parity Bonds other than Capital Appreciation Bonds,
Original Issue Discount Bonds or Balloon Maturity Bonds issued under an ordinance in which
the rate of interest on such Parity Bonds is fixed and determinable through their final maturity or
for a specified period of time. If so provided in the ordinance authorizing their issuance, Parity
Bonds maybe deemed to be Fixed Rate Bonds for only a portion of their term.
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Future Parity Bonds means any water revenue bonds which the City may hereafter issue
having a lien upon the Revenue of the System for the payment of the principal thereof and
interest thereon equal to the lien upon the Revenue of the System of the 2003 Bonds and the
Bonds.
Government Obligations has the meaning given such term in RCW Ch. 39.53, as such
chapter maybe hereafter amended or restated.
Letter of Representations means the Blanket Issuer Letter of Representations from the
City to DTC.
Maximum Annual Debt Service means highest dollar amount of Annual Debt Service in
any fiscal year or Base Period for all outstanding Parity Bonds and the Bonds and/or for all
subordinate lien evidences of indebtedness secured by Revenue of the System, as the context
requires.
Moody's means Moody's Investors Service, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, Moody's shall be deemed to refer to any other nationally recognized
securities rating agency (other than S&P and Fitch) designated by the City.
MSRB means the Municipal Securities Rulemaking Board or any successor to its
functions.
Net Proceeds when used with reference to the Bonds, means the principal amount of the
Bonds, plus accrued interest and original issue premium, if any, and less original issue discount
and proceeds, if any, deposited in the Reserve Fund.
Net Revenue means Revenue of the System less Costs of Maintenance and Operation.
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New Date means the earlier of (a) the date on which the 2003 Bonds are no longer
Outstanding; or (b) the date on which the owner(s) of at least 60% of all 2003 Bonds then
Outstanding consent to the amendment to the definitions of Revenue of the System and Debt
Service made in this ordinance. For purposes of this provision, the Owners of the Bonds and any
Future Parity Bonds are deemed to have approved the amended definitions in this ordinance.
Original Issue Discount Bonds means Parity Bonds which are sold at an initial public
offering price of less than 95% of their face value and which are specifically designated as
Original Issue Discount Bonds in the ordinance authorizing their issuance.
Parity Bonds means the Bonds, the 2003 Bonds and any Future Parity Bonds.
Parity Requirement means Net Revenues equal to or greater than:
(a) 125% of Maximum Annual Debt Service for all Parity Bonds computed by
deducting from Annual Debt Service the Annual Debt Service for each series or issue of Parity
Bonds which is covered by ULID Assessments which is determined by multiplying such Annual
Debt Service by the percentage determined by dividing the ULID Assessments originally
pledged to such issue/series by the original principal amount of such issue/series, and
(b) 100% of Maximum Annual Debt Service for all subordinate lien evidences of
indebtedness secured by Revenue of the System.
Private Person means any natural person engaged in a trade or business or any trust,
estate, partnership, association, company or corporation.
Private Person Use means the use of property in a trade or business by a Private Person
if such use is other than as a member of the general public. Private Person Use includes
ownership of the property by the Private Person as well as other arrangements that transfer to the
Private Person the actual or beneficial use of the property (such as a lease, management or
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incentive payment contract or other special arrangement) in such a manner as to set the Private
Person apart from the general public. Use of property as a member of the general public includes
attendance by the Private Person at municipal meetings or business rental of property to the
Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the
rental paid by any Private Person who desires to rent the property. Use of property by nonprofit
community groups or community recreational groups is not treated as Private Person Use if such
use is incidental to the governmental uses of property, the property is made available for such
use by all such community groups on an equal basis and such community groups are charged
only a de minimis fee to cover custodial expenses.
Project means the plan of water improvements to the System authorized in Section 2
hereof.
Project Fund means the Water Construction Fund No. 431 maintained in the office of the
City Treasurer.
Qualified Insurance means any non-cancelable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies) which insurance company or companies, as of the time of issuance of such
policy or surety bond, are currently rated in one of the two highest Rating Categories by both
Moody's and S&P.
Qualified Letter of Credit means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of registered owners of the Bonds, which
institution maintains an office, agency or branch in the United States and as of the time of
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issuance of such letter of credit, is currently rated in one of the two highest Rating Categories by
either Moody's or S&P.
Rate Covenant means Net Revenues in each fiscal year at least equal to 125% of the
amounts required in such fiscal year to be paid as scheduled debt service (principal and interest)
on all Parity Bonds, computed by deducting from such debt service 110% of the debt service for
each series or issue of Parity Bonds which is covered by ULID Assessments which is determined
by multiplying such debt service by the percentage determined by dividing the ULID
Assessments originally pledged to such issue/series by the original principal amount of such
issue/series. From and after the New Date, the maximum amount required to be paid as principal
and interest shall be calculated net of any federal subsidy legally available to pay such principal
and interest.
Rating Agency means Moody's or S&P.
Rating Category means the generic rating categories of the Rating Agency, without
regard to any refinement or gradation of such rating category by a numerical modifier or
otherwise.
Registered Owner means the person named as the registered owner of a Bond in the
Bond Register. For so long as the Bonds are held in book-entry only form, DTC shall be deemed
to be the sole Registered Owner.
Reserve Fund means the Fund of that name created pursuant to Section 10 of this
ordinance.
Reserve Requirement means the lesser of (a) Maximum Annual Debt Service and
(b) 1.25 times Average Annual Debt Service; provided, however, that the Reserve Requirement
shall not exceed an amount equal to 10% of the aggregate of the initial par amounts of each
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outstanding series of Parity Bonds. The dollar amount of the Reserve Requirement shall be re-
calculated annually.
Revenue Fund means the Water Department Fund No. 401 maintained by the Treasurer
of the City.
Revenue of the System or Revenue means all of the earnings and revenues received by
the City from the maintenance and operation of the System and all earnings from the investment
of money in the Bond Fund which earnings are deposited in the Bond Fund, and connection and
capital improvement charges collected for the purpose of defraying the cost of capital facilities of
the System, but excluding government grants, proceeds from the sale of System property, City
taxes collected by or through the System, principal proceeds of bonds and earnings or proceeds
from any investments in a trust, defeasance or escrow fund created to defease or refund System
obligations (until commingled with other earnings and revenues of the System) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code. Revenue of the System shall also include any federal or state reimbursements of operating
expenses to the extent such expenses are included as Costs of Maintenance and Operation;
provided, however, that Revenue of the System shall not include ULID Assessments. From and
after the New Date, unless declined by a written election by the City Representative, the term
Revenue of the System shall not include any federal subsidy legally available to pay the
principal of or interest on Parity Bonds.
Rule means the SEC's Rule 15c2-12 under the Securities Exchange Act of 1934, as the
same maybe amended from time to time.
S&P means Standard & Poor's Rating Services, a Standard & Poor's Financial Services
LLC business, a New York corporation, its successors and their assigns, and, if such corporation
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shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, S&P shall be deemed to refer to any other nationally recognized securities rating agency
designated by the City.
SEC means the Securities and Exchange Commission
System means the City's existing water supply and distribution system, as the same may
be added to, improved and extended for as long as any Parity Bonds are outstanding. The term
System also shall include any other utility that may in the future be combined with the System.
2003 Bond Ordinance means Ordinance No. 776 approved by the Council on March 23,
2003.
2003 Bonds has the meaning given such term in the recitals to this ordinance.
ULID means a utility local improvement district of the City.
ULID Assessments means the assessments levied in all ULIDs, the assessments in which
are payable into the Bond Fund, and shall include installments thereof and interest and any
penalties thereon.
Underwriter means Martin Nelson & Co., Inc., Seattle, Washington.
Variable Interest Rate means a variable interest rate or rates to be borne by a series of
Future Parity Bonds or any one or more maturities within a series of Future Parity Bonds. The
method of computing such a variable interest rate shall be specified in the ordinance authorizing
such Future Parity Bonds, which ordinance also shall specify either (a) the particular period or
periods of time or manner of determining such period or periods of time for which each value of
such variable interest rate shall remain in effect or (b) the time or times upon which any change
in such variable interest rate shall become effective.
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Variable Interest Rate Bo~ids means, for any period of time, Future Parity Bonds which
bear a Variable Interest Rate during that period, except that Future Parity Bonds the interest rate
or rates on which shall have been fixed for the remainder of the term thereof no longer shall be
deemed to be Variable Interest Rate Bonds.
Interpretation.
In this ordinance, unless the context otherwise requires:
(a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar
terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular
article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the
term "heretofore" shall mean before, the. date of this ordinance;
(b) Words of the masculine gender shall mean and include correlative words of the
feminine and neuter genders and words importing the singular number shall mean and include
the plural number and vice versa;
(c) Words importing persons shall include firms, associations, partnerships (including
limited partnerships), trusts, corporations and other legal entities, including public bodies, as well
as natural persons;
(d) Any headings preceding the text of the several articles and Sections of this
ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely
for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect
its meaning, construction or effect; and
(e) All references herein to "articles," "sections" and other subdivisions or clauses are
to the corresponding articles, sections, subdivisions or clauses hereof.
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Section 2. Compliance with Parity Conditions. The Council hereby finds and
determines, as required by Section 12 of the 2003 Bond Ordinance, that:
(a) The City has not been in default of its Rate Covenant for the immediately
preceding fiscal year (2009), and
(b) This ordinance provides that the Reserve Requirement shall be funded no later
than the date of delivery of the Future Parity Bonds.
(c) Prior to the closing and delivery of the Bonds, there will be filed a certificate
(prepared by a Consultant or the City Administrator) demonstrating fulfillment of the Parity
Requirement, commencing with 2010 (the first full fiscal year following the date on which any
portion of interest on the Bonds no longer will be paid from the proceeds of such series of Future
Parity Bonds).
The Parity Conditions having been complied with or assured, the payments required
herein to be made out of the Revenue Fund into the Bond Fund and the Reserve Fund to pay and
secure the payment of the principal of and interest on the Bonds shall constitute a lien and charge
upon the money in the Revenue Fund equal in rank with the lien and charge thereon for the
payments required to be made for the 2003 Bonds.
Section 3. Findings and Purposes• Plan of Additions and Betterments to the System.
The Council hereby finds that the public interest, welfare and convenience require the
construction, acquisition and installation of the System improvements described in this Section 3
and that said improvements are legally required and/or economically sound, and will contribute
to the conduct of the business of the System in an efficient manner.
The following plan for the acquisition, construction and installation of additions and
betterments to the System is hereby specified and adopted:
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The City will make various water improvement projects involving wells, water filteration
and treatment facilities, reservoirs, mitigation projects, transmission line replacement and make
other improvements to the System. In addition, the City may utilize some of the Bond proceeds
to acquire water rights if such rights become available following the issuance of the Bonds.
Such improvements are referred to collectively herein as the "Project".
The City shall provide all equipment, connections and appurtenances together with all
work as may be incidental and necessary to complete the Project. The Project facilities shall be
integrated into the System as required to provide a fully operational facility.
The City may make such changes in or additions to the Project or in the construction or
design of other facilities of the System as may be found necessary or desirable. Implementation
or completion of any specified improvement shall not be required if the Council determines that,
due to substantially changed circumstances, it has become advisable or impractical. If the
Project has either been completed, or its completion duly provided for, or its completion found to
be impractical, the City may apply the Bond proceeds or any portion thereof to other
improvements to the System, as the Council in its discretion shall determine. In the event that
the proceed of sale of the Bonds, plus any other moneys of the City legally available, are
insufficient to accomplish all of the Project provided by this section, the City shall use the
available funds for paying the cost of those improvements for which the Bonds were approved
deemed by the Council most necessary and to the best interest of the City.
The City shall acquire by purchase, lease or condemnation, all property, both real and
personal, or any interest therein, or rights-of--way and easements which may be found necessary
to acquire, construct and install the Project.
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The estimated cost of this plan of additions and betterments and all costs incidental
thereto (including costs of issuance of the Bonds and funding of the Reserve Fund), is hereby
declared to be as nearly as practicable the sum of $10,965,000 of which an amount not to exceed
$10,965,000 is to be provided out of the proceeds of the sale of the Bonds, and the remainder is
to be provided from other cash of the City now or hereafter on hand and available therefor.
Section 4. Authorization of Bonds. The City shall now issue and sell $10,965,000 of
water revenue bonds (the "Bonds") for the purpose of providing funds required to pay the cost of
the Project, funding the Reserve Requirement and paying the costs of issuance of the Bonds.
Section 5. Description of the Bonds. The Bonds shall be designated as the "City of
Yelm, Washington Water Revenue Bonds, 2010" (the "Bonds"); shall be dated as of their date of
original issuance; shall be fully registered as to both principal and interest; shall be in the
denomination of $5,000 each, or any integral multiple thereof, provided that no Bond shall
represent more than one maturity; shall be numbered separately in such manner and with any
additional designation as the Bond Registrar deems necessary for purposes of identification; and
shall bear interest from their date payable semiannually on the first days of each June and
December, commencing on December 1, 2010, at the following per annum interest rates and
shall mature on December 1 of the following years in the following principal amounts:
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Maturity Years
(December 1) Principal Amounts Interest Rates
2014 $ 255,000 2.00%
2015 260,000 2.00
2016 265,000 3.00
2017 270,000 3.00
2018 280,000 3.00
2019 285,000 2.80
2020 295,000 3.00
2021 305,000 3.50
2022 315,000 3.30
2023 325,000 3.50
2024 335,000 3.75
2025 350,000 3.75
2028 1,125,000 4.00
2031 1,280,000 4.25
2035 1,970,000 4.50
2040 3,050,000 4.55
The Bonds shall be obligations only of the Bond Fund and shall be payable and secured
as provided herein. The Bonds shall not be general obligations of the City.
Section 6. Place and Medium of Payment. The principal of and interest on the Bonds
shall be payable in lawful money of the United States of America. Interest on the Bonds shall be
calculated on the basis of a 360-day year and twelve 30-day months. For so long as all Bonds
are in fully-immobilized form, such payments of principal and interest thereon shall be made as
provided in the operational arrangements of DTC as referred to in the Letter of Representations.
In the event that the Bonds are no longer in fully-immobilized form, interest on the Bonds
shall be paid by check or draft mailed to the Registered Owners of the Bonds at the addresses for
such Registered Owners appearing on the Bond Register on the 15th day of the month preceding
the interest payment date. Principal of the Bonds shall be payable upon presentation and
surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar.
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Section 7. Registration.
(a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system
of registration approved by the Washington State Finance Committee from time to time through
the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by
the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all
necessary provisions to permit the exchange or registration or transfer of Bonds at its principal
corporate trust office. The Bond Registrar maybe removed at any time at the option of the City
upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the City.
No resignation or removal of the Bond Registrar shall be effective until a successor shall have
been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond
Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and
deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this
ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance.
The Bond Registrar shall be responsible for its representations contained in the Certificate of
Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all
purposes (except as provided in Section 20 of this ordinance), and neither the City nor the Bond
Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be
made only as described in Section 6 hereof, but such Bond may be transferred as herein
provided. All such payments made as described in Section 6 shall be valid and shall satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
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(c) DTC Acceptance/Letters of Representations. The Bonds initially shall be held in
fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as
eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter
of Representations. Neither the City nor the Bond Registrar will have any responsibility or
obligation to DTC participants or the persons for whom they act as nominees (or the participants
of any successor depository or those for who any such successor acts as nominee) with respect to
the Bonds in respect of the accuracy of any records maintained by DTC (or any successor
depository) or any DTC participant, the payment by DTC (or any successor depository) or any
DTC participant of any amount in respect of the principal of or interest on Bonds, any notice
which is permitted or required to be given to Registered Owners under this ordinance (except
such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any
successor depository)), or any consent given or other action taken by DTC (or any successor
depository) as the Registered Owner. For so long as any Bonds are held in fully-immobilized
form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for
all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or
any successor depository) or its nominee and shall not mean the owners of any beneficial interest
in such Bonds.
If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid
principal thereof at the rate stated on such Bond until it is paid.
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(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede & Co.", as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a
denomination corresponding to the total principal therein designated to mature on such date.
Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be
transferred except (A) to any successor of DTC or its nominee, provided that any such successor
shall be qualified under any applicable laws to provide the service proposed to be provided by it;
(B) to any substitute depository appointed by the City Representative pursuant to subsection (2)
below or such substitute depository's successor; or (C) to any person as provided in
subsection (4) below.
(2) Upon the resignation of DTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the City Representative to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the City Representative may hereafter appoint a substitute
depository. Any such substitute depository shall be qualified under any applicable laws to
provide the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1)
above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written
request of the City Representative, issue a single new Bond for each maturity then outstanding,
registered in the name of such successor or such substitute depository, or their nominees, as the
case maybe, all as specified in such written request of the City Representative.
(4) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be obtained,
_20_ P:\20287 CMW\20287 8W5
or (B) the City Representative determines that it is in the best interest of the beneficial owners of
the Bonds that such owners be able to obtain such bonds in the form of Bond certificates, the
ownership of such Bonds may then be transferred to any person or entity as herein provided, and
shall no longer be held in fully-immobilized form. The City Representative shall deliver a
written request to the Bond Registrar, together with a supply of definitive Bonds, to issue Bonds
as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all
then outstanding Bonds together with a written request of the City Representative to the Bond
Registrar, new Bonds shall be issued in the appropriate denominations and registered in the
names of such persons as are requested in such written request.
(e) Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any
such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form
appearing on such Bond duly executed by the Registered Owner or such Registered Owner's
duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the
Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without
charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the
new Registered Owner) of the same date, maturity and interest rate and for the same aggregate
principal amount in any authorized denomination, naming as Registered Owner the person or
persons listed as the assignee on the assignment form appearing on the surrendered Bond, in
exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond
Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of
the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar
_2 1 - P:\20287 CMW\20287 8W5
shall not be obligated to register the transfer or to exchange any Bond during the 15 days
preceding any interest payment or principal payment date any such Bond is to be redeemed.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the
Registered Owner of any Bond with the same rights it would have if it were not the Bond
Registrar, and to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as member of, or in any other capacity with respect to, any committee
formed to protect the right of the Registered Owners of Bonds.
(g) Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
Section 8. Redemption and Purchase.
(a) Optional Redemption. The Bonds maturing on and prior to December 1, 2020 are
not subject to optional redemption in advance of their scheduled maturity. The Bonds maturing
on and after December 1, 2021 are subject to redemption at the option of the City on and after
December 1, 2020 in whole or in part (and if in part, with maturities to be selected by the City)
on any date at a price of par plus accrued interest to the date of redemption.
(b) Mandatory Redemption. Unless redeemed pursuant to the foregoing optional
redemption provisions, the Bonds maturing on December 1 in the years 2028, 2031, 2035 and
2040 are Term Bonds and are subject to mandatory redemption at a price of par plus accrued
interest to the date of redemption on December 1 of the following years in the following
principal amounts:
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Redemption Years
2026
2027
2028*
Redemption Amounts
$ 360,000
375,000
390,000
*Final Maturity
Redemption Years
2029
2030
2031*
Redemption Amounts
$ 410,000
425,000
445,000
*Final Maturity
Redemption Years
2032
2033
2034
2035*
Redemption Amounts
$ 460,000
480,000
505,000
525,000
*Final Maturity
Redemption Years
2036
2037
2038
2039
2040*
Redemption Amounts
$ 555,000
580,000
610,000
640,000
665,000
*Final Maturity
(c) Purchase of Bonds for Retirement. The City reserves the right to use at any time
any surplus Gross Revenue available after providing for the payments required by paragraphs
First, through Fifth of Section 9 of this ordinance, or other available funds, to purchase any of the
Bonds offered to the City at any price deemed reasonable by the City to purchase any of the
Bonds offered to the City at any price deemed reasonable to the City.
(d) Selection of Bonds .for Redemption. For as long as the Bonds are held in
book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall be
made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no
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longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender
and reissuance thereof, as applicable, shall be made as provided in the following provisions of
this subsection (d). If the City redeems at any one time fewer than all of the Bonds having the
same maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed
shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of
$5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond
Registrar shall treat each Bond as representing such number of separate Bonds each of the
denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by
$5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon
surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the
Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum
thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate
in any of the denominations herein authorized.
(e) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held in uncertificated form,
notice of redemption (which notice may be conditional) shall be given in accordance with the
operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar
will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Bonds are no
longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter
provided. Unless waived by any owner of Bonds to be redeemed, official notice of any such
redemption (which redemption shall be conditioned by the Bond Registrar on the receipt of
sufficient funds for redemption) shall be given by the Bond Registrar on behalf of the City by
mailing a copy of an official redemption notice by first class mail at least 20 days and not more
'24' P:\20287 CMW\20287 8W5
than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or
Bonds to be redeemed at the address shown on the Bond Register or at such other address as is
furnished in writing by such Registered Owner to the Bond Registrar. Mailed notices will also
be sent within the same period to the Underwriter or its business successor, if any.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
(C) if fewer than all outstanding Bonds are to be redeemed, the identification
by maturity (and, in the case of partial redemption, the respective principal amounts) of the
Bonds to be redeemed,
(D) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption, and that interest thereon
shall cease to accrue from and after said date, and
(E) the place where such Bonds are to be surrendered for payment of the
redemption price, which place of payment shall be the principal office of the Bond Registrar.
On or prior to any redemption date, unless the redemption notice was conditional and the
City shall thereafter have determined not to proceed with the redemption, the City shall deposit
with the Bond Registrar an amount of money sufficient to pay the redemption price of all the
Bonds or portions of Bonds which are to be redeemed on that date.
(2) Effect of Notice; Bonds Due. If an unconditional official notice of
redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed
shall, on the redemption date, become due and payable at the redemption price therein specified,
and from and after such date (unless the City shall default in the payment of the redemption
_25_ P:\20287 CMW\20287 SWS
price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such
Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond
Registrar at the redemption price. Installments of interest due on or prior to the redemption date
shall be payable as herein provided for payment of interest. All Bonds which have been
redeemed shall be canceled and destroyed by the Bond Registrar and shall not be reissued.
(3) Additional Notice. In addition to the foregoing notice, further notice shall
be given by the City as set out below, but no defect in said further notice nor any failure to give
all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed. Each further notice of redemption
given hereunder shall contain the information required above for an official notice of redemption
plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as
originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the maturity
date of each Bond being redeemed; and (E) any other descriptive information needed to identify
accurately the Bonds being redeemed. Each further notice of redemption may be sent at least
35 days before the redemption date to each party entitled to receive notice pursuant to
Section 20, and to the Underwriter or to its business successor, if any, and to such persons and
with such additional information as the City Representative shall deem appropriate, but such
mailings shall not be a condition precedent to the redemption of such Bonds.
(4) CUSIP Number. Upon the payment of the redemption price of Bonds
being redeemed, each check or other transfer of funds issued for such purpose shall bear the
CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds
of such check or other transfer.
_26_ P:\20287 CMW\20287 SWS
(5) Amendment of Notice Provisions. The foregoing notice provisions of this
Section 5, including but not limited to the information to be included in redemption notices and
the persons designated to receive notices, may be amended by additions, deletions and changes
in order to maintain compliance with duly promulgated regulations and recommendations
regarding notices of redemption of municipal securities.
Section 9. Revenue Fund and Priority of Application of Revenue. There has
heretofore been created by the City a special fund of the City known as the "Water Department
Fund No. 401" (the "Revenue Fund") into which shall be deposited the Revenue of the System
as collected. The Revenue Fund shall be held separate and apart from all other funds and
accounts of the City and the Revenue of the System deposited in such Fund shall be used only
for the following purposes and in the following order of priority:
First, to pay the Costs of Maintenance and Operation of the System;
Second, to pay the interest on any Parity Bonds, including reimbursements to the issuer
of a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or
Qualified Insurance secures the payment of interest on Parity Bonds and the ordinance
authorizing such Parity Bonds provides for such reimbursement;
Third, to pay the principal of any Parity Bonds, including reimbursements to the issuer of
a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or Qualified
Insurance secures the payment of principal of Parity Bonds and the ordinance authorizing such
Parity Bonds provides for such reimbursement;
Fourth, to make all payments required to be made into the Reserve Fund, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified Insurance if the
'2 /' P:\20287 CMW\20287 8W5
Qualified Letter of Credit or Qualified Insurance has been issued to fund a Reserve Requirement
and the ordinance authorizing such Parity Bonds provides for such reimbursement;
Fifth, to make all payments required to be made into any revenue bond redemption fund
or revenue warrant redemption fund and debt service fund or reserve fund created to pay and
secure the payment of the principal of and interest on any other revenue bonds or revenue
warrants of the City having a lien upon the Revenue of the System junior and inferior to the lien
thereon for the payment of the principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding revenue bonds or revenue
warrants of the City, to make necessary additions, betterments, improvements and repairs to or
extensions and replacements of the System, or for any other lawful City purposes.
The City may transfer any money from any funds or accounts of the System legally
available therefor, except bond redemption funds, refunding escrow funds or defeasance funds,
to meet the required payments to be made into the Bond Fund.
Section 10. Bond Fund and Reserve Fund. The Treasurer is hereby authorized to
maintain two special funds of the City known as the "Water Revenue Debt Redemption Fund"
(the "Bond Fund") and the "Water Revenue Debt Reserve Fund" (the "Reserve Fund") for the
purpose of paying and securing the payment of all Parity Bonds.
(a) Payments into Bond Fund. The Bond Fund shall be maintained for the purpose of
paying the principal of and interest on all Parity Bonds.
As long as any Parity Bond remains outstanding, the City hereby irrevocably obligates
and binds itself to set aside and pay from the Revenue Fund into the Bond Fund those amounts
necessary, together with such other funds as are on hand and available in the Bond Fund, to pay
the interest or principal and interest next coming due on outstanding Parity Bonds. Such
~28' P:\20287 CMW\20287 SW5
payments from the Revenue Fund to the Bond Fund shall be made in a fixed amount without
regard to any fixed proportion following the closing and delivery of the Bonds on or before each
date on which an installment of interest or principal and interest falls due on Parity Bonds equal
to the installment of interest or principal and interest.
The City Treasurer is hereby authorized and directed and the City hereby obligates and
binds itself to set aside and pay into the Bond Fund all ULID Assessments as the same are
collected.
(b) Payments into Reserve Fund. The Reserve Fund shall be maintained for the
purpose of securing the payment of the principal of and interest on Parity Bonds. The City
covenants and agrees that from and after the closing and delivery of the Bonds, it will at all times
maintain an amount in the Reserve Fund at least equal to the Reserve Requirement except for
withdrawals therefrom authorized hereinafter, at all times for so long as any Parity Bonds remain
outstanding. The increase in the Reserve Requirement occurring as a result of the issuance of the
Bonds will be satisfied by a deposit in the amount of $677,148.00 from the proceeds of the
Bonds. The Reserve Requirement may be maintained by deposits of cash, a Qualified Letter of
Credit or Qualified Insurance, or a combination of the foregoing. In computing the amount on
hand in the Reserve Fund, Qualified Insurance and/or a Qualified Letter of Credit shall be valued
at the face amount thereof, and all other obligations purchased as an investment of moneys
therein shall be valued at cost. As used herein, the term "cash" shall include U.S. currency, cash
equivalents and evidences thereof, including demand deposits, certified or cashier's check; and
the deposit to the Reserve Fund may be satisfied initially by the transfer of qualified investments
to such account.
_2>- P:\20287 CMW\20287 8W5
If the balances on hand in the Reserve Fund are sufficient to satisfy the Reserve
Requirement, interest earnings shall be applied as provided in the following sentences.
Whenever there is a sufficient amount in the Bond Fund, including the Reserve Fund and the
Bond Fund to pay the principal of and interest on all outstanding Bonds, the money in the
Reserve Fund may be used to pay such principal and interest. As long as the money left
remaining on deposit in the Reserve Fund is equal to the Reserve Requirement, money in the
Reserve Fund maybe transferred to the Bond Fund and used to pay the principal of and interest
on the Bonds as the same becomes due and payable. The City also may transfer out of the
Reserve Fund any money required in order to prevent any Parity Bonds from becoming
"arbitrage bonds" under the Code.
If a deficiency in the Bond Fund shall occur, such deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and by the sale or redemption
of obligations held in the Reserve Fund, in such amounts as will provide cash in the Reserve
Fund sufficient to make up any such deficiency with respect to Parity Bonds, and if a deficiency
still exists immediately prior to an interest payment date and after the withdrawal of cash, the
City shall then draw from any Qualified Letter of Credit or Qualified Insurance for the Bonds in
sufficient amount to make up the deficiency. Such draw shall be made at such times and under
such conditions as the agreement for such Qualified Letter of Credit or such Qualified Insurance
shall provide.
In making the payments and credits to the Reserve Fund required by this Section 10(b), to
the extent that the City has obtained Qualified Insurance or a Qualified Letter of Credit for
specific amounts required pursuant to this section to be paid out of the Reserve Fund such
amounts so covered by Qualified Insurance or a Qualified Letter of Credit shall be credited
_30_ P:\20287 CMW120287 8W5
against the amounts required to be maintained in the Reserve Fund by this Section 9(b) to the
extent that such payments and credits to be made are insured by an insurance company, or
guaranteed by a letter of credit from a financial institution.
All money not required to be deposited in the Reserve Fund either may be transferred to
the Bond Fund as needed or may be used for any lawful purpose of the City.
Any Qualified Letter of Credit or Qualified Insurance shall not be cancelable on less than
30 days' notice to the City. In the event of any cancellation, the Reserve Fund shall be funded as
if the Parity Bonds that remain outstanding had been issued on the date of such notice of
cancellation.
In the event that the City elects to meet the Reserve Requirement through the use of a
Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device,
the City may contract with the entity providing such Qualified Letter of Credit, Qualified
Insurance or other equivalent credit enhancement device that the City's reimbursement
obligation, if any, to such entity shall be made from payments of principal and interest on Parity
Bonds from the City subject only to the prior lien thereon for the payments required hereunder to
be made to registered owners of Parity Bonds.
In the event a deficiency in the Bond Fund shall occur such deficiency shall be made up
from the Reserve Fund by the withdrawal of cash therefrom for that purpose and by the sale or
redemption of obligations held in the Reserve Fund, if necessary, in such amounts as will
provide cash in the Reserve Fund sufficient to make up any such deficiency, and if a deficiency
still exists immediately prior to an interest payment date and after the withdrawal of cash, the
City shall then draw from any Qualified Letter of Credit, Qualified Insurance, or other equivalent
credit facility in sufficient amount to make up the deficiency. Such draw shall be made at such
_3 1 - P:\20287 CMW\20287 8W5
times and under such conditions as the agreement for such Qualified Letter of Credit or such
Qualified Insurance shall provide. Any deficiency created in the Reserve Fund by reason of any
such withdrawal shall then be made up within one year of the date of withdrawal from Net
Revenues or from ULID Assessments (or out of any other moneys on hand legally available for
such purpose) after making necessary provision for the payments required to be made into the
Bond Fund within such year.
(c) Priority of Lien of Payments into Bond Fund and Reserve Fund. The amounts so
pledged to be paid into the Bond Fund and the Reserve Fund from the Revenue Fund and from
ULID Assessments are hereby declared to be a prior lien and charge upon the Revenue of the
System and ULID Assessments superior to all other charges of any kind or nature whatsoever
except the Costs of Maintenance and Operation of the System, and except that the amounts so
pledged are of equal lien to the charges upon such Revenue and ULID Assessments for the
payment of the principal of and interest on the 2003 Bonds and any Future Parity Bonds.
(d) Application and Investment of Moneys in the Bond Fund and Reserve Fund.
Money in the Bond Fund and Reserve Fund may be kept in cash or invested as permitted by law.
Investments in the Bond Fund shall mature prior to the date on which such money shall be
needed for required interest or principal payments (for investments in the Bond Fund) or having
a guaranteed redemption price prior to maturity. Investments in the Reserve Fund shall mature
not later than the last maturity of any then outstanding Parity Bonds. All interest earned and
income derived by virtue of such investments shall remain in the Bond Fund or the Reserve
Fund, as specified by the City Treasurer, and be used to meet the required deposits therein.
(e) Sufficiency of Revenues. The City Council hereby finds that in fixing the amounts
to be paid into the Bond Fund and the Reserve Fund out of the Revenue of the System, it has
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exercised due regard for the Costs of Maintenance and Operation and has not obligated the City
to set aside and pay into the Bond Fund and the Reserve Fund a greater amount of such Revenue
than in its judgment will be available over and above the Costs of Maintenance and Operation.
Section 11. Specific Covenants.
(a) Rate Covenant. The City will establish, maintain and collect such rates and
charges for service of its System for so long as any Bonds are outstanding as will maintain the
Rate Covenant.
(b) System Maintenance. The City will at all times maintain and keep the System in
good repair, working order and condition, and also will at all times operate such utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) Disposal of Properties. The City will not mortgage, sell, lease, or in any manner
encumber or dispose of all or substantially all the property of the System (voluntarily or
involuntarily), unless provision is made for payment into the Bond Fund of a sum sufficient to
pay the principal of, premium, if any, and interest on all outstanding bonds payable therefrom,
nor will it mortgage, sell, lease, or in any manner encumber or dispose of (including but not
limited to a disposition by transfer to another public or private organization) voluntarily or
involuntarily any part of the System that is used, useful and material to the operation of the
System unless
(1) the City certifies, based upon reasonable expectations, that the remaining
assets of the System shall be sufficient to continue regular operations of the City on a financially
sound basis for a period of at least five years and
-33- P:~zozs~ cnnw~zozs~ sws
(2) provision is made for replacement thereof or for payment into the Bond
Fund of the total amount of revenue received which shall not be less than an amount which shall
bear the same ratio to the amount of outstanding Parity Bonds as the greater of
(A) the Net Revenue available for Debt Service for such outstanding
Parity Bonds for the 12 months preceding such sale, lease, encumbrance or disposal from the
portion of the System sold, leased, encumbered or disposed of bears to the Net Revenue
available for Debt Service for such Parity Bonds from the entire System for the same period;
(B) the Revenue of the System for the 12 months preceding such sale,
lease, encumbrance or disposal from the portion of the System sold, leased, encumbered or
disposed of bears to the Revenue of the System for the same period;
(C) the proportion of assets (on a depreciated basis) allocable to the
assets being sold, leased, encumbered or disposed of bears to the total assets of the System; or
(D) the proportion of customers of the City allocable to the assets
being sold, leased, encumbered or disposed of bears to the total number of customers of the
System, provided, however, that the City may dispose of any portion of the facilities of the
System up to an aggregate of five percent of the book value of the total assets of the System
without the requirement for any deposit to the Bond Fund as hereinabove provided.
Any such moneys so paid into the Bond Fund shall be used to retire such outstanding
Parity Bonds at the earliest possible date. Any money received by the City as condemnation
awards, insurance proceeds or the proceeds of sale, if not deposited to the Bond Fund, shall be
used for the replacement of facilities of the System.
(d) Books and Records. The City will, while any of the Bonds remains outstanding,
keep proper and separate accounts and records in which complete and separate entries shall be
-34- P ~zoza~ cnnw~zoza~ aws
made of all transactions relating to the System, and it will furnish the original purchaser or
purchasers of the Bonds or any subsequent owner or owners thereof, at the written request of
such owner or owners, complete operating and income statements of the System in reasonable
detail covering any fiscal year, showing the financial condition of the water departments and
compliance with the terms and conditions of this ordinance, not more than 120 days after the
close of such fiscal year, and it will grant any owner or owners of at least 25% of the outstanding
Bonds the right at all reasonable times to inspect the entire System and all records, accounts and
data of the City relating thereto. Upon request of any owner of any of said Bonds, it will also
furnish to such owner a copy of the most recently completed audit of the City's accounts by the
State Auditor of Washington or independent certified public accountant.
(e) No Free Service. The City will not furnish water service to any customer
whatsoever free of charge (except to aid the poor or infirm, to provide for resource conservation
or to provide for the proper handling of hazardous materials) and will promptly take legal action
to enforce collection of all delinquent accounts.
(f) Property Insurance. The City will at all times carry fire and extended coverage
and such other forms of insurance on the buildings, equipment, facilities and properties of the
System, if such insurance is obtainable at reasonable rates and upon reasonable conditions,
against such risks, in such amounts, and with such deductibles as the Council shall deem
necessary for the protection of the System and the owners of all outstanding Parity Bonds.
(g) Liability Insurance. The City will at all times keep and arrange to keep in full
force and effect policies of public liability and property damage insurance which will protect the
City against anyone claiming damages of any kind or nature arising out of the operation of the
System, if such insurance is obtainable at reasonable rates and upon reasonable conditions, in
_35_ P:\20287 CMW\20287 8W5
such amounts and with such deductibles as the Council shall deem necessary for the protection
of the City and the owners of the outstanding Parity Bonds.
(h) Delinquencies of Accounts. The City will, on or before April 1 of each calendar
year, determine all accounts that are delinquent and will take all necessary action to enforce
payment of any such delinquencies.
(i) ULID Assessments. All ULID Assessments shall be paid into the Bond Fund and
shall be used to pay and secure the payment of the principal of and interest on the Bonds and
Future Parity Bonds. Nothing in this ordinance or this section shall be construed to prohibit the
City from issuing water revenue bonds junior in lien to the Bonds and pledging as security for
their payment assessments levied in any ULID which may have been specifically created to pay
part of the cost of improvements to the System for which those junior lien bonds were
specifically issued.
Section 12. Tax Covenants. The City covenants that it will not take or permit to be
taken on its behalf any action that would adversely affect the exemption from federal income
taxation of the interest on the Bonds and will take or require to be taken such acts as may
reasonably be within its ability and as may from time to time be required under applicable law to
continue the exemption from federal income taxation of the interest on the Bonds.
(a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City
covenants that it will not take any action or fail to take any action with respect to the proceeds of
sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the
Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if
such use had been reasonably expected on the dates of delivery of the Bonds to the initial
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purchasers thereof, would have caused the Bonds to be treated as "arbitrage bonds" within the
meaning of such term as used in Section 148 of the Code.
The City represents that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not
be relied upon. The City will comply with the requirements of Section 148 of the Code and the
applicable regulations thereunder throughout the term of the Bonds.
(b) Private Person Use Limitation for Bonds. The City covenants that for as long as
the Bonds are outstanding, it will not permit:
(1) More than 10% of the Net Proceeds of the Bonds to be allocated to any
Private Person Use; and
(2) More than 10% of the principal or interest payments on the Bonds in a
Bond Year to be directly or indirectly: (A) secured by any interest in property used or to be used
for any Private Person Use or secured by payments in respect of property used or to be used for
any Private Person Use, or (B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use.
The City further covenants that, if:
(3) More than five percent of the Net Proceeds of the Bonds are allocable to
any Private Person Use; and
(4) More than five percent of the principal or interest payments on the Bonds
in a Bond Year are (under the terms of this ordinance or any underlying arrangement) directly or
indirectly:
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(A) secured by any interest in property used or to be used for any
Private Person Use or secured by payments in respect of property used or to be used for any
Private Person Use, or
(B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use, then,
(i) any Private Person Use of the Project described in subsection (3) hereof or Private Person Use
payments described in subsection (4) hereof that is in excess of the five percent limitations
described in such subsections (3) or (4) will be for a Private Person Use that is related to the state
or local governmental use of the Project funded by the proceeds of the Bonds, and (ii) any
Private Person Use will not exceed the amount of Net Proceeds of the Bonds allocable to the
state or local governmental use portion of the Project(s) to which the Private Person Use of such
portion of the Project funded by the proceeds of the Bonds relate. The City further covenants
that it will comply with any limitations on the use of the Project funded by the proceeds of the
Bonds by other than state and local governmental users that are necessary, in the opinion of its
bond counsel, to preserve the tax exemption of the interest on the Bonds. The covenants of this
section are specified solely to assure the continued exemption from regular income taxation of
the interest on the Bonds.
(c) Modification of Tax Covenants. The covenants of this section are specified solely
to assure the continued exemption from regular income taxation of the interest on the Bonds. To
that end, the provisions of this section may be modified or eliminated without any requirement
for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such
modification or elimination will not adversely affect the tax exemption of interest on any Bonds.
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(d) Designation under Section 265(b). The City hereby designates the Bonds as
"qualified tax exempt obligations" for investment by financial institutions under Section 265(b)
of the Code. The City does not anticipate that it will issue more than $30,000,000 in qualified
tax-exempt obligations during 2010 (excluding obligations permitted by the Code to be excluded
for purposes of the City's qualification as a qualified small issuer).
Section 13. Issuance of Future Parity Bonds. The City hereby further covenants and
agrees with the owners of each of the Bonds for as long as any of the same remain outstanding as
follows:
(a) Conditions upon the Issuance of Future Parity Bonds. As long as any Bonds
remain outstanding, the City hereby further covenants and agrees that it will not issue any Future
Parity Bonds except that the City hereby reserves the right to issue additional revenue bonds,
which shall constitute a charge and lien upon the Revenue of the System equal to the lien thereon
of the Bonds. Except as provided in subsection (b) below, the City shall not issue any series of
Future Parity Bonds or incur any additional indebtedness with a parity lien or charge on Net
Revenues (i. e., on a parity of lien with Parity Bonds at the time outstanding) unless:
(1) the City shall not have been in default of its Rate Covenant for the
immediately preceding fiscal year, and
(2) the ordinance authorizing the issuance of such Future Parity Bonds shall
provide that the Reserve Requirement shall be funded no later than the date of delivery of the
Future Parity Bonds.
(3) there shall have been filed a certificate (prepared as described in
subsection (c) or (d) below) demonstrating fulfillment of the Parity Requirement, commencing
with the first full fiscal year following the date on which any portion of interest on the series of
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Future Parity Bonds then being issued no longer will be paid from the proceeds of such series of
Future Parity Bonds.
(b) No Certificate Requirea'. The certificate described in the foregoing
subsection (a)(3) shall not be required as a condition to the issuance of Future Parity Bonds:
(1) if the Future Parity Bonds being issued are for the purpose of refunding
outstanding Parity Bonds; or
(2) if the Future Parity Bonds are being issued to pay costs of construction of
facilities of the System for which Future Parity Bonds have been issued previously and the
principal amount of such Future Parity Bonds being issued for completion purposes does not
exceed an amount equal to an aggregate of 15% of the principal amount of Future Parity Bonds
theretofore issued for such facilities and reasonably allocable to the facilities to be completed as
shown in a written certificate of the City Representative, and there is delivered a Consultant's
certificate stating that the nature and purpose of such facilities has not materially changed.
(c) Certificate of the City Without A Consultant. If required pursuant to the foregoing
subsection (a)(3), a certificate may be delivered by the City (executed by the City
Representative) without a Consultant if Net Revenues for the Base Period (confirmed by an
independent auditor) conclusively demonstrate that the Parity Requirement will be fulfilled
commencing with the first full fiscal year following the date on which any portion of interest on
the series of Future Parity Bonds then being issued will not be paid from the proceeds of such
series of Future Parity Bonds.
(d) Certificate of a Consultant. Unless compliance with the requirements of
subsection (a)(3) have been otherwise satisfied (as provided in (b) or (c) above), compliance with
the Parity Requirement shall be demonstrated conclusively by a certificate of a Consultant.
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In making the computations of Net Revenues for the purpose of certifying compliance
with the Parity Requirement, the Consultant shall use as a basis the Net Revenues for the Base
Period. Such Net Revenues shall be determined by adding the following:
(1) The historical net revenue of the City for any 12 consecutive months out
of the 30 months immediately preceding the month of delivery of the Future Parity Bonds being
issued as determined by a Consultant.
(2) The net revenue derived from those customers of the City that have
become customers during such 12-month period or thereafter and prior to the date of such
certificate, adjusted to reflect a full year's net revenue from each such customer to the extent
such net revenue was not included in (1) above.
(3) The estimated annual net revenue to be derived from any person, firm,
association, private or municipal corporation under any executed contract for service, which net
revenue was not included in any of the sources of net revenue described in this subsection (d).
(4) The estimated annual net revenue to be derived from the operation of any
additions or improvements to or extensions of the City under construction but not completed at
the time of such certificate and not being paid for out of the proceeds of sale of such Future
Parity Bonds being issued, and which net revenue is not otherwise included in any of the sources
of net revenue described in this subsection (d).
(5) The estimated annual net revenue to be derived from the operation of any
additions and improvements to or extensions of the City being paid for out of the proceeds of
sale of such Bonds being issued.
In the event the City will not derive any revenue as a result of the construction of the
additions, improvements or extensions being made or to be made to the System within the
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provisions of subparagraphs (4) and (5) immediately above, the estimated normal Costs of
Maintenance and Operation (excluding any transfer of money to other funds of the City and
license fees, taxes and payments in lieu of taxes payable to the City) of such additions,
improvements and extensions shall be deducted from estimated annual net revenue.
The words "historical net revenue" or "net revenue" as used in this subsection (d) shall
mean the Revenue of the System or any part or parts thereof less the Costs of Maintenance and
Operation, but before depreciation.
Such "historical net revenue" or "net revenue" shall be adjusted to reflect the rates and
charges effective on the date of such certificate if there has been any change in such rates and
charges during or after such 12-consecutive-month period.
(e) Subordinate Lien Obligations. Nothing herein contained shall prevent the City
from issuing revenue bonds or other obligations which are a charge upon the Revenue of the
System junior or inferior to the payments required by this ordinance to be made out of such
Revenue to pay and secure the payment of any outstanding Parity Bonds.
(f) Refunding Obligations. Nothing herein contained shall prevent the City from
issuing revenue bonds to refund maturing Parity Bonds for the payment of which moneys are not
otherwise available.
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Section 14. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
No.
STATE OF WASHINGTON
CITY OF YELM
WATER REVENUE BOND, 2010
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & Co.
PRINCIPAL AMOUNT:
The City of Yelm, Washington, a municipal corporation organized and existing under and
by virtue of the laws of the State of Washington (the "City"), promises to pay to the Registered
Owner identified above, or registered assigns, on the Maturity Date identified above, solely from
the special fund of the City known as the "Water Revenue Debt Redemption Fund" (the "Bond
Fund"), the Principal Amount indicated above and to pay interest thereon from the Bond Fund
from September 8, 2010, or the most recent date to which interest has been paid or duly provided
for or until payment of this bond at the Interest Rate set forth above, payable on December 1,
2010, and semiannually thereafter on the first days of each June and December. Both principal
of and interest on this bond are payable in lawful money of the United States of America. For so
long as the bonds of this issue are held in fully immobilized form, payments of principal and
interest thereon shall be made as provided in accordance with the operational arrangements of
The Depository Trust Company ("DTC") referred to in the Blanket Issuer Letter of
Representations (the "Letter of Representations") from the City to DTC. The fiscal agency of
the state of Washington is acting as the registrar, authenticating agent and paying agent for the
bonds of this issue (the "Bond Registrar").
This bond is one of an authorized issue of bonds of the City of like date and tenor except
as to number, amount, rate of interest and date of maturity in the aggregate principal amount of
$10,965,000. This issue of bonds is authorized by the Bond Ordinance for the purposes of
paying the costs of capital improvements to the water system (the "System").
The bonds of this issue are subject to optional and mandatory redemption prior to their
scheduled maturity as provided in the Bond Ordinance.
The bonds of this issue are not general obligations of the City. The City hereby
covenants and agrees with the owner and holder of this bond that it will keep and perform all the
covenants of this bond and the Bond Ordinance.
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The bonds of this issue are not "private activity bonds" as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"). The City has designated bonds of this
issue as "qualified tax-exempt obligations" under Section 265(b) of the Code.
This bond is payable solely out of the Revenue of the System, and does not constitute a
general obligation of the City. Both principal of and interest on this bond are payable solely out
of the special fund of the City known as the Bond Fund. The City does hereby pledge and bind
itself to set aside and pay into the Bond Fund the amounts required by the Bond Ordinance to be
paid therein on or prior to the maturity of the Bond as the same shall become due from the
proceeds of the Bonds (as authorized in the Bond Ordinance) or from the sources and in the
priority specified in the Bond Ordinance.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by the Bond Registrar.
It is hereby certified that all acts, conditions, and things required by the Constitution and
statutes of the State of Washington to exist, to have happened, been done, and performed
precedent to and in the issuance of this bond have happened, been done, and performed.
IN WITNESS WHEREOF, the City of Yelm, Washington has caused this bond to be
signed with the facsimile signature of the Mayor, to be attested by the facsimile signature of the
City Clerk, and the corporate seal of the City to be reproduced hereon, all as of this 8th day of
September, 2010.
CITY OF YELM, WASHINGTON
By /s/ facsimile or manual
Mayor
ATTEST:
(SEAL)
/s/ facsimile or manual
City Clerk
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CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the bonds described in the within-mentioned Bond Ordinance and is
one of the Water Revenue Bonds, 2010 of the City of Yelm, Washington, dated September 8,
2010.
WASHINGTON STATE FISCAL
AGENCY, Bond Registrar
By
Authorized Officer
Section 15. Execution of Bonds. The Bonds shall be executed on behalf of the City
with the facsimile signature of the Mayor, shall be attested by the facsimile signature of the City
Clerk and shall have the seal of the City impressed, imprinted or otherwise reproduced thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated,
and delivered hereunder and are entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bonds shall cease to be an
officer or officers of the City before the Bonds so signed shall have been authenticated or
delivered by the Bond Registrar, or issued by the City, such Bonds shall be valid nevertheless
and maybe issued by the City with the same effect as though the persons who had executed such
Bonds had not ceased to be such officers.
Section 16. Defeasance. In the event that money and/or Governmental Obligations
maturing at such time or times and bearing interest to be earned thereon in amounts sufficient to
redeem and retire any bonds payable out of the Bond Fund in accordance with their terms are
irrevocably set aside in a special account to effect such redemption and retirement, then no
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further payments need be made into the Bond Fund for the payment of the principal of and
interest on such Bonds and the owner of such Bonds shall cease to be entitled to any lien, benefit
or security of this ordinance except the right to receive the funds so set aside and pledged, and
such Bonds shall be deemed not to be outstanding hereunder.
Within 45 days of any defeasance of Bonds, the City shall provide notice of defeasance
of Bonds to Registered Owners of Bonds being defeased, and to the MSRB, in accordance with
Section 20.
Section 17. Lost or Destroyed Bonds. In case any Bonds shall be lost, stolen or
destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount,
date and tenor to the owner thereof upon the owner's paying the expenses and charges of the
Bond Registrar and the City in connection therewith and upon his filing with the Bond Registrar
and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or
destroyed and of his ownership thereof, and upon furnishing the City and the Bond Registrar
with indemnity satisfactory to both.
Section 18. Sale of Bonds. The City hereby accepts the written offer of Martin Nelson
& Co., Seattle, Washington (the "Underwriter"). The Bonds shall be sold by negotiated sale to
the Underwriter under the terms of a bond purchase agreement dated as of this date. The City
Representative is hereby authorized and directed to execute and deliver such bond purchase
agreement.
The City Representative is hereby authorized to review and approve on behalf of the City
the preliminary and final Official Statements relative to the Bonds with such additions and
changes as may be deemed necessary or advisable to them. The preliminary Official Statement
for the Bonds dated August 10, 2010, is hereby deemed final within the meaning of
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SEC Rule 15c2-12. The proper City officials are hereby authorized and directed to do
everything necessary for the prompt execution and delivery of the Bonds to said Underwriter, in
accordance with the purchase agreement, and for the proper application and use of the proceeds
of sale thereof
Section 19. Disposition of Bond Proceeds. From the proceeds of the Bonds, a sum
sufficient to establish the Reserve Requirement shall be deposited in the Reserve Fund. The
Treasurer has heretofore established a special fund of the City designated as the "Water
Construction Fund No. 431" (the "Project Fund"). The balance of the proceeds of sale of the
Bonds shall be deposited in the Project Fund and shall be expended solely to pay the cost of
issuing and selling the Bonds and, together with other available moneys of the City, shall be used
to undertake the Project. Money in the Project Fund shall be invested by the Treasurer, pending
disbursement, in any legal investment for City funds.
Section 20. Undertaking to Provide Ongoing Disclosure.
(a) Contract/Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule.
(b) Financial Statements/Operating Data. The City agrees to provide or cause to be
provided to the Municipal Securities Rulemaking Board ("MSRB"), the following annual
financial information and operating data for the prior fiscal year (commencing in 2011 for the
fiscal year ended December 31, 2010):
1. Annual financial statements, which statements may or may not be audited,
showing ending fund balances for the City's water and sewer funds prepared in accordance with
the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor
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pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the
official statement for the Bonds under the heading "Historical Operating Results";
2. Statement of authorized, issued and outstanding Parity Bonds;
3. Number of water utility and sewer utility customers; and
4. Debt service coverage ratios for Parity Bonds.
Items 2-5 shall be required only to the extent that such information is not included in the annual
financial statements.
The information and data described above shall be provided on or before nine months
after the end of the City's fiscal year. The City's current fiscal year ends December 31. The
City may adjust such fiscal year by providing written notice of the change of fiscal year to the
MSRB. In lieu of providing such annual financial information and operating data, the City may
cross-reference to other documents available to the public on the MSRB's internet website.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with the Budgeting
Accounting and Reporting System prescribed by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute) when and if available to the MSRB.
(c) Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the MSRB notice of the occurrence of any of the following events with respect to the
Bonds if material:
• Principal and interest payment delinquencies;
• Non-payment related defaults;
• Unscheduled draws on debt service reserves reflecting financial
difficulties;
-48- P ~zoza~ cMw~zoza~ aws
• Unscheduled draws on credit enhancements reflecting financial
difficulties;
• Substitution of credit or liquidity providers, or their failure to
perform;
• Adverse tax opinions or events affecting the tax-exempt status of
the Bonds;
• Modifications to rights of owners;
• Optional, contingent or unscheduled Bond calls other than
scheduled sinking fund redemptions for which notice is given
pursuant to Exchange Act Release 34-23856;
• Defeasances;
• Release, substitution or sale of property securing the repayment of
the Bonds; and
• Rating changes.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that there is no property securing repayment of the Bonds.
(d) Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided, in a timely manner, to the MSRB, if any, notice of its failure to provide
the annual financial information described in subsection (b) above on or prior to the date set forth
in subsection (b) above.
(e) Emma; Format for Filings with the MSRB. Until otherwise designated by the
MSRB or the Securities and Exchange Commission, any information or notices submitted to the
MSRB in compliance with the Rule are to be submitted through the MSRB's Electronic
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Municipal Market Access system ("EMMA"), currently located at www.emma.msrb.org. All
notices, financial information and operating data required by this undertaking to be provided to
the MSRB must be in an electronic format as prescribed by the MSRB. All documents provided
to the MSRB pursuant to this undertaking must be accompanied by identifying information as
prescribed by the MSRB.
(f) Termination/Modification. The City's obligations to provide annual financial
information and notices of material events shall terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. This section, or any provision hereof, shall be
null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the
effect that those portions of the Rule which require this section, or any such provision, are
invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (2) notifies
the MSRB, if any, of such opinion and the cancellation of this section. Notwithstanding any
other provision of this ordinance, the City may amend this Section 20 and any provision of this
Section 20 maybe waived, with an approving opinion of nationally recognized bond counsel.
In the event of any amendment of or waiver of a provision of this Section 20, the City
shall describe such amendment in the next annual report, and shall include, as applicable, a
narrative explanation of the reason for the amendment or waiver and its impact on the type (or in
the case of a change of accounting principles, on the presentation) of financial information or
operating data being presented by the City. In addition, if the amendment relates to the
accounting principles to be followed in preparing financial statements, (I) notice of such change
shall be given in the same manner as for a material event under subsection (c), and (II) the
annual report for the year in which the change is made should present a comparison (in narrative
form and also, if practical, in quantitative form) between the financial statements as prepared on
-JO- P:\20287 CMW\20287 SWS
the basis of the new accounting principles and those prepared on the basis of the former
accounting principles.
(g) Bond Owner's Remedies Under This Section. A Bond owner's right or Beneficial
Owner's to enforce the provisions of this section shall be limited to a right to obtain specific
enforcement of the City's obligations hereunder, and any failure by the City to comply with the
provisions of this undertaking shall not be an event of default with respect to the Bonds under
this ordinance.
Section 21. Effective Date. This ordinance shall be effective five days from its
passage and publication as required by law.
ADOPTED by the City Council of the City of Yelm, Washington, and approved by its
Mayor at a regular meeting of said Council held this 24th day of August, 2010.
CITY OF YELM, WASkIINGTON
ATTEST:
~Y~
City Clerk
Mayor
-J 1 - P:\20287 CMW\20287 SW5
CERTIFICATE
I, the undersigned, City Clerk of the City of Yelm, Washington (the "City") and keeper of
the records of the City Council (the "Council"), DO HEREBY CERTIFY:
1. That the attached ordinance is a true and correct copy of Ordinance No. 922 of the
Council (the "Ordinance"), duly passed at a regular meeting thereof held on the 24t~ day of
August, 2010.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
legal quorum was present throughout the meeting and a legally sufficient number of members of
the Council voted in the proper manner for the passage of the Ordinance; that all other
requirements and proceedings incident to the proper passage of the Ordinance have been duly
fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this 24`x' day of August, 2010.
City Clerk
P:\20287 CMW\20287 8X8 06l22J10