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Ordinance 4050
ORDINANCE NO. 4050 AN ORDINANCE AUTHORIZING THE ISSUANCE OF SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS FOR THE PURPOSE OF REFUNDING THE CITY'S OUTSTANDING SALES TAX CAPITAL IMPROVEMENT BONDS, SERIES 1986; PLEDGING TWENTY PERCENT OF THE CITY'S SHARE OF WASHINGTON COUNTY'S I % SALES AND USE TAX TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has determined that in order to receive debt service savings it is in the best interest of the City to refund the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986, in the outstanding principal amount of $2,940,000 (the "Bonds Refunded") authorized by Ordinance No. 3224 of the City, adopted November 6, 1986 ("Ordinance No. 3224"); and WHEREAS, the Bonds Refunded were approved by the voters at the special election held October 7, 1986 in order to finance capital improvements, specifically a portion of the cost of acquiring, constructing and equipping a new Arts Center in the City, in joint venture with the University of Arkansas; and WHEREAS, the City can obtain the necessary funds for the refunding of the Bonds Refunded (the "refunding") by the issuance of Sales Tax Capital Improvement Refunding Bonds, Series 1997, in the aggregate principal amount of $2,610,000 (the "Series 1997 Bonds") and by appropriating available moneys held in certain of the funds established pursuant to the Trust Indenture dated November 15, 1986, authorized by Ordinance No. 3224 (the "Indenture"); and WHEREAS, the City has made arrangements for the sale of the Series 1997 Bonds to Stephens Inc. (the "Purchaser"), at a price of 99. 15% of par plus accrued interest (the "Purchase Price"), pursuant to a Bond Purchase Agreement between the Purchaser and the City (the "Agreement"), which has been presented to and is before this meeting; and WHEREAS, a final Official Statement, dated August 19, 1997 (the "Official Statement"), has been prepared and will be distributed in connection with the offer and sale of the Series 1997 Bonds; and WHEREAS, the Preliminary Official Statement, dated August 6, 1997, offering the Series 1997 Bonds for sale (the "Preliminary Official Statement"), has been presented to and is before this meeting; and WHEREAS, the Bonds Refunded are secured by a pledge of twenty percent (20%) of the City's share of the county-wide 1 % sales and use tax levied by Ordinance No. 97- 16 of the County adopted June 12, 1997; and Page 2 Ordinance No. 4050 August 19, 1997 WHEREAS, a Continuing Disclosure Agreement, dated September 1 , 1997 (the "Continuing Disclosure Agreement"), requiring the City to comply with the requirements of 17 C.F.R. § 240. 15c2-12 has been presented and is before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS, AS FOLLOWS : Section 1 . Authorization for Refunding. The refunding of the Bonds Refunded shall be accomplished, and the Mayor and City Clerk are hereby authorized to take all action necessary in connection therewith and to execute all required contracts and documents. Section 2. Acccntance of Offer to Purchase Bonds. The offer of the Purchaser for the purchase of the Series 1997 Bonds from the City at the Purchase Price, for Series 1997 Bonds bearing interest at the rates per annum, maturing and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail be and is hereby accepted and the Agreement, in substantially the form submitted to this meeting, is approved and confirmed and the Series 1997 Bonds are hereby sold to the Purchaser. The Mayor is hereby authorized and directed to execute and deliver the Agreement on behalf of the City and to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 3. Approval of Preliminary Official Statement. The Preliminary Official Statement is hereby approved and the previous use of the Preliminary Official Statement by the Purchaser in connection with the sale of the Series 1997 Bonds is hereby in all respects authorized, approved and confirmed, and the Mayor be and is hereby authorized and directed, for and on behalf of the City, to execute the Preliminary Official Statement and the final Official Statement in the name of the City to be delivered to the Purchaser for use in connection with the sale of the Series 1997 Bonds as set forth in the Agreement. The Mayor of the City is hereby authorized to execute, deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City. The Mayor's execution and delivery of the Official Statement shall constitute conclusive evidence of his approval of any such changes. Section 4. The Bonds. Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 are hereby authorized and ordered issued in the total principal amount of $2,610,000 the proceeds of the sale of which are necessary, along with available moneys held in funds established by the Indenture, to provide sufficient funds for accomplishing the refunding of the Bonds Refunded, Page 3 Ordinance No. 4050 August 19, 1997 paying expenses incidental thereto, and paying expenses of issuing the Series 1997 Bonds. The Series 1997 Bonds shall bear interest at the rates and shall mature on November 15 in the amounts and in the years as follows: Year Amount Interest Rate 1998 $290,000 4. 15% 1999 3055000 4.25% 2000 3155000 4.30% 2001 3305000 4.40% 2002 3457000 4.50% 2003 3605000 4.55% 2004 3755000 4.60% 2005 290,000 4.65% The Series 1997 Bonds shall be issuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Unless the City shall otherwise direct, the Series 1997 Bonds shall be numbered from 1 upward in order of issuance. Each Series 1997 Bond shall have a CUSIP number but the failure of a CUSIP number to appear on any Series 1997 Bond shall not affect its validity. Each Series 1997 Bond shall be dated September 1 , 1997. Interest on the Series 1997 Bonds shall be payable on November 15, 1997, and semiannually thereafter on May 15 and November 15 of each year. Payment of each installment of interest shall be made to the person in whose name the Series 1997 Bond is registered on the registration books of the City maintained by First Commercial Trust Company, National Association, Little Rock, Arkansas, as Trustee and Paying Agent (the "Trustee"), at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the 'Record Date"), irrespective of any transfer or exchange of any such Series 1997 Bond subsequent to such Record Date and prior to such interest payment date, by check or draft mailed by the Trustee to such owner at his address on such registration books. Payment of the interest on the Series 1997 Bonds shall also be made by wire transfer to the registered owner of a Series 1997 Bond or Bonds upon the request of such owner if such owner is the registered owner of$ 1 ,000,000 or more in principal amount of Series 1997 Bonds. Principal of the Series 1997 Bonds shall be payable upon surrender at maturity at the corporate trust office of the Trustee. Each Series 1997 Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from September 1 , 1997, or unless it is authenticated during the a � Page 4 Ordinance No. 4050 August 19, 1997 period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication thereof interest is in default thereon, in which event it shall bear interest from the date to which interest has been paid. Only such Series 1997 Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Section 6 hereof(the "Certificate") duly executed by the Trustee shall be entitled to any right or benefit under this Ordinance. No Series 1997 Bond shall be valid and obligatory for any purpose unless and until the Certificate shall have been duly executed by the Trustee, and the Certificate of the Trustee upon any such Series 1997 Bond shall be conclusive evidence that such Series 1997 Bond has been authenticated and delivered under this Ordinance. The Certificate shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the Series 1997 Bonds. In case any Series 1997 Bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Series 1997 Bond of like date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Series 1997 Bond, or in lieu of and in substitution for such Series 1997 Bond destroyed or lost, upon the owner paying the reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a Series 1997 Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such Series 1997 Bond was destroyed or lost, and of his ownership thereof, and fiunishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Series 1997 Bond. In the event any such Series 1997 Bond shall have matured, instead of issuing a new Series 1997 Bond, the Trustee may pay the same without the surrender thereof. Upon the issuance of a new Series 1997 Bond under this Section 4, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. The City shall cause books to be maintained by the Trustee for the registration and for the transfer of the Series 1997 Bonds as provided herein and in the Series 1997 Bonds. The Trustee shall act as the bond registrar. Each Series 1997 Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Series 1997 Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. Series 1997 Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Series 1997 Bonds of any other authorized denomination or denominations. The City shall execute and the Trustee shall authenticate and deliver Series 1997 1 , Page 5 Ordinance No. 4050 August 19, 1997 Bonds which the registered owner making the exchange is entitled to receive. The execution by the City of any Series 1997 Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall be thereby authorized to authenticate and deliver such Series 1997 Bond. No charge shall be made to any owner of any Series 1997 Bond for the privilege of transfer or exchange, but any owner of any Series 1997 Bond requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Series 1997 Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the Trustee nor the City shall be required (i) to issue, transfer or exchange any Series 1997 Bond during a period beginning at the opening of business 15 days before any selection of Series 1997 Bonds of that maturity for redemption and ending at the close of business on the day of the first mailing of the relevant notice of redemption, or (ii) to transfer or exchange any Series 1997 Bonds selected for redemption in whole or in part. The person in whose name any Series 1997 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest on any Series 1997 Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 1997 Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Series 1997 Bonds or the date fixed for redemption of any Series 1997 Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Section 5. Signatures. The Series 1997 Bonds shall be executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. Section 6. Bond Form. The Series 1997 Bonds and the Certificate shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: ' I Page 6 Ordinance No. 4050 August 19, 1997 (Form of Bond) REGISTERED REGISTERED UNITED STATES OF AMERICA, STATE OF ARKANSAS COUNTY OF WASHINGTON No. $ CITY OF FAYETTEVILLE SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 Interest Dated Maturity Rate: _% Date: September 1 , 1997 Date: November 15, _ CUSIP: Registered Owner: Principal Amount: Dollars The City of Fayetteville, County of Washington, State of Arkansas (the "City"), a city of the first class, duly created under the laws of the State of Arkansas, for value received, hereby promises to pay to the Registered Owner shown above, upon presentation and surrender of this bond at the corporate trust office of First Commercial Trust Company, National Association, Little Rock, Arkansas, or its successor or successors, as Trustee and Paying Agent (the "Trustee"), on the Maturity Date shown above, the Principal Amount shown above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay by check or draft to the Registered Owner shown above interest thereon, in like coin or currency from the interest commencement date specified below at the Interest Rate per annum shown above, payable on November 15, 1997 and on each May 15 and November 15 thereafter, until payment of such Principal Amount or, if this bond or a portion hereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this bond. Payment of each installment of interest shall be made to the person in whose name this bond is registered on the registration books of the City maintained by the Trustee at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of this bond subsequent to such Record Date and prior to such interest payment date. Payment of the interest on this bond shall also be made by wire transfer to the registered owner of this bond upon the request of such owner if such owner is the registered owner of $ 1 ,000,000 or more in principal amount of the bonds of the series of which this bond is one. Page 7 Ordinance No. 4050 August 19, 1997 This bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date shown above, or unless at the time of authentication hereof interest is in default hereon, in which event it shall bear interest from the date to which interest has been paid. This bond is one of an issue of City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997, aggregating two million six hundred and ten thousand dollars ($2,610,000) in aggregate principal amount (the "bonds"). The bonds have been issued for the purpose of refunding certain outstanding bonds of the City (the "Bonds Refunded"), paying necessary expenses incidental thereto, and paying expenses of authorizing and issuing the bonds. The bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), and pursuant to an ordinance of the City duly adopted (the "Authorizing Ordinance"), and an election duly held at which the majority of the legal voters of the City voting on the question approved the issuance of the Bonds Refunded. Reference is hereby made to the Authorizing Ordinance for the details of the nature and extent of the security, of the issuance of additional series and of the rights and obligations of the City, the Trustee and the registered owners of the bonds. The bonds are special obligations of the City, payable from twenty percent (20%) of the City's share of collections derived from the 1 % sales and use tax levied in Washington County, Arkansas (the "County") under the authority of the laws of the State, including particularly Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated and a special election held in the County on July 28, 1981 (the "Tax") and the City hereby pledges twenty percent (20%) of its share of collections of the Tax for the payment of this bond. The City has reserved the right in the Authorizing Ordinance to issue additional bonds under the Authorizing Ordinance on a panty of security with the bonds. (REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.) THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265 OF THE INTERNAL REVENUE CODE OF 19869 AS AMENDED. Page 8 Ordinance No. 4050 August 19, 1997 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed, under the Constitution and laws of the State, particularly Amendment No. 62 to the Constitution of the State and the Authorizing Legislation, precedent to and in the issuance of this bond have existed, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by this bond and the issue of which it forms a part does not exceed any constitutional or statutory limitation; and that provision has been made for the payment of the bonds and interest thereon, as provided for in the Authorizing Legislation. This bond shall not be valid until it shall have been authenticated by the Certificate hereon duly signed by the Trustee. IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this bond to be executed by its Mayor and City Clerk, their facsimile signatures thereunto duly authorized and its corporate seal to be impressed, lithographed or imprinted on this bond, all as of the Dated Date shown above. CITY OF FAYETTEVILLE, ARKANSAS By Fred Hanna, Mayor ATTEST: By: City Clerk (SEAL) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the City of Fayetteville, Arkansas Sales Tax Capital Improvements Refunding Bonds, Series 1997, issued under the provisions of the within mentioned Authorizing Ordinance. First Commercial Trust Company, National Association, Trustee By: Authorized Signature Date of Authentication: Page 9 Ordinance No. 4050 August 19, 1997 (Reverse Side of Bond) CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured by amounts maintained in the Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in the Bond Fund are insufficient for such purposes or to pay the final maturity of and the respective interest on the bonds and additional parity bonds. This bond is transferable by the Registered Owner shown above in person or by his attomey-in-fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is issued with the intent that the laws of the State shall govem its construction. The City and the Trustee may deem and treat the Registered Owner shown above as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. Page 10 Ordinance No. 4050 August 19, 1997 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ("Transferor"), hereby sells, assigns and transfers unto the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. Section 7. City Covenants and Pledge of Tax Revenues. The City hereby expressly pledges and appropriates twenty percent (20%) of the City's share of collections of the Tax , to the payment of the principal of and interest on the Bonds when due and to the payment of the fees and charges of the Trustee. Such revenues pledged to the payment of the Bonds are hereinafter referred to as the "Pledged Revenues." The City covenants it shall do nothing that will repeal or reduce the Tax in the City while any of the Bonds are outstanding. The City further covenants to use due diligence in collecting the Pledged Revenues. In the event the County repeals or ceases to collect the Tax, the City covenants to forthwith (a) notify the Arkansas Department of Finance and Administration to take all actions necessary to continue to collect the Tax within the City and disburse those collections as authorized by Arkansas Code of 1987 Annotated § 14- 164-337. Such collections are also hereby pledged to the payment of the principal of and interest on the Bonds and fees and charges of the Trustee and shall be a part of the Pledged Revenues and (b) take such action as is necessary for the Tax to continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with this Ordinance. Page 11 Ordinance No. 4050 August 19, 1997 The Bonds shall be specifically secured by a pledge of the Pledged Revenues, which pledge in favor of the Bonds is hereby irrevocably made according to the terms of this Ordinance, and the City, and the officers and employees of the City, shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this Ordinance. It is hereby covenanted and agreed by the City with the owners of the Bonds that the City will faithfully and punctually perform all duties with reference to the Pledged Revenues and the Bonds required by the Constitution and laws of the State and by this Ordinance, including the levy of the Tax within the City and the collection of the Pledged Revenues, as herein specified and covenanted and the applying of the Pledged Revenues as herein provided. Section S. Funds. The following funds are hereby created and shall be held and maintained by the Trustee and the City pursuant to the provisions of this Ordinance: (1 ) Revenue Fund; (2) Bond Fund; (3) Debt Service Reserve Fund; and (4) Cost of Issuance Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund, Debt Service Reserve Fund, and Cost of Issuance Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any Additional Bonds, create additional funds and accounts as may be necessary or convenient. ( 1 ) Revenue Fund. The City shall promptly deposit to the Revenue Fund all Pledged Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the amounts required for debt service on the Bonds as described below: 4 (a) The City shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one-sixth (1 /6th) of the interest due on the Bonds on the next interest payment date plus one-twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee and Paying Agent fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first interest payment on the Series 1997 Bonds. (b) The City shall transfer to the Trustee, for deposit into the Debt Service Page 12 Ordinance No. 4050 August 19, 1997 Reserve Fund for the Bonds, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one-twelfth ( 1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (c) Any moneys remaining in the Revenue Fund, following the transfers required by this Section 8, may be used for any lawful purpose as determined by the City. (2) Bond Fund. The Trustee shall promptly deposit the following receipts to the Bond Fund: (a) Any accrued interest received as proceeds from the Bonds; (b) All amounts required to be transferred from the Revenue Fund, held by the City; (c) All amounts required to be transferred from the Debt Service Reserve Fund; and (d) All amounts required to be transferred from the Cost of Issuance Fund. The Trustee shall pay from moneys on deposit in the Bond Fund, to the Paying Agent for the Bonds (i) on each interest payment date, the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date and such amounts shall be so applied by the Paying Agent. The Trustee shall pay, from moneys on deposit in the Bond Fund, to the Trustee and Paying Agent any fees due on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment date, the Trustee shall on such payment date, withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date, any balance remaining in the Bond Fund after all payments required by this Section 8 have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. (3) Debt Service Reserve Fun . The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal and interest requirements for the Bonds (the "Required Level'). Upon issuance of the Bonds, there Page 13 Ordinance No. 4050 August 19, 1997 shall be deposited $204,333.75 into the Debt Service Reserve Fund from the debt service reserve held by the Bonds Refunded Trustee under the Indenture. So long as the Debt Service Reserve Fund is maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of principal of and interest on the Bonds in the event there is insufficient money available in the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held in the Debt Service Reserve Fund shall ever be less than the Required Level, the account shall be restored to the Required Level by transferring moneys from the Revenue Fund as described in this Section 8 until the Required Level is attained. (4) Cost of Issuance Fund. The Trustee shall deposit into the Cost of Issuance Fund from the proceeds of the Series 1997 Bonds and other available funds, such amounts as shall be specified in delivery instructions from the City for deposit therein. Moneys at any time held in the Cost of Issuance Fund shall be used for and applied solely to pay costs of issuance of the Series 1997 Bonds including consultants, legal, and financial advisory fees and expenses. Payments from the Cost of Issuance Fund shall be made by the Trustee upon receipt of a requisition, signed by the Administrative Services Director or designee ("Issuer Representative") of the City, stating in respect to each payment to be made, at least (i) the item number of the payment, (ii) the name of the person or party to whom the payment is to be made, (iii) the amount to be paid, (iv) that obligations in the stated amounts have been incurred by the City, and that each item thereof is a proper charge against the moneys in the Cost of Issuance Fund and has not been previously paid and that such payment is not prohibited. Upon receipt of each requisition, the Trustee shall pay each such item directly to the person or party entitled thereto as named in such requisition or shall reimburse itself for such payment. Any interest earned or gains realized by investments of moneys held in the Cost of Issuance Fund shall be retained in such Fund. Upon delivery of a certificate from the Issuer Representative of the City stating that all costs of issuance of the Series 1997 Bonds have been paid, the Trustee shall transfer the balance of moneys in the Cost of Issuance Fund to the Bond Fund and the Cost of Issuance Fund shall be closed. Section 9. Payment of Bonds. Any Bond shall be deemed to be paid within the meaning of this Ordinance when payment of the principal of and interest on such Bond (whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably Page 14 Ordinance No. 4050 August 19, 1997 depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment (1) moneys sufficient to make such payment and/or (2) Government Securities as defined in Section 15 hereof which are direct obligations of the United States of America (provided that such deposit will not cause any of the bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code")), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. When all the Bonds shall have been paid within the meaning of this Ordinance, and if the Trustee has been paid its fees and expenses, the Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to this Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. Section 10. Parity Bonds. The City covenants that it will not issue any bonds, or incur any obligation, secured by a lien on or pledge of the Pledged Revenues superior to or on a parity with the lien in favor of the Series 1997 Bonds, except as authorized in this Section. The City may issue bonds or incur obligations on a parity of security with the Series 1997 Bonds ("Additional Parity Bonds") if Pledged Revenues for the preceding twelve consecutive months are in excess of 125% of the average annual debt service requirements for the Series 1997 Bonds, any outstanding Additional Parity Bonds and the Additional Parity Bonds proposed to be issued. The City may also issue bonds or incur obligations secured by a lien on or pledge of Pledged Revenues subordinate to the lien and pledge in favor of the Bonds. Section 11. Books and Accounts. The City and the Trustee will keep or cause to be kept proper books of accounts and records (separate from all other accounts and records) in which complete and correct entries shall be made of all transactions relating to the Pledged Revenues and such books shall be available for inspection by the City, the Trustee and the owner of any of the Series 1997 Bonds at reasonable times and under reasonable circumstances. Section 12. Duties of Trustee and Trustee Compensation. (a) It shall be the duty of the Trustee, on or before the 10th day of each month after the month in which the Series 1997 Bonds are delivered, to file with the City a statement setting forth in respect of the preceding calendar month: (1) The amount withdrawn or transferred by it and the amount deposited with it on account of each fund and account held by it under the provisions of this Ordinance; Page 15 Ordinance No. 4050 August 19, 1997 (2) The amount on deposit with it at the end of such month to the credit of such fund and account; (3) A brief description of all obligations held by it as an investment of moneys in each such fund and account, including the value of each investment at both cost basis and market value; (4) The amount applied to the purchase or redemption of bonds under the provisions of this Ordinance and a description of the Bonds or portions of Bonds so purchased or redeemed; and (5) Any other information that the City may reasonably request. All records and files pertaining to such funds or accounts in the custody of the Trustee hereunder shall be open at all reasonable times to the inspection of the City and its agents and representatives and the City may make copies thereof. (b) The Trustee additionally shall be responsible for the preparation and timely distribution of any and all forms and reports required by law to all Bondholders, the State and the Internal Revenue Service in connection with the payment to the Bondholders of interest on the Bonds. (c) The City shall pay to the Trustee compensation for its services as described in this Ordinance in accordance with a separate agreement between the City and the Trustee, provided that such compensation, together with all expenses, charges and other disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to the Trustee for all costs and other disbursements, shall not exceed $1,500 annually without the prior written approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes to consult with or retain counsel for any purposes hereunder whose anticipated fees, together with all other compensation, disbursements and reimbursements of the Trustee and its attorneys, agents and employees to be paid by the City hereunder, shall exceed $11,500 annually, then such counsel shall have to be acceptable to the City and such fees shall have to be approved by the City as described above. (d) All Series 1997 Bonds which are paid, either at maturity or upon redemption prior to maturity, shall be canceled and cremated, shredded, or otherwise disposed of. The Trustee shall execute and forward to the City an appropriate certificate describing the Series 1997 Bonds involved and the manner of disposition. Section 13. Default Provisions. (a) If there be any default in the payment of the principal of and interest on any of the Bonds, or if the City defaults in the performance of any covenant con- Page 16 Ordinance No. 4050 August 19, 1997 tamed in this Ordinance, the Trustee may, and shall, upon the written request of the owners of not less than 10% in principal amount of the Bonds then outstanding, by proper suit compel the performance of the duties of the officials of the City under the Constitution and laws of the State and under this Ordinance, and to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. (b) No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under this Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than 10% in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of this Ordinance or to any other remedy hereunder. It is understood and intended that no one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to enforce any right hereunder except in the manner herein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the benefit of all owners of the outstanding Bonds, and that any individual rights of action or other right given to one or more of such owners by law are restricted by this Ordinance to the rights and remedies herein provided. (c) All rights of action under this Ordinance or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of this Ordinance. (d) No remedy herein conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies herein provided, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or given by any law or by the Constitution of the State. (e) No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed Page 17 Ordinance No. 4050 August 19, 1997 to be a waiver of any such default or an acquiescence therein and, every power and remedy given by this Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. (I) The Trustee may, and upon the written request of the owners of not less than a majority of the owners in principal amount of the Bonds then outstanding, shall waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Section 14. Refunding of Bonds Refunded. When the Series 1997 Bonds have been executed by the Mayor and City Clerk and the seal of the City impressed or imprinted as herein provided, they shall be delivered to the Trustee, which shall authenticate them and deliver them to the Purchaser upon payment of the Purchase Price. The accrued interest shall be deposited in the Bond Fund. The expenses of issuing the Series 1997 Bonds shall be paid from the Purchase Price. An amount of the Purchase Price that is sufficient, along with other moneys set aside and appropriated hereby for such purpose, to accomplish the refunding shall be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas (the "Bonds Refunded Trustee"). The balance of the Purchase Price, if any, shall be deposited into the Cost of Issuance Fund. Section 15. Investment of Bond Proceeds. (a) Moneys held by the Trustee shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America (including any such securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) ("Government Securities"), (ii) in time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation ("FDIC" ), or (iii) money market funds comprised exclusively of Government Securities (collectively, "Permitted Investments"). The Trustee shall invest and reinvest pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (b) The Trustee shall invest moneys in funds or accounts in Permitted Investments with maturity or redemption dates and in amounts consistent with the times at which said moneys will be required for the purposes provided in this Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. Page 18 Ordinance No. 4050 August 19, 1997 (d) In determining the value of any fund or account held by the Trustee under this Ordinance, the Trustee shall credit Permitted Investments at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than monthly, the Trustee shall determine the value of each fund and account held hereunder and shall report such determination to the City. To the extent that any loss or reduction in value reduces the value of any fund to a level lower than the level required under this Ordinance such loss or reduction shall be made up as set forth in Section 8 hereof. The Trustee shall sell or present for redemption any Permitted Investments as necessary in order to provide money for the purpose of making any payment required hereunder, and the Trustee shall not be liable for any loss resulting from any such sale. Section 16. Change of City Officers or Officials. In the event the office of Mayor, City Clerk or City Council shall be abolished or any two or more of such offices shall be merged or consolidated or in the event the duties of a particular office shall be transferred to another office or offices, or in the event of a vacancy in any such office by reason of death, resignation, removal from office or otherwise, or in the event any such officer shall become incapable of performing the duties of his office by reason of sickness, absence from the City or otherwise, all powers conferred and all obligations and duties imposed upon such office or officer shall be performed by the office or officers succeeding to the principal functions thereof, or by the office or officer upon whom such powers, obligations and duties shall be imposed by law. Section 17. Appointment, Resignation or Removal of Trus.. (a) First Commercial Trust Company, National Association, Little Rock, Arkansas is hereby appointed to act as Trustee, Paying Agent and Bond Registrar pursuant to this Ordinance. The Trustee shall be responsible for the exercise of good faith and reasonable prudence in the execution of its trusts. The recitals in this Ordinance and in the Series 1997 Bonds are the recitals of the City and not of the Trustee. Any bank or trust company into which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges, and all other matters as was its predecessor without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of at least $15 million. (b) The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving 30 days' written notice to the City, and such resignation shall take effect at the end Page 19 Ordinance No. 4050 August 19, 1997 of such 30 days, or upon the earlier appointment of a successor trustee by the City; provided, however, such resignation shall not take effect until the successor trustee has accepted the trusts created by this Ordinance in writing. Such notice may be served personally or sent by registered mail. (c) Unless the City is in default, the Trustee may be removed at any time by an instrument in writing delivered to the Trustee with ninety days' notice signed by the City; provided, however, such removal shall not take effect until a successor trustee has accepted the trusts created by this Ordinance in writing. (d) In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal. Every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of no less than $15 million. The successor trustee shall also act as Paying Agent and Registrar. Section 18. Amendment of Ordinance. (a) The terms of this Ordinance shall constitute a contract between the City and the owners of the Series 1997 Bonds and no variation or change in the undertaking herein set forth shall be made while any of the Series 1997 Bonds are outstanding, except as hereinafter set forth in subsections (b) and (c). (b) The Trustee may consent to any variation or change in this Ordinance in connection with the issuance of any Additional Parity Bonds or in order to cure any ambiguity, defect or omission in this Ordinance or any amendment hereto without the consent of the owners of the outstanding Series 1997 Bonds. (c) The owners of not less than 75% in aggregate principal amount of the Series 1997 Bonds then outstanding shall have the right, from time to time, anything contained in this Ordinance to the contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be construed as permitting (1) an extension of the maturity of the principal of or the interest on any Series 1997 Bond, or (2) a reduction in the principal amount of any Series 1997 Bond or the rate of interest thereon, or (3) the creation of a pledge of the Pledged Revenues superior to the pledge created by this Ordinance, or (4) a privilege or priority of any Series 1997 Bond or Series 1997 Bonds over any other Series 1997 Bond or Series 1997 Bonds, or (5) a Page 20 Ordinance No. 4050 August 19, 1997 reduction in the aggregate principal amount of the Series 1997 Bonds required for consent to such supplemental ordinance. Section 19. Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting and the Mayor is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement and to take all action required on the part of the City to fulfill its obligations under the Continuing Disclosure Agreement. The City covenants that it will take all necessary action to comply with the requirements of the Securities and Exchange Commission Rule 15(c)(2)-12 under the Securities Act of 1934, as amended (17 C.F.R., § 240.15(c)2-12). Section 20. Tax Exemption Qualifications. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Series 1997 Bonds to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds of the sale of the Series 1997 Bonds and the Pledged Revenues will not be used directly or indirectly in such manner as to cause the Series 1997 Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. In addition, the City covenants to pay, or cause the Trustee to pay, any arbitrage rebate which may be due the United States Treasury at the times and in the amounts under Section 148(f) of the Code. (b) The City represents that it has not used or permitted the use of, and covenants that it will not use or permit the use of the Arts Center or the proceeds of the Series 1997 Bonds, in such manner as to cause the Series 1997 Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (c) The Series 1997 Bonds are hereby designated as "qualified tax-exempt obligations" within the meaning of the Code. The City represents that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Code), including those of its subordinate entities, issued in calendar year 1997 will not exceed $10,000,000. Section 21. Federal Guarantee Provisions. The City covenants that it will take no action which would cause the Series 1997 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury. Section 22. IRS Form 8038-G Covenants. The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar Page 21 Ordinance No. 4050 August 19, 1997 month after the close of the calendar quarter in which the Series 1997 Bonds are issued, a statement concerning the Series 1997 Bonds which contains the information required by Section 149(e) of the Code. Section 23. Call of Bonds Refunded. The City hereby calls the Bonds Refunded for redemption on the earliest practical date for which the Bonds Refunded Trustee can provide notice to the owners of the Bonds Refunded that such bonds will be redeemed. The Bonds Refunded Trustee is hereby directed to mail the necessary notices of redemption. Section 24. i ise of Bonds Refunded Moneys. All moneys in any fund or account held by the Bonds Refunded Trustee pursuant to the Indenture are hereby appropriated and shall be used as follows: (a) all money held by the Bonds Refunded Trustee in the bond fund, the redemption fund, and the debt service reserve fund shall be applied to (i) establishing the Debt Service Reserve Fund and (ii) refunding of the Bonds Refunded along with any proceeds required from the Series 1997 Bonds. (b) all money held by the Bonds Refunded Trustee in the revenue fund shall be first applied, as necessary, to refunding of the Bonds Refunded, and the balance will be deposited into the City's General Fund. Section 25. Severability Clause. The provisions of this Ordinance are separable and in the event that any section or part hereof shall be held to be invalid, such invalidity shall not affect the remainder of this Ordinance. Section 26. Conflicts. All ordinances and resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 27. Limitations of Rights. This Ordinance shall not create any right of any character and no right of any character shall arise under or pursuant hereto until the Series 1997 Bonds shall be issued and delivered except as provided in Sections 2, 3, 23 and 24 hereof. Section 28. Emergency Clause. It is hereby ascertained and declared that the refunding must be accomplished as soon as possible in order to lower the interest cost on obligations payable from the Pledged Revenues. The refunding cannot be accomplished without the issuance of the Series 1997 Bonds, and therefore, it is declared that an emergency exists and this Ordinance being necessary for the preservation of the public peace, health and safety shall be in force and take effect immediately upon and after its passage. Page 22 Ordinance No. 4050 August 19, 1997 PASSED AND APPROVED this 19th day of August , 1997. APPROVE9: By: red H a, Mayor ATTEST: By: Traci Paul, City Clerk (SEAL) Page 23 Ordinance No. 4050 August 19, 1997 CERTIFICATE The undersigned, City Clerk of the City of Fayetteville, Arkansas (the "City"), hereby certifies that the foregoing pages are a true and correct copy of Ordinance No. 4050 , passed at a regular session of the City Council of the City, held at the regular meeting place of the Council at 6:30 o'clock p.m. on the 19th day of August , 1997. GIVEN under my hand and seal this 2LGTH day of Al lc Hs 7 , 1997. • , Traci Paul, City Clerk + c� jti+t'r :�'.4 ` - loco MICROFILMED LA NEW ISSUE In the opinion of Bond Counsel, based on existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for federal income tax purposes, subject to the condition that the City comply with all requirements of the Internal Revenue Code that must be satisfied subsequent to the issuance of the Bonds, and the Bonds and interest thereon are exempt from all Arkansas state, county and municipal taxes. In the opinion of Bond Counsel, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although it is included in adjusted current earnings in calculating the corporate alternative minimwn taxable income, and the Bonds are 'qualified tax-exempt obligationswithin the meaning of Section 265 of the Internal Revenue Code. See LEGAL MATTERS, Tax Exemption. herein. $2,610,000 CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 Dated: September 1, 1997 Due: November 15, as shown below Principal of and interest on the Bonds are payable from a pledge of 20% of the receipts derived by the City of Fayetteville, Arkansas from a 1% sales and use tax levied in Washington County, Arkansas. Interest on the Bonds is payable semiannually on May 15 and November 15 in each year, commencing November 15, 1997, and the Bonds mature (on November 15 of each year), bear interest and are priced as follows: MATURITY SCHEDULE Maturity 1998 Amount $290,000 Rate (%l 4.15 Maturity 2002 Amount $345,000 Rate (%1 4.50 1999 305,000 4.25 2003 360,000 4.55 2000 315,000 4.30 2004 375,000 4.60 2001 330,000 4.40 2005 290,000 4.65 Price: 100% (Accrued interest from September 1, 1997 to be added) The Bonds are offered, subject to prior sale, when, as and if issued and received by the Underwriter named below, subject to the approval of legality by Gill Law Firm, a Professional Association, Little Rock, Arkansas, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by its counsel, Friday, Eldredge & Clark, Little Rock, Arkansas. It is expected that the Bonds will be available for delivery in New York, New York, on or about September 23, 1997. This cover page contains information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Dated: August 19, 1997. STEPHENS INC. ORDINANCE NO. 4050 MICROFILMED AN ORDINANCE AUTHORIZING THE ISSUANCE OF SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS FOR THE PURPOSE OF REFUNDING THE CITY'S OUTSTANDING SALES TAX CAPITAL IMPROVEMENT BONDS, SERIES 1986; PLEDGING TWENTY PERCENT OF THE CITY'S SHARE OF WASHINGTON COUNTY'S 1% SALES AND USE TAX TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has determined that in order to receive debt service savings it is in the best interest of the City to refund the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986, in the outstanding principal amount of $2,940,000 (the "Bonds Refunded") authorized by Ordinance No. 3224 of the City, adopted November 6, 1986 ("Ordinance No. 3224"); and WHEREAS, the Bonds Refunded were approved by the voters at the special election held October 7, 1986 in order to finance capital improvements, specifically a portion of the cost of acquiring, constructing and equipping a new Arts Center in the City, in joint venture with the University of Arkansas; and WHEREAS,. the City can obtain the necessary funds for the refunding of the Bonds Refunded (the "refunding") by the issuance of Sales Tax Capital Improvement Refunding Bonds, Series 1997, in the aggregate principal amount of $2,610,000 (the "Series 1997 Bonds") and by appropriating available moneys held in certain of the funds established pursuant to the Trust Indenture dated November 15, 1986, authorized by Ordinance No. 3224 (the "Indenture"); and WHEREAS, the City has made arrangements for the sale of the Series 1997 Bonds to Stephens Inc. (the "Purchaser"), at a price of 99.15% of par plus accrued interest (the "Purchase Price"), pursuant to a Bond Purchase Agreement between the Purchaser and the City (the "Agreement"), which has been presented to and is before this meeting; and WHEREAS, a final Official Statement, dated August 19, 1997 (the "Official Statement"), has been prepared and will be distributed in connection with the offer and sale of the Series 1997 Bonds; and WHEREAS, the Preliminary Official Statement, dated August 6, 1997, offering the Series 1997 Bonds for sale (the "Preliminary Official Statement"), has been presented to and is before this meeting; and WHEREAS, the Bonds Refunded are secured by a pledge of twenty percent (20%) of the City's share of the county -wide 1% sales and use tax levied by Ordinance No. 97-16 of the County adopted June 12, 1997; and Page 2 Ordinance No. 4050 August 19, 1997 WHEREAS, a Continuing Disclosure Agreement, dated September I, 1997 (the "Continuing Disclosure Agreement"), requiring the City to comply with the requirements of 17 C.F.R. § 240.15c2-12 has been presented and is before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS, AS FOLLOWS: Section 1. Authorization for Refunding. The refunding of the Bonds Refunded shall be accomplished, and the Mayor and City Clerk are hereby authorized to take all action necessary in connection therewith and to execute all required contracts and documents. Section 2. Acceptance of Offer to Purchase Bonds. The offer of the Purchaser for the purchase of the Series 1997 Bonds from the City at the Purchase Price, for Series 1997 Bonds bearing interest at the rates per annum, maturing and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail be and is hereby accepted and the Agreement, in substantially the form submitted to this meeting, is approved and confirmed and the Series 1997 Bonds are hereby sold to the Purchaser. The Mayor is hereby authorized and directed to execute and deliver the Agreement on behalf of the City and to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 3. Approval of Preliminary Official Statement. The Preliminary Official Statement is hereby approved and the previous use of the Preliminary Official Statement by the Purchaser in connection with the sale of the Series 1997 Bonds is hereby in all respects authorized, approved and confirmed, and the Mayor be and is hereby authorized and directed, for and on behalf of the City, to execute the Preliminary Official Statement and the final Official Statement in the name of the City to be delivered to the Purchaser for use in connection with the sale of the Series 1997 Bonds as set forth in the Agreement. The Mayor of the City is hereby authorized to execute, deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City. The Mayor's execution and delivery of the Official Statement shall constitute conclusive evidence of his approval of any such changes. Section 4, The Bonds. Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 are hereby authorized and ordered issued in the total principal amount of $2,610,000 the proceeds of the sale of which are necessary, along with available moneys held in funds established by the Indenture, to provide sufficient funds for accomplishing the refunding of the Bonds Refunded, Page 3 Ordinance No. 4050 August 19, 1997 paying expenses incidental thereto, and paying expenses of issuing the Series 1997 Bonds. The Series 1997 Bonds shall bear interest at the rates and shall mature on November 15 in the amounts and. in the years as follows: 1998 $290,000 4.15% 1999 305,000 4.25% 2000 315,000 4.30% 2001 330,000 4.40% 2002 345,000 4.50% 2003 360,000 4.55% 2004 375,000 4.60% 2005 290,000 4.65% The Series 1997 Bonds shall be issuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Unless the City shall otherwise direct, the Series 1997 Bonds shall be numbered from I upward in order of issuance. Each Series 1997 Bond shall have a CUSIP number but the failure of a CUSIP number to appear on any Series 1997 Bond shall not affect its validity. Each Series 1997 Bond shall be dated September 1, 1997. Interest on the Series 1997 Bonds shall be payable on November 15, 1997, and semiannually thereafter on May 15 and November 15 of each year.. Payment of each installment of interest shall be made to the person in whose name the Series 1997 Bond is registered on the registration books of the City maintained by First Commercial Trust Company, National Association, Little Rock, Arkansas, as Trustee and Paying Agent (the "Trustee"), at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of any such Series 1997 Bond subsequent to such Record Date and prior to such interest payment date, by check or draft mailed by the Trustee to such owner at his address on such registration books. Payment of the interest on She Series 1997 Bonds shall also be made by wire transfer to the registered owner of a Series 1997 Bond or Bonds upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of Series 1997 Bonds. Principal of the Series 1997 Bonds shall be payable upon surrender at maturity at the corporate trust office of the Trustee. Each Series 1997 Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from September 1, 1997, or unless it is authenticated during the Page 4 Ordinance No. 4050 August 19, 1997 period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication thereof interest is in default thereon, in which event it shall bear interest from the date to which interest has been paid. Only such Series 1997 Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Section 6 hereof (the "Certificate") duly executed by the Trustee shall be entitled to any right or benefit under this Ordinance. No Series 1997 Bond shall be valid and obligatory for any purpose unless and until the Certificate shall have been duly executed by the Trustee, and the Certificate of the Trustee upon any such Series 1997 Bond shall be conclusive evidence that such Series 1997 Bond has been authenticated and delivered under this Ordinance. The Certificate shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the Series 1997 Bonds. In case any Series 1997 Bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Series 1997 Bond of like date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Series 1997 Bond, or in lieu of and in substitution for such Series 1997 Bond destroyed or lost, upon the owner paying the reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a Series 1997 Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such Series 1997 Bond was destroyed or lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Series 1997 Bond. In the event any such Series 1997 Bond shall have matured, instead of issuing a new Series 1997 Bond, the Trustee may pay the same without the surrender thereof. Upon the issuance of a new Series 1997 Bond under this Section 4, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. The City shall cause books to be maintained by the Trustee for the registration and for the transfer of the Series 1997 Bonds as provided herein and in the Series 1997 Bonds. The Trustee shall act as the bond registrar. Each Series 1997 Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Series 1997 Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. Series 1997 Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Series 1997 Bonds of any other authorized denomination or denominations. The City shall execute and the Trustee shall authenticate and deliver Series 1997 Page 5 Ordinance No. 4050 August 19, 1997 Bonds which the registered owner making the exchange is entitled to receive. The execution by the City of any Series 1997 Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall be thereby authorized to authenticate and deliver such Series 1997 Bond. No charge shall be made to any owner of any Series 1997 Bond for the privilege of transfer or exchange, but any owner of any Series 1997 Bond requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Series 1997 Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the Trustee nor the City shall be required (i) to issue, transfer or exchange any Series 1997 Bond during a period beginning at the opening of business 15 days before any selection of Series 1997 Bonds of that maturity for redemption and ending at the close of business on the day of the first mailing of the relevant notice of redemption, or (ii) to transfer or exchange any Series 1997 Bonds selected for redemption in whole or in part. The person in whose name any Series 1997 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest on any Series 1997 Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 1997 Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Series 1997 Bonds or the date fixed for redemption of any Series 1997 Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Section 5. Signatures, The Series 1997 Bonds shall be executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. Section 6, Bond Form. The Series 1997 Bonds and the Certificate shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: Page 6 Ordinance No. 4050 August 19, 1997 (Form of Bond) REGISTERED UNITED STATES OF AMERICA, STATE OF ARKANSAS COUNTY OF WASHINGTON No. REGISTERED CITY OF FAYETTEVILLE SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 Interest Dated Maturity Rate: % Date: September 1, 1997 Date: November 15, _ CUSIP: Registered Owner: Principal Amount: Dollars The City of Fayetteville, County of Washington, State of Arkansas (the "City"), a city of the first class, duly created under the laws of the State of Arkansas, for value received, hereby promises to pay to the Registered Owner shown above, upon presentation and surrender of this bond at the corporate trust office of First Commercial Trust Company, National Association, Little Rock, Arkansas, or its successor or successors, as Trustee and Paying Agent (the "Trustee"), on the Maturity Date shown above, the Principal Amount shown above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay by check or draft to the Registered Owner shown above interest thereon, in like coin or currency from the interest commencement date specified below at the Interest Rate per annum shown above,•payable on November 15, 1997 and on each May 15 and November 15 thereafter, until payment of such Principal Amount or, if this bond or a portion hereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this bond. Payment of each installment of interest shall be made to the person in whose name this bond is registered on the registration books of the City maintained by the Trustee at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of this bond subsequent to such Record Date and prior to such interest payment date. Payment of the interest on this bond shall also be made by wire transfer to the registered owner of this bond upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of the bonds of the series of which this bond is one. Page 7 Ordinance No. 4050 August 19, 1997 This bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear .interest from such date, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date shown above, or unless at the time of authentication hereof interest is in default .hereon, in which event it shall bear interest from the date to which interest has been paid. This bond is one of an issue of City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997, aggregating two million six hundred and ten thousand dollars ($2,610,000) in aggregate principal amount (the "bonds"). The bonds have been issued for the purpose of refunding certain outstanding bonds of the City (the "Bonds Refunded"), paying necessary expenses incidental thereto, and paying expenses of authorizing and issuing the bonds. The bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), and pursuant to an ordinance of the City duly adopted (the "Authorizing Ordinance"), and an election duly held at which the majority of the legal voters of the City voting on the question approved the issuance of the Bonds Refunded. Reference is hereby made to the Authorizing Ordinance for the details of the nature and extent of the security, of the issuance of additional series and of the rights and obligations of the City, the Trustee and the registered owners of the bonds. The bonds are special obligations of the City, payable from twenty percent (20%) of the City's share of collections derived from the 1% sales and use tax levied in Washington County, Arkansas (the "County") under the authority of the laws of the State, including particularly Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated and a special election held in the County on July 28, 1981 (the "Tax") and the City hereby pledges twenty percent (20%) of its share of collections of the Tax for the payment of this bond. The City has reserved the right in the Authorizing Ordinance to issue additional bonds under the Authorizing Ordinance on a parity of -security with the bonds. (REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.) • THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. Page 8 Ordinance No. 4050 August 19, 1997 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed, under the Constitution and laws of the State, particularly Amendment No. 62 to the Constitution of the State and the Authorizing Legislation, precedent to and in the issuance of this bond have existed, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by this bond and the issue of which it forms a part does not exceed any constitutional or statutory limitation; and that provision has been made for the payment of the bonds and interest thereon, as provided for in the Authorizing Legislation. This bond shall not be valid until it shall have been authenticated by the Certificate hereon duly signed by the Trustee. IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this bond to be executed by its Mayor and City Clerk, their facsimile signatures thereunto duly authorized and its corporate seal to be impressed, lithographed or imprinted on this bond, all as of the Dated Date shown above. ATTEST: City Clerk (SEAL) CITY OF FAYETTEVILLE, ARKANSAS Fred Hanna, Mayor TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the City of Fayetteville, Arkansas Sales Tax Capital Improvements Refunding Bonds, Series 1997, issued under the provisions of the within mentioned Authorizing Ordinance. First Commercial Trust Company, National Association, Trustee By: Date of Authentication: Authorized Signature T] Page 9 Ordinance No. 4050 August 19, 1997 (Reverse Side of Bond) CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured by amounts maintained in the Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in the Bond Fund are insufficient for such purposes or to pay the final maturity of and the respective interest on the bonds and additional parity bonds. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is issued with the intent that the laws of the State shall govern its construction. The City and the Trustee may deem and treat the Registered Owner shown above as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. Page 10 Ordinance No. 4050 August 19, 1997 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ("Transferor"), hereby sells, assigns and transfers unto , the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE:, Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. Section 7. City Covenants and Pledge of Tax Revenues. The City hereby expressly pledges and appropriates twenty percent (20%) of the City's share of collections of the Tax , to the payment of the principal of and interest on the Bonds when due and to the payment of the fees and charges of the Trustee. Such revenues pledged to the payment of the Bonds are hereinafter referred to as the "Pledged Revenues." The City covenants it shall do nothing that will repeal or reduce the Tax in the City while any of the Bonds are outstanding. The City further covenants to use due diligence in collecting the Pledged Revenues. In the event the County repeals or ceases to collect the Tax, the City covenants to forthwith (a) notify the Arkansas Department of Finance and Administration to take all actions necessary to continue to collect the Tax within the City and disburse those collections as authorized by Arkansas Code of 1987 Annotated § 14-164-337. Such collections are also hereby pledged to the payment of the principal of and interest on the Bonds and fees and charges of the Trustee and shall be a part of the Pledged Revenues and (b) take such action as is necessary for the Tax to continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with this Ordinance. Page 11 Ordinance No. 4050 August 19, 1997 The Bonds shall be specifically secured by a pledge of the Pledged Revenues, which pledge in favor of the Bonds is hereby irrevocably made according to the terms of this Ordinance, and the City, and the officers and employees of the City, shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this Ordinance. It is hereby covenanted and agreed by the City with the owners of the Bonds that the City will faithfully and punctually perform all duties with reference to the Pledged Revenues and the Bonds required by the Constitution and laws of the State and by this Ordinance, including the levy of the Tax within the City and the collection of the Pledged Revenues, as herein specified and covenanted and the applying of the Pledged Revenues as herein provided. Section S. Funds. The following funds are hereby created and shall be held and maintained by the Trustee and the City pursuant to the provisions of this Ordinance: (1) Revenue Fund; (2) Bond Fund; (3) Debt Service Reserve Fund; and (4) Cost of Issuance Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund, Debt Service Reserve Fund, and Cost of Issuance Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any Additional Bonds, create additional funds and accounts as may be necessary or convenient. (1) Revenue Fund. The City shall promptly deposit to the Revenue Fund all Pledged Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the .amounts required for debt service on the Bonds as described below: (a) The City shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one -twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee and Paying Agent fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first interest payment on the Series 1997 Bonds. (b) The City shall transfer to the Trustee, for deposit into the Debt Service Page 12 Ordinance No. 4050 August 19, 1997 Reserve Fund for the Bonds, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (c) Any moneys remaining in the Revenue Fund, following the transfers required by this Section 8, may be used for any lawful purpose as determined by the City. (2) Bond Fes. The Trustee shall promptly deposit the following receipts to the Bond Fund: (a) Any accrued interest received as proceeds from the Bonds; (b) All amounts required to be transferred from the Revenue Fund, held by the City; (c) All amounts required to be transferred from the Debt Service Reserve Fund; and (d) All amounts required to be transferred from the Cost of Issuance Fund. The Trustee shall pay from moneys on deposit in the Bond Fund, to the Paying Agent for the Bonds (i) on each interest payment date, the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date and such amounts shall be so applied by the Paying Agent. The Trustee shall pay, from moneys on deposit in the Bond Fund, to the Trustee and Paying Agent any fees due on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment date, the Trustee shall on such payment date, withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date, any balance remaining in the Bond Fund after all payments required by this Section 8 have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. (3) Debt Service Reserve Fund. The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal and interest requirements for the Bonds (the "Required Level"). Upon issuance of the Bonds, there Page 13 Ordinance No. 4050 August 19, 1997 shall be deposited $204,333.75 into the Debt Service Reserve Fund from the debt service reserve held by the Bonds Refunded Trustee under the Indenture. So long as the Debt Service Reserve Fund is. maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of principal of and interest on the Bonds in the event there is insufficient money available in the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held in the Debt Service Reserve Fund shall ever be less than the Required Level, the account shall be restored to the Required Level by transferring moneys from the Revenue Fund as described in this Section 8 until the Required Level is attained. (4) Cost of Issuance Fund. The Trustee shall deposit into the Cost of Issuance Fund from the proceeds of the Series 1997 Bonds and other available funds, such amounts as shall be specified in delivery instructions from the City for deposit therein. Moneys at any time held in the Cost of Issuance Fund shall be used for and applied solely to pay costs of issuance of the Series 1997 Bonds including consultants, legal, and financial advisory fees and expenses. Payments from the Cost of Issuance Fund shall be made by the Trustee upon receipt of a requisition, signed by the Administrative Services Director or designee ("Issuer Representative") of the City, stating in respect to each payment to be made, at least (i) the item number of the payment, (ii) the name of the person or party to whom the payment is to be made, (iii) the amount to be paid, (iv) that obligations in the stated amounts have been incurred by the City, and that each item thereof is a proper charge against the moneys in the Cost of Issuance Fund and has not been previously paid and that such payment is not prohibited. Upon receipt of each requisition, the Trustee shall pay each such item directly to the person or party entitled thereto as named in such requisition or shall reimburse itself for such payment. Any interest earned or gains realized by investments of moneys held in the Cost of Issuance Fund shall be retained in such Fund. Upon delivery of a certificate from the Issuer Representative of the City stating that all costs of issuance of the Series 1997 Bonds have been paid, the Trustee shall transfer the balance of moneys in the Cost of Issuance Fund to the Bond Fund and the Cost of Issuance Fund shall be closed. Section 9. Payment of Bonds. Any Bond shall be deemed to be paid within the meaning of this Ordinance when payment of the principal of and interest on such Bond (whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably Page 14 Ordinance No. 4050 August 19, 1997 depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment (1) moneys sufficient to make such payment and/or (2) Government Securities as defined in Section 15 hereof which are direct obligations of the United States of America (provided that such deposit will not cause any of the bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code")), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. When all the Bonds shall have been paid within the meaning of this Ordinance, and if the Trustee has been paid its fees and expenses, the Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to this Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. Section 10. Parity onds. The City covenants that it will not issue any bonds, or incur any obligation, secured by a lien on or pledge of the Pledged Revenues superior to or on a parity with the lien in favor of the Series 1997 Bonds, except as authorized in this Section. The City may issue bonds or incur obligations on a parity of security with the Series 1997 Bonds ("Additional Parity Bonds") if Pledged Revenues for the preceding twelve consecutive months are in excess of 125% of the average annual debt service requirements for the Series 1997 Bonds, any outstanding Additional Parity Bonds and the Additional Parity Bonds proposed to be issued. The City may also issue bonds or incur obligations secured by a lien on or pledge of Pledged Revenues subordinate to the lien and pledge in favor of the Bonds. Section 11. Books and Accounts. The City and the Trustee will keep or cause to be kept proper books of accounts and records (separate from all other accounts and records) in which complete and correct entries shall be made of all transactions relating to the Pledged Revenues and such books shall be available for inspection by the City, the Trustee and the owner of any of the Series 1997 Bonds at reasonable times and under reasonable circumstances. Section 12. Duties of Trustee and Trustee Compensation. (a) It shall be the duty of the Trustee, on or before the 10th day of each month after the month in which the Series 1997 Bonds are delivered, to file with the City a statement setting forth in respect of the preceding calendar month: (1) The amount withdrawn or transferred by it and the amount deposited with it on account of each fund and account held by it under the provisions of this Ordinance; Page 15 Ordinance No. 4050 August 19, 1997 (2) The amount on deposit with it at the end of such month to the credit of such fund and account; (3) A brief description of all obligations held by it as an investment of moneys in each such fund and account, including the value of each investment at both cost basis and market value; (4) The amount applied to the purchase or redemption of bonds under the provisions of this Ordinance and a description of the Bonds or portions of Bonds so purchased or redeemed; and (5) Any other information that the City may reasonably request. All records and files pertaining to such funds or accounts in the custody of the Trustee hereunder shall be open at all reasonable times to the inspection of the City and its agents and representatives and the City may make copies thereof. (b) The Trustee additionally shall be responsible for the preparation and timely distribution of any and all forms and reports required by law to all Bondholders, the State and the Internal Revenue Service in connection with the payment to the Bondholders of interest on the Bonds. (c) The City shall pay to the Trustee compensation for its services as described in this Ordinance in accordance with a separate agreement between the City and the Trustee, provided that such compensation, together with all expenses, charges and other disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to the Trustee for all costs and other disbursements, shall not exceed $1,500 annually without the prior written approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes to consult with or retain counsel for any purposes hereunder whose anticipated fees, together with all other compensation, disbursements and reimbursements of the Trustee and its attorneys, agents and employees to be paid by the City hereunder, shall exceed $11,500 annually, then such counsel shall have to be acceptable to the City and such fees shall have to be approved by the City as described above. (d) All Series 1997 Bonds which are paid, either at maturity or upon redemption prior to maturity, shall be canceled and cremated, shredded, or otherwise disposed of. The Trustee shall execute and forward to the City an appropriate certificate describing the Series 1997 Bonds involved and the manner of disposition. Section 13. Default Provisions. (a) If there be any default in the payment of the principal of and interest on any of the Bonds, or if the City defaults in the performance of any covenant con- Page 16 Ordinance No. 4050 August 19, 1997 tamed in this Ordinance, the Trustee may, and shall, upon the written request of the owners of not less than 10% in principal amount of the Bonds then outstanding, by proper suit compel the performance of the duties of the officials of the City under the Constitution and laws of the State and under this Ordinance, and to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. (b) No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under this Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than 10% in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of this Ordinance or to any other remedy hereunder. It is understood and intended that no one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to enforce any right hereunder except in the manner herein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the benefit of all owners of the outstanding Bonds, and that any individual rights of action or other right given to one or more of such owners by law are restricted by this Ordinance to the rights and remedies herein provided. (c) All rights of action under this Ordinance or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of this Ordinance. (d) No remedy herein conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies herein provided, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or given by any law or by the Constitution of the State. (e) No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed Page 17 Ordinance No. 4050 August 19, 1997 to be a waiver of any such default or an acquiescence therein and, every power and remedy given by this Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. (I) The Trustee may, and upon the written request of the owners of not less than a majority of the owners in principal amount of the Bonds then outstanding, shall waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Section 14. Refunding of Bonds Refimd d. When the Series 1997. Bonds have been executed by the Mayor and City Clerk and the seal of the City impressed or imprinted as herein provided, they shall be delivered to the Trustee, which shall authenticate them and deliver them to the Purchaser upon payment of the Purchase Price. The accrued interest shall be deposited in the Bond Fund. The expenses of issuing the Series 1997 Bonds shall be paid from the Purchase Price. An amount of the Purchase Price that is sufficient, along with other moneys set aside and appropriated hereby for such purpose, to accomplish the refunding shall be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas (the "Bonds Refunded Trustee"). The balance of the Purchase Price, if any, shall be deposited into the Cost of Issuance Fund. Section 15. Investment of Bond Proceeds. (a) Moneys held by the Trustee shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America (including any such securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) ("Government Securities"), (ii) in time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation ("FDIC" ), or (iii) money market funds comprised exclusively of Government Securities (collectively, "Permitted Investments"). The Trustee shall invest and reinvest pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (b) The Trustee shall invest moneys in funds or accounts in Permitted Investments with maturity or redemption dates and in amounts consistent with the times at which said moneys will be required for the purposes provided in this Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. Page 18 Ordinance No. 4050 August 19, 1997 (d) In determining the value of any fund or account held by the Trustee under this Ordinance, the Trustee shall credit Permitted Investments at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than monthly, the Trustee shall determine the value of each fund and account held hereunder and shall report such determination to the City. To the extent that any loss or reduction in value reduces the value of any fund to a level lower than the level required under this Ordinance such loss or reduction shall be made up as set forth in Section 8 hereof. The Trustee shall sell or present for redemption any Permitted Investments as necessary in order to provide money for the purpose of making any payment required hereunder, and the Trustee shall not be liable for any loss resulting from any such sale. Section 16. Change of City Officers or Officials. In the event the office of Mayor, City Clerk or City Council shall be abolished or any two or more of such offices shall be merged or consolidated or in the event the duties of a particular office shall be transferred to another office or offices, or in the event of a vacancy in any such office by reason of death, resignation, removal from office or otherwise, or in the event any such officer shall become incapable of performing the duties of his office by reason of sickness, absence from the City or otherwise, all powers conferred and all obligations and duties imposed upon such office or officer shall be performed by the office or officers succeeding to the principal functions thereof, or by the office or officer upon whom such powers, obligations and duties shall be imposed by law. Section 17. Appointment, Resignation or Removal of Trustee. (a) First Commercial Trust Company, National Association, Little Rock, Arkansas is hereby appointed to act as Trustee, Paying Agent and Bond Registrar pursuant to this Ordinance. The Trustee shall be responsible for the exercise of good faith and reasonable prudence in the execution of its trusts. The recitals in this Ordinance and in the Series 1997 Bonds are the recitals of the City and not of the Trustee. Any bank or trust company into which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges, and all other matters as was its predecessor without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of at least $15 million. (b) The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving 30 days' written notice to the City, and such resignation shall take effect at the end Page 19 Ordinance No. 4050 August 19, 1997 of such 30 days, or upon the earlier appointment of a successor trustee by the City; provided, however, such resignation shall not take effect until the successor trustee has accepted the trusts created by this Ordinance in writing. Such notice may be served personally or sent by registered mail. (c) Unless the City is in default, the Trustee may be removed at any time by an instrument in writing delivered to the Trustee with ninety days' notice signed by the City; provided, however, such removal shall not take effect until a successor trustee has accepted the trusts created by this Ordinance in writing. (d) In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal. Every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of no less than $15 million. The successor trustee shall also act as Paying Agent and Registrar. Section 18. Amendment of Ordinance. (a) The terms of this Ordinance shall constitute a contract between the City and the owners of the Series 1997 Bonds and no variation or change in the undertaking herein set forth shall be made while any of the Series 1997 Bonds are outstanding, except as hereinafter set forth in subsections (b) and (c). (b) The Trustee may consent to any variation or change in this Ordinance in connection with the issuance of any Additional Parity Bonds or in order to cure any ambiguity, defect or omission in this Ordinance or any amendment hereto without the consent of the owners of the outstanding Series 1997 Bonds. (c) The owners of not less than 75% in aggregate principal amount of the Series 1997 Bonds then outstanding shall have the right, from time to time, anything contained in this Ordinance to the contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be construed as permitting (1) an extension of the maturity of the principal of or the interest on any Series 1997 Bond, or (2) a reduction in the principal amount of any Series 1997 Bond or the rate of interest thereon, or (3) the creation of a pledge of the Pledged Revenues superior to the pledge created by this Ordinance, or (4) a privilege or priority of any Series 1997 Bond or Series 1997 Bonds over any other Series 1997 Bond or Series 1997 Bonds, or (5) a Page 20 Ordinance No. 4050 August 19, 1997 reduction in the aggregate principal amount of the Series 1997 Bonds required for consent to such supplemental ordinance. Section 19. Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting and the Mayor is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement and to take all action required on the part of the City to fulfill its obligations under the Continuing Disclosure Agreement. The City covenants that it will take all necessary action to comply with the requirements of the Securities and Exchange Commission Rule 15(c)(2)-12 under the Securities Act of 1934, as amended (17 C.F.R., § 240.15(c)2-12). Section 20. Tax Exemption Qualifications. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Series 1997 Bonds to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds of the sale of the Series 1997 Bonds and the Pledged Revenues will not be used directly or indirectly in such manner as to cause the Series 1997 Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. In addition, the City covenants to pay, or cause the Trustee to pay, any arbitrage rebate which may be due the United States Treasury at the times and in the amounts under Section 148(f) of the Code. (b) The City represents that it has not used or permitted the use of, and covenants that it will not use or permit the use of the Arts Center or the proceeds of the Series 1997 Bonds, in such manner as to cause the Series 1997 Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (c) The Series 1997 Bonds are hereby designated as "qualified tax-exempt obligations" within the meaning of the Code. The City represents that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Code), including those of its subordinate entities, issued in calendar year 1997 will not exceed $10,000,000. Section 21. Federal Guarantee Provisions. The City covenants that it will take no action which would cause the Series 1997 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury. Section 22 IRS Form 8038-G Covenants. The City covenants that it will submit to the I, - Secretary of the Treasury of the United States, not later than the 15th day of the second calendar Page 21 Ordinance No. 4050 August 19, 1997 month after the close of the calendar quarter in which the Series 1997 Bonds are issued, a statement concerning the Series 1997 Bonds which contains the information required by Section 149(e) of the Code. Section 23. Call of Bonds Refunded. The City hereby calls the Bonds Refunded for redemption on the earliest practical date for which the Bonds Refunded Trustee can provide notice to the owners of the Bonds Refunded that such bonds will be redeemed. The Bonds Refunded Trustee is hereby directed to mail the necessary notices of redemption. Section 24. Use of Bonds Refunded Moneys. All moneys in any fund or account held by the Bonds Refunded Trustee pursuant to the Indenture are hereby appropriated and shall be used as follows: (a) all money held by the Bonds Refunded Trustee in the bond fund, the redemption fund, and the debt service reserve fund shall be applied to (i) establishing the Debt Service Reserve Fund and (ii) refunding of the Bonds Refunded along with any proceeds required from the Series 1997 Bonds. (b) all money held by the Bonds Refunded Trustee in the revenue fund shall be first applied, as necessary, to refunding of the Bonds Refunded, and the balance will be deposited into the City's General Fund. Section 15. Severability Clause. The provisions of this Ordinance are separable and in the event that any section or part hereof shall be held to be invalid, such invalidity shall not affect the remainder of this Ordinance. Section 26. Conflicts. All ordinances and resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 27. Limitations of Rights. This Ordinance shall not create any right of any character and no right of any character shall arise under or pursuant hereto until the Series 1997 Bonds shall be issued and delivered except as provided in Sections 2, 3, 23 and 24 hereof. Section 28. Emergency Clarice. It is hereby ascertained and declared that the refunding must be accomplished as soon as possible in order to lower the interest cost on obligations payable from the Pledged Revenues. The refunding cannot be accomplished without the issuance of the Series 1997 Bonds, and therefore, it is declared that an emergency exists and this Ordinance being necessary for the preservation of the public peace, health and safety shall be in force and take effect immediately upon and after its passage. Page 22 Ordinance No. 4050 August 19, 1997 PASSED AND APPROVED this 19th day of August , 1997. APPROVE : By: tied H a, Mayor ATTEST: By: Qb Traci Paul, City Clerk (SEAL) Page 23 Ordinance No. 4050 August l9i 1997 CERTIFICATE The undersigned, City Clerk of the City of Fayetteville, Arkansas (the "City"), hereby certifies that the foregoing pages are a true and correct copy of Ordinance No. 4050 , passed at a regular session of the City Council of the City, held at the regular meeting place of the Council at 6:30 o'clock p.m. on the 19th day of _August , 1997. GWEN under my hand and seal this 2071.1 day of At j rt t,4T , 1997. Traci Paul, City Clerk <Io REGIONS BANK CORPORATE TRUST DEPARTMENT 106 ST FRANCIS STREET MOBILE, AL 36602 CREMATION/DESTRUCTION CERTIFICATE DATED 1/11/2004 BOND ISSUE # BOND # 63-64 65-68 103 9256 TOTALS cUii cf 4LDSo /997 ISSUER NAME HERE CITY OFFFA�TTEVILLE ISSUER ADDRESS ATTN-ACCOUNTING ISSUER ADDRESS MANAGER ISSUER ADDRESS 113 W. MOUNTAIN FAYETTEVILLE, AR 72701 AMOUNT TOTAL AMOUNT $ 5,000.00 $ 10,000.00 $ 10,000.00 $ 40,000.00 $ 310,000.00 $ 310,000.00 q 360,000.00 RECEIVED FEB 0 3 2004 REGIONS BANK ACCTG. 2rPT CORPORATE TRUST DEPARTMENT NAME HERE CITY OF FAYETTEVILLE 106 ST FRANCIS STREET ISSUER ADDRESS ATTN-ACCOUNTING MOBILE, AL 36602 ISSUER ADDRESS MANAGER ISSUER ADDRESS 113 W. MOUNTAIN CREMATION/DESTRUCTION CERTIFICATE FAYETTEVILLE, AR DATED 1/11/2004 72701 BOND ISSUE # BOND # 63-64 65-68 103 WITNESSED BY: 9256 AMOUNT TOTAL AMOUNT $ 5,000.00 $ 10,000.00 $ 10,000.00 $ 40,000.00 $ 310,000.00 $ 310,000.00 TOTALS /b�u�-� £. f a3 -0`f RECEIPT IS HEREBY ACKNOWLEDGED OF ABOVE DESCR ED ENCLOSURES nn L / E: 360,000.00 RECFIVED FEB 112004 Crry OF F:. i ETTEVILLE CITY CLER;CS OFFICE [n ££ v xi $dam gg 'a- sa;-,g smm$8 8 c m mp p1 m °< m n•cgu a 9 m m ?� Li .1 Ii T+ �° u�55mu4°m=C�o 2 �m mo YIl � (xJ D 3�%a�m4mg yy �a So -=o-m assn m = o n F Ng U mmb~RR-= o�a=m�EomRgn•jSZ�d3 3�1^. 3�v sj5S$on{rto6C!r ymy�o{AAn""5m3,b �3 Ca gd•aRma �g=Sam •; A ��".' l_J �• a EE %G'g4 ° o $ _ � o v m Bm $9m �.s Dqmq O O /yyy 4 fflIUHiPW4WHIUH o Qo3:a=n @ m 2 S-_$tt .� :. -c w•z c � � 2'N_7�gpv g_aomq-3m8ggc m`S asm°8a gmap� m3mmaod8� N g (/I VT 4 > �i. ffiPPP �� 4 p N m' 5� Nw u J � �y f=l m aa q= n gg3°3mCpm m q a Q �EyQN . em m m s°4 m2� 66 cma mas YN�3 p O � mfn°p (n a Iitil1 ]m=paam�3$$ SEm.w3 �R.aawm m3 k8am��sm cS"Qo8»ggm 'mm 3<=o'w mgmm<_m°_Sy T O y-��mSnxms�ww amdm =-�a=8mya'umgiSRcm$d=5 gmgm$.o$am IIIUI a>3iG6 jS'i'5oRGd�mn$tp sa mDe mBSvqmm�mew DCJnnn Z 0(t.�iN 00mi OriCu� Sw.. ji=•O2 D; DL" = a •5C q�OG O :n F .333S55M�w����_ 9 H §6 D �j y. wCdw$i 0y 63�aS0 m7tl C^ �$ m°wyo'E. is'@3d n'-2 ^am (O `N1 1 8 O DD tl.3 0 m4-, gs5s m aS3 G4a$Mt-wd m�5 maps owm - •i1 @ oc y Om ?•a Wl,R a3iIut _mm_C$Ctm o a�ai�� mC~ C=mwma @3,q�' °8 u�dB�mmEm 33wt ?aJmQmP 3_ �3.inmmi�m9du4Diam ]1 m Sm CA�5�+i S_, -3R 5•�.a o pm �g 2�m 'mba jGwwn d ang* m- W6W m Q mgg 3$ =a pjUo§ mR F u E c q 3�-3 gRI°H3mf4a$,- m G c i 3 a_ g S C C .,_ G3.°m E m m E $= Sqi pJmmm�Y. m_ m `Sme anda.c _.s S om 0 � In Z ,C�gg mgw = m m m 7 s :vr .,•�•�•S d .. ••O: s g m m <, c p -oro m v. m m F q �6s Z iii nmyJ ;: mJ V °O. O `, `3�j, '•me m � m d E S O DM Z< ' - Lryin .,,q •....3�1�,r� ...••/jY~� # 8 x N umi p^� mmm r x •••n•.••...,., m$.'z w 8o=. �aa38� �j¢mg�am `g a m m zZa __. F 'Hi m3m *0 y v m� c N �- m' g yV g33ddm ism mR" v m S a"m9 n mN�ug RW.m r spa°' ,� O mm o g o g d m a - mcmi mwm0 ��J4cO�Viii! 58 T� NST 'L• DZ 2cm' c zy Fmmn E Om om m1 � i1N A •� ys m°g 3_I and i� m m Vi r y M yO < aT 45'u - mo0 ym m5.m 42 Om m4 ` •Zq g O ° 3bw m 2 oH_ tl. w m al CI Wj m f�'Vt Rm5 o m -J y w i$gom(ml Qm L^i b05=jj% � aDm ME m am%BM �z my aBm Ed,'?a ai m' mD fi z �� = 6 ga na ggmm4 d m d m '�a 2Stuno m F 05 ion .�1 M m 6° a ow§�•` m ad pw o o°c 3n- 3)� JDC mEf.Roma S'G rw u cm' o G34 pm-MW!�S�j� mO � nu3m �mpm '... 0 m�j 0 QSffjj T� r2 2C 2�a�J il. tl' aL 2 mgao mom' ao a S iCi Rm0 , G$ m o� tai�� ci.a•Zrvmc •.. RS m'a Ss 0y1p0 O R JW nm $o$"m'8m@a�� V .E. wa 5� n 5 D mm 4G_ W yy jil ° i47 =gym $ mE m agog_$$ 9Rm3Sa m° I. m�agm o_ a 4Si •1 °z z n° gym $'$ 'Wn.0 w�0°Ifi 1� Iy�yII Rdu III a°'�6sO flhttiifl n S O`' O \-1O$ 83m53mR Sil0O O 'I u %% UJ'iITED STATES OF AMERICA STATE OF ARKANSAS , CITY OF FAYETTEVILLE, ARKANSAS • SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 • FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the twenty percent (20%) of the City's share of the Tax. The bonds are fuller secured to the transferee in exchange therefor. This bond is issued with the intent that the laws of by amounts maintained in the Debt Service Reserve Fund established by the Authorizing the Stale shall govern its construction. Ordinance. Moneys In the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional panty bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective interest on the bonds and additional panty bonds, principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duty authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen The bonds are issuade only as fully registered bonds in thedenomaation of $5,000, and any integral multiple thereof. Subject to the Itations anal upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a tike aggregate principal amount of tufty registered bonds of the same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issuef) of Sales Tax Capital Improvement Refunding Bonds. Series 1997 in the total principal amount of $2,610,000 (the 'Bonds'), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 67) and Title 14, Chapter 164, Subchapter 3 of theArkansas Code of 1987Annotated, as amended (the'Authorizing Legislation), and City of Fayetteville. Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and Issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verity the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offeringinateral relating to the Bonds and we express no opinion relating Hereto. Based op our examination, we are of the opinion, as of the date hereof and under existing law, that I. The Bonds have been lnow ity orm, including and pawed under the mConstitution and Acs of in State of Arkansas now in and b particularlythe sndment 62 and tiin Authorizing Legislation, and are valid and binding obligations of We Issuer enforceable in accordance with their lama. 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of This 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987Annoated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has full legal right, power and authority to authorize and issue the Bonds, and to carryout Me transactions contemplated by the Authorizing Ordinance and the Bonds. 4. The Authorizing Ordinance has been duty passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duty authorized executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable safety from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item or tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of Me Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal Income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are'qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial Institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereinafter enacted in that Weir enforcement may be subject tothe exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the data hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances Mat may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours, GILL LAW FIRM, a professional association �' ♦d �s� tl ,.'.(L l�U1 ASSIGNMENT }1 IZ3 z FOR VALUE RECEIVED, ("Transferof), hereby sells, assigns and transfers unto , the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the lace of the within bond in every particular. without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. �r E SW M o g m m sc- m3YD m=$R8 $ m u`�- a 3 9 �mm£m Gd w fi $ v.G '" mN $ �°gN'$5� � aZq g� $mm P m K4 r' tP1 �G ai m $ u d 6'-�s.= 'mm R em@ SQe am oB a am oq$$6vmR m S 4SXR 3 O ,P cn iii St Ol^ONO m yy 55 $77ggg = ^g IiIiQQPG'R$Y0 $! R� T l!! W e � ��A-�Sa22558��'m-g�3$R �'mos3.m�6$3. 01111 $$m3m�mRd 3 10 �mF • �iv SI' (°i] a r U Qifli !11[iHuI1ihIflUJI ..5 C; 2 a � j m GY m y =� 5 g G E $�g mgmag?gym M am D 3 v =F ' m :rN o yy 3g s4 dim 3 my °�m% Il gi 5$�_3 1 !11111111511 H (] m ?Q IV m a a�5�+6 --3 �Rm �g3?3LSmem°°O -'pZ33u (1 n fittit 3$��emy�¢ idgN56$��. 7 N.sS s3 1 $�if�4yS$ sde $N1gm =c d 3$m5G dsT$3 mg $G 6yyd tyg�c q�f� m; 3$s �S$''Sm�m$�� m is G ifim�R a I mm II as g4545Gcmgg bgym 4 xmyy p ^� UI N l i i um ymS Ge �m-m Ymm Rm m = mo^ aa' m.in D r $v H JI{1i9I,tt(IIjiL ;la: ,., ;;u •:OTC o = ! .x � §R L� 3 S 3gs'a3� _ W s GOD e is %• lv z O m r r m '••..... %��\`. r, es8n 8 3 y Z D '9 ..3�••.` 0 w $88 �jn a y ct a 6 z v m v$ m 3J � m LZ'1 D m OIy pY CCCCCC jmy @ Gv '°3K nOm Y@S4 N NO� Zyn �g f� m mQ, o d aR=_ m N W94JZJgmB 36n� o RI J 33s $ dEg i 3`Zc m9� N 4Sg =O �DI� Y/ i' m a mce p DY u? m yO O omC q�" m .1msji6m .SFu� 20C� 1111111* Of HH �� g5 tN �. } dp �yg � gg B m vG'c1O mp a uG a �y I.P LII 4. s me g �m 9� NO �c \ Dy Eg ygy�Y m -dm m 3$$�8 mo "�? 3P . $ $o m m mm4 m m A PT: ft m�$1d dN q L£�mp{ d msm$ O� H tnl/ si.. $ _: ��ma32 5823� ___ ., zMi 9OOmm 8$ g me X$m `Z 3p$�c tno �m mmm-6R N .. gg di$g �5om Le$ i� v� �$e�iiG�m$ d m g3sa c�orR$�Sa°s'�'3m °8m' i pm5rmj,3smo W�% $d u88m o d�-" p oo 'I ,sir .'q 30 N $ 'S'edd gim' o ���m$ mr33X$m�d v N -j O T d '.4 tY #.'mow..`.. "• it �i �� �i �".r".^ Li`i . %'.. V4i'� ` .lVi4 ..:% .y�./'. . � i L u� wrv'. t) ) �.f `_ v • TEL( , S'.a.•,' r. 0 N U, UNITEQ STATES OF AMERICA STATE OFARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the twenty percent (20%) of the City's share of Me Tax. The bonds are further secured to the transferee in exchange therefor. This bond is Issued with the intent that the laws of by amounts maintained in the Debt Service Reserve Fund established by Me Authorizing the State shall govern its construction. Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective interest on the bonds and additional party bonds, principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the Contrary. This bond is transferable by me Registered Owner shown above in person or by his attomey4mfact duty authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to me limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral muthple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered balls may be exchanged (or a like aggregate principal amount of fuy registered bonds of the same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the 'Issued of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the Bonds), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 621 and Tide 14, Chapter 164, Subchapter3 of theArkansas Code of 19a7Annotated as amended (Me'Authorizing Legislation'), and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the "Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such cavilled proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the codified proceedings and other certifications of public officials furnished to us without undertaking to verity the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based costa examination, we are of the opinion, as of the date hereof and under existing law, tat:, 1. The Bonds have been lawfully authorized all issued under the Constitution and laws of me State of Arkansas now in force, including particularly Amendment 62 and the Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20%0l the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of The 26, Chapter 74, Subchapter 3 of theArkansas Code of 1987Annoated, asamended. The Bonds are not secured by any lien on or security interest in any physical properties Of me Issuer. 3. The Issuer has full legal right, power and authority to authorize and issue the Bonds, and to carry out the transactions contemplated by the Authorizing Ordinance and the Bonds. 4. TheAuthorizing Ordinance has been duty passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item or tax preference for purposes of the federal alternative nenawm tax imposed on individuals and corporations: it should be noted however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (es defined fox federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth In the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be Included in gross income for federal Income tax purposes retroactive tothe date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified In paragraph 7. 7, The Bonds are qualified tax-exempt obligations' within the meaning of Section 265(b)(3) of the Code, and, in me case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to Interest on the Bonds. S. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moratorium and other similar laws affecting creditors' tights heretofore or hereinafter enacted in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. ASSIGNMENT Sinccrey yours, GILL LAW FIRM, a professional association SAll Fj�1. ..`( yT (� ... IT FOR VALUE RECEIVED, ('Translerof), hereby sells, assigns and transfers unto the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member lino of me New York Stock Exchange or a commercial bank or a trust company. - - a M e m :gm =§ag i am£ig�eE �a�,R m' m N F v a a T sa d F ? 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J hi `2 0- Jq m J9am -O Npp flu S q n YI iii .:1' `T O m Tm r ~- gm m 63 g8 Eggury gAat�— - o� O j�Y u m' m1°oJ° ZQIZ.l�umi F ...... .�.\\+�. v i �goN mymn�q r vi a Z a •,K 3 .• '41ryu Nmpz -+ w1Im8� R�m� 3 RI y m Zy p•OM P\ O aC F v O� <_3mmm 7 0 - V1 c `Z -&~ N s 10 - m /} Y. m fli m u c _l 5 m m m £_ m e ql m O 3=mam< °. vi<�% ZyD 'll1 m0y mJ_ m ° �mo �,v m m w i rn 0MM Ob d c'ma 0 o oo 5=a .S. I�O 2 2mo -•d J m J -to `. Yo a gH m0 m A nNP3u NO {D M D 000 D0 m T m g J�< < b grc3jma 0 m D Njin ON O J OiT J. W 0 On°QOm J. i J 4J� J°q°n J OM mZ° 7 C VI a b3mJ00 = uE ZO D9 lJC�s00n Dm 5$mJomDsv < 5 y mb �a �.� y 3 JSmc C O y0 =m iWmjmR O n < O JOP IT NNmF a0 C um 3Na�; 0C 0 lny Na J 0_. J t n 6J i o yi a �J s 3 lL m O N m^m67Na 4Z i0N Na"JO \4 y < - R@J ,cam 0 vrG.R m 90 my m m i� o° gc0 mD m n1^0 Om$°.m in y °J N 3iQjm Zp 0y F:.. J0R03NR-1 Xo be�eogoaa ) a°n $ rvg<g'o.' nm om zo S$$5w¢mJmm U? 'mFs ° omnN� Jv m m3 y0 mmnoi3Jc$ V 't Ljg n m�si OS ZZ m 30x' N 0 0, m 6* M qO CJ0 igM5i a0 j-qP`Z 0-.600 rm 0N(I n+m O, 'I 1• Sg u0 w v'�J 3c$�m' $� Oa om'iy w _ .. f�..l1y'trµ ,� cc g gm m m n N s y m <' m J '° m— ri a ~ N { ? JF yy / V T �1 ({� an to °o d<5'm a0 cy". .°mS`�i i, yry 4. �$ =mVom m m o"> >F 3m0 . �VVV Q R qJ 6 n$ m? v 0= J m O N a O V 1"• v g m R i' go'vJ i. of m mgam$onz0 ��zm� m oBc�iNma W O IIp:p FM v°c= m �' o-6 "o n 011144]77" ..� II g "u go M O of 3 Zm q 'xi O i I yy l�J m mOJEm0O a,3mo pmp� a F 0 0 m b a l m i° m m g n N *` 'y `N✓ UNITE)) STATES OF AMERICA t I STATE OF ARKANSAS , CITY OF FAYETTEVILLE, ARKANSAS • SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured to the transferee in exchange therefor. This bond is issued with the intent that the laws of by amounts maintained in the Debt Service Reserve Fund established by the Authorizing the State shall govern its construction. Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective interest on the bonds and additional parity bonds, principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall he affected by any notice to the contrary. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: The bonds are issuable only as fully registered bonds in the denomination of $5,000. and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturityof other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issuer) of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the "Bonds"), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ("Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987Annotated, as amended (the "Authorizing Legislation"), and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the "Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of tact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. 5 Based on our examination, we are of the opinion, as of the date hereof and under existing law, that: 1. The jtonds have been lawfully authorized and issued under the Constitution and laws of the State of Arkansas now in force, including particularly Amendment 62 and the Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in, accordance with their terms. - 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of ❑tle 26, Chapter 74, Subchapter 3of theArkansas Code of 1987Anrotated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has full legal right, power and authority to authorize and issue the Bonds, and to carry out the transactions contemplated by the Authorizing Ordinance and the Bonds. 4. The Authorizing Ordinance has been duly passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item or tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations: it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined forfederal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income forfederal income tax purposes retroactive tome date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are "qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moratorium and other similar laws affecting creditors rights heretofore or hereinafter enacted in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of me date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours, GILL LAW FIRM, a professional association s.. LCN+�; sinSMflE r A OaFOR VALUE RECEIVED, ASGNMENT ('Transferor'), hereby sells, assigns and transfers unto the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the looks kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of me New York Stock Exchange or a commercial bank or a trust company. 7 .f. 0 N r Ali &° U n n ��' $$o`I� mm'$Q$j>�QB m'm m'q$ I U oc- u •• iy$m.y° F p ��m $om d?"pm- aHmm 4 $ 3.gg�m�0g�°.��gsmcyY@oO OO O^•A• a mz38� ;oaGm f��3mmo mom m m@ 2�s �=1 i p CMA - . GC54` OCSpNOmSOYJyqpubm0$gmm�c��Ii v$ mx' $�9m-'pN-^SC-u l�/�Ty'Yy!� 3m �sm°3m Ss €a.s$apt .��•.. 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CITy'+. 4 R '- m B Q$ m °� ��%mi Z -q •'.��% _6 �:� 3m° .0q3 63p^ad8�?gm$jeeam kill G'g.°c 4so335m4?is ,�`n. :• -`1n' No OO• �; n .'•me me oqm ZD< n'1 >( �8� 4 mm " 3 - m _ -: '••1n.nm"", ., mi0 8 -4a, m �+ Z om'F '" o �rcm C -. p `� D in 31j�'lf iq.SM m x ��iS mpw pmy, mcA $5 mGB m mm �C mmm ma m Z e$m$ N N < Z „fi ;e= I. r N m>RaHg a w4 Z $5n 0m0m 4"$43 Vim$- y m" £m Zm' •S9S F3 O W Z Z i CO ism E O '2E Om m 'd a:Z �.6,2J um _ m'em 8ii3 a cpyI t�`ycq"m 'r^ y/ �,•. . N < "Gy� b7 v " my -1 p"°C `ZS �g O �T Om 1≤ G pip"m m pmm -01 2O Nmg>0°3�C m m2 mC j₹D�33r. m 5 ^ 3�(y�d3 'wdoi IIIqan m0 ms�cm &•g ss mp nGJPia 25r•- 3N..330£ �y Dy j Q<-�"m S,. p•ZL $ �n3 mm m¢Na30Rom9 n o$ o �1 w Oam z$ 3$$ m$m'�m fn r _ "g m $ y $ mt p- m m$j °3$ mo tl1m 8 g- ^ -. Y2'Pdm�% mm 5 o m8mv�° W i d A4r.. m moi S $Om m mm' y$4s W1'ij ay II 2 m mm6$ m a3 6 �4 Ip mm m O m j {i 9 M O n �I r \_, n^ m m_ 5 i• (y 2 " Jy 0 .Y �y i:.��.. •.nr ]G ° g ! N NPm$ mN ]IG p`0mm N J # �; t ' is a_,tom $x3 q 0 N U, OI UNITED STATES OF AMERICA STATE OFARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of Me Tax. The bonds are runner secured by amounts maintained in Me Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys In the Debt Service Reserve Fund may be used only for payment of principal of and interest on Me bonds and additional party bonds in Me event moneys in Me Bond Fund are Insufficient for such purposes or to pay the final maturity of and Me respective interest an the bonds and additional parity bonds. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in Me manner, subject to Me limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfera new fully registered bond or bonds of Me same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is issued with the intent Mat the laws of the State shall govern its construction. The City and the Trustee may deem and treat Me Registered Owner shown above as Me absolute owner hereof for the purpose of receiving payment of or an account of principal hereof and interest due hereon and for all other purposes, and neither Me City nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral multiple thereof. Subject to Me limitations and upon payment of the charges provided in Me Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of Me same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with Me issuance by Me City of Fayetteville, Arkansas (the -Issuer) of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the 'Bonds'), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 621) and Title 14, Chapter 164, Subchapter 3 of iheArkansas Code of 1987 Annotated, as amended (the Authorizing Legilatiorfl, and City of Fayetteville. Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the Authorizing Ordinancel. The Bonds are being issued to provide sufficient funds to accomplish the refunding of Me Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing Me Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify Me same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of Me Official Statement or other ofcring material relating to Me Bonds and we express no opinion relating thereto. Based on our examination, we are of the opinion, as of the date hereof and under existing 1a6.' that: 1 The Bonds have been lawfully authorized and issued under the Constitution and laws of Me State of Arkansas now in lorce, including particularly Amendment 62 and Me Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terra. 2. The Bonds are secured bye pledge of 20%of the Issuer's share of collections of the 1% sales and use tax duty levied in Washington County, Arkansas, under the authority of Title 28, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has lull legal right, power and authority to authorize and issue Me Bonds, and to carry out Me transactions contemplated by the Authorizing Ordinance and Me Bonds. 4. The Authorizing Ordinance has been duly passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by Me Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in Me Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item or tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence Is subject to the condition Mat the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, Met must be satisfied subsequent to the issuance of Me Bonds in order that interest thereon be, or continua to be, excluded from gross income for federal income ax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are 'qualified tax-exempt obligations within Me moaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)15) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on Me Bonds, 8. The Bonds and interest income therefrom are exempt from all Aransas state, county and municipal axes. 9. It is to be understood that the rights of Me registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moatoram and other rimer laws affecting creditorsdgha heretofore or hereinafter enacted in Mat their enforcement may be subject to Me exercise of judicial discretion in accordance with general principles of equity. This opinion Is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. �n;rt 7�(sj1i. ASSIGNMENT FOR VALUE RECEIVED, ("fransferer), hereby sells, assigns and I'Mri rs Me within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney for registration thereof with full power of substitution In Me premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. Sincerely yours, GILL LAW FIRM, a professional association i6( N fl into to transfer the I' within bond on the books kept GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. m m ''-.36 m� rvm3m� 1'$g mmw m iic 5a A56 oq s N2 oolm w \_l `i((aj�i1 tl D �y 3y0, .y7m kmmm J yw O bq 9 Jaw -O Siin/\ � I y w� yi w1O0O am' 6 J- o c N.'. ,g ax m 3my Qy 0c3°J$� 1"m 9 5'C am ocJ"�60_ m��g� d -?5 Q4$� sR3nJ3Y $oi• D r 9 V dGGJ@J aJOaOm G3 Cm °mpqY O_T m 6 E i a m O a m N m m J'� m o \+ w D m D G i O A T ��pp 1 V •'. hR��}I1 A11. 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'.g3�''•. i,�Y~ 8 gmm� � $mgmm�g o.'z ,`, .,•q'•...... .1f�\C :' gs vmt° % mammSm `m (D r 2 .6 ♦r. •rrll.Imna mF R vm rcm Om y�vw �Daq m \' C)> y sman18m8mm "7, r , mS�ii a• ' m m 8�$ m a 5�s m . j'm m' n,Jn fiJ i m m 2 n Ban .cff1.M-_\ gi50 >0q T T N G00 PN%c,C s'$ j3�sc O m ' mpw-, 41 S acGa 6=m0 Z m Cw W a!% I�y�/}/ & m N.S'�mv9 Sm SJ Ozmmg 1 Y a1 £ d5y \ • iuID m D m y0_ n @ r=$0530 °•O a >a mm?Om n �f₹ so >a w�mmy d VI yO 6 aa=— > cic P-m2a2 Ty 5$%S_oa $6c gm (@ 3w Dy�3?'y-� of m�� J az,�m%mgg �11—v%?o° m c O > m m m J a �m -.sa SS'T ( `\\ m sma �3m 1!� g o33O o'8 �i G Sly"v. $7 \ 31 D a .am3m z> m oTso% I "1lll� �J 9 , gggffi yz 6 m mm'�13 m0 Ja N p O ?a zyy �j_ S o ui Z d o on m X N daa 0 5 n \ ��y:� .TYI •<�r p no'm S#R �. 5%� oa Z �� 5 c N m Om Nk ,AA y2O $¢6cw mN. On _ x { i_A 1 ' ff{YYY\ yOg m 5°s 05 0y i2 c�tm mmN� X� mSJ3 TO N; cjma �'$m'Z0 a ___ • - (())����.. 5 c 3 < soomomd Id a"S ios�, c. Ti+y !^� ac N /y�yyy - l '5'sl G°>omm3pnx o O f 0 a li a S -1 Fw F m o$ m r l�l �. 6 m X00 i� 0 Mo=%�mJoab. �i Q �x: `d bL S Ja RB m' my r� 'gym jN�.m m m0 W O WSr' ytU 06 ilYJ.l 3 Ma m 3mma gs 0 I j ' it • m ns pp00 aZm O O 0 u .1, . I 'A pa� ° 0 0 6 J G mJ m% J C 0 H° qm J rcyy 5 ^ u 1_$ mma m(S w D'D a°m'm wa Cl) v C�7 mss; x t S UNRED STATES OF AMERICA STATE OFARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of the lax. The bonds are further secured by amounts maintained in the Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys in 91e Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in the Bond Fund are insufficient 1w such purposes or to pay the final maturity of and the respective interest on the bonds and additional party bonds. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fad duty authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association tittle Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond Is issued with the intent that the laws of the State shall govern its construction. The City and the Trustee may deem and treat the Registered Owner shown above as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes, and neither the Cly nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any Integral multiple thereof. Subject to the liritations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issue/') of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the 4Bonds'), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 62") and Toe 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987Annotated. as amended (Me'Authorizing Legislation"), and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the "Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capitol Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained In the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based odour examination, we are of the opinion, as of the date hereof and under existing law, tat: 1. The Bonds of Arkansashave been /now win oin l d ono issued sAr the montt62 one laws gtihe State a now in force, b particularly Amendment nf oand the ac g with their t and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied In Washington County. Arkansas, under the authority of Title 26, Cfapter74, Subcfapter3 of the Arkansas Code of 1987 Annotated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has full legal right, power and authorityto authorize and issue the Bonds, and to carry out the transactions contemplated by the Autprizing Ordinance and me Bonds. 4. The Authorizing Ordinance has been duty passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross Income for federal income tax purposes and is not an item or tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the Condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds In order that interest thereon be, or continue to be. excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to Interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bands and the enforceability thereof may be subject to bankruptcy. Insolvency and reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereinafter enacted in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours. GILL LAW FIRM, a professional association ASSIGNMENT SMt FOR VALUE RECEIVED, (Transferof7, hereby salts, assigns and transfers unto . the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the lace of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a Must company. ® f� y6 ,"�, l.?�Tsji ''A^ (p._'ryyZ f 4tr^ "`® ill'} •1 d. nl 1) P 1. m V .rte. _ `�3 amg:g�ffiR$ ma 9 D �D a -m ms;_am_ a 3U D_ m and isj mx$ S� $8 Sem mn$.n 6gs Z mm '. [rJ •�'_. ay m .mqq��y yym�m nmo 3m� 4 �wm 9 r 6 mnS yg&Ca5wBd BmQ ss.z F m 111! SN o$mam 0 xm 0 Q Sm m�� QmO yy D c uava y8g QL __ mm�$ao65'�93`oc�¢vm m Rao {� §qz t0 m Nmm¢3 $${mJ.3i m�m a3 zm a=$m4 �O m 560°m4 Sds mm 43 nw g_ 4 .1111110 'GR-`e -! m �'mv'm a8vR 6=-m 4$e'84 �ai ! 00 ( s^ oc Naam � 4'm -6c mm'gm�6gi� mg� m$ > T 40Cq (ali 000 j%j Sm fl H i ≥ °8$ffiyv5. mm,m^E2$$av wa $Fgimggs y M R �1.. S m am.0 N'o?> 6o=�� aaS aR S'�'�4E z n .R, • ziJ 553'G rvm �n 4y £SS-'A�° �4mQm 6s�:q¢�. o_ 3 .m a� > u.t dffi Sv°omrvm3�iEcffi33GD? S iJ Oy ry �ivoy—x <I S mw Omm4m go 36bi 9 affi 2 aS.m a�a_m�?Z 23850 jMONd O O >4 n 0�n�n 'i_3sdi?So'�°'m��'m g'�m=a69 a� ,..t.•. a6 > d. w$bffi mow m-.$m?°ffi'm� 2000 b LL,•°' v (]s tl.3 O 02.04 "^gi Sc e°�m'�4��ffiffij4a c$ :• a yr �v z q'gmm m6 �aac �m�6owmffim44i$3 Ci m Oc d, �au,Zm3.6mR £080 �m 338C 804 N z Sy �E m�v 3%Co mw a2�m& R$Z R x�gaN m0 0>> !1 ffi'Nm mq0 amx x '$j 6w //1 u' c' mc1dd uddn �•�^ i'lg? ≥; oo ao =ffi_dq. br' 3m�m my �. 52 my m m Ym. • $0� 3p�ue 0003 �'Sm -3�mc M y > 3a]aCa 3- cma -ma c C C y. ffi t) 5 ammo m� u.m$ pp 5y4 Z Z '�0° g ��G �4ywa Su[a3- III r ��' .x.mr. m 0 a 3. imT i °� S_lb g I� ..... om a xw o' 4md l4• �, c}i%'^'� _6 'x :0 limm5 64mm 68$�08j'6m G1 n y m -i m m '..OT �.� 1 mm .`'°� W 'a o O m 2 z>< t'jEg ;., .;%yYe' S°Tn m00S�.c`z8 �^° oZ3 O r r N1T > ./� .. .. o f S 'a3majc _wgwna�w 05`'0 —oIym if m3.m n6 a a.m 0a m m O �% 4fday m mg0 3mo cn m Z s Ott amE °effigy m 7C2 0 0m S FF Z Z "'++fill 4aT m jb 33330 nm ° dyC0 3 i'1_$a°�a m 2m 5m,m aq0 W �/�� r Ya3 = 33"5 T �K S 0:20.9.2 �•• . m D m C 0 x m- 0 0 W ES ; m b d i 0 0 m V I O .A . m2 av u 6 n �:. .•v. if m Ca5 D <m gR m aGS..q°R� 1� O 0l3 0 j£m_ 2 u SOT nffi?'�o5 °m Xlm > m w m O m x a 1^�{ p ui i ' \ ndT 4 m 0 mT �� g,2G d4o H m F Yy, G m T _ i7Lr!:lr T i r v 9S'b �D O< liIiiiliL 0qj�J�J b mul yN_ ffim �3 zC NQ m�mmC9 tm^� I>'� TN m g ffig'�m So 0 'do z -a m0 �S9.�R`Vll v' no m 3'°9z mx ym Sm6=g°=oja Cl 3 m 0 ? vn °@ffi vm om zo g$°$u ��Cmrd fA Gg m' mS og5 oo m=€md?8� m�G� III 4bT '�'' O '0 '" DgO3 �Smm 4c � '*4 wm 6 O y°g9yam 4H.ORATSmd cm� V Y ICI J ° Sa80' O m m8m 3.om W O j 30 g 2 0 '44 WHO @ a� m aam, m' 3s3�z0 0 5 0 Crf l �nnmrr a3 dug p}( qq� 5a i N O io _ A o FFFFFFIJMMMM'���.w��*�y . to 1. etl J`C `f i _.e. ,l- 1, .?. ..mh _... e.•� 1 �N, Yt,.l=t ,N. , UI{ITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES TAY CAPITAL IMPROVEMENT REFUNDING BOND ' SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured to the transferee In exchange therefor. This bond is Issued with the intent that the laws of by amounts maintained in the Debt Service Reserve Fund established by the Authorizing the State shall govern its construction. Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional partly bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective interest on the bonds and additional parity bonds, principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duty authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: The bonds are issuable only as fully registered bonds In the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same mostlyof other aut orized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the issuer of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the Bonds"), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated, as amended (the "Authorizing Legislation'), and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as of August 19,1997 (the 'Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by Independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based on our examination, we are of the opinion, as of the date hereof and under existing law,! 1. he Bonds have been lawfully authorized and issued under the Constitution and laws t,A the State of Arkansas now in force, including particularly Amendment 62 and the Authoring Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of Title 28, Chapter 74, Subchapter3ottheArkansas Code of 1967Anmtated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has full legal right, power and authority to authorize and issue the Bonds. and to carry out the transactions contemplated by the Authorizing Ordinance and the Bonds. 4. The Authorizing Ordinance has been duly passed and constitutes a valid and binding ordinance in accordance with Its terms. 5. The Bonds have been duty authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an Rem or tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations: it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined forfederal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross Income for federal income tax purposes retroactive to the date of Issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are 'qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's Interest expense allocable to interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is lobe understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, Insolvency and reorganization. n,oratorium and other similar laws affecting creditors rights heretofore or hereinafter erected in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours, GILL LAW FIRM, a professional association C-, ASSIGNMENT '-Y LI `t t j h1 1a Fri r.5 si m Sig. FOR VALUE RECEIVED, ('Transferor"), hereby sells, assigns and transfers unto the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without allemation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. r :fit'{ - iiiii flsS T.;�a<. E V1. ja ri SJ •— A%`I' \) 5)i�rl r J V !/ f )\i T ♦ }l5 !ir �% A c / 1 T ♦ l !.�/ 5 Stlf(( M1 \ If J ! V �� .li3N S 'stir ; Y_S. x� i%tir � � ..'q. ./ - - ..r ♦. R .T. �r r f � ' .P = ��- -Ir 1-' ≥_ Y r T,�, , � i � Y . �✓'� � I' ! � g �, : -^� � {u if \: rs/ I' =+ t� 111 1: } H HE HHH e C.'- r 1 s • •a r+'S 5 5J I = s • .^y rf .y, c 1 ♦. , :If � S 1 Y X.5~V �1�yJ�' �I ' t • . i—i I • • I •� • \ I L IJ Y ___. _mil ~ -♦,{°vt _rr 4 • .✓" .a w- r y� ((it. tFlt4i)./ � �f��'nk"t f J { �� +\T�ilf�flll� ✓.. UNITED STATES OF AMERICA STATE OFARKANSAS CITY OF FAYETTEVILLE, ARKANSAS , SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured to the transferee in exchange therefor. This bond is issued with the intent that the laws of by amounts maintained In the Debt Service Reserve Fund established by the Authorizing the State shall govern its construction. Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional panty bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective Interest on the bonds and additional panty bonds, principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond, Upon such transfera new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 City of Fayettevllle, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen The bonds are Issuabe any as fu0y registered bonds in the denomination of $5.CW, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issuer') of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the "Bonds'). pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 62') and Tide 14, Chapter 164, Subchapter3 of theArkansas Code of 1987Annoated, as amended (the "Authorizing Legislations, and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as ofAugust 19,1997 (the'Authonzing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined he law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion. we have relied upon the reesentations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verity the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based on our examination, we are of the opinion, as of the date hereof and under existing law, met: 1. The Bonds have been awfully authorized and issued under the Constitution and laws of the State of Arkansas now in force, including particularly Amendment 62 and the Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20% of he Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under he authority ofTitle 26, Chapter 74, Subchapter 3 of theArkansas Code of 1967Annoated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 3. The Issuer has full legal right, power and authority to authorize and issue me Bonds, and to carry out the transactions contemplated by the Authorizing Ordinance and the Bonds, 4. TheAuthonzing Ordinance has been duly passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal Income tax purposes and is not an Item or tax preference for purposes of the federal attemative minimum tax imposed on individuals and corporations; it should be noted, however, that for he purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986. as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be. excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to campy with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Cade, and, in the case of certain financial institutions (within the meaning of Section 285(b)(5) of the Cale), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moratorium and other similar laws affecAng creditors rights heretofore or hereinafter enacted in that their enforcement may be subject to he exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise. or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in he law that may hereafter occur. Sincerely yours, GILL LAW FIRM, a professional association ASSIGNMENT z 4StF& FOR VALUE RECEIVED, ('Transferor'). hereby sells, assigns and transfers unto the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. S 2,610,000 CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS County and City Proceedings (Old Bonds) 1. Certified Copy of Ordinance No. 81-27 of the County adopted June 18, 1981, as amended by Ordinance No. 83-16 adopted May 12, 1983, regarding a I% local sales and use tax, proof of publication, proclamation of election results, and proof of publication of proclamation. 2. Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Ordinance No. 3206 Exhibit B - Minutes adopting Ordinance. Exhibit C - Proof of Publication of Ordinance. Exhibit D - Notice of Special Election Exhibit E - Copy of Ballot Exhibit F - Proclamation declaring results Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Ordinance 3224, authorizing the issuance of the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986. Exhibit B - Minutes adopting Ordinance Exhibit C - Proof of Publication of Ordinance County and City Proceedings New Bonds) 4. 6. 8. Certified Copy of Ordinance No. 97-16 of the County adopted June 12, 1997, levying the 1% local sales and use tax, proof of publication. Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Certified Copy of Ordinance No. 4050 of the City adopted August 19, 1997, authorizing the issuance of the City's Sales Tax Capital Improvement Refunding Bonds, Series 1997. Exhibit B - Minutes adopting Ordinance Exhibit C - Proof of Publication of Ordinance Non -Litigation Certificate Transactional Documents Preliminary Official Statement with Rule 15(c)(2)-12 Certificate attached. Bond Purchase Agreement P:\DOCUMENT\CTB\FAYETFEV\CLOSEAGD October 13. 1997 ORDINANCE NO. 4050 MICROFILMED `ED AN ORDINANCE AUTHORIZING THE ISSUANCE OF SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS FOR THE PURPOSE OF REFUNDING THE CITY'S OUTSTANDING SALES TAX CAPITAL IMPROVEMENT BONDS, SERIES 1986; PLEDGING TWENTY PERCENT OF THE CITY'S SHARE OF WASHINGTON COUNTY'S 1% SALES AND USE TAX TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has determined that in order to receive debt service savings it is in the best interest of the City to refund the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986, in the outstanding principal amount of $2,940,000 (the "Bonds Refunded") authorized by Ordinance No. 3224 of the City, adopted November 6, 1986 ("Ordinance No. 3224"); and WHEREAS, the Bonds Refunded were approved by the voters at the special election held October 7, 1986 in order to finance capital improvements, specifically a portion of the cost of acquiring, constructing and equipping a new Arts Center in the City, in joint venture with the University of Arkansas; and WHEREAS, the City can obtain the necessary funds for the refunding of the Bonds Refunded (the "refunding") by the issuance of Sales Tax Capital Improvement Refunding Bonds, Series 1997, in the aggregate principal amount of $2,610,000 (the "Series 1997 Bonds") and by appropriating available moneys held in certain of the funds established pursuant to the Trust Indenture dated November 15, 1986, authorized by Ordinance No. 3224 (the "Indenture"); and WHEREAS, the City has made arrangements for the sale of the Series 1997 Bonds to Stephens Inc. (the "Purchaser"), at a price of 99.15% of par plus accrued interest (the "Purchase Price"), pursuant to a Bond Purchase Agreement between the Purchaser and the City (the "Agreement"), which has been presented to and is before this meeting; and WHEREAS, a final Official Statement, dated August 19, 1997 (the "Official Statement"), has been prepared and will be distributed in connection with the offer and sale of the Series 1997 Bonds; and WHEREAS, the Preliminary Official Statement, dated August 6, 1997, offering the Series 1997 Bonds for sale (the "Preliminary Official Statement"), has been presented to and is before this meeting; and WHEREAS, the Bonds Refunded are secured by a pledge of twenty percent (20%) of the City's share of the county -wide 1% sales and use tax levied by Ordinance No. 97-16 of the County adopted June 12, 1997; and Page 2 Ordinance No. 4050 August 19, 1997 WHEREAS, a Continuing Disclosure Agreement, dated September 1, 1997 (the "Continuing Disclosure Agreement"), requiring the City to comply with the requirements of 17 C.F.R. § 240.15c2-12 has been presented and is before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS, AS FOLLOWS: Section 1. Authorization for Refunding. The refunding of the Bonds Refunded shall be accomplished, and the Mayor and City Clerk are hereby authorized to take all action necessary in connection therewith and to execute all required contracts and documents. Section 2. Acceptance of Offer to Purchase Bonds. The offer of the Purchaser for the purchase of the Series 1997 Bonds from the City at the Purchase Price, for Series 1997 Bonds bearing interest at the rates per annum, maturing and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail be and is hereby accepted and the Agreement, in substantially the form submitted to this meeting, is approved and confirmed and the Series 1997 Bonds are hereby sold to the Purchaser. The Mayor is hereby authorized and directed to execute and deliver the Agreement on behalf of the City and to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 3. Approval of Preliminary Official Statement. The Preliminary Official Statement is hereby approved and the previous use of the Preliminary Official Statement by the Purchaser in connection with the sale of the Series 1997 Bonds is hereby in all respects authorized, approved and confirmed, and the Mayor be and is hereby authorized and directed, -for and on behalf of the City, to execute the Preliminary Official Statement and the final Official Statement in the name of the City to be delivered to the Purchaser for use in connection with the sale of the Series 1997 Bonds as set forth in the Agreement. The Mayor of the City is hereby authorized to execute, deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City. The Mayor's execution and delivery of the Official Statement shall constitute conclusive evidence of his approval of any such changes. Section 4. The Bonds. Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 are hereby authorized and ordered issued in the total principal amount of $2,610,000 the proceeds of the sale of which are necessary, along with available moneys held in funds established by the Indenture, to provide sufficient funds for accomplishing the refunding of the Bonds Refunded, Page 3 Ordinance No. 4050 August 19, 1997 paying expenses incidental thereto, and paying expenses of issuing the Series 1997 Bonds. The Series 1997 Bonds shall bear interest at the rates and shall mature on November 15 in the amounts and, in the years as follows: 1998 $290,000 4.15% 1999 305,000 4.25% 2000 315,000 4.30% 2001 330,000 4.40% 2002 345,000 4.50% 2003 360,000 4.55% 2004 375,000 4:60% 2005 290,000 4.65% The Series 1997 Bonds shall be issuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Unless the City shall otherwise direct, the Series 1997 Bonds shall be numbered from I upward in order of issuance. Each Series 1997 Bond shall have a CUSIP number but the failure of a CUSIP number to appear on any Series 1997 Bond shall not affect its validity. Each Series 1997 Bond shall be dated September 1, 1997. Interest on the Series 1997 Bonds shall be payable on November 15, 1997, and semiannually thereafter on May 15 and November 15 of each year. Payment of each installment of interest shall be made to the person in whose name the Series 1997 Bond is registered on the registration books of the City maintained by First Commercial Trust Company, National Association, Little Rock, Arkansas, as Trustee and Paying Agent (the "Trustee"), at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of any such Series 1997 Bond subsequent to such Record Date and prior to such interest payment date, by check or draft mailed by the Trustee to such owner at his address on such registration books. Payment of the interest on the Series 1997 Bonds shall also be made by wire transfer to the registered owner of a Series 1997 Bond or Bonds upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of Series 1997 Bonds. Principal of the Series 1997 Bonds shall be payable upon surrender at maturity at the corporate trust office of the Trustee. Each Series 1997 Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from September 1, 1997, or unless it is authenticated during the Page 4 Ordinance No. 4050 August 19, 1997 period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication thereof interest is in default thereon, in which event it shall bear interest from the date to which interest has been paid. Only such Series 1997 Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Section 6 hereof (the "Certificate") duly executed by the Trustee shall be entitled to any right or benefit under this Ordinance. No Series 1997 Bond shall be valid and obligatory for any purpose unless and until the Certificate shall have been duly executed by the Trustee, and the Certificate of the Trustee upon any such Series 1997 Bond shall be conclusive evidence that such Series 1997 Bond has been authenticated and delivered under this Ordinance. The Certificate shall to deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the Series 1997 Bonds. In case any Series 1997 Bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Series 1997 Bond of like date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Series 1997 Bond, or in lieu of and in substitution for such Series 1997 Bond destroyed or lost, upon the owner paying the reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a Series 1997 Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such Series 1997 Bond was destroyed or lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Series 1997 Bond. In the event any such Series 1997 Bond shall have matured, instead of issuing a new Series 1997 Bond, the Trustee may pay the same without the surrender thereof. Upon the issuance of a new Series 1997 Bond under this Section 4, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. The City shall cause books to be maintained by the Trustee for the registration and for the transfer of the Series 1997 Bonds as provided herein and in the Series 1997 Bonds. The Trustee shall act as the bond registrar. Each Series 1997 Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Series 1997 Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. Series 1997 Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Series 1997 Bonds of any other authorized denomination or denominations. The City shall execute and the Trustee shall authenticate and deliver Series 1997 Page 5 Ordinance No. 4050 August 19, 1997 Bonds which the registered owner making the exchange is entitled to receive. The execution by the City of any Series 1997 Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall be thereby authorized to authenticate and deliver such Series 1997 Bond. No charge shall be made to any owner of any Series 1997 Bond for the privilege of transfer or exchange, but any owner of any Series 1997 Bond requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Series 1997 Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the Trustee nor the City shall be required (i) to issue, transfer or exchange any Series 1997 Bond during a period beginning at the opening of business 15 days before any selection of Series 1997 Bonds of that maturity for redemption and ending at the close of business on the day of the first mailing of the relevant notice of redemption, or (ii) to transfer or exchange any Series 1997 Bonds selected for redemption in whole or in part. The person in whose name any Series 1997 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest on any Series 1997 Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 1997 Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Series 1997 Bonds or the date fixed for redemption of any Series 1997 Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Section 5. Signatures. The Series 1997 Bonds shall be executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. Section 6. Bond Form. The Series 1997 Bonds and the Certificate shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: Page 6 Ordinance No. 4050 August 19, 1997 (Form of Bond) REGISTERED No. UNITED STATES OF AMERICA, STATE OF ARKANSAS COUNTY OF WASHINGTON CITY OF FAYETTEVILLE SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 Interest Dated Maturity Rate: _% Date: September 1, 1997 Date: November 15, Registered Owner: Principal Amount: Dollars REGISTERED CUSIP: The City of Fayetteville, County of Washington, State of Arkansas (the "City"), a city of the first class, duly created under the laws of the State of Arkansas, for value received, hereby promises to pay to the Registered Owner shown above, upon presentation and surrender of this bond at the corporate trust office of First Commercial Trust Company, National Association, Little Rock, Arkansas, or its successor or successors, as Trustee and Paying Agent (the "Trustee"), on the Maturity Date shown above, the Principal Amount shown above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay by check or draft to the Registered Owner shown above interest thereon, in like coin or currency from the interest commencement date specified below at the Interest Rate per annum shown above, payable on November 15, 1997 and on each May 15 and November 15 thereafter, until payment of such Principal Amount or, if this bond or a portion hereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this bond. Payment of each installment of interest shall be made to the person in whose name this bond is registered on the registration books of the City maintained by the Trustee at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of this bond subsequent to such Record Date and prior to such interest payment date. Payment of the interest on this bond shall also be made by wire transfer to the registered owner of this bond upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of the bonds of the series of which this bond is one. Page 7 Ordinance No. 4050 August 19, 1997 This bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear ...interest from such date, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date shown above, or unless at the time of authentication hereof interest is in default -hereon, in which event it shall bear interest from the date to which interest has been paid. This bond is one of an issue of City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997, aggregating two million six hundred and ten thousand dollars ($2,610,000) in aggregate principal amount (the "bonds"). The bonds have been issued for the purpose of refunding certain outstanding bonds of the City (the "Bonds Refunded"), paying necessary expenses incidental thereto, and paying expenses of authorizing and issuing the bonds. The bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), and pursuant to an ordinance of the City duly adopted (the "Authorizing Ordinance"), and an election duly held at which the majority of the legal voters of the City voting on the question approved the issuance of the Bonds Refunded. Reference is hereby made to the Authorizing Ordinance for the details of the nature and extent of the security, of the issuance of additional series and of the rights and obligations of the City, the Trustee and the registered owners of the bonds. The bonds are special obligations of the City, payable from twenty percent (20%) of the City's share of collections derived from the 1% sales and use tax levied in Washington County, Arkansas (the "County") under the authority of the laws of the State, including particularly Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated and a special election held in the County on July 28, 1981 (the "Tax") and the City hereby pledges twenty percent (20%) of its share of collections of the Tax for the payment of this bond. The City has reserved the right in the Authorizing Ordinance to issue additional bonds under the Authorizing Ordinance on a parity of security with the bonds. (REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.) THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. Page 8 Ordinance No. 4050 August 19, 1997 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed, under. the Constitution and laws of the State, particularly Amendment No. 62 to the Constitution of the State and the Authorizing Legislation, precedent to and in the issuance of this bond have existed, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by this bond and the issue of which it forms a part does not exceed any constitutional or statutory limitation; and that provision has been made for the payment of the bonds and interest thereon, as provided for in the Authorizing Legislation. This bond shall not be valid until it shall have been authenticated by the Certificate hereon duly signed by the Trustee. IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this bond to be executed by its Mayor and City Clerk, their facsimile signatures thereunto duly authorized and its corporate seal to be impressed, lithographed or imprinted on this bond, all as of the Dated Date shown above. CITY OF FAYETTEVILLE, ARKANSAS I2 Fred Hanna, Mayor ATTEST: By: City Clerk (SEAL) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the City of Fayetteville, Arkansas Sales Tax Capital Improvements Refunding Bonds, Series 1997, issued under the provisions of the within mentioned Authorizing Ordinance. First Commercial Trust Company, National Association, Trustee By: Authorized Signature Date of Authentication: Page 9 Ordinance No. 4050 August 19, 1997 (Reverse Side of Bond) CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured by amounts maintained in the Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in the Bond Fund are insufficient for such purposes or to pay the final maturity of and the respective interest on the bonds and additional parity bonds. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is issued with the intent that the laws of the State shall govern its construction. The City and the Trustee may deem and treat the Registered Owner shown above as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. Page 10 Ordinance No. 4050 August 19, 1997 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ("Transferor"), hereby sells, assigns and transfers unto , the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. Section 7. City Covenants and Pledge of Tax Revenues. The City hereby expressly pledges and appropriates twenty percent (20%) of the City's share of collections of the Tax , to the payment of the principal of and interest on the Bonds when due and to the payment of the fees and charges of the Trustee. Such revenues pledged to the payment of the Bonds are hereinafter referred to as the "Pledged Revenues." The City covenants it shall do nothing that will repeal or reduce the Tax in the City while any of the Bonds are outstanding. The City further covenants to use due diligence in collecting the Pledged Revenues. In the event the County repeals or ceases to collect the Tax, the City covenants to forthwith (a) notify the Arkansas Department of Finance and Administration to take all actions necessary to continue to collect the Tax within the City and disburse those collections as authorized by Arkansas Code of 1987 Annotated §14-164-337. Such collections are also hereby pledged to the payment of the principal of and interest on the Bonds and fees and charges of the Trustee and shall be a part of the Pledged Revenues and (b) take such action as is necessary for the Tax to continue to be collected in the City until. the Bonds are retired or provision is made for their payment in accordance with this Ordinance. Page II Ordinance No. 4050 August 19, 1997 The Bonds shall be specifically secured by a pledge of the Pledged Revenues, which pledge in favor of the Bonds is hereby irrevocably made according to the terms of this Ordinance, and the City, and the officers and employees of the City, shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this Ordinance. It is hereby covenanted and agreed by the City with the owners of the Bonds that the City .,,will faithfully and punctually perform all duties with reference to the Pledged Revenues and the Bonds required by the Constitution and laws of the State and by this Ordinance, including the levy of the Tax within the City and the collection of the Pledged Revenues, as herein specified and covenanted and the applying of the Pledged Revenues as herein provided. Section 8. Funds. The following funds are hereby created and shall be held and maintained by the Trustee and the City pursuant to the provisions of this Ordinance: (1) Revenue Fund; (2) Bond Fund; (3) Debt Service Reserve Fund; and (4) Cost of Issuance Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund, Debt Service Reserve Fund, and Cost of Issuance Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any Additional Bonds, create additional funds and accounts as may be necessary or convenient. • (1) Revenue Fund. The City shall promptly deposit to the Revenue Fund all Pledged 'Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the ,,amounts required for debt service on the Bonds as described below: (a) The City shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one -twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee and Paying Agent fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first interest payment on the Series 1997 Bonds. (b) The City shall transfer to the Trustee, for deposit into the Debt Service Page 12 Ordinance No. 4050 August 19, 1997 Reserve Fund for the Bonds, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (c) Any moneys remaining in the. Revenue Fund, following the transfers required by this Section 8, may be used for any lawful purpose as determined by the City. (2) Bond Fund. The Trustee shall promptly deposit the following receipts to the Bond Fund: (a) Any accrued interest received as proceeds from the Bonds; (b) All amounts required to be transferred from the Revenue Fund, held by the City; (c) All amounts required to be transferred from the Debt Service Reserve Fund; and (d) All amounts required to be transferred from the Cost of Issuance Fund. The Trustee shall pay from moneys on deposit in the Bond Fund, to the Paying Agent for the Bonds (i) on each interest payment date, the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date and such amounts shall be so applied by the Paying Agent. The Trustee shall pay, from moneys on deposit in the Bond Fund, to the Trustee and Paying Agent any fees due on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment date, the Trustee shall on such payment date, withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date; any balance remaining in the Bond Fund after all payments required by this Section 8 have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. (3) Debt Service Reserve Fund. The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal and interest requirements for the Bonds (the "Required Level"). Upon issuance of the Bonds, there Page 13 Ordinance No. 4050 August 19, 1997 shall be deposited $204,333.75 into the Debt Service Reserve Fund from the debt service reserve held by the Bonds Refunded Trustee under the Indenture. So long as the Debt Service Reserve Fund ,is_maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of principal of and interest on the Bonds in the event there is insufficient money availablein the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held in the Debt Service Reserve Fund shall ever be less than ,the Required Level, the account shall be restored to the Required Level by transferring moneys from the Revenue Fund as described in this Section 8 until the Required Level is attained. (4) Cost of Issuance Fund. The Trustee shall deposit into the Cost of Issuance Fund from the proceeds of the Series 1997 Bonds and other available funds, such amounts as shall be specified in delivery instructions from the City for deposit therein. Moneys at any time held in the Cost of Issuance Fund shall be used for and applied solely to pay costs of issuance of the Series 1997 Bonds including consultants, legal, and financial advisory fees and expenses. Payments from the Cost of Issuance Fund shall be made by the Trustee upon receipt of a requisition, signed by the Administrative Services Director or designee ("Issuer Representative") of the City, stating in respect to each payment to be made, at least (i) the item number of the payment, (ii) the name of the person or party to whom the payment is to be made, (iii) the amount to be paid, (iv) that obligations in the stated amounts have been incurred by the City, and that each item thereof is a proper charge against the moneys in the Cost of Issuance Fund and has not been previously paid and that such payment is not prohibited. Upon receipt of each requisition, the Trustee shall pay each such item directly to the person or party entitled thereto as named in such requisition or shall reimburse itself for such payment. -. Any interest earned or gains realized by investments of moneys held in the Cost of Issuance Fund shall be retained in such Fund. Upon delivery of a certificate from the Issuer Representative of the City stating that all costs of issuance of the Series 1997 Bonds have been paid, the Trustee shall transfer the balance of moneys in the Cost of Issuance Fund to the Bond Fund and the Cost of Issuance Fund shall be closed. Section 9. Payment of Ponds. Any Bond shall be deemed to be paid within the meaning of this Ordinance when payment of the principal of and interest on such Bond (whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably Page 16 Ordinance No. 4050 August 19, 1997 tamed in this Ordinance, the Trustee may, and shall, upon the written request of the owners of not less than 10% in principal amount of the Bonds then outstanding, by proper suit compel the performance of the duties of the officials of the City under the Constitution and laws of the State and under this Ordinance, and to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. (b) No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under this Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than 10% in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of this Ordinance or to any other remedy hereunder. It is understood and intended that no one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to enforce any right hereunder except in the manner herein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the benefit of all owners of the outstanding Bonds, and that any individual rights of action or other right given to one or more of such owners by law are restricted by this Ordinance . to the rights and remedies herein provided. (c) All rights of action under this Ordinance or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of this Ordinance. (d) No remedy herein conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies herein provided, and each and every such remedy shall be cumulative and shall be inaddition to every other remedy given hereunder or given by any law or by the Constitution of the State. (e) No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed Page 17 Ordinance No. 4050 August 19, 1997 to be a -waiver of any such default or an acquiescence therein and, every power and remedy given by this Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. (f) The Trustee may, and upon the written request of the owners of not less than a majority of the owners in principal amount of the Bonds then outstanding, shall waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Section 14. Refunding of Bonds R find d. When the Series 1997. Bonds have been executed by the Mayor and City Clerk and the seal of the City impressed or imprinted as herein provided, they shall be delivered to the Trustee, which shall authenticate them and deliver them to the Purchaser upon payment of the Purchase Price. The accrued interest shall be deposited in the Bond Fund. The expenses of issuing the Series 1997 Bonds shall be paid from the Purchase Price. An amount of the Purchase Price that is sufficient, along with other moneys set aside and appropriated hereby for such purpose, to accomplish the refunding shall be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas (the "Bonds Refunded Trustee"). The balance of the Purchase Price, if any, shall be deposited into the Cost of Issuance Fund. Section 15. Investment of Bond Proceeds. (a) Moneys held by the Trustee shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America (including any such securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) ("Government Securities"), (ii) in time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation ("FDIC" ), or (iii) money market funds comprised exclusively of Government Securities (collectively, "Permitted Investments"). The Trustee shall invest and reinvest pursuant to the direction of the City and in the Trustee's discretion in the absence of any.direct instructions from the City. (b) The Trustee shall invest moneys in funds or accounts in Permitted Investments with maturity or redemption dates and in amounts consistent with the times at which said moneys will be required for the purposes provided in this Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. Page 20 Ordinance No. 4050 August 19, 1997 reduction in the aggregate principal amount ofthe Series 1997 Bonds required for consent to such supplemental ordinance. Section 19. Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting and the Mayor is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement and to take all action required on the part of the City to fulfill its obligations under the Continuing Disclosure Agreement. The City covenants that it will take all necessary action to comply with the requirements of the Securities and Exchange Commission Rule 15(c)(2)-12 under the Securities Act of 1934, as amended (17 C.F.R., § 240.15(c)2-12). Section 20. Tax Exemption Qualifications. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Series 1997 Bonds to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds of the sale of the Series 1997 Bonds and the Pledged Revenues will not be used directly or indirectly in such manner as to cause the Series 1997 Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. In addition, the City covenants to pay, or cause the Trustee to pay, any arbitrage rebate which may be due the United States Treasury at the times and in the amounts under Section 148(0 of the Code. (b) The City represents that it has not used or permitted the use of, and covenants that it will not use or permit the use of the Arts Center or the proceeds of the Series 1997 Bonds, in such manner as to cause the Series 1997 Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (c) The Series 1997 Bonds are hereby designated as "qualified tax-exempt obligations" within the meaning of the Code. The City represents that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Code), including those of its subordinate entities, issued in calendar year 1997 will not exceed $10,000,000. Section 21. Federal Guarantee Provisions. The City covenants that it will take no action which would cause the Series 1997 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury. Section 22. IRS Form R038 -C, Covenants. The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar Page 21 Ordinance No. 4050 August 19, 1997 month after the close of the calendar quarter in which the Series 1997 Bonds are issued, a statement concerning the Series 1997 Bonds which contains the information required by Section 149(e) of the Code. Section 23. Call of Bonds Refunded. The City hereby calls the Bonds Refunded for redemption on the earliest practical date for which the Bonds Refunded Trustee can provide notice to the owners of the Bonds Refunded that such bonds will be redeemed. The Bonds Refunded Trustee is hereby directed to mail the necessary notices of redemption. Section 24. use of Bonds Refunded Moneys. All moneys in any fund or account held by the Bonds Refunded Trustee pursuant to the Indenture are hereby appropriated and shall be used as follows: (a) all money held by the Bonds Refunded Trustee in the bond fund, the redemption fund, and the debt service reserve fund shall be applied to (i) establishing the Debt Service Reserve Fund and (ii) refunding of the Bonds Refunded along with any proceeds required from the Series 1997 Bonds. (b) all money held by the Bonds Refunded Trustee in the revenue fund shall be first applied, as necessary, to refunding of the Bonds Refunded, and the balance will be deposited into the City's General Fund. Seetinn2S Severability (la ise. tThe provisions of this Ordinance are separable and in the event that any section or part hereof shall be held to be invalid, such invalidity shall not affect the remainder of this Ordinance. Section 2L .Cenflicts. All ordinances and resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 27. Limitations of Rights. This Ordinance shall not create any right of any character and no right of any character shall arise under or pursuant hereto until the Series 1997 Bonds shall be issued and delivered except as provided in Sections 2, 3, 23 and 24 hereof. Section 28. Fmerg .envy Clause. It is hereby ascertained and declared that the refunding must be accomplished as soon as possible in order to lower the interest cost on obligations payable from the Pledged Revenues. The refunding cannot be accomplished without the issuance of the Series 1997 Bonds, and therefore, it is declared that an emergency exists and this Ordinance being necessary for the preservation of the public peace, health and safety shall be in force and take effect immediately upon and after its passage. Page 22 Ordinance No. 4050 August 19, 1997 PASSED AND APPROVED this 19th day of August , 1997. APPROVE : By: red H a, Mayor ATTEST: By: Traci Paul, City Clerk (SEAL) Page 23 Ordinance No. 4050 August 19, 1997 CERTIFICATE The undersigned, City Clerk of the City of Fayetteville, Arkansas (the "City"), hereby certifies that the foregoing pages are a true and correct copy of Ordinance No. 4050 , passed at a regular session of the City Council of the City, held at the regular meeting place of the Council at 6:30 o'clock p.m. on the 19th day of August , 1997. GIVEN under my hand and seal this 20TH day of Al jC T , 1997. `-_S1Lldd ,: Traci Paul, City Clerk ;MI0 0FhLMED 0 BLACK & VEATCH Report on Revenue Requirements, Costs of Service, and Rates for Water and Wastewater Service for Fayetteville, Arkansas II BLACK & VEATCH II 1 Contents 111 Introduction Water Utility Revenue Water Sales Revenue Under Existing Rates Other Water Revenue Water Utility Revenue Requirements Operation and Maintenance Expenses Water Utility Major Capital Improvements Water Utility Routine Capital Improvements Water Utility Debt Service Requirements Recommended Water Revenue Adjustments Water Utility Cost Allocations Water Utility Cost Allocation to Functional Cost Components Allocation of Net Water Plant Investment Allocation of Water Facilities Depreciation Expense Allocation of Water Utility Operating Expenses Distribution of Water Utility Costs to Customer Classes Water Rate Adjustment Existing Water Rates Proposed Water Rates Wastewater Utility Revenue Wastewater Utility Revenue Under Existing Rates Other Wastewater Revenue Wastewater Utility Revenue Requirements Operation and Maintenance Expense Wastewater Utility Major Capital Improvements Wastewater Utility Routine Capital Improvements Wastewater Utility Debt Service Requirements Recommended Wastewater Revenue Adjustments Wastewater Utility Cost Allocations Wastewater Utility Cost Allocation to Functional Cost Components Allocation of Net Wastewater Plant Investment Allocation of Wastewater Facilities Depreciation Expense Allocation of Wastewater Utility Operating Expenses Distribution of Wastewater Utility Costs to Customer Classes 2 2 2 6 6 6 6 6 9 11 11 it 13 13 13 22 22 22 26 26 26 30 30 30 30 30 33 35 35 35 35 39 39 IC -1 Contents (Continued) I Wastewater Rate Adjustment 46 Existing Wastewater Rates 46 Proposed Wastewater Rates 46 Combined Water and Wastewater Utilities 50 List of Tables Table W- 1 Water Utility - Historical and Projected Number of Accounts 3 Table W-2 Water Utility - Historical and Projected Billed Usage 4 Table W-3 Water Utility - Historical and Projected Revenues 5 Table W-4 Water Utility - Summary of Historical and Projected Operation and Maintenance Expense 7 Table W-5 Water Utility - Proposed Major Capital Improvement Program Expenditures 8 Table W-6 Water Utility - Debt Service on Outstanding Bonds 9 Table W-7 Water Utility - Operating Fund Cash Flow Analysis 10 Table W-8 Water Utility - Cost of Service 12 Table W-9 Water Utility - Allocation of Net Non -Contributed Plant Investment 14 Table W-10 Water Utility - Allocation of Projected Depreciation Expense on Total Plant 15 Table W-11 Water Utility - Allocation of Operation & Maintenance Expense 16 Table W-12 Water Utility - Estimated Units of Service 17 Table W-13 Water Utility - Unit Cost of Service 18 Table W-14 Water Utility - Allocation of Cost of Service to Customer Classes 20 TC-2 Contents (Continued) List of Tables (Continued) Table W- 15 Water Utility - Comparison of Adjusted Cost of Service With Revenue Under Existing Rates 21 Table W-16 Water Utility - Comparison of Existing and Proposed Rates 23 Table W- 17 Water Utility - Comparison of Allocated Cost of Service With Revenue Under Cost of Service Rates and Proposed Rates 24 Table W-18 Water Utility Typical Monthly Bills 25 Table S-1 Wastewater Utility -Historical and Projected Number of Accounts 27 Table S-2 Wastewater Utility - Historical and Projected Billed Usage 28 Table S-3 Wastewater Utility - Historical and Projected Revenues 29 Table S-4 Wastewater Utility - Summary of Historical and Projected Operation and Maintenance Expense 31 Table S-5 Wastewater Utility - Proposed Major Capital Improvement Program Expenditures 32 Table S-6 Wastewater Utility - Debt Service on Outstanding Bonds 33 Table S-7 Wastewater Utility - Operating Fund Cash Flow Analysis 34 Table S-8 Wastewater Utility - Cost of Service 36 Table S-9 Wastewater Utility - Allocation of Net Non -Contributed Plant Investment 37 Table S-10 Wastewater Utility - Allocation of Projected Depreciation Expense on Total Plant 38 Table S-11 Wastewater Utility - Allocation of Operation & Maintenance Expense 40 Table S-12 Wastewater Utility -Estimated Units of Service 41 TC-3 Contents (Continued) List of Tables (Continued) Page Table S-13 Wastewater Utility - Unit Costs of Service 42 Table S-14 Wastewater Utility - Allocation of Cost of Service to Customer Classes 44 Table S-15 Wastewater Utility - Comparison of Adjust Cost of Service With Revenue Under Existing Rates 45 Table S-16 Wastewater Utility - Comparison of Existing and Proposed Rates 47 Table S-17 Wastewater Utility - Comparison of Allocated Cost of Service With Revenue Under Cost of Service Rates and Proposed Rates 48 Table S-18 Wastewater Utility - Typical Monthly Bills 49 Table C-1 Combined Utility -Operating Fund Cash Flow Analysis 51 TC-4 Introduction The City of Fayetteville, Arkansas, engaged Black & Veatch to perform a cost of service study and design rates for water and wastewater service. For each utility, the study includes projection of revenues and revenue requirements, development of a financing plan, allocation of costs to customer classes, and design of a schedule of rates to equitably recover total costs of service from the various classes of customers. This report presents the results of the comprehensive water and wastewater rate study. Revenue requirements are projected through 2000, recognizing anticipated growth in number of customers and water use throughout the service area. Revenue requirements include projected operation and maintenance expenses, capital improvement expenditures, and debt service requirements. For the purposes of this study, capital improvement expenditures exclude costs for the future new wastewater treatment plant. An analysis of projected revenues under existing rates and total revenue requirements provides the basis for deriving the level of revenue adjustments needed, if any, to meet future annual obligations. The current water and wastewater rates became effective on January 1, 1994. I L] Li I I II Water Utility Revenue The principal source of revenue for the water utility to meet annual costs of water service is from charges for service to water customers. Additional revenue is derived from fire protection charges, interest income, and other miscellaneous sources. Water Sales Revenue Under Existing Rates Historical and projected number of water utility accounts is shown in Table W-1. Historical and projected billed usage is shown in Table W-2. Projected water sales revenue is based on the estimated number of accounts and the estimated water sales volumes, which are also presented in Table W-3. Customer numbers are projected to increase by approximately 3.2 percent per year through the study period. It is assumed that water sales per customer will remain constant at the level experienced in recent years. The projected increase in water sales revenue is therefore due to the estimated increase in customer numbers and the associated increase in total water usage. Other Water Revenue Revenues from fire protection charges are estimated at $200,000 per year, while miscellaneous operating revenues are estimated to total $219,000 per year. Interest income, calculated at 4 percent of the balances available for investment, is estimated to average approximately $96,500 per year during the study period. 2 w •C .a 0 I- C, T I — Z 10 L r 'O an CD 15 I.- 0 M y ie V b N N I N .p 00 'C V N en I O N N1 Vn r •rn 00 O N N N O a en I 00 b N 0 N N _ N N OM r T ^ M nun v a O N N U, I Ni N O a N — o.- Vi 00 N — en N N 00 N VI N en O m N R N- 00 N l�l — N Ni ON W Q 00 00 O (NN -- 00 0 0 r N O N I N Nen 0'N N 00 1= '11N 00T '0 K N 00 N - 6' — O N C 0 C m O N 00 >D 00 C 00 N C.,C 00 O'. yn i y b N T y - I a I ON0ON 0p C N O\ r r C 'N 'ncN I I A • c u `? e0 ti. y 'u — U 01 u w Co A C A u u E o 7 v — u a.. C 3 . e 0 = o - i.. U 3 Lfl CM Ac to 0100 ,w C° ,O .r .OI� Cu C o "`: O M rlooaIo C 00 OO � Q M M M 000 O O O O 000 O O O N M N N Ol O vl 0- N 00 00 I N- b Ol N In M N In 0000 M M M O - Q p O pen p C O N T O p I p r m 0 1 rnlv�i v h 00 00 I N M M 0' M M g88I8 S 8 vi C - 1 ri 00 00 M I— N M Q W 00 M M 00 c ON pppp p 0 00 o N V 00 N W CM — 00 M eel F — M M — M O O 00 N — VI O '0 en — m 0 CM O\ 1 r ' Q fl 1- 00 I O M M ; t- - N M N M Vl Vl V1 b l0O N ten '0 QCM 00 IN N CO en vt M M N 0\ T N M It, — M ACM M O 00 Q 00-00100 0 M N N M M — N en v 00 00 O en b o^ a N ten 0''0N n rn N N N >D 100 0' '0 N N N � — N r1 i - 'S C1 I C . O ' ra Yc A y u G . PC. y - 7 - coot o- - rl `o=C _ ? •- l0' a qq V� t`opC I� M IQ no CI Ob • • 0% 9 88818 8 O ;8 Cl C'1 0n L Al r rn C N Cl 0 Idfl L a 8!88 88 8 rfl tl1 u m 00010 O Q p p 0 ' CIO pp O O - v• n • JF o` Q 0 0 8o0 0 Oo I 00 R N en Q 6'i N0 Q O — 0% = •� N b ? Ufl O d O vIn N ry ePl 1. Ivy «' a` V' ore 0 N 'N N r I Q - - - a C °I C 0 l0 U w 8 ry c- v ;, o .c 'C r- v I a a CI— ooo j o L en-.— '0 GO O o c O Ci N �r - rn C mrn Nvvl- en Un o o 44 �I� o r1 — I — D\ 00 N I L Nl N O r W ' vI 0 _ N r I O— 00 'C OOOO GGO r r aryy Cyr 00 O Cl — C � k n A = c u H u G q •y - d� 8— a U ' -o =v k I Water Utility Revenue Requirements Revenue requirements, consisting of operation and maintenance expenses and capital costs, are the cash obligations of the water utility. Operation and maintenance expenses include ` the cost of purchased water, personnel and materials required to operate and maintain the water utility system, plus the costs of metering, billing, collecting, and administrative services. In estimating future costs, historical costs by utility function are projected for the study period ( recognizing requirements for service and estimated inflationary increases. Capital costs consist of debt service requirements, cash financing of capital improvements, and operating reserves. Operation and Maintenance Expenses Historical and projected operation and maintenance expenses are shown in Table W-4. Projected operation and maintenance expenses are based on an analysis of historical expense trends and anticipated future conditions. Estimated increases in operating costs are due to anticipated inflationary increases in the costs of purchased water, labor, power, and materials and supplies, plus the estimated growth in customer numbers. Purchased water costs are anticipated ' to increase 3 percent per year per million gallons beginning in 1997 from 1996 estimated levels. Personnel growth and the cost of personal services are projected to increase approximately 4 percent per year, and all other expenses are expected to increase by approximately 3 percent per year. 1 Water Utility Major Capital Improvements The proposed major capital improvement program for the water utility, as furnished by the City, is shown in Table W-5. Water Utility Routine Capital Improvements Routine capital improvements include equipment, system replacements, and system extensions which occur on a recurring basis each year. Projected expenditures for routine capital improvements represent an allowance based on historical expenditures. Water Utility Debt Service Requirements Existing debt service requirements consist of principal and interest on the Water and Wastewater Revenue Bonds, Series 1992 and Series 1994, as shown in Table W-6. Based on the facilities constructed with the original bond funds, 88.8 percent of the annual principal and interest on the Series 1992 Bonds, and 100 percent of the Series 1994 Bonds is allocated to the water utility. The balance of the debt service is allocated to the Wastewater utility. Additional 6 I -x C R W CCC O W R d a L Ow O •am C O N E 1 1 o O X 8 00 V n CM z 10 CO u1 'C V N OI w tC a F, N N N N .la — O O ^ — �pj .O N N Q r 00 O LI pV .O — O O !' N _I ^ — N O N N xl — _ 00 I 00 ul 8 8 8 ul P C IO 1 rOi Q O 8 00Oyy O. 0.1 Pl w N a — n V1 000 — O N .O N 00 N N 8 00 T O 0 O 00 0 O 0 V1 N ,,,� 0\ N O N ! N N VI n N N N a l- a N n N � - n n 00 00 N T v v 0 • N Ci 00 n O N .G Oa 1 N R ! N1 a ry E ww sO — ^ o a - ^ a O N N H (t] en — — N N C — — m O i a N a N O .O V O A a N 00 00 N 00 10 — O 1z 6O D pWW� w Cl h a en O R — .p —1•— -i N 00 Q y a a — .O N 0 n 10 a n 0 r v - v n I N ,x•, W a n V V] n Q n n; `u oav w F, a .O 00 a O ^ V01 l ri - I IQ M SI 00 ,o - - O n e n VI - N N00 I O O — O N V1 00 j M C C 0 N I R N sO v 00 Q - n - .o U A Y C cJ V c 0 C 6 0 G S a Lz] dJ 0 U @ G a a m e c"9- n, a v a e - a, d! c obo n a. y V ¢ 0 o c 0. -= - 6 .. m n x = O v i� - 3 3 3 2 is C. O' v 0a ...7 .� - N n V V1 sO N 00 7 to a Cu - CO ..I a. x E I- C) 0 a ac E VQ W a ma O a _ O 0 n. 0 vp = OOO'c 'm � rn V. (• - M •V M n h IN _ S 8 I- o In $� S fV Q N - Q M 8 8 e Go',..,,a n. i I- ppIyy�y S in $ o g pQ •-ii `O N I �0 w-,O C O v O O O O O p O O N Go In -IC N W q u � rM—Ohry oo Co0 - M-_ O\ h r QD N_ O r4 ..., N M h R W M V1 M m 0 -000 h ie . o an000ro 2oryl, C vMvi—I�IO U W h c N M C In 00 00 ¢ N S W N N b b O - O C tl — u e h E U u o > u ° E E a 7 C T L E 't > I-. _ to T u ✓) C O' I - _J C ,0 C O m ,_o` y d u Q E Y v E c .o c - 1 G a C G d a >,>, > O .y ,O p aJ u o . = a •o � u c c. u A u w a u A Ens u% y ? v S. > = a vL•, n3 X33 cod -Y N we`d n 'u3 u -,c y., ci Z 0 0 F 0 'O CC d O H 3¢m33at ao33i ) 92 LLI o. . a3'a E-, u — N M er In .O n 00 T O- ry M.. O h 00 O1 O- N M It VI 'O - - N N N N debt service will be incurred as revenue bonds are issued to finance the proposed water utility capital improvements. Table W-6 Water Utility Debt Service on Outstanding Bonds Year Principal and Interest Series 1992 Bonds Series 1994 Bonds All Bonds $ $ $ 1996 731,600 573,500 1,305,100 1997 733,500 575,600 1,309,100 1998 734,300 576,200 1,310,500 1999 738,000 575,500 1,313,500 2000 740,700 573,600 1,314,300 Recommended Water Revenue Adjustments The adequacy of revenues under existing rates to meet projected revenue requirements is summarized in the flow of funds analysis shown in Table W-7. The indicated revenue increases are assumed to become effective as shown on Lines 3 through 7 of Table W-7. The indicated revenue increases are designed to provide a minimum ending balance in the operating fund (Line 24) equal to approximately 60 days of operation and maintenance expenses. E Table W-7 Water Utility Operating Fund Cash Flow Analysis Line 61o. Description OPERATING ACCOUNT Revenues: I Water Sales - Existing Rates 2 Fire Protection Charges Additional Revenues Required: Billings Months Date of Increase Increase Effective 3 1/1/1996 0.0% 12 4 9/1/1997 5.0% 4 5 1/1/1998 0.0% 12 6 1/1/1999 0.0% 12 7 (/1/2000 3.0% 12 8 Total Additional Revenues 9 Total Water Sales Revenues 10 Interest Income I 1 Other Income 12 Total Revenues and Other Income Revenue Requirements: 13 Operating Expense 14 Net Earnings Debt Service 15 Existing Revenue Bonds 16 Proposed Revenue Bonds 17 Total Debt Service 18 Minor Capital Expense 19 Transfer to Capital Project Fund 20 Bond Defeasance/Avoidance Cost 21 Total Revenue Requirements 22 Net Annual Balance 23 Beginning of Year Balance 24 End of Year Balance CAPITAL PROJECTS FUNDING Sources of Funds 25 Funds Available at Beginning of Year 26 Transfer from Operating Fund 27 Sales Tax Revenue 28 Interest Income 29 Total Funds Available for Major Capital Improvements Capital Fund Requrements 30 Major Capital Improvements 31 End of Year Balance (I) (2) Year (3) Fndig December11 (4) (5) 1296 1297 $ $ 1.9.28 $ 1444 $ 20(10 $ 8.898.400 9.114,100 9.337.200 9,567,600 9,806.400 200.000 200,000 200.000 200.000 200,000 0 0 0 0 0 141.300 476,900 488,400 500,300 0 0 0 0 0 286,800 0 141.300 476.900 488,400 787.100 9,098.400 9.455.400 10.014,100 10,256,000 10,793,500 120.400 90,800 90.200 88.100 93,400 219,000 219.000 219.000 219,000 219,000 9.437.800 9.765.200 10.323.300 10,563,100 11,105,900 7,013.800 7.268.500 7,633,100 8,018,900 8.427,600 2.424.000 2.496,700 2.690.200 2.544,200 2,678,300 1,305,100 1.309,100 1,310,500 1,313,500 1,314,300 0 0 0 0 0 1,305.100 1.3 09.100 1,310,500 1,313,500 1,314,300 239.000 246.200 253.500 261,100 269,000 2.600.000 700,000 1,400,000 800,000 1,000.000 0 0 0 0 0 11.157.900 9.523.800 10,597,100 10.393,500 11.010.900 (1,720.100) 241.400 (273.800) 169,600 95,000 3.184.500 1.464.400 1.705,800 1.432.000 1,601.600 1.464.400 1.705.800 1,432,000 1,601.600 1.696,600 1,010.500 937,220 32.820 97,920 45,920 2,600,000 700.000 1.400,000 800,000 1.000.000 862.000 236,500 165,000 462,500 1,187,500 21.700 14,700 0 0 0 4,494.200 1.888,420 1.597.820 1,360,420 2,233.420 3.556.980 1.855.600 1.499,900 1.314,500 1.740,000 937,220 32.820 97,920 45,920 493,420 Debt Service Coverage: 32 Maximum Revenue Bond Debt Service 1,320.000 1.320,000 1.320,000 1.320,000 1.320.000 33 Revenue Bond Debt Service Coverage (Line I4/LineI7) 186% 191% 205% 194% 204% 34 Parity Revenue Bond Debt Service Coverage (Line 14/Line 32) 184% 189% 204% 193% 203% L! 10 Water Utility Cost Allocations The primary function of the water utility is to supply water when and where customers want it and in sufficient amounts to meet the needs of the customers. In providing this service, the utility experiences costs in relation to the operating and capital investments needed to meet the service expectations of all customer classes. Allocation of these requirements to customer classes should take into account the volume of water used, peak rates of demand, number of accounts, and other relevant factors. The cost of service to be allocated to the various customer classes consists of the 1997 test year revenue requirements, which total $9,779,800. Under the utility basis of cost allocation used in this report, costs are classified as operation and maintenance expense, depreciation, and return. In test year 1997, estimated operation and maintenance expenses are $7,408,900, depreciation is $873,400 and return is $1,497,500 as shown in Table W-8. Operation and maintenance expenses include the cost of purchased water, personnel and materials required to operate and maintain the water system, plus the costs of metering, billing, collecting, and administrative services. Depreciation is a loss in value of the original plant investment, not restored by current maintenance, due to wear, decay, inadequacy, and obsolescence. Annual depreciation is determined as a percentage of original investment based on expected service lives of the various facilities. Unless funds are provided for normal annual replacement of original plant items, operating reliability of the system, as well as the value, will decrease. Depreciation funds are used to finance principal payments on bond issues and provide normal annual capital expenditures. Total return on the system investment provides funds for bond interest payments and any other costs that may be incurred. In developing the level of return on net plant serving the requirements of outside City customers, provisions for a reasonable margin should be made to meet interest on borrowed funds, and to recognize the business risk assumed by the City in pro- viding reliable facilities to serve nonresident customers. Water Utility Cost Allocation to Functional Cost Components The cost elements of water service are first allocated to functional cost components to facilitate the allocation of costs to customers according to their requirements for average or base water use, extra capacity demand, and the number and size of services. Allocation of Net Water Plant Investment The estimated 1997 test year net plant investment in water facilities consists of net plant in service as of December 31, 1995, and the estimated cost of proposed capital improvements 11 Table W-8 Water Utility Cost of Service 1997 Test Year Line Operating g Capital No.pe Expense Cost Total $ $ $ Revenue Requirements I Operating Expense 7,268,500 7,268,500 2 Debt Service Requirements 1,309,100 1,309,100 3 Capital Outlay 246,200 246,200 4 Transfer to Capital Projects Fund 700,000 700,000 5 Total 7,268,500 2,255,300 9,523,800 Less Revenue Requirements Met from Other Sources 6 Other Revenue 219.000 219,000 7 Interest Income 69,300 21,500 90,800 8 Decrease/(Increase) in Funds Available (182,900) (58,500) (241,400) 9 Adjustment If Rate Increase Effective All Year (245,800) (78,600) (324,400) 10 Total (140,400) (115,600) (256,000) I 1 Cost of Service to be Met from Water Sales Charges 7,408.900 2,370.900 9,779,800 Cost of Service Expressed on a Utility Basis: 12 Operating Expense 7,408,900 7,408,900 13 Depreciation 873,400 873,400 14 Return 1,497.500 1,497,500 15 Cost of Service to be Met from Water Sales Charges 7,408,900 2,370,900 9,779,800 12 through the test year. Allocation of this investment to functional cost components is shown in Table W-9 for test year 1997. Plant investment is allocated to cost components on a design basis recognizing the principal function governing the design of the facility. The allocation of net plant investment provides the basis for allocation of depreciation expense. Allocation of Water Facilities Depreciation Expense Depreciation is a real part of the cost of operating a utility. In utility accounting, it is generally accepted practice to use depreciation funds to finance system replacements, improve- ments, and extensions. While such action does not restore the value lost in each property unit every year, the total value lost through depreciation is restored to the system as a whole. Depreciation funds can be reinvested in the system either by direct payment of routine capital additions and replacements or by principal payments on bonded debt. The allocation of depreciation expense, shown in Table W-10 is based on the allocation of net plant investment. Allocation of Water Utility Operating Expenses Projected operating expenses for the test year are allocated to cost components as shown in Table W- 11. Operating expenses are allocated to functional cost components in generally the same manner as plant investment. Distribution of Water Utility Costs to Customer Classes The total cost responsibility of each class of customer may be estimated by the distribu- tion of the cost of service for each cost component among the classes based on the respective service requirements of each class. Customer classes consist of residential, commercial, industrial, outside city, wholesale, and public and private fire protection. The commercial class includes combination/commercial, multi unit, nonprofit, yard irrigation and construction meters. Wholesale includes the RDA's, Elkins, West Fork, and Mt. Olive. These classes group together customers with similar service requirement characteristics and provide a means for allocating costs to customers. Estimated units of service for the customer classifications are summarized in Table W-12. Service requirements for each class are based on the average daily water use projections and estimates of each class maximum day and maximum hour demands and metering and billing requirements. The unit costs of service, shown in Table W- 13, are based on the total costs divided by the applicable units of service. Application of the total unit cost of service to the respective service requirements for each customer class results in the total allocated cost of service for each 13 g g i8 * P M • O N pp - - p S pen S„ Cl J -� N r Vl r M a a Ir 5yy e „ Q8 IO vi N V r (N Q Q IH . I- - 4N - E N C I I C C v lO o I- 4-- em 88.O S - ,. $ - 2 ri C a N V vi < o O , - Z 8 8 Z riNfl M - Q § h _ O v IieN m V1 eN �O It-. C o 88 ^- 8 C O �' m[JG Q �. �i (a 0 U o a N F Q F Z >I _tl _ N I N Q E 0 N d 0. C G C N n o L C I- L = J u O Y tf 3 q E a a L J i [to C F Q. c a - N M Q r '0 r w 14 ld --- _ - 3 0. O: = - ) ) / : : j k ± \ - !4 - , , , In ' 15 § ' m — ) I« ° § I# i — 9— 7 ) Io § § a - OR ■ �] K K 8'8* en § ) } }! # 7 7 - - 4 ;�/R 4 ■ / § -- §oq _ - , ! � - I ■ } $ $ C f/) 7 _ « c4 / ! ) U ; ! i §! 7 _ . { i _ ^ ° ! f \ / •®® )) \ } } ) U- 0. 0 !« - , , 16 9 u a e el r r r r Oo r W m r r b O I- - - H C Nnb ,en 10 rilo P 'T rib 7 b m P I 'a' a — of � el r l$ $ pen P N b ry n I n el r T o l b a N N n p n A n N W b O N e T I o' I m rJ + - r C - • 41 5 I I N b'1 a 'On N Ng Nnm Olb XO0 C Ie Ole - _'�m br e r b n n; o y e�arR $�8 8 e n N e e - 6 A 7 Y.i U I V mm_ e1 -1'e b W O a a r Ig W m b P V r _ C ? m h ) e- N • - , - -IO CM r• r O h -en fl -1r- r Oc0Ju ��I r 0 O T voi - N n nIQ y C F 03 .m Wan N n r•'y al Q W c59 q U —N d E esOee !k 0 p O N n N r '� Wray —n.. q6 W c3 O0 b u g r'e, � .3 i� alr m e ry N I W _ 8 8 8 $ $ $l N e N N N O- r m Com 1 n Q 00-0' m NiN C e W m n len n W a _ nj >' 8 n u H -n `� o 2 2 0 CU. Q p 9 v O E n 3 i m co'!'ii > uai s V 0 w�cu.0 m oaa " 3a� cd — - N n e n b r m a - - 17 h O 'n ^ DO O V1 M 'no' 8O 00CM 8 O^ ^ yy I N F, N r of V O N en No • - NM M� Np NM IM 'OO 00 u p 00 0 9 O O M - N M - N p O O O a O O O °` VI O- O S 8 O T O 'o m l- M 8 (V N N 8 w • r r 00 N d. N G 1- t. r 00 �p no N r1 O - N N O N N $o $ $r S,n 'n $n m$ $o $ NOd O 2 a0 m N o - o h O 00 °V"1° 'n o o O 0 M M pp I $ 888 I 'ON O N M N V1 cO 'ow, p p N �" 'O N .... 00 'V N 1� M OO V1 M Vl - b N M '0 N N O O T CO O - N N O men o go O O O O O O O O O �. S rvp INNC- O r0 O O O•O I CC N • V b wt g O g O O N -- oo r vn W I Vltfl or M $ O O cola $ $ 00 of O O a 6 6 O O J O y .r N .-• — N d ` e� d Ua N 00 h Vl N NC N O InVI O N 00 N p.00 V O N t�f N fV O 00 Vl vl — t•'1 O� N N vl � en Np. M N �p+f �O eN b M— h N N en — N— O NI N N 7 88 O O N O N O- W N O O I$ ONO N $ 'tv, D\ fl.C a— O M No N Oo a a N en • N a- b W < o O C-. 00 NO N I' ON ._. m I- M p p O O O Ia $ 8 P C m Go en ri O N O h a N 'itN — — — O' 00 � C U_ - H E Z _ H _ u c u u > v) C C u Z � E - �.... o E ' N C J U J V T •L u H H J �n > > T T O O •ctO L U d y U Y O U U a •' O≤' V "• ° O r fl O o U L 9 V C V V 9 Y ' U o U •p .w.. v O:. 7 E' y Z° ° A r U 5 ' N M p fit p.00 a© - N - tun- 'O 18 I II customer class. The costs of service allocated to customer classes are summarized in Table W-14. It is noted that the ordinance for the 1992 Water and Wastewater Refunding Bonds ' requires that no services be provided without charge. This requirement may be interpreted to include public fire protection. The City has not paid for public fire protection service in the past, land it is assumed in this analysis that any such charges to the City would be offset by an equal charge to the water utility in the form of a payment in lieu of taxes or a charge for administrative services. Therefore, the allocated cost of providing public fire protection has been reallocated to the customer classes benefitting from such service in relation to their respective allocated costs of service. Table W-15 shows allocated cost of service by customer class, revenue under existing rates, and the additional revenue required form each class. 1 L [I L I I I I [1 [1 I 1 19 I - C 1 1 I '^ o o m m 6] = 8 8 8 P Lu a N O vOi, U O m a r v O R 1'11 I a _ m 88 88 IS m e ; N o N - V b C -,. L �` 88 88 88 I8 ' n T N o. - W s m._ y - �., '8 $� $8 8 b M - N en b m e en ( (� v -'GR - C pm O C) v S ≤O 000® n0 C 8 1-10 p ^ 0 m m IG m r h b v1 a n r1 8 N -M cc r r. n W H nn O Y1 Nr. a O __ m N 8 N O ;8 W aQ0 O Abp O O q O O N O N h W b O r 1 0 P }• i� ^ 0. 8 r r 1.1 - b -< r vl O pen Ia N N 3 "y s r _ a C) ! d ::Nr. q pp _8 v v m O W P ...41 rm m m Wri — re O •!� ^ `O N 8 tf N - :O r - —; H O P N N 10 My v N eq., O < O < t S y n N N - n wf b .^ •O —88 I m ry W O O O 88 I O O O O 8 Q Y P^ rf W Qb r.00 hm �m 1.1 Y N m r - bhp W Q m b S .O -. r m O. W O Q Up 8 p p p p p O O O Ig 8 O O 8 IN - a r n M P O U - < ai N O `•' r b n eP0 O om0 m T C W ri r r b q • C M • C Yy1 Y 1 T C,, C T N m N .N >` N N N N U n 1 1 1 m _ Y •1 1 N U I r r VL Y Y 1 c N A N a U N N N _ U •O N Y •C O ECOSE L Y N N „ IL U Y N A N V N Y U J U 9 U CO o m U O S z ' —N tl1< Nb r W q �N �.< �b rm 01 — ^ 20 Ia o hno o r, m 0 0 Ic c=o o c o o c vi u 8g §18 8 8 818 c ,a N C c N.. N C .X O ,D tom., ry _ V _ 01 P1 - aLu Q__ N „ _ I- 00 008 I8 8 I8 818 G OD ?? o o n, T N g h r; v, _ o H Vi t�, I^ N op 'a-) 000 00 S S o 8 918 3 H y � 0 a r u p N r, ., y Vn .- r, a v flCJ T vi - 'O 7 O - - C` H 3 0 C � O ggg C o > o - N , a.- - w >, o —v c C6 o - y > =-- U U _ = Sc- u o 0 d c _ - N rl O Vl 'D r- W T C 21 Water Rate Adjustment The principal consideration in establishing water rate schedules is to establish rates to customers reasonably commensurate with the cost of providing water service. Theoretically, the only method of assessing entirely equitable rates for water service would be the determination of each customer's bill based upon his particular service requirements. Since this is impractical, schedules of rates are normally designed to meet average conditions for groups of customers having similar service requirements. Rates should be reasonably simple in application and subject to as few misinterpretations as possible. The revenue requirements and cost of service allocations described in this report provide the basis for adjusting water rates. The revenue requirements section shows the need for adjustment and the level of revenue required. The allocations section provides the unit costs of service used in the rate design process and gives a basis for determining whether resultant rates will develop revenues which recover costs of service from customer classes in proportion to service required and provide the total level of revenue required. Existing Water Rates All customers are billed a service charge which varies by meter size, plus a volume charge. The volume charge for wholesale customers is a flat charge regardless of water usage, while the volume charge to all other customers declines as usage increases. The existing schedule of water rates is shown in Table W- 16 with proposed rates. The existing water rates became effective on January 1, 1994. Proposed Water Rates Table W-16 shows the proposed water rates designed to meet adjusted costs of service. The proposed rate structure is similar to the existing structure. A comparison of allocated costs of service for the test year with water sales revenue under the proposed rates is shown in Table W-17. Revenues under the proposed rates will adequately recover the total cost of service. To better reflect the total effect the proposed increases in the total level of water sales revenue have on customer bills, a comparison of typical bills under existing rates and the rates proposed to become effective September 1, 1997, is shown in Table W-18. 22 Table W-16 Water Utility Comparison of Existing and Proposed Rates 1997 Test Year Existing Charges Growth Proposed Charges Fayetteville t_n_,ill Farmina[on Greeninnd A= Wheeler Inside rip.. �L Outside ity Service Charge - Meter Size $ $ inches 5/8 3.53 4.88 5.94 4.88 5.01 3.53 4.48 3/4 3.77 5.53 6.18 5.53 5.66 3.77 4.79 1 4.47 6.83 7.18 6.83 6.96 4.90 6.22 11/2 8.41 9.83 12.30 9.83 9.96 8.60 10.92 2 9.89 13.54 13.54 13.54 13.67 12.45 15.81 3 22.60 29.43 29.43 29.43 29.56 29.00 36.83 4 33.90 47.09 47.09 47.09 47.22 48.00 60.96 6 70.63 91.82 91.82 91.82 91.95 96.00 121.92 8 -no- -no- -no- -no- -no- 144.00 182.88 Vol mme Charm - /Mnal Existing Charges Proposed Charges First Next Next Over First Next Next Over 10 Maal 290Mani 4.7� S.cM)0 Mg+l 10pdgat 290 Mani 4.700 Mvnl 5.0➢0Maat Fayetteville 2.38 1.84 1.60 1.45 2.55 210 1.60 1.45 Farmington 3.18 2.65 2.18 1.88 3.20 2.75 2.00 1.80 Greenland 3.41 2.83 2.30 2.00 3.20 2.75 2.00 1.80 Growth Area 3.00 2.47 2.12 1.77 3.20 2.75 2.00 1.80 Wheeler Inside City Minimum Bill 3.00 2.47 2.12 1.77 3.20 2.75 2.00 1.80 Note: Inside City minimum Wholeaale Water Rates monthly bill includes service charge plus 1.000 gallons water consumption. usage ExWholesale-All 2.70 m70sd P. 2.70 Wholesale (Reduced Demand)-AII usage 2.49 2.49 Monthly Meter Charge (S/Month) 58.20 58.20 Existing Proposed Men Size Chatae Conti: inches S/month S/month 2" -no- 6.00 3" 16.09 18.00 4" 32.18 36.00 6" 89.38 100.00 8" 187.73 210.00 10" -no- 360.00 23 U- d CO v N d ca IY I-0 V o as y N 'o N `20 o9 wccV)CL ° d 'm a a ca o it C a, Q C OL J E °C 0 V w W C CO r DD C\ 00 J u S S 8 pO S S n c E O O O a o Cp CC S C C S C 8 0 S S u - a = U N - > c vn o O N — YI O.c, fl oo in ao — a o0 d goon oo $ o dcn dco' m In - o N LF O t+t 00 en N 1� cc E E H L - T R c1 cJ 'C d 'O Cfl e o O y U G '.° f- 00 24 Table W-18 Water Utility ' Typical Monthly Bills Meter Existing Proposed Rates ' Size Usage Bates Amount Increase Increase inches Mgal. $ $ $ 96 Fayetteville 5/8 5 15.43 16.28 0.85 53 5/8 10 27.33 29.03 1.70 6.2 5/8 25 54.93 62.03 7.10 12.9 5/8 30 64.13 73.03 8.90 13.9 I 10 28.27 30.40 2.13 7.5 1 20 46.67 52.40 5.73 12.3 1 50 101.87 118.40 16.53 16.2 1 100 193.87 228.40 34.53 17.8 ' 4 500 911.30 1,031.50 120.20 13.2 4 1,000 1,711.30 1,831.50 120.20 7.0 6 2,500 4,148.03 4,279.50 131.47 3.2 6 5,000 8,148.03 8,279.50 131.47 1.6 Farmington 5/8 5 20.78 20.48 (0.30) (1.4) 5/8 10 36.68 36.48 (0.20) (0.5) 5/8 25 76.43 77.73 1.30 1.7 5/8 30 89.68 91.48 1.80 2.0 IGreenland 5/8 5 22.99 20.48 (231) (10.9) 5/8 t0 40.04 36.48 (3.56) (8.9) 5/8 25 82.49 77.73 (4.76) (5.8) 5/8 30 96.64 91.48 (5.16) (5.3) ' Growth Area 5/8 5 19.88 20.48 0.60 3.0 5/8 10 34.88 36.48 1.60 4.6 5/8 25 71.93 77.73 5.80 8.1 5/8 30 84.28 91.48 7.20 8.5 Wheeler 5/8 5 20.01 20.48 0.47 2.3 5/8 10 35.01 36.48 1.47 4.2 5/8 25 72.06 77.73 5.67 7.9 5/8 30 84.41 91.48 7.07 8.4 1 25 Wastewater Utility Revenue The principal source of revenue for the wastewater utility to meet annual costs of service is from charges for service to wastewater customers. Additional revenue is derived from interest income and other miscellaneous sources. Wastewater Utility Revenue Under Existing Rates It is assumed that the number of wastewater customers will increase at the same rate as water customers, or approximately 3.2 percent per year. Historical and projected number of wastewater customers is shown in Table S -I. The associated increase in billed wastewater volume and wastewater service revenues is shown in Tables S-2 and S-3, respectively. Other Wastewater Revenue Miscellaneous operating revenue is estimated at $148,000 per year through the study period. Interest income, calculated at 4 percent of the balances available for investment, is estimated to average approximately $114,000 per year during the study period. N N r1 —00 en N 'O 1Or O- - - N N in -00 I V en 00 0O0 'C h I- O'1 - 00 O - N N --r I r -.IN en Nnm O — I y C N IO N Fenr—en op en 1� at en 00 c•Jt� — a a — U U C G z en 00 H1 In U N — — — — N r O - r t` O N o ..1 1 O Ur C O C c0 00 1 O a ..O C f'1- N 100 :7 CY V'1 Q 1 O\ a i O % I vl - N- i d N N b 'V I 0 N fl iO' 00 Im - I E C R Y. r - U w a' 8 " y ea d, ,mo u � O u S fl r W Y O C h — O F -- C U- O 3 .•'� 27 C1 ooinclr a CIo �o ppG���ccn• O G oo r v ri U G N v -1 0000 , a - — t o E •-0 CD p 0 0 O 0 m n O O O I O r o u our — a ven mloo O ,_ v r m u E OOIO O OOO1O O 010 0 u . Cu v v oo a � r = CC W �Q� n a - ao v N N =^ ppCp pp pp u In �{ v v n a cv0 = N "•.� fry In 00 r a I W o c F — r C' ° c O o ocolo q o a c u r 0•4" oo— oo vi v r t° a '� 5 n n or oo n u I- Cl) Gam: VN N - / L N— en 00 C h a ip •� N Q �O R R <f R m '— ^ coo r b— h O V ' 3 O •cY o0 'o 1� 00 - a N Cl U WV Nvl h N a R v1 .-: u n c mo6Oie e gon N 00 rn y — h — �.. U r b c • t. (, U N N C OUD L --en en r 'O a0 C j A w— en n — O — I a n C N a 7 O. !A Nn I- a vi•v=,E In T D -G C00 V's 'In C4 + — N N 7 n N S _ u I V W I Vi .C Cu n N rn en 1 r I- • ; `n U � -MMI� Vi (M1O �•� -. —en m y v E c o N N G '.:. �a •cE U E N A U g - H m u `_,b U U U n E •a ° a u y a,y E l o — c• - m U0 L' 7 F 28 000 0 ; 0 �0 vi 0.0i. -c�.00 -t I— I 00 N h M N N r N vl 100 V — — 00 00 0 O 8 O I0 O R _ OO�� O M IN N o6 OV �O M I N M r oj C -a O N n O In V1 C V1— — 00 00 > > NI $ I O I T U C O 00 U 00WWqq R M U • --� C - r 00 v I M g_ v — — r 00 b in inC U p pIn U O O O R N d4 U I 4. ?•! H — ao et 00 V N O U _ rfflr, MI �' �O It v-- r 00 > C o 0 0 0 0 0 00 O 0 C M a U V It Mlot t IO O r O v - - r r U L y C C r-NaI a nIr. N Q 00 �C M 'C 'C a. bq O .- rn r N vl V1 > V r M I N M O r Q v - - r; r u .� -o o m'o l— C O '0 (NIt I U — rn - r O C\ C ^) O Ci C' b V r .. C. 1 vt I Qi --• T - 00 I M en c . > M- - ` .p r G A '0-0100 c, 00 0 o0 b -u .t O r+i u, a N- r v U> C. 0O 00 M v1 1 00 s... In d 0 w C C U y I In I �O �O r 0 .D O r ; HO i 1 69 Oro' C M L R 0"1 N J M — v1 4 C C C U i `. i C N vii 9 u > I. U u u .0 W C d O O •n .C.. O U 9 U J w a,9 E > -c S Z ≥ A cz U o ae U S O. 3 ,-..-... ,— C� Wastewater Utility Revenue Requirements Revenue requirements, consisting of operation and maintenance expenses and capital costs, are the cash obligations of the wastewater utility. Operation and maintenance expenses include the cost of personnel and materials required to operate and maintain the wastewater utility collection and treatment system; plus the costs of metering, billing and collecting, and administrative services allocated to the wastewater utility. In estimating future costs, historical costs by utility function are projected for the study period recognizing requirements for service and estimated inflationary increases. Capital costs consist of debt service requirements, cash financing of capital improvements, and operating reserves. Operation and Maintenance Expense Historical and projected operation and maintenance expenses are shown in Table S-4. Projected operation and maintenance expenses are based on an analysis of historical trends and anticipated future conditions. Estimated increases in operating costs are due to anticipated inflationary increases in the costs of labor, power, and materials and supplies, plus the estimated growth in customer numbers. Projected Wastewater Maintenance and Collection expenses include an allowance for additional personnel and associated costs. It is assumed the cost associated with the contract operation of the wastewater treatment plant and lift stations will increase 3 percent per year. In addition, it is estimated for this study that labor costs will increase at 4 percent per year and all other costs at 3 percent per year. Wastewater Utility Major Capital Improvements The proposed capital expenditures for the wastewater utility are shown in Table S-5. Significant expenditures are scheduled for wastewater system rehabilitation and work on large interceptor lines. Expenditures for the future new wastewater treatment plant are excluded for the purpose of this study, and will be recognized in future cost of service reports. Wastewater Utility Routine Capital Improvements Routine capital improvements include equipment, system replacements, and system extensions which occur on a recurring basis each year. Projected expenditures for routine capital improvements represent an allowance based on historical expenditures. Wastewater Utility Debt Service Requirements Existing debt service requirements consist of principal and interest on the Water and Wastewater Revenue Bonds, Series 1992, as shown in Table S-6. Based on the facilities 30 o h � I r, 8 VI o en In en' 00 w I 30 O M 00 O I N VI N VI o 0. 0 - c VI NI C I y l9 — C N r'1 I VI fq LOII - _ n en C (U ° a n' o o x L � 1 8 O Y1 N 1 cc — 00 NI C C) — .C C S C o 0 0 p O - Iflwi N 00 �n .en VI Y1 VI m -, VI w N h I I C Y 00 DJ .O N 1 0 en (Q E R Q N N O I N O t�1 a 00 NJ O - b - b 7 C I - O - N d - 'NI N L a V OV w N C — O u < - z j 0' m �+ 3 d r u v v o n .50 KI- O n I a n l - •Q U MI O ' N N I W A W N N N a00 O C R en C 00 N '01 -, O V I C D\ N — 0 N N ry en N I - 00 oaJ 00 '0 vii — o ¢_ iu N 7 v 0 N I.- 0 c0a � p G c u oa a E o v n ' o dj u Cl) e 0 c E y E u E O. C y O„ . y —c s F p a = O f O a 3C1) F. y 3 n n G. G o h n 3 a 3 u 0a Z — N tfl Q In '0 I� 31 i '0000 '0C OOee^�1M°°'Ohrnmv r OO V OO�aS0v1-0000N [i 00 O V1 N0 N - C 00 D\ V1 C N M M C M O - O V N - - 00 N M - N N O N COWl O CC C O C vVi O O N O 00 Vl N N I- .- — _- pp G ppo 8 OrO4_S O 0gVi0xo v, C' o �� b 0 vi enC viC 'p 4i C vi C — O� c. - r; x W S uiir"oo g0 oo vi enov, Iv; 00 0 '^ e` 8 O �M O S 00 v0=V i0 J 8 C Ina a rt h - N N 0^0 '0 N 0 fl N - N L!9 M C 0 0 0o O O M O O pC O In m �p v'e '0 y Q� ai v -0v01•_VOi00 aS SNO.NO C OM0 nn- O C) w> m Q•1 v N_ n N C rn vi �n t� a 'o �n Vi N_ rn- a 'n �n a jOL m O-JI vNi N CC a' -c' F- N 8 'nv M 00 M b N- N 00 _ A O�O �f Vi 0NO ^ 0�0 N W Vl N 0�0 W N yQ ¢ OV O vi vi — — a� a qn N' ee 06 C•i r a V C U O T U o O V C U !0 0 o E m C " n C U O. G y C t m A w v ei y y U U C C U O C O• •a U �, 2 Q O O O. [,�yy�j .� 3 U a.C a °1 • v, L'' y 0 a`> > r c .. v Ern u v'! n y —' x - " •v a `� ::.. a a. us UU c 'cJ O U z tt`3�v vii > v Ep. 3 arvo A ti J i Q.. u c r a A u o ul 0 3 3 3 3 c ti rn rn u.SFrn a:�aFU�rn3-3o:y331. 33 rI - - - - - - - - N N N N N N 32 constructed with the original bond funds, 11.2 percent of the annual principal and interest on the refunding issue is allocated to the wastewater utility. Table S-6 Wastewater Utility Debt Service on Outstanding Bonds Year Principal and Interest 1996 92,300 1997 92,500 1998 92,600 1999 93,100 2000 93,400 Recommended Wastewater Revenue Adjustments A financing plan which would meet the projected wastewater utility revenue require- ments and provide an adequate working capital balance is shown in Table S-7. The indicated revenue increases are assumed to become effective as shown on Lines 2 through 6 of Table S-7. 33 Table S-7 , Wastewater Utility Operating Fund Cash Flow Analysis Line (I) (2) Year Ending (3) December (4) 31 (5) No. Description 1996 2000 1991 1998 1999 OPERATING ACCOUNT $ $ $ $ $ Revenues: I Sewer Sales - Existing Rates 7.927.900 8,137.200 8,354,300 8,578,700 8,811,500 Additional Revenues Required: Billings Months 2 atof Incrence Increase Effective 1/1/1996 0.0% 12 0 0 0 0 0 3 9/1/1997 3.0% 4 74.000 250.600 257,400 264,300 4 1/1/1998 0.0% 12 0 0 0 5 1/1/1999 0.0% 12 0 0 6 (/1/2000 3.0% 12 247,800 7 Total Additional Revenues 0 74,000 250,600 257,400 512,100 8 Total Sewer Sales Revenues 7,927.900 8,211.200 8.604,900 8,836,100 9,323.600 9 Interest Income 98.000 90.500 119,400 133,600 128,200 10 Other Income 148.000 148,000 148,000 148,000 148.000 II Total Revenues and Other Income 8.173.900 8.449.700 8.872.300 9.117,700 9,599,800 Revenue Requirements: 12 Operating Expense 5,382.500 5,903.800 6.108.800 6.322,500 6,545.000 13 Net Earnings 2,791,400 2.545.900 2,763.500 2,795,200 3,054,800 Debt Service 14 Existing Revenue Bonds 92,300 92,500 92,600 93,100 93,400 15 Proposed Revenue Bonds 0 0 0 0 0 16 Total Debt Service 92,300 92.500 92,600 93,100 93,400 17 Minor Capital Expense 21.000 21.500 22.100 22,700 23,300 S Transfer to Capital Project Fund 3,400.000 1,700.000 1,500,000 2.500,000 2,800.000 19 Bond Defeasance/Avoidance Cost 350.000 424,000 600,600 607,400 862.100 20 Total Revenue Requirements 9.245.800 8.141,800 8.324.100 9.545,700 10,323.800 21 Net Annual Balance (1,071.900) 307,900 548.200 (428.000) (724,000) 22 Beginning of Year Balance 2,691.000 1.619,100 1.927,000 2,475,200 2.047,200 23 End of YearBalance 1,619.100 1,927,000 2.475,200 2,047,200 1,323,200 CAPITAL PROJECTS FUNDING Sources of Funds 24 Funds Available at Beginning of Year 853,900 2,601.244 3,437,544 3,911.244 5,077,744 25 Transfer from Operating Fund 3.400.000 1.700,000 1.500,000 2,500,000 2,800,000 26 Sales Tax Revenue 2.834.000 1,472,500 2,165,000 1,462,500 937,500 27 Interest Income 12.400 91,300 103,700 150,500 213,200 28 Total Funds Available for Major Capital Improvements 7,100.300 5.865.044 7.206.244 8,024,244 9,028,444 Capital Fund Requirments 29 Major Capital Improvements 4.499.056 2.427,500 3.295.000 2.946.500 2.507.500 30 End of Year Balance 2.601.244 3.437.544 3.911,244 5.077,744 6,520.944 Debt Service Coverage: 31 Maximum Revenue Bond Debt Service 94.300 94,300 94,300 94,300 94,300 32 Revenue Bond Debt Service Coverage (Line 13/Linel6) 3024% 2752% 2984% 3002% 3271% 33 Parity Revenue Bond Debt Service Coverage (Line 13/Line 31) 2960% 2700% 2931% 2964% 3239% Wastewater Utility Cost Allocations In developing an equitable wastewater service charge structure, costs of service are allocable to the various customer classes according to the service requirements of each class. Allocation of the costs of service should take into account the quantity of wastewater contributed, strength of wastewater, number of customers, and other relevant factors. Cost of service allocations presented in this report are considered to be in compliance with current Environmental Protection Agency (EPA) rules and regulations. The cost of service to be allocated to the various customer classes consists of the total revenue requirements for the 1997 test year. The cost of service to be recovered from wastewater service charges totals $8,381,300 as shown in Table S-8. The total cost of service is comprised of $6,034,400 in operating expenses, $688,600 depreciation expense, and $1,658,300 return. Wastewater Utility Cost Allocation to Functional Cost Components The total cost of wastewater service is analyzed by system functions in order to equitably distribute costs of service to the various classes of customers. Costs of wastewater service may be classified and assigned to the basic functional cost components of volume related costs, strength related costs, and customer related costs. Allocation of Net Wastewater Plant Investment The estimated 1997 test year net plant investment in wastewater facilities consists of plant in service as of December 31, 1995, and the estimated cost of proposed capital improve- ments through the test year. Allocation of this investment to functional cost components is shown in Table S-9. Net plant investment is allocated to cost components on a design basis recognizing the principal function governing the design of the facility. The allocation of net plant investment provides the basis for allocation of depreciation expense. Allocation of Wastewater Facilities Depreciation Expense Depreciation expense is an annual allowance for loss in service value of system facilities not restored by current maintenance due to a number of factors which result in the ultimate retirement of the property. The depreciation expense is based upon the total investment in facilities and would provide for the eventual recovery of the original cost of construction of the wastewater system over its service life. Table S-10 shows the estimated test year annual depreciation expense allocated to cost components. 35 Table S-8 Wastewater Utility Cost of Service 1997 Test Year Line Operating Capital No. Expense Cost Total $ $ $ Revenue Requirements I Operating Expense 5,903,800 5,903,800 2 Debt Service Requirements 92,500 92,500 3 Capital Outlay 21,500 21,500 4 Transfer to Construction Fund 1700000 1,700,000 5 Bond Defeasance Cost 424,000 424,000 6 Total 5,903,800 2,238,000 8,141,800 less Revenue Requirements Met from Other Sources 7 Other Revenue 148.000 148,000 8 Interest Income 65.600 24,900 90,500 9 Decreasel(Increase) in Funds Available (221,700) (86,200) (307,900) 10 Adjustment If Rate Increase Effective All Year (122,500) (47,600) (170,100) 11 Total (130,600) (108,900) (239,500) 12 Cost of Service to be Met from Wastewater Sales Charges 6,034,400 2,346,900 8,381,300 Cost of Service Expressed on a Utility Basis: 13 Operating Expense 6,034.400 6,034,400 14 Depreciation 688,600 688,600 15 Return 1,658.300 1,658,300 16 Cost of Service to be Met from Wastewater Sales Charges 6,034.400 2,346.900 8,381,300 36 Hx e I- t j' 0o a I a en U_ r w = w m � oho 0o cCd ? v iCMCS tl II- _ X i O ISIt g63 N N en C `� I O' 0' I T E c g C vy - N :U C C O 6E I N - I� d m N N 4n •r °, ' y C,) L r a� vO C oci 3 o o N W C �.. ... 00= C C .Y] C .0 0 0 In N e� O L _ u a n. — vi r+ g d o z c69 m � t q '0 O ° z N N I- 0 O (5 V O N C C C a N U Q T E E 6 0 O U v E m - =Q u v`ui-- m c A F V) u U C C y - r 0% Z v u 2 v c o $ 3 °- u v F a o UCOv c 0' F a o U 3 J 37 ' Allocation of Wastewater Utility Operating Expenses Projected operation and maintenance expenses for the test year are allocated to cost components as shown in Table S-11. Operating expenses for the treatment plant and collection system are allocated to functional cost components in generally the same manner as plant investment. Distribution of Wastewater Utility Costs to Customer Classes ' The total cost responsibility of each class of customer may be estimated by the distribution of the cost of service for each cost component among the classes based on the respective service requirements of each class. For purposes of cost allocation, utility customers are classified in a manner such that customers in each class have similar service requirements. Current wastewater utility customer ' classifications include residential, commercial, industrial, outside city, and wholesale. The estimated test year service requirements or units of service for the various customer classes are shown in Table S-12. Historical data and information provided from utility records were used to estimate the projected units of service. Wastewater collected and treated consists ' of two elements: (1) contributed sanitary and industrial wastewater flow and (2) infiltration/ inflow of ground water into the sewers. Contributed wastewater flow is that portion of the annual water use or other discharge of each customer class which enters the sanitary wastewater ' system. Estimates of the contributed volume of each class is generally based upon water billing records that exclude estimated water use not reaching the wastewater system, such as that used ' for lawn sprinkling and car washing or that included in manufactured products. It is estimated that the amount of flow entering the sewers through infiltration/inflow will average approximately 37 percent of the total wastewater flow reaching the treatment plant. Each customer class should bear its proportionate share of the costs associated with infiltration/ ' inflow as the wastewater system must be adequate to convey and process the total wastewater flow. Infiltration/inflow is allocated to customer classes on the premise that two-thirds of the total is distributable on the basis of the number of customers with the remaining one-third allocated on the basis of contributed volume. Estimated total strength units are based on treatment plant records which indicate the ' average wastewater biochemical oxygen demand (BOD) and suspended solids concentrations are estimated to be approximately 210 milligrams per liter (mg/1) and 250 mg/l, respectively. ' The costs of service are distributed to the various customer classes by application of unit costs of service to respective service requirements. The 1997 test year unit cost of service for each functional cost component is shown in Table S-13. Unit costs are based on the total costs ' divided by the applicable units of service. The total unit costs of service applied to the respective 1 39 C S� N Na. N C en N q O :O >l en N Tel S S a. - N 00 r h cJ g g u v pIn It.-- H 8 a O o O N ^ r of N I l+l v p - 00 a S N — N — m 0e v I d' v p 0 N 0' 0' v1 Q R of r en v'1 8 8 0 o =c U — w'1 a N r o -� n .� c o N1 vl N of •p O u adi p 00 en 00 00 en — '^ fc Off,' C, 0. C, U E E d C y 6 d ` E X v -, Co E 3 O 3 o O u y u of ; A `u v e u F a E 0 C a N en v h fo r ec O_. c 'o g -. rn � ' Q 8 'O r q �m „Vi o I'^ `c_ it o r Vl O r ;..n fl I N N N N - Q ' '0 88 8 s8 8 �„ 8 'Cc Q eNn I "_' cC I a= t o vi 0 dI- >4 8S 8 8Q 18 88 8 8- V_ _ 70 b O N m NN I h .-. I 4+ .y— 'Q" O y gg !8 88 S 90 18 �O 1- L. (� .� L•• 00 N o N ,- ' Q O .� I - $ in Or- m r v 3= � I ('I N N I vs 8 8 I 80 o p pp •1 O I O O O Q N f`! 00 of N vl f� N O\ N Q Ev h —Cult (` O` a0 I a C 00 — Cl en N W j §o 88 8818 8818 ^� 0\ r C N r0 I ONO a N C 00 m N I Vl Q h D\ OD h Nl N N tV ti et O 00 N J 7 7 J Z y C L L 00 3 0 3 0 3 0 = uL b OO 0.y O .L. V L O 9L O L. >> d U r (n L Q C p A G C O= U �mU� ti 3U_ a v C_ ...1 N en Q vt .0 r-00 a -- O- 41 p8 8 8� Sr 8 O818 8 o VI vi oo O� N _c m OOH Ia a w >y ri v r °° r Q C a 00 'N 70 00 no N C Q - r Ir N QI po 8 S pp �. ,Q, Or "fl b 8 r �O d pr. 8 Q 18 .Q ' �C. ~ I n r O m O N p O Q I- ' ne IC �r N r O p C s p b N N N h N N N N 8 8 8 8 p p pp SN t N O� d ar0 1� 1 a . O O b 1Q� 'Q .�. vi— Ir V N hm N r ( e 00O O VIH N N ' C N N N 'C Q b rn ' p 8©8 Co O.O C I p O FS 2 O S O S q OO VI 'O' :dQ- N C -c r1 O OO ad 0 `�' � N N >2 � -S. r r - -N OO 8 Sr.p p V/ r1 O. I Q �e N O nt O o N wi p O S O p o e r r V �N ` �^ N Q O S Iq O S S r T N d O y N vN r -o NO r0 OO - OO w, w H � b b 00 3 y N '` W O S S I O S Q O b S b O S O I S 00 N S r H V^ YJ r e� O N N o.w-. �+1 O f�f Vl N N1 -m cy« g h co no 00 „� oo 1 g g 888 n - N G 00 • 0O0 b _. 00 N 00 C r C N E Z c u rn Y y e c G C C E E = O C a C Y 6 = W u E y 00N r N Vl r C.r N U Y U Y r �••� C O A J Y •� Y C O Y Co O 3 F N F,'d n'O r-00 a O - N - Q - - 1 42 II service requirements for each customer class results in the total allocated cost of service for each customer class ash shown in Table S-14. Comparison of the cost of service for each customer class with revenue under existing rates and the indicated percentage increase in the level of revenue from each class required to meet those costs is shown in Table S-15. 43 V U r .q vs •.• C UI W C) N U) I- C) C C M N —Q 0 N y V w o N O ,0 V 0 O as as n O S - 8! 8 00 0 O N OO O 0 . 88 IS � c� 8 r -C88 00 V G �� � `d coo 06 vi — r rn a '0S vS -'S rO N— vS O O D\ 'Sri V't't h N rV M to C h 0 S S rn 99 m O O N of F --c' N r R- N — `p Q — I - 88 0 88 88 s Oho w e O� O ri O a 00 000\ �O in— N RCN ri fn N N HIS en — N r r C S O 0 O O S 50 55 O N N =O r N V1 00 t+l 00 N N r fn rn N r N r N T N N % I vi en — 00 N N O O S S S Q S S —enDO 0 00 S a a i O,c O o rl; oo d cf v rn — ,d vi v rnoo —'n vi ao r -- N N — S 515 5 S S 'D '0 00 O 00 — I N N N O\co e+f - - 00 a. c W U u - r c u c I 1 O • H 4 O H m 69 64 —�i, T 69 {i74,. a Y Oo U I. 1 , — a C. r V r ra Y r YO — Y R Y Y a U 'y u C O •C O • C O U. C O U, C 0 ' �,= ?Du EOU >>U rn oOU 'm x-50 c u 0 v VDU r — 7 u _ O 3 F' — N e'Cr- 0O0 II O e v CJ b T C" 0 C) 0 f-; La I d 8 8 N 0 a t� I8 .0 en AI 8 8 8 • O N 00 1 00 8 s 8 ' - N OO e Icy 00 O UN a.. a«_ v O-� .>. •u A • V E O v a C.) c v u >. o 'S .t = �� > U o - A a d 7 Yl 'O N- 45 Wastewater Rate Adjustment ' The principal consideration in establishing wastewater rate schedules is to establish charges to customers reasonably commensurate with the cost of providing wastewater service. ' Theoretically, the only method of assessing entirely equitable charges for wastewater service would be the determination of each customer's bill based on his particular requirements for service. Since this is impractical, schedules of rates are normally designed to meet average ' conditions for groups of customers having similar service requirements. Rates should be reasonably simple in application and subject to as few misinterpretations as possible. Existing Wastewater Rates The existing schedule of rates for retail wastewater service is shown in Table S-16. All customers are billed a service charge which varies by meter size, plus a volume charge. Existing wastewater rates were established on January 1, 1994. Proposed Wastewater Rates The proposed wastewater rates, shown in Table S- 16, retain the form of the existing rate schedule. A comparison of allocated costs of service for the test year with wastewater revenue under the proposed rates is shown in Table S-17. As indicated, revenues under the proposed rates will adequately recover the total cost of service. A comparison of typical bills for wastewater service under existing and proposed rate schedules is presented in Table S-18 to better reflect the total effect of the increases in the level of wastewater service revenue on customer bills. Table S-16 Wastewater Utility Comparison of Existing and Proposed Rates 1997 Test Year Service Charge - /bill Meter Size inches 5/8 3/4 1 11/2 2 3 4 6 8 Volume Charge - $/Mgal Existing Charges Proposed Charges All Areas Inside City Outside City $ $ 7.12 8.00 9.60 8.08 9.25 11.10 10.02 10.40 12.48 14.54 14.54 17.45 19.36 19.36 23.23 40.40 40.40 48.48 71.11 71.11 85.33 135.75 135.75 162.90 - na - 213.08 255.70 Existing Charges Proposed Charges Growth Fayetteville Farmington Greenland Area Inside ity Outside City $ $ Residential 2.52 4.41 4.41 4.41 2.39 4.00 Commercial 1.71 4.41 4.41 4.41 1.87 4.00 Wholesale Sewer Rates /Mggal Exing Proposed Wholesale -All usage 2.46 1.80 Excess Strength Surcharge- S/pound Existing Proposed DOD charge in excess of 300 mg/I 0.2061 0.2061 SS charge in excess of 300 mg/I 0.1030 0.1030 mg/I- milligrams per liter 47 I- .- U - 0 O d y 0• r O y R O.. d N N • cu r o O i2 0 C V wo off .s.C O c0 0 O C U- 5 - (to E� O. C) - UI- .. 6 Ml T N S- 00' 000 O' V'1 Ill p^ IS cc v r r N OO — — I r S pp O O O S rNrn pl r N w m en en - O 00 S Slo ry N 06 p Q Or en b N m Ml E T C V. C —:E ' C U - O d y q -V E 0 7 0 S E F cTv mxc�� u oa 3. - N Ml C V1 O r Table S-18 Wastewater Utility Typical Monthly Bills Meter Size inches Fayetteville Residential 5/8 5/8 5/8 5/8 Commercial 1 1 I I Industrial 4 4 6 6 Farmington 5/8 5/8 5/8 5/8 Greenland 5/8 5/8 5/8 5/8 Growth Area 5/8 5/8 5/8 5/8 Existing Proposed Rates Usage Bates Amount Increase Increase Mgal. $ $ $ % 5 19.72 19.95 0.23 1.2 10 32.32 31.90 (0.42) (1.3) 25 70.12 67.75 (2.37) (3.4) 30 82.72 79.70 (3.02) (3.7) 10 27.12 29.10 1.98 7.3 20 44.22 47.80 3.58 8.1 50 95.52 103.90 8.38 8.8 100 181.02 197.40 16.38 9.0 500 926.11 1,006.11 80.00 8.6 1000 1,781.11 1,941.11 160.00 9.0 2500 4,410.75 4,810.75 400.00 9.1 5000 8,685.75 9,485.75 800.00 9.2 5 29.17 29.60 0.43 1.5 10 51.22 49.60 (1.62) (3.2) 25 117.37 109.60 (7.77) (6.6) 30 139.42 129.60 (9.82) (7.0) 5 29.17 29.60 0.43 1.5 10 51.22 49.60 (1.62) (3.2) 25 117.37 109.60 (7.77) (6.6) 30 139.42 129.60 (9.82) (7.0) 5 29.17 29.60 0.43 1.5 10 51.22 49.60 (1.62) (3.2) 25 117.37 109.60 (7.77) (6.6) 30 139.42 129.60 (9.82) (7.0) Combined Water and Wastewater Utilities The projected cash flow tables for the water utility (Table W-7) and the wastewater utility (Table S-7) are combined in this section to facilitate conducting the coverage tests required by the bond ordinance. The combined cash flow statement is shown in Table C-1. The bond ordinance states that gross revenues shall be at least 110 percent of the amount required to pay operating expenses, principal and interest, any Registrar and paying agent fees, required deposits to the Debt Service Reserve Fund, and required deposits to the Renewal and Replacement Fund. As shown in Table C-1, the coverage requirement is met assuming the proposed revenue increases are implemented as indicated. In addition, the bond ordinance requires that prior to issuing parity bonds, the following conditions must be met: (a) net revenues in the year preceding issuance of additional parity bonds must be no less than 120 percent of the maximum annual debt service on all outstanding and proposed bonds; or (b) net revenues in the year following issuance of the parity bonds must be no less than 120 percent of the maximum annual debt service on all outstanding and proposed bonds. For purposes of part (b), net revenues may be adjusted for rate increases adopted before the additional parity bonds are issued. Lines 33 through 37 of Table C-1 indicate coverage levels anticipated under each Covenant, and show that all requirements are realized. 50 Table C-1 Combined Utility Operating Fund Cash Flow Analysis (1) (2) (3) (4) (5) Line Year Ending December 31 No. Description 1246 1927 1928 1222 2440 OPERATING ACCOUNT Revenues: 1 Water/Sewer Sales - Existing Rates 16,826,300 17,251,300 17,691,500 18,146,300 18,617,900 2 Fire Protection Charges 200,000 200,000 200,000 200,000 200,000 Additional Revenues Required: Billings Months Effective 3 Date of Increase Increase 1/1/1996 0.0% 12 0 0 0 0 0 4 9/1/1997 4.1% 4 215,300 727,500 745,800 764,600 5 1/1/1998 0.0% 12 0 0 0 6 1/1/1999 0.0% 12 0 0 7 1/1/2000 3.1% 12 534,600 8 Total Additional Revenues 0 215,300 727,500 745,800 1,299,200 9 Total Water/Sewer Sales Revenues 17,026,300 17,666,600 18,619,000 19,092,100 20,117,100 10 Interest Income 218,400 181,300 209,600 221,700 221,600 11 Other Income 367,000 367,000 367,000 367,000 367,000 12 Total Revenues and Other Income 17,611,700 18,214,900 19,195,600 19,680,800 20,705,700 Revenue Requirements: 13 Operating Expense 12,396,300 13,172,300 13,741,900 14,341,400 14,972,600 14 Net Earnings 5,215,400 5,042,600 5,453,700 5,339,400 5,733,100 Debt Service 15 Existing Revenue Bonds 1,397,400 1,401,600 1,403,100 1,406,600 1,407,700 16 Proposed Revenue Bonds 0 0 0 0 0 17 Total Debt Service 1,397,400 1,401,600 1,403,100 1,406,600 1,407,700 18 Minor Capital Expense 260,000 267,700 275,600 283,800 292,300 19 Transfer to Capital Project Fund 6,000,000 2,400,000 2,900,000 3,300,000 3,800,000 20 Bond DefeasanedAvoidance Cost 350,000 424,000 600,600 607,400 862,100 21 Total Revenue Requirements 20,403,700 17,665,600 18,921,200 19,939,200 21,334,700 22 Net Annual Balance (2,792,000) 549,300 274,400 (629,000) (258,400) 23 Beginning of Year Balance 5,875,500 3,083,500 3,632,800 3,907,200 3,648,800 24 End of Year Balance 3,083,500 3,632,800 3,907,200 3,648,800 3,019,800 CAPITAL PROJECTS FUNDING Sources of Funds 25 Funds Available at Beginning of Year 1,864,400 3,538,464 3,470,364 4,008,464 5,116,464 26 Transfer from Operating Fund 6,000,000 2,400,000 2,900,000 3,300,000 3,800,000 27 Sales Tax Revenue 3,696,000 1,709,000 2,330,000 1,925,000 2,125,000 28 Interest Income 34,100 106,000 103,000 144,000 199,700 29 Total Funds Available for Major Capital Improvements 11,594,500 7,753,464 8,803,364 9,377,464 11,241,164 Capital Fund Requirments 30 Major Capital Improvements 8,056,036 4,283,100 4,794,900 4,261,000 4,247,500 31 End of Year Balance 3,538,464 3,470,364 4,008,464 5,116,464 6,993,664 Debt Service Coverage: 32 Maximum Revenue Bond Debt Service 1,414,300 1,414,300 1,414,300 1,414,300 1,414,300 33 Revenue Bond Debt Service Coverage (Line 14/Linel7) 373% 360% 389% 380% 407% 34 Parity Revenue Bond Debt Service Coverage (Line 14/Line 32) 369% 357% 386% 378% 405% \ 5. | C \ O 0 § -n ( o 03 03 ca a \ \ \ } # _ = 2s\�[E3;■"Ew o G m� c k)$ / . 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J3 m SsJs�•p PQQL� cc 25Gn 3 af me- arm 0-y$@3 ny o 4t' mn$ G ��mayc49 a amjOC4,.23FS63w m0 °S a i3•'° oea my �g um 11gg ¢m v Jas gm GG63 via mcaSa11 =3T°Nmam�$SiC8n sS�o4 mo< a m3a G 3i 3 ac <_ mJe ma va o "S •. 3 Ee S 3 ma p Eg ay ys4� w _,0 n mm ^ emsm 3 - G o Lj'Je >L al a _O �yO r° 00aeiNm-iN �TN ge'�1. pOCL0mO m3 �V_• .�m Q)CCe LG3 S+� ••G mwa mw mPf �r,aol? oum-'-. > a_y 0= ?w'3v-- o"a °Gm oo e�}3.a m `<33j33 m o q C� ga' LJy = m 3 C J 1'-J (2 n�5S-- arSJ3+ a� '3S $gm-yyu 4a mnm2 �o•3""m SsJ 3c m3'N2 NZ uu nff"?JJrr ^ m_s fm m$nPrN-4 •= mm 3o £+ �¢1m• a4awa(?,S<a3yJ is�0 bJ xj� • N= m[�& ..�a< aoeSe aag s Sj'mo oa o C- mom g5 W .o'p ,a Emm GG��11•_ya a maaso 3 m m- 3 c- m o' i o 35$33± yi 11 SDuSg$3 4 ioum5 mm a ml o so .aS�ia=.� $ m Ys rm IL• vmWx4'.. g m B$ 4 G d m.Jm S+S 3063 m om $6_ a - m w.05ao n_S o8 H5 SSNasi m .m5 m;c Ema S9m opma SnQno yu god m _E m u • G > 3 q rrpp (O6�s m r. 611 {� 'nmcS- 0.aap@5° Q�jop 443+G4� __.� ].QQ ] m b•^�o '-Za .�s�a `15'1�� im3'm�mi mJaS llma a OnOm 2023' OJY 3i na0a4� me _ a5m JO- - �1 n n dsi: aced request within a reasonable time. and such notification, request and )s. offer of fndermly are hereby declared oft ittewryA"mcaa,atteoptia 01 to he Ti's.., to be wMiawu precedent to ionl the execution of the powere and trust cesit el his Ordinance or to any other uer /dmedy hereunder. It is understood I in' and Intended that no one or more doi owners of the Bonds shag have any the nghl in any mariner whatever by he or their action 10 affect, disturb or be CteIudice the security of this (ht) Ordfrancs, or to enforce any night hirounder except in the manner nd .1 rein provided, that an praeedin ter i s4ow or in equity shag be inssured,d, net h' matters as was its predecessor without the execution or tiling of any Instrument a any further ac( deed, of mnveyanro on to pan d any of the patties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $15 million or shall be the lead bank or trust company of a holding canpeny having capital and surplus of at least 15 million. (b) The Trustee and any successor trustee may at any time resign from the trusts hereby crated by wing 30 days' written notice to the City, and such resignation shall take effct at o a (a) all money belt 9 oe Bondi the redo Trustee In the Ovid land the ce reserve tuna, an the del of 10xi Restebl shin a 0bt . /ice Or y let Sen Reserve Fund entl (ii) rent with o I the i Bonds siteRefneed elont any proceeds required Irorrth• S tries 19977)alIm STATE OF ARKANSAS (b) ell money held b, to Bonds Refunded Tmsleo in the Ie fund shalt be firor applied, as as:sery, ro refunding of the Balls Reu,nd,ed, end S`S`. CysGavt0vI. """' County of Washington Ci s lance Ftsltldo Section 25 01 bike Clause. •tl antl maintained in Ino manner the end such 30 days, or upon the the orovisioa of this Ordnance ere 'en herein provided and for me benefit of earlier appointment of a successor I mt; SOowrwn of me oulsWq ich and mat bgMtlyal "gof action humee by the on previtle l however, 1 IfJI any noha anti resignation stroll aso r tit Mke effect [ a fl owners night given A one or more of ' untll the successor trustee has on suedrdinc law are rights in by Ord the trusts created by this [ this s herein o the rights and Ordinance in writing Suchr son may 11 sa remediesAn rig t of aced. be served personally or sent by n (c) ce rights of action under the registered mad. Si Dndmeoc0 a leper arty d me Bonds, (c) Unions me Cityis in default, me 7 Id enforceable by the Trustee, may be byTrustee may be remwed at any time a etl of any b it Bnd without the pang ssionsuch by an iustee in visions delivered notto a of any of the Bonds, an tl any such the Trustee with ninety de notice pp m eta, rust a Proceeding instilled by alPred by the Cay not to effewvA, B le the Ta and f shall be brought In he such A at shte not lake effect Aid e ie name and for the benefit eofc all to a successor tortes has accepted the 2', d, criers d the Bonds, subject to the trusts created by this Ordinance in :e Ij pt {d) N of this Origin 0. writing. is Cos (d) No remedy herein conferred to upon a reserved l0 the Tnatee W m do ow]yrs of to Bovine's bdanded Any to be exUaivg of any other remedy a raid remedies herein provided and each 'ance and every such remedy shall be and amulet• end shag be in addition to r at every other remedy given hereunder as or given by any law or by the m•r Canst u on of the State. dro (e) No delay or omission of the inn Trustee or of any owners of the ren Baca to exercise 9er%ry right or power nntE aonued Ligon any default shaA klir any such right or power or shat be construed to be a waiver of ansuch y Ito ,4 default or an acquiescence therein for (2) 'II end, every power and remedy given I In by "a Ordetsnce to 9s Trustee and Oct to the owners of the Bonds, of °11 respectively, may be exercised from sit if time to time and as often as may be be deemed OWedienl. Nn '(g The Trustee may, and upon the he wnnen request of the owners of not • as Illess than a majority of the owners in principal amount off the Bonds then is 111outslanding, shall waive any default de which shall have been remedied ch iI before me entry of finaljudgment or rid !.decree in any suit, action or no Iiproceer4lng instituted under the ttt provis'.aq of this Ordinance or before a8 'the completion of to enforcement of •At any other remedy, but no such waiver on !shag extend to or affect any other is hexisting or any subsequent default or efaullto or impair any rights or its 'Irsmadios consequent thereon. Is Section 14 -Refunding of Bonds M Refunded. When the Series 1997 to Bonds ' have been executed by the In Mayor and City Clark and the sent of id the „ City impressed or Imprinted as Id 'heroin provided, they shall be id delver ea to the Trustee, which shag of �axgynaceto them and deliver them to gr 'Abe Purchaser upon payment of the i1a has. Price. The accrued interest a jsid be deposited in the Bond Fund. aj TM expenses of issuing the Series y '1W7 Bonds shall be paid from the 1. ;Pwchm Price. ,e• An Amount of the Purchase Price ' Ahat is sufficient, along with other sat aside and appropriated I$ ah telly for such purpose, to 'accomplish the refunding shall be ell with Fist Commercial Trust , National Association, vile Rccs, oats (the -Bonds Refunded Truchas ). The balance of the 1 �I�Purchase Price, if any, shall be V. Rod into the Cost of Issuance Section 15 -Investment of Bond I IIIPreceeds. (al Moneys held by the Trustee ehaI be invested end ( reinvested in (i) direct or fully 4 ,�guaranteed obligations of the United Stafes of America (including any such 1 Ome deposits or certificates 01 )ail of banks, including the tae, that are Insured by the oral Deposit Insurance oration ('FDIC' ), or (i) money At funds corrpnsetl exck Ivey d srnment Securities (collectively, mitled Investments'). The tee shall invest and reinvest uant to the direction of the City in the Trustee's discretion In the Ad, of any direct instructions from ,fry. O) The Trustee shall invest .eye in funds or accounts in ratted Investments with maturity rdemplion dates and in amounts (di In case the Trustee hareunde shall resign or be removed. or let dissolved, or shall be in course o dissolution or liquidation, or otherwis[ become incapable of actin( hereunder, or in case it shall be faker under the control of any public ottei a officers, a ole receiver appointec by the court, a successor may be appointed by the City by an instrumem executed and signed by its Mayor and arrested by its City Clerk under its seal. Every such successor Wslee shall be a trust company or bank in good standing, having capital and surplus of not less than $15 million or shall be the lead bank or trust captla ofd holding than havin cego The o rioor less teen ll million. The successor trustee and also act as Paying Agent and ReVecti Section 18 -Amendment of Ordinance. (a) The Items of this Ordinance the shall constitute the a contract the between City and the owners of the Series change Bonds undertaking ern ng heroin s a orash ll me s any ht forth shall 1997 one Wae any of the SxceptIes as he Bonds are outstanding, sbscxcestb) (c)her set forth ) heeoliom (b) and (on (b) The Trustee may consent to any variation or change in this Ordinuances in connection n with the Bonds of any Additional Parity or in t order cure any ambigOrdinancety, dor or omission Ithis without aeery at of hment ownershereto Mmout the cogent d the owners of the c) 'The 1997 Bonds. /c) agg owners of not less mthan t h m aggregate principal Bonds then n the Series 1897 Bontls Ikon outstanding shag have vet right, from re time, erltolug the co in ary Ordinance to ccontrary notwithstanding,tedo to consent the to and of approve ordinance vie adoption by the City such shall ie nce spy deed heretolefor as spug o eeof mory or g desirable fig, the purpose of motoring, altering, l anradding to or thecindms, in r any particular, cnany of the terms or provisions inacontained in al Ominnce: or coded supplemental ordinance: nothing contained, this however, that ll petit contained in Spermitting (:hag pemn or be construed as mtyg an prncipal of the maturity of the Series 1997 9 Bonedinterestanany SanerdricBond, or (2) a reduction 1 the BpAnd of amount interest So t9r7 Bo^d or es rate of aledge ofthereon, e or (3) Revenuese crnu s sf p rior o of the Pledgedreby INS suOrdinan to the 4) a privilege verge oy this Ordan Sr (ie a 97 or priority Seof 99y Series Bondof or Series 1997 Bonds over any 97 Series (5 a Bond or Series 1897 Bonds, or (5) a IN Section 19 Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting and the Mayor Is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement and to take ee action requited on the pan of the City to (mfg its obligations under the Continuing Disclosure Agreement. The City covenants that it well hake Al necessary action to comply with the requirements of the Securities and Exchange Commission Rule 15(cK2)- 12 under the Securities Act of 1934, a amended (17 C.F.R.f 240.15(ci2' tble and In the event that any I or part hereof shall be held to era such invalidity shad not heremainder of ths Oda,Jr )lion 26 -Conflicts. All Ica and resolutions and pans in congicl herewith are hereby d to the extent of such conflict. ion 27 -Limitations of flights, rdiancs shall not create any any character and no right of erecter shall arise under or it hereto until the Series 1997 shall be issued and delivered as provided in Sections 2, 3, 24 hereof, ion 28 -Emergency Clause, It by ascertained and declared he refunding must be 4ished a soon as possible in ) lower the interest cost on ms payable from ill Pledged as. The refunding cannot be Gshed without the issuance of PASSED AND APPROVED this 19th des of Ali=. 1997. APPROVED: ATTEST: Ciry Clerk By: Fred Hanna L) CERTIFICATE The undersigned, City Clerk of the City of Fayetteville, Arkansas (the 'City'), hereby certifies that the loregomo pages ve a true and correct copy of nonce NOA050, passed d,1 e reggular cession of the City Council of the Ciy, held et me regular meeting place of the Council at 6:30 o'clock p.m. on the 19t day of Augra4 1997. GIVEN under my hand and seal the 20th Any of August, 1997. Trod Cay I, RANDALL COPE, hereby certify that I am the publisher of THE NORTHWEST ARKANSAS TIMES, a daily newspaper having a second class mailing privilege, and being not less than four pages of live columns each, published at a fixed place of business and at fixed (daily) intervals continuously in the City of Fayetteville,. County of Washington, Arkansas for more than a period of twelve months, circulated and distributed from an established place of business to subscribers and readers generally of all classes in the City and County for a definite price for each copy, or a fixed price per annum, which price was fixed at what is considered the value of the publication, based upon the news value and service value it contains, that at least fifty percent of the subscribers thereto have paid for their subscriptions to the newspaper or its agents or through recognized news dealers over a period of at least six months and that the said newspaper publishes an average of more than forty percent news matter, further certify that the legal notice attached in the matter of (�c0;nanee� N„<., was published in the regular daily issue of said newspaper for consecutive insertions as follows: The first insertion on the day of 1911 L the second insertion on the day of 19 the third insertion on the day of 19 and the fourth insertion on the day of 19 Publisher / Ge al Manager Sworn to and subscribed Notary Public, Slate of Arkansas Notary Public My Commission Expire wR(n;'wton Count My Commission Expires O21I/uS (((C(C((C C(((C(((((((C((((C C C CC(((( Fees for Printing..r............................................$ Costof Proof...............................r,,...................$ Total.......... I. V will be required for the Section 20 -Tax E'. provided in this Authorizing ' Qualifications. (a) I. covenants that it shall not iggatiors purchasedres. an, edioniorjuffer or permit an vet nP -ag tiedrnrYe.+'rm�e)b_q&... .. S 2,610,000 CITY OF FAYETTEVTLLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 CLOSING DOCUMENTS SEPTEMBER 1997 S 2,610,000 CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS County and City Proceedings (Old Bonds) l . Certified Copy of Ordinance No. 81-27 of the County adopted June 18, 1981, as amended by Ordinance No. 83-16 adopted May 12, 1983, regardinga 1% local sales and use tax, .proof of publication, proclamation of election results, and proof of publication of proclamation. 2. Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Ordinance No. 3206 Exhibit B - Minutes adopting Ordinance. Exhibit C - Proof of Publication of Ordinance. Exhibit D - Notice of Special Election Exhibit E - Copy of Ballot Exhibit F - Proclamation declaring results 3. Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Ordinance 3224, authorizing the issuance of the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986: Exhibit B - Minutes adopting Ordinance • Exhibit C - Proof of Publication of Ordinance County and City Proceedings (New Bonds) 4. Certified Copy of Ordinance No. 97-16 of the County adopted June 12, 1997, levying the 1% local sales and use tax, proof of publication. Certificate of Mayor and City Clerk to which the following are attached as exhibits: Exhibit A - Certified Copy of Ordinance No. 4050 of the City adopted August 19, 1997, authorizing the issuance of the City's Sales ; Tax. ,_ Capital, Improvement Refiindiiig Bpndst. Series 1997. Exhibit B - Minutes adopting Ordinance Exhibit C - Proof of Publication of Ordinance 6. Non -Litigation Certificate Transactional Documents Preliminary Official Statement with Rule 15(c)(2)-12 Certificate attached. 8. Bond Purchase Agreement 0 P\DOCIJ.ENTCTB\FAYETTEV\CLOSE.AGD October 13. 1991 0 • E1 9. Official Statement Closing Certificates 10. Continuing Disclosure Agreement Ii. Certificate of Issuer Pursuant to Paragraph 11(c)(4) of the Bond Purchase Agreement. 12. Certificate of County Pursuant to Paragraph 11(c)(6) (c)(6) of the Bond Purchase Agreement. 13. No Arbitrage Certificate 14. Facsimile Signature Certificates 15. Specimen Bond 16. Certificate of Printer 17. Certificate of Underwriter 18. Certificate of Trustee 19. Delivery Instructions 20. Form 8038-G and Proof of Mailing 21. Notice to Call 1986 Bonds Opinions 22. Bond Counsel 23. Supplemental Opinion of Bond Counsel 24. Underwriter's Counsel 25. City Attorney Miscellaneous 26. Certificates of Arkansas Department of Finance and Administration and State Treasurer as to Sales Tax 27. Cross- Receipt for Bonds and Bond Proceeds 28. Satisfaction of Bonds Refunded Receipt I' 'DOCUME N'. CTBIFA Y ETIE V IC I.OS E. AGO October 13. 1997 2 • •/ % 3224 FOC ORDINANCE NO. �4, .\MCROFIUAt AN ORDINANCE AUTHORIZING THE ISSUANCE OF4�SALES TNS� CAPITAL IMPROVEMENT BONDS TO PROVIDE FUNDS,,'TO;.PPA A 23 PORTION OF THE COST OF ACQUIRING, CONSTAubTrH/,MAD. , DEEQUIPPING AN AUTHORIZING ry LIVERYOFA BOND PURCHASE AGREEMET PROVIDING FOA'4y% SALE OF THE BONDS; AUTHORIZING THE EXECUTION F�YND DELIVERY OF A TRUST INDENTURE SECURING THE BONDS; PRESCRIBING MATTERS RELATED THERETO; AND DECLARING AN EMERGENCY WHEREAS, By Ordinance No. 3206 duly adopted by the Board of Directors (the "Board") of the City of Fayetteville, Arkansas (the "City") on August 28, 1986 (the "Election Ordinance"), there was submitted to the qualified electors of the City the question of issuing, under Amendment 62 to the Constitution of Arkansas ("Amendment 62"), as implemented by Act 871 of the General Assembly of the State of Arkansas for the year 1985 (the "Act"), sales tax capital improvement bonds in principal amount not to exceed $4,000,000 (the "bonds") to provide funds to pay a • portion of the costs of acquiring, constructing and equipping an arts center in joint venture with the University of Arkansas (the "Project"); and WHEREAS, the Election Ordinance also provided for the pledge of twenty percent (20%) of the City's portion of a one percent (1%) local sales tax levied by Washington County, Arkansas (the "Sales Tax") to secure repayment of the bonds; and WHEREAS, at a special election held October 7, 1986, a majority of the qualified electors of the City voting on the question approved the issuance of the bonds and the pledging thereto of twenty percent (20%) of the City's portion of the Sales Tax; and WHEREAS, the City, has determined to sell and issue its $3,770,000 Sales Tax Capital Improvement Bonds, Series 1986 (the "Bonds"), as permitted under Amendment 62 and the Act; and WHEREAS, the City has reserved in the Indenture (hereinafter defined) securing the Bonds certain rights to subsequently issue additional bonds, which with the Bonds may not exceed $4,000,000 in aggregrate principal amount, for the purpose of providing financing to complete the Project, if necessary; and • LIBER 1209 PAGE '02 WHEREAS, the City has made arrangements for the sale of the • Bonds to A. G. Edwards & Sons, Inc. of St. Louis, Missouri (the "Purchaser"), and in connection therewith has prepared and distributed a Preliminary Official Statement, dated October 27, 1986 (the "Preliminary Official Statement"); and WHEREAS, there has been submitted to the City by the Purchaser a Bond Purchase Agreement (the "Bond Purchase Agreement") providing for the purchase of the Bonds; and WHEREAS, a final Official Statement, dated November 7, 1986, (the "Official Statement") has been prepared and will be distributed in connection with the offer and sale of the Bonds; and WHEREAS, copies of the Preliminary Official Statement, Official Statement, Bond Purchase Agreement, and Indenture have been presented to and are before the Board at this meeting. NOW THEREFORE, BE IT ORDAINED by the Board of Directors of the City of Fayetteville. Arkansas, that: Section 1. In addition to the terms defined in the preamble to this Ordinance, the following words and terms used in this Ordinance shall have the following meanings unless the context clearly states another or different meaning or intent: Ll • "County" means Washington County, Arkansas. "Levying Ordinance" means Ordinance County on June 18, 1981, as amended adopted by the County on May 12, 1983, (1%) local sales tax has been levied on within the County, the collection of November of 1981, following approval of with the laws of the State. No. 81-27 adopted by the by Ordinance No. 83-16 under which a one percent. the retail sale of goods which tax commenced in the voters in accordance "Indenture shall mean the Trust Indenture dated as of November 15, 1986 between the City and the Trustee which provides for the issuance of the Bonds. "Pledged Receipts" means twenty percent (20%) of all proceeds derived by the City from its portion of the one percent (1%) local sales tax levied by the County pursuant to the Levying Ordinance. "Project" means the capital improvement project of the City consisting of a new arts center to be acquired, constructed and equipped in part with proceeds of the Bonds as provided in the Indenture. "Purchaser" shall mean A. G Louis, Missouri. -2- Edwards & Sons, Inc., of St. USER1209PAGE 303 "Trustee" means Mcllroy Bank & Trust, of Fayetteville, • Arkansas, together with its successor and any other corporation which may at any time be substituted in its place pursuant to the Indenture. Section 2. All actions heretofore taken by the City in connection with the offer and sale of the Bonds, including the preparation and distribution of the Preliminary Official Statement, the preparation of the Official Statement and preparation of the Indenture are hereby in all respects ratified and approved. Section 3. There is hereby authorized and directed the acceptance of the offer by the Purchaser, pursuant to the Bond Purchase Agreement, to purchase the Bonds at a price of $3,694,600 (98.0% of the principal amount thereof), plus accrued interest thereon from November 15, 1986 to the date of delivery thereof. The Bond Purchase Agreement is hereby approved in substantially the form exhibited at this meeting, and the Mayor or the Assistant Mayor of the City is hereby authorized to execute, acknowledge, and deliver the Bond Purchase Agreement and the City Clerk is hereby authorized to attest the same and to affix the seal of the City thereto. Any changes to the Bond Purchase Agreement may be approved by any officers of the City executing such document, their execution and delivery to constitute conclusive evidence of such approval. • Section 4. To provide a portion of the funds for the acquisition, constructing, and equipping of the Project there is hereby authorized the issuance of bonds of the City under Amendment 62 and the Act, to be designated "City of Fayetteville, Arkansas Sales Tax Capital Improvement Bonds, Series 1986" in aggregate principal amount of $3,770,000. The Bonds shall be issued in the forms and denominations set forth in the Indenture, shall be dated as of November 15, 1986, shall be numbered as provided in the Indenture; shall mature annually on November 15 of each year commencing November 15, 1987, as set forth in Schedule A hereto (which schedule is incorporated herein by this reference); shall bear interest payable semiannually on May 15 and November 15 of each year commencing May 15, 1987, at the rates set forth in the Indenture and in Schedule A hereto; shall be subject to redemption prior to maturity upon the terms and conditions set forth in the Indenture; and shall be sold to the Purchaser for the price specified in Section 3 of this Ordinance. Section 5. The Bonds shall be special obligations of the City and, except to the extent payable from bond proceeds or moneys from the investment thereof, shall be payable solely from Pledged Receipts received by or on behalf of the City, and delivered to the Trustee pursuant to the Indenture. Except as specifically provided herein and in the Indenture, the Bonds shall not constitute a debt or liability of the City within the • meaning of any constitutional or statutory limitation. -3- EIBER1209 PAGE 304 Section 6. The Bonds shall be executed on behalf of the •City by the facsimile signature of the Mayor and the City Clerk of the City, in the manner provided in the Indenture. If any of the officers who shall have signed or sealed any of said bonds shall cease to be such officer of the City, for bonds so signed and delivered as have been actually authenticated by the Trustee or delivered by the City, such bonds nevertheless shall be deemed authenticated, issued, and delivered with the same force and effect as though the person or persons who signed or sealed such bonds had not ceased to be an officer or officers of the City, or any such bonds may be signed and sealed on behalf of the City by such persons who, at the actual date of the execution of such bonds, shall be the proper officers of the City, although at the nominal date of such bonds, any person so signing and sealing shall not have been such officer of the City. Section 7. The Indenture is hereby approved in substantially the form exhibited at this meeting, and the Mayor or the Assistant Mayor of the City is hereby authorized to execute, acknowledge, and deliver the Indenture and the City Clerk is hereby authorized to attest the same and to affix the seal of the City thereto. Any changes to the Indenture may be approved by any officers of the City executing such document, their execution and delivery to constitute conclusive evidence of such approval. • Section 8. The Board hereby approves the preparation of, and ratifies and confirms the use by the Purchaser of the Preliminary Official Statement and the Official Statement, and the Mayor or the Assistant Mayor is hereby authorized and directed to execute and deliver the Official Statement for and on behalf of the City. Section 9. Rose Law Firm, a Professional Association, of Little Rock, Arkansas, is hereby confirmed as Bond Counsel with respect to the issuance of the Bonds, the fees and expenses of which firm shall be a cost of the Project. Section 10. The Mayor or Assistant Mayor and City Clerk of the City are hereby empowered to execute and deliver the Bonds and all documents, certificates, and other instruments which may be required under the terms of the Indenture or Bond Purchase Agreement and which are appropriate to effect the purposes of this Ordinance. Section 11. All ordinances or resolutions of the City in conflict herewith are hereby repealed to the extent of such conflict. Section 12. This Ordinance is necessary for the preservation of the health and safety of the citizens of the City, accordingly, an emergency is hereby declared and this Ordinance shall be immediately c�d • effective. LIBIR1209PAGE305 -4- Adopted this 6th day of November, 1986. • t :YE 11c AT:TE$" : t �. y.' 'F:eFk j. L CITY By: OF FAYETTEVILLE, ARKANSAS k'' 'a4 Mayor -5- E19ER' 209 PAGE 306 Schedule A • $3,770,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Bonds Series 1986 Maturity Schedule Year Rate of November 15 Amount Interest 1987 $ 30,000 4.25% 1988 35,000 4.75 1989 45,000 5.00 1990 50,000 5.20 1991 75,000 5.40 1992 100,000 5.60 1993 100,000 5.75 1994 125,000 5.90 1995 135,000 6.00 1996 135,000 6.15 1997 155,000 6.30 1998 170,000 6.45 1999 195,000 6.60 2000 225,000 6.75 • 2001 260,000 6.90 2007 1,935,000 7.10 • -6- LIBER1209 PAGE3O7 i• E 3 I• • • MINUTES OF A SPECIAL MEETING OF THE CITY BOARD OF DIRECTORS A special meeting of the Fayetteville City Board of Directors was held on Thursday, November 6, 1986 at 4:00 p.m. in Room 326 of City Hall, 113 W. Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Noland; Directors Lancaster, Johnson, Hess, Martin and Orton; City Manager Grimes, City Attorney McCord, Department Directors Burch, Coates and Linebaugh, City Clerk Kennedy, members of the press and audience. ABSENT: CALL TO ORDER Director Bumpass The Mayor called the meeting to order with six Directors present. WATER QUALITY ACT The Mayor said Senate Bill 1128, The Water Quality Act of 1986, is on 416.1 President's Reagan's desk. The Mayor asked if the Board wished to encourage the President to sign this Bill. Director Orton, seconded by Martin, made a motion to encourage the 416.2 President to sign the Bill. Director Johnson said this Bill also includes the relinquishing of 416.3 sewer storm water drainage prevention requirements. Upon roll call, the motion passed, 6-0, with Director Bumpass absent. 416.4 RESOLUTION NO.11.irl-F.'a APPEARS ON PAGE Y7 OF ORDINANCE & RESOLUTION BOOK V I i ARTS CENTER BONDS The Mayor explained the purpose of this meeting was to consider passage 416.5 of an Ordinance authorizing issuance of $3,770,000 in Sales Tax Capital Improvement Bonds for the Arts Center and the execution of a Trust Indenture with Mcllroy Bank and Trust, an Official Statement, and a Bond Purchase Agreement with A. G. Edwards and Sons. Les Baledge, representing The Rose Law Firm, bond counsel for this 416.6 issue, addressed the Board. Baledge explained the bonds are to be issued pursuant to Amendment 62 to the Constitution and Act 871 of 1985. He said the ordinance would ratify the use of the Preliminary Official Statement used in connection with the offer and sale of the bonds, will authorize the execution of the bond purchase agreement with A. G. Edwards and Sons to purchase the bonds at 98% of the principal amount, will authorize the execution of a Trust Indenture to secure the bonds, and will authorize the preparation of a Final Official Statement to be delivered to the purchasers of the bonds. Baledge said the bonds will be secured by a pledge and first lien on 20% of the City's share of the County 1% sales tax. Baledge said the indenture would specifically permit the City to issue subordinate lien debt in the future if there are excess revenues from this tax that are available which the City wants to pledge. He said, in addition, the insurer for the bonds has agreed to relax restrictions to permit the investment of funds held under the indenture with the local banks. 417.1 Director Johnson asked if additional amounts, should they be needed for capital improvements, can be issued under the same bonds. Baledge said it would be possible to issue bonds secured by a subordinate lien on the revenues, but this would require another election. 417.2 Chuck Devers, speaking for A.G. Edwards and Sons, explained the difference between the original bond amount of $3,545,000 and the current amount of $3,770,000 is the result of some changes in the project budget which were called in to the firm two days ago. Devers went over financial information which had been provided the Directors, including a Summary Sheet, a Debt Service and Coverage report, and a Schedule of Payments. 417.3 Devers said the bonds were rated AAA by both Moody's and Standard and Poors Corporation. He said the bond discount is 2%, and the insurance • premium rate is .720% total debt service. He said the debt service reserve bond is equal to 10% of the amount of the issue and reserve bonds will be available to the city as a "rainy day account" and can in fact be used to make the final bond payment in the final year. He said total debt service was $7,540,174. Devers said the average interest rate at which the bonds were sold was 6.864%. 417.4 The City Attorney read the ordinance for the first time. Director Johnson, seconded by Orton, made a motion to suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed, 6-0. The ordinance was read for the second time. Director Johnson, seconded by Orton, made a motion to further suspend the rules and place the ordinance on its third and final reading. Upon roll call, the motion passed, 6-0. The ordinance was read for the third time. 417.5 Director Martin asked if the bonds were sold if the ordinance is adopted. Devers responded that, if the ordinance is adopted, the bonds were sold from the city's standpoint. 417.6 Upon roll call, the ordinance passed, 6-0. ORDINANCE NO. 3224 APPEARS ON PAGE _ft OF ORDINANCE & RESOLUTION BOOK _ • 0 November 6, 1996 Director Johnson, seconded by Orton, made a motion to pass an emergency 418.1 clause. Upon roll call, the motion passed, 6-0. ADJOURNMENT with no further business before the Board, the meeting adjourned at 418.2 about 4:40 p.m. 0 • . Legal Notices ORDINANCE NO.3224 AN ORDINANCE THE IS - of CE OF SALES, TAX 10HORIZING STATE of ARKANSAS AL IMPROVEMENT DS TO PROVIDE FUNDS TO PAY A POR= Imo' .. ........ .. .. ..� ., n._._......•/ N'a-hi-tp'On- 'TION OF THE CST. OF ACQUIRING. CONSTRUCG , TING AND EQUIPPING AN ARTS CENTER; AUTHORIZING THE EX - E C U T I 0 N A N D DELIVERY OF A BOND Northwest Arkmiso3 Times, Mon., Nov. I7, 1986 • 11A PURCHASE AGREEMENT FAYETTEVILLE, ARKANSAS PROVIDING FOR THE - Legal Notices t. Legal Notices SALE OF THE BONDS; AUTHORIZING THE EX- Sectors 3. There i3 hereby Section 12. This Ordinance E C U T 1 O N A N D authorized and directed the is necessary for the preser. DELIVERY OF A TRUST acceptance of the offer by vation at the health and safe. INDENTURE SECURING the Purchaser, pursuant to ty of the citizens of the City, THE BONDS; PRESCRIB- the Bond Purchase Agree. accordingly, -an emergency ING MATTERS RELATED ment, to purchase the Bonds is hereby declared and this THERETO; AND DECLAR- at a price of 13,694,600 Ordinance Shall be immedi. INGANEMERGENCY (98.0% of the principal atelyeffective. 7 WHEREAS. By Ordinance amount thereof), plus ac- Adopted this 6th day of No. 3206 duly adopted by the cruild interest thereon from November, 1986. Board of Directors (the November 15, 1986 to the CITYOF FAYETTEVILLE.. "Board") of the City of dafe'of delivery thereof. The ARKANSAS Fayetteville. Arkansas (the Bond Purchase Agreement By: Paul R. Noland "City") on August 28. 1986 is hereby approved in - Mayor (the "Election Ordinance"), Substantially the form ex- ATTEST: there was submitted to the hibited at this meeting, and By: Suzanne Kennedy qualified electors of the City the Mayor or the Assistant City Clerk the question of Issuing, Mayor of the City IS hereby Schedule A under Amendment 62 to the authorized -to execute. ac- 13,770,000 Constitution of Arkansas knowledge, and deliver the City of Fayetteville, ("Amendment 62"), as Im- Bond Purchase Agreement Arkansas plemented by Act 871 of the and the City Clerk is hereby Sales -Tax -Capital General Assembly of the authorized . to attest the Improvement Bonds State of Arkansas for the same and to aft 1k the seal of Series 1986 year 1985 (the "Act"), sales the City thereto. Any Maturity Schedule tax capital improvement changes to the Bond Pur- Year Rate of bonds in principal amount chase Agreement -may be Nov. IS Amount Interest not to exceed 14,000.000 (the "bons") approved by any officers of 1987 $ 30,000 4.23% to -provide funds to the City executing such 1911 35.000 4.73 pay rtforl of the costs of document, their execution 1989 43.000 £00 ec g, constructing and and delivery to constitute 1990 30,000 £10 eq g aO arts center in conclusive evidence of such 1991 73,000 5:40 Joint venture with the UN- approval. 1192 100,000 versify of Arkansas (the "rotect"): 'Section 4. To provide a 1991 100,000 573 and 'WHEREAS, portion of the funds for the 1994 125,000 5,90 the Election acquisition, constructing, 1995 133.400 6:00 Ordinance also provided for and equipping of the Protect 1996 135,000 6.13 the pledge of twenty percent there Is hereby authorized 1997 133,000 6.30 (20%) of the City's portion of the Issuance of bonds of the 1998 170,000 a one percent (1%) local City under Amendment 62 0.43 1999 193,000 660 sates tax levied by washing- and the Act, to be designated 2000 223,000 4.73 Ion County, Arkansas (the "City of Fayetteville. 7001 260,000 4.90 "Sales Tax") to secure Arkansas Sales Tax Capital repayment of the bons;an Improvement Bonds. Series ,2007 1.935,000 7.10 WHEREAS, at a special 1986" In aggregate principal election held October 7, 1986, amount of 13,770,000. The a majority of the qualified Bonds Shall be issued in the electors of the City voting on forms and denominations the question approved the set forth in the indenture, issuanc n Yh 11 b e t o bonds and --------anal a e dated as of My Commission Expires: the pledging thereto of twan- November 15, 1986, shall be tY percent (20%) of the Cl- 1Y's portion of the Sales humbered'as provided in the 'Indenture; .- / Tax; shall mature an. — `/ .and nually on November IS of WHEREAS, the City, has each year commencing determined to sell and Issue November 15, 1987, as set its 53,770,000 Sales Tax Capi. forth in Schedule A hereto tel Improvement Bonds, (which schedule is Incor- Serles 1986 (the "Bonds"), Porated herein by this refer. j.as permitted under-ence); shall bear interest Fees for Printing _ S ' Amendment 62 and the Act; 'payable Semiannually on and . 'May 1S an November 15 of WHEREAS, the City has -each year commencing May Cost of Proof _. S reserved in the Indenture '15, 1987, at the rates set forth (hereinafter defined) recur- in the Indenture and in ing the Bonds certain rights Schedule'A hereto: shall be Total _. $• to subsequently Issue addi- subject to redemption priori tional bonds, which with the t0 maturity upon the terms) Bonds 'ma conHi 'a. C .l . t A 0*- hereby certify that I WEST ARKA49SASTIMfES. adally newspaper rlvtlege. and being not less than (our pages of a fixed place of business and at a fixed idallyl )f Fayetteville. County of Washington. Arkansas e months, circulated and distributed from an •ubscrtbers and readers generally of all classes lope price for each copy, or a fixed price per what is considered the value of the publication. wide value It conta ins. that at least fifty percent lid cash for their subscriptions to the newspaper zed news dealers over a period of at least six Japer publishes an average of more than forty notice hereto attached in the matter of Issue of said newspaper for L7d, day of / (4—rr• 19 day of 19 day of 19 the ayr'dtL before me this •�___ _._ da f �h Noti Pubilc Y n0 ez<eetl re; red Shallagate be n�}/1111�`/,. principal amount, for the sold t0 the Purchaser for the, ourpose of providing floje t- Price specified in Section 3 oh .no to complete the Project, -t' SectionOrdinance. I I ,- •f nK ry; and 'Sections. The Bontls shall. V - W AS, the s has be spacial obligations of the, antl Bonds nts for the City and, except to the ex- 1 ale the Bonto A.G, tent payable from bond pro- i -dwards & Sons, Inc. of St. ceees or moneys from the -owe, Missouri (the "Pur. investment thereof, shall be hater"),'and in Connection Payable Solely from Pleaded I herewith has prepared and Receipts received by or on listributed a Preliminary behalf of the City, and )iflclal Statement, dated delivered to the Trustee put- I` )ttober 27, 1986 (the "Pre- stiant to the Indenture, Ex- Iminery Official State. C&Pt as specifically Provided 4 F I L EU..— '97 JUN 17 H(4 9 42 A1AR'�7" """nDS • CO. & PROBATE CLERK WASH; UCTOtl CO. ARK. ORDINANCE NO. 97-16 BE IT ENACTED BY THE QUORUM COURT OF THE COUNTY OF WASHINGTON, STATE OF ARKANSAS, AN ORDINANCE TO BE ENTITLED: AN ORDINANCE LEVYING A ONE PERCENT SALES AND USE TAX WITHIN WASHINGTON COUNTY, ARKANSAS; AND PRESCRIBING OTHER MATTERS PERTAINING THERETO. • WHEREAS, at the special election held on July 28, 1981, a majority of the qualified electors voting on the question approved the levy of a one percent (1%) sales and use tax within Washington County, Arkansas (the "County") under the authority of Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"); and, WHEREAS, due to a recent Supreme Court decision, it is not clear if there should have been a separate levying ordinance. NOW, THEREFORE, BE IT ORDAINED BY THE QUORUM COURT OF WASHINGTON COUNTY, ARKANSAS: ARTICLE 1. Under the authority of the Authorizing Legislation, there is hereby levied a rate of one percent (1%) tax on the gross receipts from the sale at retail within the County of all items which are subject to the Arkansas Gross Receipts Act of 1941, as amended (A.C.A. §26-52-101, et seq.) and the imposition of an excise (or use) tax on the storage, use, distribution or other consumption within the County of tangible personal property subject to the Arkansas Compensating Tax Act of 1949, as amended (A.C.A. §26-53-101, et seq.), at a rate of one percent (1%) of the sale price of the property or, in the case of leases or rentals, of the lease or rental price (collectively, the "Sales and Use tax"). Collections of the Sales and Use Tax shall be divided among the County and the municipalities in the County based upon population in the unincorporated areas of the County and the population in each municipality. The Sales and Use tax shall be levied and collected only to a maximum tax of $25.00 for each single transaction. ARTICLE 2. "Single Transaction" is defined in Washington • County Code 15-13.2. ORDINANCE NO. 97-16 PAGE 2 ARTICLE 3. All ordinances and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Furthermore, this Ordinance shall have retroactive effect to July 28, 1981. ARTICLE 4. The provisions of this Ordinance are severable and in the event that any section or part hereof shall be held to be invalid, such invalidity shall not affect the remainder of this Ordinance. MA YN 2 WARDS, County Clerk Sponsor: David Ruff Date of Passage: June 12. 1997 Votes For: 10 Votes Against: 2 Abstentions: _0 Absent: _1 CLltf"ei`ai:li. I CERTIFY THAT T113 COPY of TH ON FLUK IN TIMS OFPICE lI D.C. ST. _E OF ARKANSAS, • County of Washington 1 TOM STALLBAUMER do solemnly swear • k PUBLISHER ORDINANCE NO. 9]-16• epv Aelation ab,.ace: m. of The Morning News of Northwest Be it it enacted by Me OUWm.t Court of the County ;el Arkansas, a daily newspaper having Washington. Stets ,ol)I entitles.', an avernACe tot a general circulation in said county, ensued: An Ordnance Levying s ona.t and do solemnly swear the said ad - percent eats and we lase, within Washington count : vertisement was published for Askeneaq and prearibmg, } other mailers panakdng there-. ONE consecutive to.1Whreld r the spacial elp}c ten heal on My a. 1961,.1 DAY in said mashy of the qualified elect tors voting on the wsaMbas news a er, the said publication ap- Approved Me levy of . One�t P P percent (1%) sales and:uit: peering' tea within was&mton caunlY Arkansas (the -CountYl under Che haplet ]4.it Subchapter ] v• 6. 21ST day of ttUNE 1992 the Arkansas Code of Me 196] Annotated (the -AYMpnaing day of —19— Legislation-); and, Whereas. due to a recent of —ln— Supreme Cow decision. It is day J not dew it there should have day been a separate levying ode 19— nMce. day of Now. therefore, be it ordained by the Quorum Court of .19— WaNingtonCounty, Mtansas: day of Mtide I. Under the authority of the Authorizing Legislation. Mere re hereby levied a rate of day of 14�e,�' we percent (1%) tax on Me , gross withinDomun sale01 atretai (v gros receipt. Iron nCthe all items which we subject to the Mkanne Gross Receipts Ad of 1941. as amended (A.C.A. S26 -52-1Q1. 01 seq.) and the 23RD day 0 imposition of an excise for use) sworn to before me this tax an the rorags. use. dlstrib- z union or other consumption JUNE , • within the County of tangible r 19 rZ A personal subject to the Act of s Compensating Tax ry 6 c Act of 1949. as amended a rate f one percent 61,etseq.l. s1 Notary Public q300 a rate of one p (1%) of the Sala price of Me prolari a, c M the case of l or rentals. 9-20-20D3 of Me lase or or rental price(coe expires -a eel. C, the -Ssles and Use fQ taxi. Collections of the Sale / and U..n / .� UTax shorn be divided Jc G2 among the County and the .e IS municipalities in the tCounty �zsll based upon populatlOn in the 0. 7 unincorporated areas of the County and the population in each munidpaly. The Sales and Use Tax shall be levied and collected only to a maximum tax of $25.00 for eat single WansaMade M. 2. -Single Tranaacgon-, is de is defined in Washington County Code 1519.2. _. . Ankle 3. An adln ncas and pats Mreol k1 conflict here- L with are hereby reputed to the extent of such conflict. ' FwMermre. this Ordinance shall have repealed to the v extent of suMu Ordinance nict. Furthermore, snap 8 1 nYwctive dIM to nil 26.1961. Ordnance a nc The severabe of this n me event re aarablundor pert eeMlthat nt section be pert d.h.,.0I Nab M held toof invect.he remainder of this Ordnance.13191 C Chaise doe. County Judge on Cxnyy Cr County Curt erk Amt 2 21. 199] 5 I ORDINANCE NO. 4050 • AN ORDINANCE AUTHORIZING THE ISSUANCE OF SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS FOR THE PURPOSE OF REFUNDING THE CITY'S OUTSTANDING SALES TAX CAPITAL IMPROVEMENT BONDS, SERIES 1986; PLEDGING TWENTY PERCENT OF THE CITY'S SHARE OF WASHINGTON COUNTY'S 1% SALES AND USE TAX TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has determined that in order to receive debt service savings it is in the best interest of the City to refund the City's outstanding Sales Tax Capital Improvement Bonds, Series 1986, in the outstanding principal amount of $2,940,000 (the "Bonds Refunded") authorized by Ordinance No. 3224 of the City, adopted November 6, 1986 ("Ordinance No. 3224"); and WHEREAS, the Bonds Refunded were approved by the voters at the special election held October 7, 1986 in order to finance capital improvements, specifically a portion of the cost of acquiring, constructing and equipping a new Arts Center in the City, in joint venture with the University of Arkansas; and • WHEREAS, the City can obtain the necessary funds for the refunding of the Bonds Refunded (the "refunding") by the issuance of Sales Tax Capital Improvement Refunding Bonds, Series 1997, in the aggregate principal amount of $2,610,000 (the "Series 1997 Bonds") and by appropriating available moneys held in certain of the funds established pursuant to the Trust Indenture dated November 15, 1986, authorized by Ordinance No. 3224 (the "Indenture"); and WHEREAS, the City has made arrangements for the sale of the Series 1997 Bonds to Stephens Inc. (the "Purchaser"), at a price of 99.15% of par plus accrued interest (the "Purchase Price"), pursuant to a Bond Purchase Agreement between the Purchaser and the City (the "Agreement"), which has been presented to and is before this meeting; and WHEREAS, a final Official Statement, dated August 19, 1997 (the "Official Statement"), has been prepared and will be distributed in connection with the offer and sale of the Series 1997 Bonds; and WHEREAS, the Preliminary Official Statement, dated August 6, 1997, offering the Series 1997 Bonds for sale (the "Preliminary Official Statement"), has been presented to and is before this meeting; and WHEREAS, the Bonds Refunded are secured by a pledge of twenty percent (20%) of the City's share of the county -wide 1% sales and use tax levied by Ordinance No. 97-16 of the County • adopted June 12, 1997; and Page 2 • Ordinance No. 4050 August 19, 1997 WHEREAS, a Continuing Disclosure Agreement, dated September 1, 1997 (the "Continuing Disclosure Agreement"), requiring the City to comply with the requirements of 17 C.F.R. § 240.15c2-12 has been presented and is before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS, AS FOLLOWS: Section 1. Authorization for Refunding. The refunding of the Bonds Refunded shall be accomplished, and the Mayor and City Clerk are hereby authorized to take all action necessary in connection therewith and to execute all required contracts and documents. Section 2. Acceptance of Offer to Purchase Bonds. The offer of the Purchaser for the purchase of the Series 1997 Bonds from the City at the Purchase Price, for Series 1997 Bonds bearing interest at the rates per annum, maturing and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail be and is hereby accepted and the Agreement, in substantially the form submitted to this meeting, is approved and confirmed and the Series 1997 Bonds are hereby sold to the Purchaser. The Mayor is hereby authorized and directed to execute and • deliver the Agreement on behalf of the City and to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 3. Appmy l ofa liminary Official Statement. The Prelimmnary Official Statement is hereby approved and the previous use of the Preliminary Official Statement by the Purchaser in connection with the sale of the Series 1997 Bonds is hereby in all respects authorized, approved and confirmed, and the Mayor be and is hereby authorized and directed, for and on behalf of the City, to execute the Preliminary Official Statement and the final Official Statement in the name of the City to be delivered to the Purchaser for use in connection with the sale of the Series 1997 Bonds as set forth in the Agreement. The Mayor of the City is hereby authorized to execute, deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City. The Mayor's execution and delivery of the Official Statement shall constitute conclusive evidence of his approval of any such changes. Section 4. The Bonds. Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"), City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 are hereby authorized and ordered issued in the total principal amount of $2,610,000 the proceeds of the sale of which are necessary, along with available moneys held in funds established by the Indenture, to provide sufficient funds for accomplishing the refunding of the Bonds Refunded, • Page 3 • Ordinance No. 4050 August 19, 1997 paying expenses incidental thereto, and paying expenses of issuing the Series 1997 Bonds. The Series 1997 Bonds shall bear interest at the rates and shall mature on November 15 in the amounts and in the years as follows: 1998 $290,000 4.15% 1999 305,000 4.25% 2000 315,000 4.30% 2001 330,000 4.40% 2002 345,000 4.50% 2003 360,000 4.55% 2004 375,000 4.60% 2005 290,000 4.65% The Series 1997 Bonds shall be issuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Unless the City shall otherwise direct, • the Series 1997 Bonds shall be numbered from I upward in order of issuance. Each Series 1997 Bond shall have a CUSIP number but the failure of a CUSIP number to appear on any Series 1997 Bond shall not affect its validity. Each Series 1997 Bond shall be dated September 1, 1997. Interest on the Series 1997 Bonds shall be payable on November 15, 1997, and semiannually thereafter on May 15 and November 15 of each year. Payment of each installment of interest shall be made to the person in whose name the Series 1997 Bond is registered on the registration books of the City maintained by First Commercial Trust Company, National Association, Little Rock, Arkansas, as Trustee and Paying Agent (the "Trustee"), at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of any such Series 1997 Bond subsequent to such Record Date and prior to such interest payment date, by check or draft mailed by the Trustee to such owner at his address on such registration books. Payment of the interest on the Series 1997 Bonds shall also be made by wire transfer to the registered owner of a Series 1997 Bond or Bonds upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of Series 1997 Bonds. Principal of the Series 1997 Bonds shall be payable upon surrender at maturity at the corporate trust office of the Trustee. Each Series 1997 Bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated prior to the first interest payment date, • in which event it shall bear interest from September 1, 1997, or unless it is authenticated during the Page 4 • Ordinance No. 4050 August 19, 1997 period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless at the time of authentication thereof interest is in default thereon, in which event it shall bear interest from the date to which interest has been paid. Only such Series 1997 Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Section 6 hereof (the "Certificate") duly executed by the Trustee shall be entitled to any right or benefit under this Ordinance. No Series 1997 Bond shall be valid and obligatory for any purpose unless and until the Certificate shall have been duly executed by the Trustee, and the Certificate of the Trustee upon any such Series 1997 Bond shall be conclusive evidence that such Series 1997 Bond has been authenticated and delivered under this Ordinance. The Certificate shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate on all of the Series 1997 Bonds. In case any Series 1997 Bond shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Series 1997 Bond of like date, number, maturity and tenor in exchange and substitution for and • upon cancellation of such mutilated Series 1997 Bond, or in lieu of and in substitution for such Series 1997 Bond destroyed or lost, upon the owner paying the reasonable expenses and charges of the City and Trustee in connection therewith, and, in the case of a Series 1997 Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such Series 1997 Bond was destroyed or lost, and of his ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Series 1997 Bond. In the event any such Series 1997 Bond shall have matured, instead of issuing a new Series 1997 Bond, the Trustee may pay the same without the surrender thereof. Upon the issuance of a new Series 1997 Bond under this Section 4, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. The City shall cause books to be maintained by the Trustee for the registration and for the transfer of the Series 1997 Bonds as provided herein and in the Series 1997 Bonds. The Trustee shall act as the bond registrar. Each Series 1997 Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Series 1997 Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. Series 1997 Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Series 1997 Bonds of any other authorized denomination • or denominations. The City shall execute and the Trustee shall authenticate and deliver Series 1997 Pa • d 5 Ordinance No. 4050 August 19, 1997 Bonds which the registered owner making the exchange is entitled to receive. The execution by the City of any Series 1997 Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall be thereby authorized to authenticate and deliver such Series 1997 Bond. No charge shall be made to any owner of any Series 1997 Bond for the privilege of transfer or exchange, but any owner of any Series 1997 Bond requesting any such transfer or exchange shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Series 1997 Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the Trustee nor the City shall be required (i) to issue, transfer or exchange any Series 1997 Bond during a period beginning at the opening of business 15 days before any selection of Series 1997 Bonds of that maturity for redemption and ending at the close of business on the day of the first mailing of the relevant notice of redemption, or (ii) to transfer or exchange any Series 1997 Bonds selected for redemption in whole or in part. • The person in whose name any Series 1997 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest on any Series 1997 Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 1997 Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Series 1997 Bonds or the date fixed for redemption of any Series 1997 Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Section 5. Signatures. The Series 1997 Bonds shall be executed on behalf of the City by the manual or facsimile signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. Section 6. Bond Form. The Series 1997 Bonds and the Certificate shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: • No. Page 6 • Ordinance No. 4050 August 19, 1997 (Form of Bond) REGISTERED UNITED STATES OF AMERICA, STATE OF ARKANSAS COUNTY OF WASHINGTON CITY OF FAYETTEVILLE SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 Interest Dated Maturity Rate: _% Date: September 1, 1997 Date: November 15, _ CUSIP: Registered Owner: Principal Amount: Dollars • The City of Fayetteville, County of Washington, State of Arkansas (the "City"), a city of the first class, duly created under the laws of the State of Arkansas, for value received, hereby promises to pay to the Registered Owner shown above, upon presentation and surrender of this bond at the corporate trust office of First Commercial Trust Company, National Association, Little Rock, Arkansas, or its successor or successors, as Trustee and Paying Agent (the "Trustee"), on the Maturity Date shown above, the Principal Amount shown above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts and to pay by check or draft to the Registered Owner shown above interest thereon, in like coin or currency from the interest commencement date specified below at the Interest Rate per annum shown above, payable on November 15, 1997 and on each May 15 and November 15 thereafter, until payment of such Principal Amount or, if this bond or a portion hereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this bond. Payment of each installment of interest shall be made to the person in whose name this bond is registered on the registration books of the City maintained by the Trustee at the close of business on the last day of the month (whether or not a business day) next preceding each interest payment date (the "Record Date"), irrespective of any transfer or exchange of this bond subsequent to such Record Date and prior to such interest payment date. Payment of the interest on this bond shall also be made by wire transfer to the registered owner of this bond upon the request of such owner if such owner is the registered owner of $1,000,000 or more in principal amount of the bonds of the series of which this bond is one. Page 7 • Ordinance No. 4050 August 19, 1997 This bond shall bear interest from the payment date next preceding the date on which it is authenticated unless it is authenticated on an interest payment date, in which event it shall bear interest from such date, or unless it is authenticated during the period from the Record Date to the next interest payment date, in which case it shall bear interest from such interest payment date, or unless it is authenticated prior to the first interest payment date, in which event it shall bear interest from the Dated Date shown above, or unless at the time of authentication hereof interest is in default hereon, in which event it shall bear interest from the date to which interest has been paid. This bond is one of an issue of City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997, aggregating two million six hundred and ten thousand dollars ($2,610,000) in aggregate principal amount (the "bonds"). The bonds have been issued for the purpose of refunding certain outstanding bonds of the City (the "Bonds Refunded"), paying necessary expenses incidental thereto, and paying expenses of authorizing and issuing the bonds. The bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), particularly Amendment No. 62 to the Constitution of the State and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing • Legislation"), and pursuant to an ordinance of the City duly adopted (the "Authorizing Ordinance"), and an election duly held at which the majority of the legal voters of the City voting on the question approved the issuance of the Bonds Refunded. Reference is hereby made to the Authorizing Ordinance for the details of the nature and extent of the security, of the issuance of additional series and of the rights and obligations of the City, the Trustee and the registered owners of the bonds. The bonds are special obligations of the City, payable from twenty percent (20%) of the City's share of collections derived from the 1% sales and use tax levied in Washington County, Arkansas (the "County") under the authority of the laws of the State, including particularly Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated and a special election held in the County on July 28, 1981 (the "Tax") and the City hereby pledges twenty percent (20%) of its share of collections of the Tax for the payment of this bond. The City has reserved the right in the Authorizing Ordinance to issue additional bonds under the Authorizing Ordinance on a parity of security with the bonds. (REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE.) THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. • Page 8 i Or Ordinance No. 4050 August 19, 1997 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed, under the Constitution and laws of the State, particularly Amendment No. 62 to the Constitution of the State and the Authorizing Legislation, precedent to and in the issuance of this bond have existed, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by this bond and the issue of which it forms a part does not exceed any constitutional or statutory limitation; and that provision has been made for the payment of the bonds and interest thereon, as provided for in the Authorizing Legislation. This bond shall not be valid until it shall have been authenticated by the Certificate hereon duly signed by the Trustee. IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this bond to be executed by its Mayor and City Clerk, their facsimile signatures thereunto duly authorized and its corporate seal to be impressed, lithographed or imprinted on this bond, all as of the Dated Date shown above. CITY OF FAYETTEVILLE, ARKANSAS • By Fred Hanna, Mayor ATTEST: By: City Clerk (SEAL) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the City of Fayetteville, Arkansas Sales Tax Capital Improvements Refunding Bonds, Series 1997, issued under the provisions of the within mentioned Authorizing Ordinance. First Commercial Trust Company, National Association, Trustee By: Authorized Signature • Date of Authentication: Page 9 Ordinance No. 4050 August 19, 1997 (Reverse Side of Bond) CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 The bonds are special obligations of the City payable from the revenues generated by the twenty percent (20%) of the City's share of the Tax. The bonds are further secured by amounts maintained in the Debt Service Reserve Fund established by the Authorizing Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in the Bond Fund are insufficient for such purposes or to pay the final maturity of and the respective interest on the bonds and additional parity bonds. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the • Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is issued with the intent that the laws of the State shall govern its construction. The City and the Trustee may deem and treat the Registered Owner shown above as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes, and neither the City nor the Trustee shall be affected by any notice to the contrary. The bonds are issuable only as fully registered bonds in the denomination of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. • Page 10 • Ordinance No. 4050 August 19, 1997 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ("Transferor"), hereby sells, assigns and transfers unto , the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE: Transferor NOTICE: The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY: C NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. Section 7. City Covenants and Pledge of Tax Revenues. The City hereby expressly pledges and appropriates twenty percent (20%) of the City's share of collections of the Tax , to the payment of the principal of and interest on the Bonds when due and to the payment of the fees and charges of the Trustee. Such revenues pledged to the payment of the Bonds are hereinafter referred to as the "Pledged Revenues." The City covenants it shall do nothing that will repeal or reduce the Tax in the City while any of the Bonds are outstanding. The City further covenants to use due diligence in collecting the Pledged Revenues. In the event the County repeals or ceases to collect the Tax, the City covenants to forthwith (a) notify the Arkansas Department of Finance and Administration to take all actions necessary to continue to collect the Tax within the City and disburse those collections as authorized by Arkansas Code of 1987 Annotated §14-164-337. Such collections are also hereby pledged to the payment of the principal of and interest on the Bonds and fees and charges of the Trustee and shall be a part of the Pledged Revenues and (b) take such action as is necessary for the Tax to continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with this Ordinance. Page 11 • Ordinance No. 4050 August 19, 1997 The Bonds shall be specifically secured by a pledge of the Pledged Revenues, which pledge in favor of the Bonds is hereby irrevocably made according to the terms of this Ordinance, and the City, and the officers and employees of the City, shall execute, perform and carry out the terms thereof in strict conformity with the provisions of this Ordinance. It is hereby covenanted and agreed by the City with the owners of the Bonds that the City will faithfully and punctually perform all duties with reference to the Pledged Revenues and the Bonds required by the Constitution and laws of the State and by this Ordinance, including the levy of the Tax within the City and the collection of the Pledged Revenues, as herein specified and covenanted and the applying of the Pledged Revenues as herein provided. Section S. Funds. The following funds are hereby created and shall be held and maintained by the Trustee and the City pursuant to the provisions of this Ordinance: (1) Revenue Fund; (2) Bond Fund; (3) Debt Service Reserve Fund; and • (4) Cost of Issuance Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund, Debt Service Reserve Fund, and Cost of Issuance Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any Additional Bonds, create additional funds and accounts as may be necessary or convenient. (1) Revenue nd. The City shall promptly deposit to the Revenue Fund all Pledged Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the amounts required for debt service on the Bonds as described below: (a) The City shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one -twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee and Paying Agent fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first interest payment on the Series 1997 Bonds. • (b) The City shall transfer to the Trustee, for deposit into the Debt Service Page 12 • Ordinance No. 4050 August 19, 1997 Reserve Fund for the Bonds, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (c) Any moneys remaining in the Revenue Fund, following the transfers required by this Section 8, may be used for any lawful purpose as determined by the City. (2) Bond Fund. The Trustee shall promptly deposit the following receipts to the Bond Fund: (a) Any accrued interest received as proceeds from the Bonds; (b) All amounts required to be transferred from the Revenue Fund, held by the City; (c) All amounts required to be transferred from the Debt Service Reserve Fund; and (d) All amounts required to be transferred from the Cost of Issuance Fund. The Trustee shall pay from moneys on deposit in the Bond Fund, to the Paying Agent for the Bonds (i) on each interest payment date, the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date and such amounts shall be so applied by the Paying Agent. The Trustee shall pay, from moneys on deposit in the Bond Fund, to the Trustee and Paying Agent any fees due on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment date, the Trustee shall on such payment date, withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date, any balance remaining in the Bond Fund after all payments required by this Section 8 have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. (3) Debt Service Reserve Fund. The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal • and interest requirements for the Bonds (the "Required Level'). Upon issuance of the Bonds, there Page 13 • Ordinance No. 4050 August 19, 1997 shall be deposited $204,333.75 into the Debt Service Reserve Fund from the debt service reserve held by the Bonds Refunded Trustee under the Indenture. So long as the Debt Service Reserve Fund is maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of principal of and interest on the Bonds in the event there is insufficient money available in the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held in the Debt Service Reserve Fund shall ever be less than the Required Level, the account shall be restored to the Required Level by transferring moneys from the Revenue Fund as described in this Section 8 until the Required Level is attained. (4) Cost of Issuance Fund. The Trustee shall deposit into the Cost of Issuance Fund from the proceeds of the Series 1997 Bonds and other available funds, such amounts as shall be specified in delivery instructions from the City for deposit therein. Moneys at any time held in the Cost of Issuance Fund shall be used for and applied solely to pay costs of issuance of the Series 1997 Bonds including consultants, legal, and financial advisory fees and expenses. • Payments from the Cost of Issuance Fund shall be made by the Trustee upon receipt of a requisition, signed by the Administrative Services Director or designee ("Issuer Representative") of the City, stating in respect to each payment to be made, at least (i) the item number of the payment, (ii) the name of the person or party to whom the payment is to be made, (iii) the amount to be paid, (iv) that obligations in the stated amounts have been incurred by the City, and that each item thereof is a proper charge against the moneys in the Cost of Issuance Fund and has not been previously paid and that such payment is not prohibited. Upon receipt of each requisition, the Trustee shall pay each such item directly to the person or party entitled thereto as named in such requisition or shall reimburse itself for such payment. Any interest earned or gains realized by investments of moneys held in the Cost of Issuance Fund shall be retained in such Fund. Upon delivery of a certificate from the Issuer Representative of the City stating that all costs of issuance of the Series 1997 Bonds have been paid, the Trustee shall transfer the balance of moneys in the Cost of Issuance Fund to the Bond Fund and the Cost of Issuance Fund shall be closed. Section 9. Payment of Bonds. Any Bond shall be deemed to be paid within the meaning of this Ordinance when payment of the principal of and interest on such Bond (whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have been made or caused to • be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably Page 14 • Ordinance No. 4050 August 19, 1997 depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment (1) moneys sufficient to make such payment and/or (2) Government Securities as defined in Section 15 hereof which are direct obligations of the United States of America (provided that such deposit will not cause any of the bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code")), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. When all the Bonds shall have been paid within the meaning of this Ordinance, and if the Trustee has been paid its fees and expenses, the Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to this Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. Section 10. Parity onds. The City covenants that it will not issue any bonds, or incur • any obligation, secured by a lien on or pledge of the Pledged Revenues superior to or on a parity with the lien in favor of the Series 1997 Bonds, except as authorized in this Section. The City may issue bonds or incur obligations on a parity of security with the Series 1997 Bonds ("Additional Parity Bonds") if Pledged Revenues for the preceding twelve consecutive months are in excess of 125% of the average annual debt service requirements for the Series 1997 Bonds, any outstanding Additional Parity Bonds and the Additional Parity Bonds proposed to be issued. The City may also issue bonds or incur obligations secured by a lien on or pledge of Pledged Revenues subordinate to the lien and pledge in favor of the Bonds. Section 11. Books and Accounts. The City and the Trustee will keep or cause to be kept proper books of accounts and records (separate from all other accounts and records) in which complete and correct entries shall be made of all transactions relating to the Pledged Revenues and such books shall be available for inspection by the City, the Trustee and the owner of any of the Series 1997 Bonds at reasonable times and under reasonable circumstances. Section 12. Duties of Trustee and Trustee Compensation. (a) It shall be the duty of the Trustee, on or before the 10th day of each month after the month in which the Series 1997 Bonds are delivered, to file with the City a statement setting forth in respect of the preceding calendar month: (1) The amount withdrawn or transferred by it and the amount deposited with it on • account of each fund and account held by it under the provisions of this Ordinance; Page 15 Ordinance No. 4050 August 19, 1997 (2) The amount on deposit with it at the end of such month to the credit of such fund and account; (3) A brief description of all obligations held by it as an investment of moneys in each such fund and account, including the value of each investment at both cost basis and market value; (4) The amount applied to the purchase or redemption of bonds under the provisions of this Ordinance and a description of the Bonds or portions of Bonds so purchased or redeemed; and (5) Any other information that the City may reasonably request. All records and files pertaining to such funds or accounts in the custody of the Trustee hereunder shall be open at all reasonable times to the inspection of the City and its agents and representatives and the City may make copies thereof. • (b) The Trustee additionally shall be responsible for the preparation and timely distribution of any and all forms and reports required by law to all Bondholders, the State and the Internal Revenue Service in connection with the payment to the Bondholders of interest on the Bonds. (c) The City shall pay to the Trustee compensation for its services as described in this Ordinance in accordance with a separate agreement between the City and the Trustee, provided that such compensation, together with all expenses, charges and other disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to the Trustee for all costs and other disbursements, shall not exceed $1,500 annually without the prior written approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes to consult with or retain counsel for any purposes hereunder whose anticipated fees, together with all other compensation, disbursements and reimbursements of the Trustee and its attorneys, agents and employees to be paid by the City hereunder, shall exceed $11,500 annually, then such counsel shall have to be acceptable to the City and such fees shall have to be approved by the City as described above. (d) All Series 1997 Bonds which are paid, either at maturity or upon redemption prior to maturity, shall be canceled and cremated, shredded, or otherwise disposed of. The Trustee shall execute and forward to the City an appropriate certificate describing the Series 1997 Bonds involved and the manner of disposition. Section 13. Default alts Provisions. (a) If there be any default in the payment of the principal • of and interest on any of the Bonds, or if the City defaults in the performance of any covenant con- Page 16 • Ordinance No. 4050 August 19, 1997 tamed in this Ordinance, the Trustee may, and shall, upon the written request of the owners of not less than 10% in principal amount of the Bonds then outstanding, by proper suit compel the performance of the duties of the officials of the City under the Constitution and laws of the State and under this Ordinance, and to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. (b) No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under this Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than 10% in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused • or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of this Ordinance or to any other remedy hereunder. It is understood and intended that no one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to enforce any right hereunder except in the manner herein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the benefit of all owners of the outstanding Bonds, and that any individual rights of action or other right given to one or more of such owners by law are restricted by this Ordinance to the rights and remedies herein provided. (c) All rights of action under this Ordinance or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of this Ordinance. (d) No remedy herein conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies herein provided, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or given by any law or by the Constitution of the State. (e) No delay or omission of the Trustee or of any owners of the Bonds to exercise any • right or power accrued upon any default shall impair any such right or power or shall be construed Page 17 • Ordinance No. 4050 August 19, 1997 to be a waiver of any such default or an acquiescence therein and, every power and remedy given by this Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. (f) The Trustee may, and upon the written request of the owners of not less than a majority of the owners in principal amount of the Bonds then outstanding, shall waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provisions of this Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Section 14. Refunding of Bonds Refunded. When the Series 1997 Bonds have been executed by the Mayor and City Clerk and the seal of the City impressed or imprinted as herein provided, they shall be delivered to the Trustee, which shall authenticate them and deliver them to the Purchaser upon payment of the Purchase Price. The accrued interest shall be deposited in the Bond Fund. The expenses of issuing the Series 1997 Bonds shall be paid from the Purchase Price. • An amount of the Purchase Price that is sufficient, along with other moneys set aside and appropriated hereby for such purpose, to accomplish the refunding shall be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas (the "Bonds Refunded Trustee"). The balance of the Purchase Price, if any, shall be deposited into the Cost of Issuance Fund. Section 15. Investment of Bond Proceeds. (a) Moneys held by the Trustee shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America (including any such securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) ("Government Securities"), (ii) in time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation ("FDIC" ), or (iii) money market funds comprised exclusively of Government Securities (collectively, "Permitted Investments"). The Trustee shall invest and reinvest pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (b) The Trustee shall invest moneys in funds or accounts in Permitted Investments with maturity or redemption dates and in amounts consistent with the times at which said moneys will be required for the purposes provided in this Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall • be charged to said fund. Page 18 • Ordinance No. 4050 August 19, 1997 (d) In determining the value of any fund or account held by the Trustee under this Ordinance, the Trustee shall credit Permitted Investments at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than monthly, the Trustee shall determine the value of each fund and account held hereunder and shall report such determination to the City. To the extent that any loss or reduction in value reduces the value of any fund to a level lower than the level required under this Ordinance such loss or reduction shall be made up as set forth in Section 8 hereof. The Trustee shall sell or present for redemption any Permitted Investments as necessary in order to provide money for the purpose of making any payment required hereunder, and the Trustee shall not be liable for any loss resulting from any such sale. Section 16. Change of City Officers or Officials. In the event the office of Mayor, City Clerk or City Council shall be abolished or any two or more of such offices shall be merged or consolidated or in the event the duties of a particular office shall be transferred to another office or offices, or in the event of a vacancy in any such office by reason of death, resignation, removal from office or otherwise, or in the event any such officer shall become incapable of performing the duties • of his office by reason of sickness, absence from the City or otherwise, all powers conferred and all obligations and duties imposed upon such office or officer shall be performed by the office or officers succeeding to the principal functions thereof, or by the office or officer upon whom such powers, obligations and duties shall be imposed by law. Section 17. Appointment, Resignation or Removal of Trustee. (a) First Commercial Trust Company, National Association, Little Rock, Arkansas is hereby appointed to act as Trustee, Paying Agent and Bond Registrar pursuant to this Ordinance. The Trustee shall be responsible for the exercise of good faith and reasonable prudence in the execution of its trusts. The recitals in this Ordinance and in the Series 1997 Bonds are the recitals of the City and not of the Trustee. Any bank or trust company into which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges, and all other matters as was its predecessor without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of at least $15 million. (b) The Trustee and any successor trustee may at any time resign from the trusts hereby • created by giving 30 days' written notice to the City, and such resignation shall take effect at the end • Page 19 Ordinance No. 4050 August 19, 1997 of such 30 days, or upon the earlier appointment of a successor trustee by the City; provided, however, such resignation shall not take effect until the successor trustee has accepted the trusts created by this Ordinance in writing. Such notice may be served personally or sent by registered mail. (c) Unless the City is in default, the Trustee may be removed at any time by an instrument in writing delivered to the Trustee with ninety days' notice signed by the City; provided, however, such removal shall not take effect until a successor trustee has accepted the trusts created by this Ordinance in writing. (d) In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal. Every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $15 million or shall be the lead bank or trust company of a holding company having capital and surplus of no less than • $15 million. The successor trustee shall also act as Paying Agent and Registrar. Section 18. Amendment of Ordinance. (a) The terms of this Ordinance shall constitute a contract between the City and the owners of the Series 1997 Bonds and no variation or change in the undertaking herein set forth shall be made while any of the Series 1997 Bonds are outstanding, except as hereinafter set forth in subsections (b) and (c). (b) The Trustee may consent to any variation or change in this Ordinance in connection with the issuance of any Additional Parity Bonds or in order to cure any ambiguity, defect or omission in this Ordinance or any amendment hereto without the consent of the owners of the outstanding Series 1997 Bonds. (c) The owners of not less than 75% in aggregate principal amount of the Series 1997 Bonds then outstanding shall have the right, from time to time, anything contained in this Ordinance to the contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance supplemental hereto as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any supplemental ordinance; provided, however, that nothing contained in this Section shall permit or be construed as permitting (1) an extension of the maturity of the principal of or the interest on any Series 1997 Bond, or (2) a reduction in the principal amount of any Series 1997 Bond or the rate of interest thereon, or (3) the creation of a pledge of the Pledged Revenues superior to the pledge created by this Ordinance, or (4) a privilege or priority of any Series • 1997 Bond or Series 1997 Bonds over any other Series 1997 Bond or Series 1997 Bonds, or (5) a Page 20 • Ordinance No. 4050 August 19, 1997 reduction in the aggregate principal amount of the Series 1997 Bonds required for consent to such supplemental ordinance. Section on 19. Continuing Disclosure Agreement. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting and the Mayor is hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement and to take all action required on the part of the City to fulfill its obligations under the Continuing Disclosure Agreement. The City covenants that it will take all necessary action to comply with the requirements of the Securities and Exchange Commission Rule 15(c)(2)-12 under the Securities Act of 1934, as amended (17 C.F.R., § 240.15(c)2-12). Section 20. Tax Exemption Qualifications. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Series 1997 Bonds to be included in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds of the sale of the Series 1997 Bonds and the Pledged Revenues will not be used directly or indirectly in such manner as to cause the Series 1997 Bonds to be treated as "arbitrage bonds" within the • meaning of Section 148 of the Code. In addition, the City covenants to pay, or cause the Trustee to pay, any arbitrage rebate which may be due the United States Treasury at the times and in the amounts under Section 148(f) of the Code. (b) The City represents that it has not used or permitted the use of, and covenants that it will not use or permit the use of the Arts Center or the proceeds of the Series 1997 Bonds, in such manner as to cause the Series 1997 Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (c) The Series 1997 Bonds are hereby designated as "qualified tax-exempt obligations" within the meaning of the Code. The City represents that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501(c)(3) bonds" within the meaning of Section 145 of the Code), including those of its subordinate entities, issued in calendar year 1997 will not exceed $10,000,000. Section 21. Federal Guannte. Provisions. The City covenants that it will take no action which would cause the Series 1997 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury. Section 22. IRS Form 8038-G Covenants. The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar Page 21 • Ordinance No. 4050 August 19, 1997 month after the close of the calendar quarter in which the Series 1997 Bonds are issued, a statement concerning the Series 1997 Bonds which contains the information required by Section 149(e) of the Code. Section 23. Call of Bonds Refimded. The City hereby calls the Bonds Refunded for redemption on the earliest practical date for which the Bonds Refunded Trustee can provide notice to the owners of the Bonds Refunded that such bonds will be redeemed. The Bonds Refunded Trustee is hereby directed to mail the necessary notices of redemption. Section 24. 1 Jse of Bonds Refunded Moneys. All moneys in any fund or account held by the Bonds Refunded Trustee pursuant to the Indenture are hereby appropriated and shall be used as follows: (a) all money held by the Bonds Refunded Trustee in the bond fund, the redemption fund, and the debt service reserve fund' shall be applied to (i) establishing the Debt Service Reserve Fund and (ii) refunding of the Bonds Refunded along with any proceeds required from the Series 1997 Bonds. (b) all money held by the Bonds Refunded Trustee in the revenue fund shall be first applied, as necessary, to refunding of the Bonds Refunded, and the balance will be deposited into the City's General Fund. Section 25. Severability Clause. The provisions of this Ordinance are separable and in the event that any section or part hereof shall be held to be invalid, such invalidity shall not affect the remainder of this Ordinance. Section 26. Conflicts. All ordinances and resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. Section 27. Limitations of Rights. This Ordinance shall not create any right of any character and no right of any character shall arise under or pursuant hereto until the Series 1997 Bonds shall be issued and delivered except as provided in Sections 2, 3, 23 and 24 hereof. Section 28. Emergency Clause. It is hereby ascertained and declared that the refunding must be accomplished as soon as possible in order to lower the interest cost on obligations payable from the Pledged Revenues. The refunding cannot be accomplished without the issuance of the Series 1997 Bonds, and therefore, it is declared that an emergency exists and this Ordinance being necessary for the preservation of the public peace, health and safety shall be in force and take effect immediately upon and after its passage. Ll Page 22 • Ordinance No. 4050 August 19, 1997 PASSED AND APPROVED this 19th day of August , 1997. By: red Hanna, Mayor ATTEST: By: ATTEST: 1`e L' Traci Paul, City Clerk (SEAL) LI Page 23 Ordinance No. 4050 August 19, 1997 CERTIFICATE The undersigned, City Clerk of the City of Fayetteville, Arkansas (the "City"), hereby certifies that the foregoing pages are a true and correct copy of Ordinance No. 4050 , passed at a regular session of the City Council of the City, held at the regular meeting place of the Council at 6:30 o'clock p.m. on the 19th day of August , 1997. GIVEN under my hand and seal this 2(.TH day of A tt tom, 1997. Traci Paul, City Clerk • A MEETING OF THE FAYETTEVILLE CITY COUNCIL • A meeting of the Fayetteville City Council was held on Tuesday, August 19, 1997, at 6:30 p.m., in the Council Room of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Fred Hanna; Aldermen Donna Pettus, Kit Williams, Len Schaper, Heather Daniel, Cyrus Young, and Randy Zurcher; City Attorney Jerry Rose; City Clerk/Treasurer Traci Paul; staff; press; and audience. ABSENT: Aldermen Stephen Miller and Trent Trumbo Mayor Hanna called the meeting to order with six aldermen present. ADA EMPLOYER OF THE YEAR AWARD Mayor Hanna presented the City's Americans With Disabilities Employer of the Year Award to the J. C. Penney store in the Northwest Arkansas Mall. Dean Redford, store manager, accepted the award. NOMINATING COMMITTEE REPORT Alderman Daniel nominated James Alford for the Cable Board. • Alderman Pettus seconded. Upon roll call, the motion passed on a vote of 6 to 0. CONSENT AGENDA Mayor Hanna introduced consideration of items which may be approved by motion or contracts and leases which can be approved by resolution and which may be grouped together and approved simultaneously under a consent agenda: A. Minutes of the August 5 regular City Council meeting; B. A resolution approving a contract with Ozark Restoration in the amount of $34,000 for rehabilitation of a residential structure in conjunction with the Community Development Home Buyer Program; RESOLUTION 74-97 AS RECORDED IN THE CITY CLERK'S OFFICE. C. A resolution approving an engineering contract with Milholland and Company in an amount not to exceed $60,350 for the development of detailed plans and specifications for the improvement of Poplar Street from Gregg Street to Leverett; RESOLUTION 75-97 AS RECORDED IN THE CITY CLERK'S OFFICE. August 19, 1997 • D. A resolution approving a construction contract with Hunnicutt Construction Co., Inc., in the amount of $17,200 plus a loo project contingency of $1,800 for two Fayetteville entryway signs; RESOLUTION 76-97 AS RECORDED IN THE CITY CLERK'S OFFICE. Alderman Williams moved to accept the consent agenda. Alderman Schaper seconded. Upon roll call, the motion passed on a vote of 6 to 0. OLD BUSINESS ANNEXATION RZA97-10 Mayor Hanna announced this item was removed from the agenda until September 2, 1997. NOISE ORDINANCE Mayor Hanna announced this item has been referred to the Ordinance Review Committee. REZONING P297-15 • Mayor Hanna introduced consideration of an ordinance rezoning 2.78 acres located north of Wedington Drive and east of Salem Road from C-2, Thoroughfare Commercial, to R-2, Medium Density Residential, as requested by Brian Ray on behalf of Clary Development. This ordinance was left on the second reading at the August 5 Council meeting. City Attorney Rose read the ordinance for the third time. Alett Little, Planning Director, stated she'd been informed by the City Clerk that the applicant has asked for this to be postponed until the September 2, 1997, Council meeting. City Clerk Traci Paul confirmed that the applicant had called her office to make this request. Rose stated it was now on its third reading and could be tabled until the next meeting. Alderman Daniel moved to table this until the next meeting. Alderman Schaper asked if this item went with item 4 on the agenda, the greenspace waiver for Summit Development. 2 August 19, 1997 • Little responded it does, but they have not asked for item 4 to be postponed. Brian Ray, Development Consultants, stated the reason they did not want the rezoning to go forward at this time is they would like to wait until the large scale development plan for this property is approved. The sale of the property will not take place until the large scale development plan is approved. The owner does not want it rezoned until there is a workable plan. Alderman Schaper asked if it is legal to approve a large scale development on land that is not appropriately zoned. Little replied the approval cannot be other than contingent upon rezoning. This is proper. She believed the greenspace waiver must be had in order for the large scale to be processed. Alderman Pettus seconded the motion to table. Upon roll call, the motion passed on a vote of 6 to 0. APPEAL GREENSPACE REQUIREMENT --PACESETTER PROPERTIES Mayor Hanna introduced an appeal of the decision of the Parks & Recreation Advisory Board to require the dedication of park land within the Pacesetter Properties Development located north of • Salem Village and west of Salem Rd. as requested by Michele Harrington on behalf of Pacesetter Properties. This item was postponed at the August 5 Council meeting. Michele Harrington, attorney, stated they are seeking a waiver of the park land ordinance as it relates to this subdivision due to the unique circumstances regarding what the developers might be able to do for the City. The developers have worked hard to find a way to utilize a piece of land that they have the opportunity to purchase and put in the hands of the City, which the City can add to the 15 acre proposed girls softball complex, making it a nearly 24 acre park. In the course of submitting that proposal, the developers would ask that the park land requirement for the subdivision be waived. Hopefully, the ability to add on to that park and provide access to the east, to provide irrigation, and to provide a picnic and walking area would make this a great addition to the park. This subdivision is in a unique location. There is a large school ground and park across the street. Ms. Harrington stated her clients would additionally like to offer a lot in the subdivision for the smaller children to use as a playground within the subdivision. That lot could be of the Parks Board's choosing. This would not be the same size as the 3.75 acres required, but it would go some distance to ameliorate the concerns about having a park right in the subdivision. • 3 August 19, 1997 Alderman Pettus asked if the Parks & Recreation Department had been talked to about this proposal of deeding a lot. Ms. Harrington conferred with her clients and informed the Council this was new this evening. Alderman Schaper suggested the neighborhood park could be maintained by a property owners association. Mayor Hanna suggested letting the Parks Department work with the developer to chose a lot and have the developers agree to install playground equipment and maintain it for three to five years or until the subdivision is sold out, then the homeowners or the Parks Department could assume responsibility. Alderman Daniel suggested the Parks Department could purchase an additional adjoining lot. Alderman Young noted there were two triangle lots, which are hard to build on but would make nice parks. Alderman Williams stated the Council has indicated to the Parks Department that if the Council accepts this, they are asking the Parks Department to develop part of the large park next to it with equipment. • Kevin Crosson, Public Works Director, agreed this had been discussed but did not realized there was a consensus on this. He stated staff had pointed out there is a significant set of playground equipment there with the school that the City installed. Alderman Williams explained he did not mean to have a playground there, but rather picnic tables and things like that. Alderman Pettus asked for clarification of what was before the Council. She asked if the appeal was the same as what was being discussed. Ms. Harrington replied a Parks Board meeting has intervened at which time this was brought up as a new option and it has turned into a waiver. At this point, they are asking for a waiver rather than an appeal. Alderman Young asked if their request was for a motion from the Council to waive the requirements and accept the nine acres with the proviso that the developer would dedicate at least one lot in the subdivision for a park. Ms. Harrington replied that is correct. • 4 August 19, 1997 • Alderman Williams stated he was happy to make that motion. Alderman Pettus seconded. Upon roll call, the motion passed on a vote of 6 to 0. CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Mayor Hanna introduced a public hearing and consideration of a request for a Certificate of Public Convenience and Necessity for the operation of Tony C Taxi Service in Fayetteville as submitted by Tony Catroppa. Information was handed out to the Council regarding the Elderly Taxi Program, as requested at agenda session. Ben Mayes, Administrative Services Director, stated the City has not received any calls or complaints regarding the Elderly Taxi Program for lack of service since Twin City has stopped their service. Jerry Paddock, representing Mr. Catroppa, explained Mr. Catroppa's request. The City has recently lost a taxi service. Mr. Catroppa currently operates a taxi service in Rogers and has received permission from the City of Springdale to operate a taxi service there. This area has been designated a metro area. Mr. Catroppa's intention is to develop a service that will serve this • metro area. Mr. Catroppa's Rogers cabs are well maintained and provide good service. There is a need for this in this area. It is Mr. Catroppa's intention to put enough units within the Fayetteville -Springdale area to cover the loss of the recent company and to enhance the service, especially at night. He intends to place three units in Fayetteville at first. Certificates of insurance will be provided for each one. Alderman Daniel reported she has not received any calls from the other cab companies. No other alderman reported receiving a call. Mr. Paddock thought a good deal of Mr. Catroppa's customers will be later in the evening, rather than the elderly. This would run 24 hours a day. The proposed rate is slightly under rates being charged now, a $2 initial charge and $1 per mile following. Mayes confirmed this is in line with rates in the city now. Mr. Paddock stated Mr. Catroppa is currently in the process of putting together a satellite location for the Fayetteville - Springdale area. He hasn't started operating in Springdale yet. The central dispatch will be at the Rogers location. The company currently has six cabs and is operating two. The other four will be for Springdale and Fayetteville. 5 August 19, 1997 • Tony Catroppa explained the cab business is a necessity for him as he owns restaurants that serve liquor and people who drink should take a cab. Getting a cab at night is hard. Alderman Pettus asked if he has actually had people leave their cars and take a taxi. Mr. Catroppa answered he has. The police in Rogers have thought his restaurant was open at 3:00 in the morning because the parking lot was so full of cars. The people had taken cabs. He stated he has had no safety problems with his cabs. Mayor Hanna asked for comments from the audience. There were none. Alderman Daniel moved that the Council grant this request for Certificate of Public Convenience. Alderman Pettus seconded. Upon roll call, the motion passed on a vote of 6 to 0. GREENSPACE WAIVER --SUMMIT DEVELOPMENT Mayor Hanna introduced a resolution granting a waiver of the greenspace land requirement and accepting money in lieu for the proposed Fayetteville apartment development of Summit Development. • Brian Ray, Development Consultants, stated this land totals 8.5 acres and they are proposing to build 203 units, a little below the maximum allowed. About half the site would have to be given for greenspace. A justification of the waiver is that this will be a senior citizens apartment complex. Another justification is its proximity to an existing park, Davis Park, two and a half blocks away. Alderman Schaper asked what legal guarantees the City has that this is going to be a senior citizens complex. Bruce Adams, Summit Development, the project and legally bind the on the ownership and operation o is to maintain the project at an which will potentially involve a restrictive covenants. With the period is 30 years. responded they intend to design use with restrictive covenants E this facility. Their intention affordable level for seniors, bond financing program requiring bond financing, the compliance Alderman Schaper remarked that after the bonds are paid off, there would be nothing to prevent converting this to a general apartment complex. He would like to see something run with the land, a deed restriction on the land. • 6 August 19, 1997 • Alderman Zurcher asked if the Council thought old people need greenspace any less than young people do. Alderman Williams noted that Davis Park is not too far away. He asked if any greenspace would be preserved for tenants. Mr. Adams replied greenspace has been maintained. They have proposed an abundant amount of landscape with an abundant amount of trees that exceeds code. Their intention is to provide a greenspace within the project. This, in addition to the proximity of the park, would address the needs of the senior residents. Alderman Williams has observed that the way to Davis Park is level, for ease of walking. He suggested the Parks Board should earmark for Davis Park whatever money it gets for this. Kevin Crosson, Public Works Director, thought there would be difficulty earmarking greenspace funds but there are plans to allocate an equivalent amount for Davis Park. Mr. Adams stated he supported this. Alderman Young stated this may start off as a senior citizen development, but it may not stay that way. • Alderman Zurcher stated the primary campaign promise for the Penny for Parks Tax was money for more park lands. The City has not been able to buy more park land with that money. Here is an ordinance which entitles the City to require a certain amount of land. Putting more money into the existing park does not give the City more park land. It will be the same land with 203 units added to it. The Council would be cheating the city if it does not take the land it is entitled to. Alderman Williams responded that the Parks & Recreation Advisory Board has examined current and future needs. They found the need for 1994 was 18 to 36 acres, we currently have 38 acres and added another 9 acres up the road on Salem. We are adding park land and hope to add more. We can't take half the development, and we do have a park about two blocks away. Alderman Zurcher pointed out if it is zoned R-2 as requested, it could be densely populated. Crosson stated the ordinance gives the Parks Board the ability to be pragmatic in their recommendations to the Council. Alderman Young asked how people will get out to Salem Road, on foot or by car, and how elderly people would get to the park. • 7 August 19, 1997 • Mr. Ray replied there is access back to Timberline and direct access along the sidewalks within two blocks without going down to Wedington, so there is direct access on the northwest corner of this property over to Davis Park. For pedestrians, there is sidewalk in the large scale design. There is 42% greenspace, as planned without the dedication, and there are walking trails on the site itself in the large scale development plan. Mr. Ray presented a plat which showed 150 units in a three-story building. The remaining 53 units are within single -story, eight- plex or five-plex units throughout the site. With two stories, you spend a lot on elevators without much return, which is why they went with the three-story unit with one-story accessories. 58% of the site is in building or parking lot coverage. The rest is in greenspace. There will be a permanent water feature. They are talking about a pavilion and a walking path throughout the project. These plans have not been finalized, as they depend on the development requirements and other things. The tree ordinance requires a minimum of 27 trees in the parking lot and they will provide approximately 86 trees. Alderman Williams moved follow through on the waiver of greenspace requirement that the Parks & Recreation Advisory Board presented. Alderman Daniel seconded. • Alderman Zurcher asked if the parking shown was the required parking for any large scale development of this many units. Mr. Ray replied they had requested a variance due to the senior status of the project. The national average is about .85 parking per senior unit. They would be receptive to a request by the Council to reduce parking to increase landscape. There being no further comments, Mayor Hanna called for the vote. Upon roll call, the resolution passed on a vote of 5 to 2, with Mayor Hanna voting yes and Aldermen Schaper and Zurcher voting no. City Attorney Rose announced this resolution carried 5 to 2 with the Mayor's vote. RESOLUTION 77-97 AS RECORDED IN THE CITY CLERK'S OFFICE SERIES 1997 SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS Mayor Hanna introduced approval of documents associated with the refinancing of the Series 1986 Sales Tax Capital Improvement Bonds, which were originally issued to partially finance capital improvements related to the Walton Performing Arts Center. • 8 August 19, 1997 • City Attorney Rose read the ordinance for the first time. Ben Mayes, Administrative Services Director, supplied a history and explanation of this ordinance. Back in 1986, the City issued $3,770,000 worth of bonds to assist in the construction of our arts center. Those bonds mature in the year 2007. In that issue, we pledged 20% of the City's share of the countywide sales tax. In 1995, the interest rate in the bond market had become such that it made sense to refinance those bonds. We had two professional selection teams. One selected a bond counsel, the Gill Law Firm; and the other team selected the underwriter, Stephens, Inc. These were approved by the Council in January of 1996. At about the same time, lawsuits were filed challenging countywide sales taxes. For this reason, the City delayed refinancing and refunding of this bond until the suits were resolved. The Supreme Court ruled in May of this year. This was on the agenda for the first meeting in June. The Washington County case was not actually dropped until two weeks ago, so there was a wait on that. Mayes stated the Council had a summary from Stephens, Inc. There is currently $2,940,000 outstanding on these bonds. By refunding these bonds, we can reduce that principal to $2,610,000. This is a reduction of approximately $330,000. The average interest rate • is currently 7.05%. The proposal in this refunding reduces that interest rate to 4.55%. The maturity is currently at 2007. The proposed maturity will be 2005. Our savings will be $619,000. The net present value on that savings will be $311,751. The pledge is still the same, 20% of the City's share of the countywide sales tax. Staff recommends going ahead with this refunding. Dennis Hunt, Stephens, Inc., reminded the Council of an August 12 preliminary pricing report. They were able to market the bonds at a slightly lower interest rate than was presented at that time. He stated they were committing to underwrite them at a 4.51%. He felt it was important to point out that, typically, on a refunding of this nature, you are looking at 4% to 5% net present value savings, a viable refunding candidate. This is in excess of 10% net present value savings. Alderman Daniel informed the public that the City would be paying a fee of $60,000 for this transaction. Mr. Hunt agreed total fees were approximately that amount, net on the $619,000. The $60,000 is already deducted. Alderman Williams moved to suspend the rules and go to the second reading. Alderman Daniel seconded. Upon roll call, the motion passed on a vote of 6 to 0. I August 19, 1997 • City Attorney Rose read the ordinance for the second time. Alderman Williams pointed out that City Attorney Rose had read the entire ordinance the first time for legal considerations. Alderman Pettus moved to suspend the rules and go to the third and final reading. Alderman Williams seconded. Upon roll call, the motion passed on a vote of 6 to 0. City Attorney Rose read the ordinance for the third time. Mayor Hanna asked for comments from the audience. There were none. He then called for the vote. Upon roll call, the ordinance passed on a vote of 6 to 0. Rose informed the Council a vote on the emergency clause was needed. Upon roll call, the emergency clause passed on a vote of 6 to 0. ORDINANCE 4050 IS FOUND ON PAGE OF ORDINANCE BOOK EMINENT DOMAIN ORDINANCE • Mayor Hanna announced this has been removed from the agenda. LAND PURCHASE --CLACK Mayor Hanna introduced a resolution authorizing the Mayor and City Clerk to enter into a contract for the purchase of a 0.95 acre of unimproved land located on the north side of 20th Street and west of School Ave. from Alan and Lawrence Clack. Alderman Schaper announced he would be abstaining on this issue. Mayor Hanna stated this is part of the land the City pledged to purchase to help the University of Arkansas do their project for Engineering South. When this purchase is finished, the University and the City will cooperate to widen 20th Street. Mayor Hanna asked for audience comments. There were none. Alderman Williams moved to go forth with the purchase. Alderman Pettus seconded. Upon roll call, the resolution passed on a vote of 5-0-1, with Alderman Schaper abstaining. RESOLUTION 78-97 AS RECORDED IN THE CITY CLERK'S OFFICE 0 10 August 19, 1997 • BOTANICAL GARDEN Mayor Hanna introduced a report from the Botanical Garden Committee and a resolution approving a land lease agreement with the Botanical Garden Society of the Ozarks, Inc. Alderman Williams reported the aldermen committee formed to study this has been working on this for several months. He stated the Council members now have before them a smaller version of the tentative master plan that the Botanical Garden of the Ozarks has presented. Donna Porter, Botanical Garden of the Ozarks, Inc., stated this organization has been trying for four years to get City approval for use of this land for a botanical garden. For three of those years, they have worked with the Parks Board. They have also been working on organizational development entailing board development, financial structuring, fund raising, and the cultivation of community support. One way they have tried to cultivate community support is by providing educational programs and projects for the public. Most of these have been funded by grants and greenspace money. Most of these accomplishments have been the result of strictly volunteer effort. • Ms. Porter introduced Kay Curry, landscape architect, who designed the conceptual master plan. She noted this is not the final master plan. They will be hiring a landscape architectural firm for the final master plan, one with botanical design experience. This preliminary conceptual plan will serve as the backbone for the final plan. Ms. Porter reviewed the conceptual design and phases of site development for the Council. Alderman Williams noted the trail will go all around the lake. Alderman Williams noted that in the lease, Phase I is supposed to be completed in approximately three years from the date of the agreement. He called attention to section 11.3, Periodic Review, of the land lease agreement. This is to assure that this botanical garden will actually come about or the City will get the land back. Alderman Schaper noted the proposed trail easement goes around the periphery of the property, instead of around Lake Fayetteville. • 11 August 19, 1997 • Ms. Porter explained there is an existing trail which is basically a walking trail. Everyone is in agreement that it will be left as a walking trail. The new trail would be a multi -use trail. Alderman Schaper expressed concerned that the total acreage is about 100 acres and the part proposed for development is about 60 acres, an extremely ambitious project. He asked why not focus on just the fewer acres. Ms. Porter spoke to the importance of restoration of natural areas. Alderman Schaper suggested having some type of agreement where the City agrees the remaining portion should be kept in a natural state and could be augmented by private efforts to do that, possibly even City efforts. He did not see the need to lease it to the Botanical Garden Society. Ms. Porter responded they were willing to use their staff and volunteers to do this project. Alderman Williams stated admission fees would be charged for the cultivated gardens, not to the woodland part. This will remain open to the citizens of Fayetteville. He felt sure this was in • the agreement. Ms. Porter stated the woodland area would have to be restricted at the point it would access the gardens, but the western woodland property would remain open to the public. Alderman Zurcher suggested having a conservation easement, to keep it from eventually being developed. Alderman Young thought that is essentially what this agreement does. Mayor Hanna noted there is no time limit on Phase II and Phase III. Alderman Williams responded that the attachment to the lease shows Phase II would be years three to seven and Phase III would be years seven to twelve. All three phases will total 12 years. He agreed this should be in the lease, as it is for Phase I. Mayor Hanna had concerns about admission charges being reasonable for the average citizen, funding sources being authorized from time to time by the City, and the generality of section 6.2, Temporary Use of the City Equipment and Facilities. • 12 August 19, 1997 • Alderman Williams explained Section 6.2 was included so that the Society agrees to defend and indemnify the City for any liability arising from their use of City equipment and facilities. Ms. Porter noted the lease will be reviewed and could be changed on a yearly basis. Alderman Pettus asked if City Attorney Rose had prepared this lease. Rose replied it was prepared in part by the Botanical Gardens Society and in part by him. It is essentially bits and pieces of other leases that exist across the United States for other botanical gardens. The Committee also made some changes. Alderman Williams agreed that in section 10.0 pertaining to admission fees there should be something regarding the City's review of the admission price. It could be the Parks & Recreation Advisory Board and not necessarily have to come back to the Council. The Committee has discussed with the Society that if the City did loan equipment or make some investment in the garden, the City would want, for example, free admission for school children to compensate the City. He also pointed out that at the end of the lease term, it all reverts back to the City. • Ms. Porter stated it was not the Society's intent to make this unaffordable. Kevin Crosson, Public Works Director, stated the Society would have a competitive advantage by having a contractual clause allowing them to ask for capital improvement funds. It could reduce the pool of funding. He was also concerned about the use of City equipment and facilities. It could give the Society advantage over the other non-profit organizations and puts the City in an uncomfortable position when approached by other non- profit organizations, as it is all the time. Also, City business has to be taken care of first and this would make planning difficult. There was concern that the forest area is delineated from the developed part of the garden. He wanted the Council to be aware that this is an intense development on an undeveloped piece of property. Ben Mayes, Administrative Services Director, stated he would prefer to see a financial audit done annually, instead of every three years. This pertained to section 9.0. Regarding section 6.2 and access to City compost and mulching material, this has not typically been made available to other than residents because it is such a popular program that the City doesn't even use it in its own parks. • 13 August 19, 1997 • Crosson stated this is a 50 -year lease; and while a lot of things may be understood right now, 25 years from now things could be interpreted in a dramatically different way. Alderman Williams asked if the loaning or use of City equipment had to be in the lease with the indemnification of the City or can this be done without it being in the lease. City Attorney Rose replied it could be done, assuming it is a proper public purpose. The City would not be indemnified if a member of the Society is hurt using City equipment. The defense and indemnification clause needs to be put in. Ms. Porter stated the clause regarding the use of City equipment could be taken out of the agreement. The Society is hoping the City will work with them. Alderman Williams stated he would like to have the changes made regarding admission fees being approved by the Parks & Recreation Advisory Board and having the financial books and records audited every year. The other concerns could be looked at, too. Rose asked if the Council wished to revise the lease at their meeting. • Alderman Schaper hoped staff would meet with Rose to work on any necessary revisions and then the Council would get it at the next meeting. Rose agreed to provide another draft. He stated he did not attend the meeting where the conceptual design was presented. He pointed out that the front of the lease has a place to insert the legal description. There is a neighbor to the north and east, the Environmental Studies Center. The City has already leased to them certain lands to the north and east of them. The ordinance giving them that lease does not have a legal description. He stated he did further research, looking at maps, notes, and minutes, and it was his best opinion that more likely than not the City has given to the Environmental Study Center that land north of the ditch. The Environmental Study Center could tell him he is wrong and they don't want that land and there would be no problem. Ms. Porter stated she had met with the Environmental Study Center to address this and they agreed that this area would overlap. Rose stated he could do a lease up to the ditch and have the Environmental Study Center do a sublease for that land. If they don't want it, he can write up a legal description and give it all to the Society. It should be done in a straightforward • 14 August 19, 1997 • manner. Alderman Young stated he was at that meeting and it was the intent to have an overlap. He suggested having Rose write a lease for the Environmental Study Center to give to the Botanical Gardens the exclusive use of this land. He stated this has already been worked out. Rose agreed to do this. He stated the lease before the Council would be for the area south of that ditch. There would be a sublease for the other. It was agreed progress would be reported at the agenda session. Alderman Pettus asked for the changes to be redlined. Bill Ackerman, Parks & Recreation Advisory Board, stated when this project was first brought to them, the Board made decisions based on information available at that time. Since that time a number of changes and developments have occurred that the Board was not made aware of. The Board has not had an opportunity to review the present contract or the phases that have been pulled together. The Board would like to review the documents and meet with the Society to be brought up to date and then work with the • Council to come to a common agreement. Parks is moving forward with a major trail project, which the Botanical Society has had little if any input on, just as the Parks Board has had little or no input on the trail the Society is designing. Things need to be coordinated. He suggested this being taken back to the Parks Board for review. Alderman Zurcher stated he understood this was not under the Parks Department. Alderman Williams explained it originally went to the Parks Board, which is where the contract originally came from. The contract has been refined some but not much changed. He agreed the trails need to be discussed. Mr. Ackerman felt there were a number of things in the agreement that would concern the Parks Board. Most importantly would be how the project evolves in coordination with everything planned for the Lake Fayetteville area. A number of decisions remain to be made. The Parks Board has not seen what is before the Council now. The Parks Board moved this forward to the Council in order to expedite the Society's ability to get support, design work, etc. It was not moved forward with a carte blanche endorsement. He restated his request to have the Parks & Recreation Advisory Board review this and how it fits into the whole scheme of the park system. • 15 August 19, 1997 Paula Marinoni, audience member botanical garden. She was amaz of what this could be. She gay botanical gardens are doing. S from the City of what this mean opportunity to attract tourism. not have the greenspace it has something now for the future. this as something positive for can work with the Society to do spoke in strong support of the ed that there was no understanding e exciting examples of what other he was looking for more vision s to Fayetteville. This is an In 25, years, Fayetteville will now. The City needs to be doing She challenged the Council to see Fayetteville and to ask how they this for the city. Ms. Porter stated the major components of the second preliminary master plan are basically.the same as the first preliminary master plan. Alderman Williams cautioned the Council about throwing roadblocks and hurdles in front of groups trying to make gifts to Fayetteville. This group has worked for years. The Committee insisted the Society produce the conceptual master plan before the lease was discussed with the Council. To now tell them to go back through the bureaucracy one more time before considering the lease is sending the wrong message to this group. A couple of things do need to be adjusted in the lease, but it would be a mistake to keep sending it back. We have to be careful of putting up so many hurdles that Fayetteville never gets its • botanical garden. He was in favor of getting any input Parks wants to give the Council, but it would be a mistake to send it back to that Board. We need to look at the lease, make changes at the agenda session, and at the next Council meeting go forward with this. Without having a lease, the Society's ability to solicit funds will be limited. Alderman Zurcher moved to table this until next meeting, figure out the legal description on the lease, have present the two Council members now absent who are on the Committee, and vote on it next time. Alderman Williams seconded. Mr. Ackerman felt it could be worked out in the next two weeks with the Parks Board. Upon roll call, the motion passed on a vote of 6 to 0. Mayor Hanna adjourned the meeting at 9:38 p.m. 16 R }ats ywe�i.. s -;r iL-•�.w\t4M \ .,Y -' K FATE OF ARKANSAS SS. )unty of Washington I, RANDALL COPE, hereby certify that I am the publisher of THE )RTHWEST ARKANSAS TIMES, a daily newspaper having a second ass mailing privilege, and being not less than four pages of five lumns each, published at a fixed place of business and at fixed (daily) ervals continuously in the City of Fayetteville, County of Washington, kansas for more than a period of twelve months, circulated and :tributed from an established place of business to subscribers and iders generally of all classes in the City and County for a definite price each copy, or a fixed price per annum, which price was fixed at what considered the value of the publication, based upon the news value i service value it contains, that at least fifty percent of the subscribers Preto have paid for their subscriptions to the newspaper or its agents through recognized news dealers over a period of at least six months i that the said newspaper publishes an average of more than forty .-cent news matter. it certify that the legal notice attached in the matter of Oc0 tAAnk,� 4052 s published in the regular daily issue of said newspaper for isecutive insertions as follows: [� r1 3 first insertion on the �g 22 day of 19 second insertion on the third insertion on the I the fourth insertion on the day of 19_ day of 19 19 Publisher / Ger'ral Manager um to and subscr*bed before me on this r1 day of n r. •;err, ja:, Notary Public Commission Expires: Washtr;etu:: County '( A4, C"R'niss1un Exoues OJ7i05'< Ccccccccccccccu<uccuucaccc< is for Printing ...............................................$ . 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GIVV — my Sad led MI—tl41M41i1. .�1 6j • NON -LITIGATION CERTIFICATE The undersigned, being the duly elected Mayor of the City of Fayetteville, Arkansas ("City"), does hereby certify and attest that as of the date of this Certificate that there exists against the City no pending or threatened litigation or administrative or other judicial action of any nature before any city, county, state or federal court or administrative body of whatever nature which affects or might affect in any manner the validity and enforceability of the bonds being issued by the City contemporaneously herewith, the authority of the City to issue the subject bonds, the authority of the City to execute all closing documents associated with the subject bonds, the authority of the City to pledge that portion of Washington County's sales and use tax which supports and collateralizes the repayment of the subject bonds, the existence of the City, the authority of the members of the City Council to hold their respective offices or exert those powers vested in them as are necessary to issue the subject bonds, the power, authority and obligation of the City to repay the bonds, or otherwise. This Certificate is executed by the undersigned on this 23rd day of September, 1997. Fred B. Hanna, Mayor . P:\DOCUMENTCTB\FAYETTEWJON-LITI.CTB September 10, 1997 (4:58pm) • RULE 15c2-12 CERTIFICATION The undersigned, Mayor of the City of Fayetteville, Arkansas (the "Issuer"), hereby certifies as follows: 1. This Certificate is delivered to provide for compliance with Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule"). 2. The Issuer is an "issuer of municipal securities" under the Rule with respect to the Issuer's Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"). 3. To provide for the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement dated August 6, 1997 (the "Preliminary Official Statement"), setting forth information concerning the Bonds and the Issuer. 4. The undersigned, as the Mayor of the Issuer, hereby declares, on behalf of the Issuer, the Preliminary Official Statement to be a final official statement, as such term is defined in the Rule, as of its date, except for the omission of the interest rates, underwriter's discount, aggregate principal amount, principal amount per maturity and other terms of the Bonds • depending on such matters. IN WITNESS WHEREOF, I have hereunto set my hand as of this 6th day of August, 1997. CITY OF FAYETTEVILLE, ARKANSAS By___________________ Mayor PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 6, 1997 NEW ISSUE In the opinion of Bond Counsel, based on existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for federal income tax purposes, subject to the condition that the City comply with all requirements of the Internal Revenue Code that must be satisfied subsequent to the issuance of the Bonds, and the Bonds and interest thereon are exempt from all Arkansas state, county and municipal taxes. In the opinion of Bond Counsel, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although it is included in adjusted current earnings in calculating the corporate alternative minimum taxable income, and the Bonds are "qualified tax-exempt obligations" within the meaning of Section 265 of the Internal Revenue Code. See LEGAL MATTERS, Tax Exemption, herein. $2,610,000* CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 Dated: September 1, 1997 Due: November 15, as shown below Principal of and interest on the Bonds are payable from a pledge of 20% of the receipts derived by the City of Fayetteville, Arkansas from a 1% sales and use tax levied in Washington County, Arkansas. Interest on the Bonds is payable semiannually on May 15 and November 15 in each year, commencing November 15, 1997, and the Bonds mature (on November 15 of each year), bear interest and are priced as follows: MATURITY SCHEDULE Maturity Amount Rate (%1 Maturity Amount Rate (%' 1998 $290,000 2002 $345,000 1999 305,000 2003 360,000 2000 315,000 2004 375,000 2001 330,000 2005 290,000 Price: 100% (Accrued interest from September 1, 1997 to be added) The Bonds are offered, subject to prior sale, when, as and if issued and received by the Underwriter named below, subject to the approval of legality by Gill Law Firm, a Professional Association, Little Rock, Arkansas, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by its counsel, Friday, Eldredge & Clark, Little Rock, Arkansas. It is expected that the Bonds will be available for delivery in New York, New York, on or about September 23, 1997. This cover page contains information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Dated: , 1997. STEPHENS INC. *Subject to Change. No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give •any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or other solicitation of an offer to buy, nor shall there be any sale of the Bonds by any persons in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City or Washington County since the date hereof. TABLE OF CONTENTS INTRODUCTION TO THE OFFICIAL STATEMENT THE BONDS Generally 2 Purpose for Bonds 3 Security 3 THE CITY AND THE COUNTY 4 Generally 4 Population 4 Transportation 4 Government 4 Facilities 4 •Medical Education 5 Litigation 5 Financial Institutions 5 Economy 5 County Economic Data 6 County Tax Assessments 7 Building Permits 7 THE TAX 7 Generally 7 Sales Tax 8 Exemptions from Sales Tax 9 Use Tax 13 Exemptions from Use Tax 13 Administration 14 Historical Tax Receipts 15 Future Tax Receipts 15 THE AUTHORIZING ORDINANCE 16 Establishment of Funds 16 Revenue Fund 16 Bond Fund 16 Debt Service Reserve Fund 17 • Investments 17 Certain Covenants 18 Parity Bonds 18 • Defaults and Remedies 18 Defeasance 19 The Trustee 19 Supplemental Ordinances 20 CONTINUING DISCLOSURE AGREEMENT 20 Purpose of the Continuing Disclosure Agreement 20 Definitions 20 Provision of Annual Report 21 Content of Annual Reports 21 Reporting of Significant Events 22 Termination of Reporting Obligation 23 Dissemination Agent 22 Amendment; Waiver 23 Additional Information 23 Default 23 Duties of Trustee and Dissemination Agent and Right of Indemnity 24 Beneficiaries 24 DEBT SERVICE REQUIREMENTS 24 DEBT SERVICE COVERAGE 24 LEGAL MATTERS 25 Legal Proceedings 25 • Legal Opinions 25 Tax Exemption 25 MISCELLANEOUS 26 Underwriting 26 Enforceability of Remedies 27 Information in Official Statement 27 • CIS [R/;1�.`11VA Y*ii1VIU • $2,610,000* CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 INTRODUCTION TO THE OFFICIAL STATEMENT This Introduction is subject in all respects to the more complete information contained in this Official Statement. The offering of the bonds to potential investors is made only by means of the entire Official Statement, including the cover page hereof. A full review should be made of the entire Official Statement, as well as the Authorizing Ordinance described herein. This Official Statement of the City of Fayetteville, Arkansas (the "City") is furnished in connection with the offering, by the City of its $2,610,000* principal amount of Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"), dated September 1, 1997 (the "Bonds"). The Bonds are being issued for the purpose of refunding the City's Sales Tax Capital Improvement Bonds, Series 1986 (the "Bonds Refunded") which will be redeemed on or about September 23, 1997 at par. The Bonds Refunded were issued to finance a portion of the cost of acquiring, constructing and equipping an arts center in the City, in a joint venture with the University of Arkansas, known as the "Walton Arts Center" (the "Improvements"). See THE BONDS, Pose for Bonds. The City is a city of the first class organized under the laws of the State of Arkansas (the "State") and is located in Washington County (the "County") in northwestern Arkansas. The City is authorized under Amendment No. 62 to the Constitution of the State ("Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation") to issue capital improvement bonds and to expend the proceeds thereof for the intended purposes. See THE CITY • AND THE COUNTY. The Bonds are not general obligations of the City, but are special obligations payable solely from 20% of the City's share (the "Pledged Revenues") of collections of a I% sales and use tax levied in the County (the "Tax"). Tax collections are divided among the County and each municipality in the County based upon population. See THE TAX and THE BONDS, Security. The Tax is levied under Title 26, Chapter 74 of the Arkansas Code of 1987 Annotated (the "Tax Legislation"), Ordinance No. 97-16 of the County adopted on June 12, 1997 (the "Tax Ordinance") and a special election held in the County on July 28, 1981. Pledged Revenues not needed to pay the principal of and interest on the Bonds when due may be used by the City for any lawful purpose. The issuance of the Bonds Refunded and the pledging of the Pledged Revenues to the payment of the principal of and interest on the Bonds Refunded were approved at a special election held October 7, 1986. The Bonds are being issued pursuant to and in full compliance with Amendment 62 and the Authorizing Legislation and Ordinance No. of the City, adopted on , 1997 (the "Authorizing Ordinance"). See THE AUTHORIZING ORDINANCE. The City is authorized to issue additional bonds on a parity of security with the Bonds. See THE AUTHORIZING ORDINANCE, Parity Bonds. The Bonds are issuable only as fully registered bonds, without coupons, in the denomination of $5,000 or integral multiple thereof. Interest is payable November 15, 1997, and semiannually thereafter on each May 15 and November 15. Principal is payable at the principal office of First Commercial Trust Company, National Association, Little Rock, Arkansas, as trustee, bond registrar and paying agent (the "Trustee"). Interest is payable by check mailed by the Trustee to the registered owners as of the record date -for each interest payment date. The record date for payment of interest on the Bonds shall be the last day of the calendar month next preceding each interest payment date. A Bond may be transferred, • *Subject to Change. in whole or in part (in integral multiples of $5,000), but only upon delivery of the Bond, together with a written instrument of transfer, to the Trustee. See THE BONDS, Generally. • Under existing law and assuming compliance with certain covenants described herein, (i) interest on the Bonds is excluded from gross income for federal income tax purposes, (ii) interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (iii) with respect to corporations, interest on the Bonds will be taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax, (iv) the Bonds are "qualified tax-exempt obligations" within the meaning of Section 265 of the Internal Revenue Code of 1986, as amended (the "Code"), and certain financial institutions are allowed a deduction of 80% of that portion of their interest expense allocable to interest on the Bonds, and (v) the Bonds and interest thereon are exempt from all State, county and municipal taxes. See LEGAL MATTERS, Tax Exemption. It is expected that the Bonds will be available for delivery on or about September 23, 1997, through the facilities of the Depository Trust Company in New York, New York. The City and the Trustee have entered into a Continuing Disclosure Agreement in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5) (the "Continuing Disclosure Agreement"). See CONTINUING DISCLOSURE AGREEMENT. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Authorizing Ordinance and the Continuing Disclosure Agreement summarized herein are available upon request from Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, Attention: Public Finance. THE BONDS Generally. The Bonds are dated, mature and bear interest as set forth on the cover page hereof. The • principal of the Bonds is payable upon presentation and surrender at the principal office of the Trustee. Payment of interest on the Bonds will be made to each registered owner thereof by check or draft mailed by the Trustee to such owner at his address as such name and address appear on the registration book of the City kept by the Trustee on the record date which is the last day of the calendar month next preceding the calendar month in which such interest payment date falls. All such payments will be made in lawful money of the United States of America. The Bonds are issuable in the form of registered Bonds without coupons in the denomination of $5,000 each or any integral multiple thereof, interchangeable in accordance with the provisions of the Authorizing Ordinance. In the event any Bond is mutilated, lost or destroyed, the City shall, if not then prohibited by law, execute and the Trustee may authenticate a new Bond in accordance with the provisions therefor in the Authorizing Ordinance. Each Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. No charge shall be made to any owner of any Bond for the privilege of registration, but any owner of any Bond requesting any such registration shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the City nor the Trustee shall be required to transfer or exchange any Bonds selected for redemption in whole or in part. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute • owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or 2 interest of any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall •be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Purpose for Bonds. The Bonds Refunded are in the outstanding principal amount of $2,940,000 and are to be paid as they are called for redemption on or about September 23, 1997 at par. A portion of Bond proceeds and available funds of the City will be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas, as trustee for the owners of the Bonds Refunded (the "Bonds Refunded Trustee"), and used to redeem the Bonds Refunded. The sources and uses of funds to accomplish the refunding of the Bonds Refunded, fund a debt service reserve and pay costs of issuing the Bonds are estimated by the City as follows: SOURCES: * Principal Amount of Bonds $2,610,000 Existing Funds Held by Bonds Refunded Trustee 671,963 Total Sources $3,281,963 . USES: Cost of Refunding $3,012,573 Deposit to Debt Service Reserve 204,680 Costs of Issuance and Underwriter's Discount 62,640 Contingency 2,070 Total Uses $3,281,963 The payment of Underwriter's discount and the costs of issuing the Bonds relating to the payment of professional fees will be contingent on the Bonds being issued. See MISCELLANEOUS, Underwriting for a description of the Underwriter's discount. Security. The Bonds are not general obligations of the City but are special obligations, secured by a pledge of the Pledged Revenues which consist of 20% of the City's share of Tax collections. Collections of the Tax are divided among the County and each municipality in the County based upon population. The City will maintain a debt service reserve in an amount equal to one-half of the maximum annual debt service requirement on the Bonds. The Bonds are secured under the Authorizing Ordinance. For a description of pending litigation challenging the validity of the Tax, see LEGAL MATTERS, Legal Proceedings herein. For a summary of the terms of the Authorizing Ordinance, see THE AUTHORIZING ORDINANCE. The City may issue additional bonds on a parity of security with the Bonds. See THE AUTHORIZING ORDINANCE, Parity Bonds. • *Subject to Change. 11 THE CITY AND THE COUNTY Generally. The City is the seat of government of Washington County (the "County") and is located in • the northwest portion of the State about 194 miles northwest of Little Rock, Arkansas and 121 miles east of Tulsa, Oklahoma. Popul2tion. According to the United States Department of Commerce, Bureau of Census, the following table sets forth the population trends for the City and County since 1960: Year City County 1960 20,274 55,797 1970 30,729 77,370 1980 36,608 100,494 1990 42,099 113,409 1994 49,219* 127,613* 1997 52,662** 142,737** * Estimate **Preliminary results of special County -wide census. Trdnsporation. The City is served by U.S. Highway Nos. 62 and 71 and State Highway Nos. 16, 45, 112, 156,180 and 265. The City owns a municipal airport with a 6,006 -foot paved runway that has charter and commercial air service. A commercial jet service/commuter airport is proposed to be constructed in the County. The new airport will be known as the Northwest Arkansas Regional Airport. Approximately twenty-six (26) motor freight carriers and the Arkansas Missouri Railroad make daily • shipments from the City to major cities across the United States. Government. The City currently operates under the Mayor -Council form of government pursuant to which a Mayor, City Attorney, City Clerk/Treasurer, and eight Aldermen are elected. The Mayor, City Attorney, and City Clerk/Treasurer are full-time positions elected to four year -terms. The eight Aldermen represent the four wards of the City with two positions being elected from each ward, each serving a two year term. The City's elected officials, the dates on which their terms expire and their principal occupations are as follows: Fred B. Hanna 12/98 Jerry Rose 12/98 Traci Paul 12/98 Stephen Miller 12/98 Kit Williams 12/98 Heather Daniel 12/98 Cyrus Young 12/98 Randy Zurcher 12/98 Len Schaper 12/98 Trent Trumbo 12/98 Donna Pettus 12/98 Mayor City Attorney City Clerk & Treasurer Alderman, Microbiologist Alderman, Attorney Alderman, School Teacher Alderman, Engineer Alderman, School Teacher Alderman, Professor of Electrical Engineering Alderman, Stockbroker Alderman, Attorney Medical Facilities. The City has one general, acute care hospital with 294 beds. The City is served by approximately 254 physicians and surgeons. • Education. Primary and secondary education for the City's inhabitants are provided by a public school system which is accredited by the North Central Association of Secondary Schools and Colleges. •Located within the Fayetteville School District, there are ten elementary schools, two junior high schools and one high school. In addition, the University of Arkansas at Fayetteville is located in the City (approximate enrollment - 12,394). Litigation. There is no material litigation or administrative proceedings pending or threatened against the City except for the following cases in which the City is a defendant: Chancery Court of Washington County, Arkansas, Case No. E-94,1783. On June 18, 1994, the City, by Ordinance No. 3806, established a design overlay district for the U.S. Highway 71 corridor. The ordinance added regulations and standards to the properties lying within 660 feet of each side of the right of way of U.S. Highway 71. The lawsuit challenging the ordinance was first filed in November 1994. Through a series of amendments the suit is now a class action with a class of property owners within the overlay district. The third amended petition makes five claims: that the ordinance is vague, arbitrary, and capricious; that the ordinance constitutes an unconstitutional taking of property without compensation; that the ordinance seizes and confiscates property; that the ordinance violates the Arkansas Civil Rights Act; and that the ordinance was passed with improper notice. The case has not been set for trial. Regulations of land through zoning ordinances have rarely been held by the courts to constitute an unconstitutional taking. Should the plaintiff class be successful, separate trials would have to be held to determine what damages resulted to each piece of property. It is impossible at this time to predict with any degree of accuracy potential damage amounts. Hick eta]. v. City of Fayetteville et al. Circuit Court of Washington County, Arkansas, Case No. CIV •97-500. This class action suit was filed in April of 1997 challenging the real property tax millage levied by the cities of Fayetteville and Springdale and the respective school districts of those cities. The suit seeks to make these governmental entities "roll back" real property taxes to conform to statutory and constitutional limits. The City has only one mill of real property tax. It collects by ordinance .5 mill for police retirement and .5 mill for firemen's retirement. Should the plaintiffs be successful the total exposure to the City would approximate $70,000 plus a proportionate share of attorney's fees. Financial Institutions. According to the Arkansas Bankers Association, the City is currently served by four banks having their principal offices in the City. These banks had the following aggregate deposits and assets for the years indicated: Year Total Deposits Total Assets 1992 $764,172,000 852,932,000 1993 823,479,000 967,933,000 1994 820,376,000 982,981,000 1995 868,699,000 1,008,992,000 1996 915,949,000 1,091,898,000 Economy. The economy of the City and the County is a mixture of agriculture, industry and commerce. The principal campus of the University of Arkansas is located in the City and had total enrollment for the Fall of 1996 of 12,394. For the 1996-97 fiscal year ending June 30, 1997, the University of Arkansas at Fayetteville had an operating budget of approximately $125,000,000. The University of •Arkansas at Fayetteville employs approximately 3,100 full-time and part-time faculty, administrative, secretarial, clerical, and maintenance personnel making the University of Arkansas at Fayetteville the largest employer in the community. Other entities that employ over 300 persons in the City, their products or services and approximate number of employees are set forth below: • Campbell Soup Company Manufacturing 1,000-2,500 Washington Regional Medical Center Health Care 1,000-2,500 Superior Industries International Manufacturing 1,000-2,500 Fayetteville School District Education 500-999 Tyson Entree Division Manufacturing 500-999 Tyson Mexican Original Manufacturing 500-999 Arkansas Western Gas Company Utility 300-499 City of Fayetteville Government 300-499 Levi Strauss and Company Manufacturing 300-499 Veterans' Admin. Medical Center Health Care 300-499 Wa1-Mart Stores Retail Sales 300-499 Washington County Government 300-499 County Economic Data. Total personal income estimates for the County are as follows (1): Total Personal Income Averaoe Annual C;rnwth (9 1970 $ 207,310,000 ---- 1980 718,278,000 13.2 1990 1,736,176,000 9.2 1994 2,365,272,000 8.0 Per capita personal income estimates for the County are as follows(1): Year Per Capita Personal Income Average 1970 $ 2,669 1980 7,137 10.3 1990 15,211 7.9 1994 18,595 5.2 Set forth below is a breakdown of retail sales in the County(1): 1977 $ 322,172,000 ---- 1982 498,362,000 9.1 1987 750,240,000 8.5 1992 1,113,157,000 8.2 (1)Source: Arkansas State and County Economic Data. Institute for Economic Advancement, College of Business Administration, University of Arkansas at Little Rock (June 1996). • 1 C6 The annual average unemployment rates for the City, the County and the State since 1992 are as follows according to the Arkansas Employment Security Division: • Annual Average Unemployment Year City County State 1992 4.0 3.8 7.3 1993 3.2 3.1 6.2 1994 2.6 2.5 5.3 1995 2.6 2.5 4.9 1996 3.0 2.9 5.4 1997* 3.1 2.9 4.6 *As opn�97. County Tax Assessments. The real and personal property tax assessments for the County for the years listed are is as follows(1): ,tuu 1970 $ 94,450,000 ---- 1980 196,488,000 7.6 1990 650,101,000 12.7 1994 875,295,000 7.7 1995 1,031,798,000 17.9 (1)Source: Arkansas State and County Economic Data. Institute for Economic Advancement, College • of Business Administration, University of Arkansas at Little Rock (June 1996). Building Permits. Building permits issued by the City(1) are shown below for the years indicated: Year Commercial Permits Residential Permits Value of Permits 1996 44 551 $64,057,664 1995 54 616 90,946,650 1994 76 633 97,389,564 1993 55 596 87,005,237 1992 48 425 56,279,064 (1) Does not include activity of the University of Arkansas and renovations to existing structures. Generally. Pursuant to the Tax Legislation and the Tax Ordinance, the County has levied the Tax, which is a tax within the County on all items which are subject to taxation under The Arkansas Gross Receipts Act of 1941 and a tax on the receipts from storing, distributing, using or consuming tangible personal property under The Arkansas Compensating (Use) Tax Act of 1949. The Tax is limited to a maximum of $25 for any single transaction. Pursuant to the Authorizing Ordinance, the City has pledged 20% of its share of Tax receipts to the payment of the Bonds. The Tax was approved at a special election held July 28, 1981 and became effective October 1, 1981. Pursuant to the Tax Legislation, Tax receipts are divided among the County and the municipalities therein based upon the population in the unincorporated areas of the County and the population of each municipality according • to the latest official federal decennial census or latest special census in the Cougty as a whole. 7 Sales Tax. The sales tax portion of the Tax is generally levied upon the gross proceeds and receipts derived from all sales to any person within the County of the following: • (a) Tangible personal property; (b) Natural or artificial gas, electricity, water, ice, steam, or any other utility or public service except transportation services, sewer services and sanitation or garbage collection services; (c) (i) Service by telephone, telecommunications and telegraph companies to subscribers or users, including transmission of messages or images, whether local or long distance, including all service, installation, construction and rental charges having any connection with transmission of any message or image; (ii) Service of furnishing rooms, suites, condominiums, townhouses, rental houses or other accommodations by hotels, apartment hotels, lodging houses, tourist camps, tourist courts, property management companies, or any other provider of accommodations to transient guests; (iii) Service of cable television, community antenna television, and any and all other distribution of television, video, or radio services with or without the use of wires provided to subscribers, paying customers or users, including installation, service, rental, repair and other charges having any connection with the providing of the said services; (iv) Service or alteration, addition, cleaning, refinishing, replacement and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and • equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; however, the tax does not apply to (A) coin operated car washes, (B) the maintenance or repair of railroad parts, railroad cars and equipment brought into the County solely and exclusively for the purpose of being repaired, refurbished, modified, or converted within the County, (C) the service of alteration, addition, cleaning, refinishing, replacement or repair of commercial jet aircraft or commercial jet aircraft components or subcomponents, (D) the repair or remanufacture of industrial metal rollers or platens that have a remanufactured non-metallic material covering on all or a part of the roller or platen surface, or (E) the alteration, addition, cleaning, refinishing, replacement or repair of non -mechanical, passive or manually operated components of buildings or other improvements or structures affixed to real estate; (v) Service of providing transportation or delivery of money, property or valuables by armored car; service of providing cleaning or janitorial work; service of pool cleaning and servicing; pager services; telephone answering services; landscaping and non- residential lawn care services; service of parking a motor vehicle or allowing a motor vehicle to be parked; service of storing a motor vehicle; service of storing furs; and the service of providing indoor tanning at a tanning salon; (d) Printing of all kinds, types and characters, including the service of overprinting, and photography of all kinds; (e) Tickets or admissions to places of amusement, to athletic, entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes and tickets, admissions, dues or fees; • (f) Dues and fees to health spas, health clubs and fitness clubs; dues and fees to private clubs which hold any permit from the Alcoholic Beverage Control Board allowing the sale, • dispensing or serving of alcoholic beverages of any kind on the premises; and (g) Lease or rental of motor vehicles, other than diesel trucks rented for residential moving or commercial shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 days, or purchase of motor vehicles for rental or lease regardless of the length of the rental or lease. Exemptions from Sales Tax. As summarized below, several types of transactions have been exempted from the sales tax by the General Assembly of the State. Some of the current exemptions include the sale of: (a) New or used house trailers, mobile homes, aircraft, motor vehicles, trailers or semi -trailers and a used house trailer, mobile home, aircraft, motor vehicle, trailer or semi -trailer is taken as a credit or part payment of the purchase price, when the total consideration is less than the following: $2,000 for aircraft, house trailers and mobile homes (or $10,000 in case the house trailer or mobile home is a "manufactured home"); and $2,500 for motor vehicles, trailers and semi- trailers; (b) Aircraft held for resale and used for rental or charter, whether by a business or an individual for a period not to exceed one (1) year from the date of purchase of aircraft; (c) Tangible personal property or services by churches, except where such organizations may be engaged in business for profit; (d) Tangible personal property, or service by charitable organizations, except where such organizations may be engaged in business for profit; • (e) Food in public, common, high school or college cafeterias and lunchrooms operated primarily for teachers and pupils, and not operated primarily for the public or for profit; (f) Newspapers; (g) Property or services to the United States Government; motor vehicles and adaptive equipment to disabled veterans who have purchased said vehicles or equipment with financial assistance of the Veterans Administration; tangible personal property to the Salvation Army, Heifer Project International, Inc., Habitat for Humanities, the Boy Scouts of America, the Girl Scouts of America or any of the Scout Councils in the State; tangible personal property or service to the Boys Clubs of America or any local councils or organizations of the Boys Clubs of America, the Girls Clubs of America or any local councils or organizations of the Girls Clubs of America, to the Poets' Roundtable of Arkansas, to 4-H Clubs and FFA Clubs, to the Arkansas 4-H Foundation, the Arkansas Future Farmers of America Foundation and the Arkansas Future Farmers of America Association; (h) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax has been paid to the State and special fuel or petroleum products sold for consumption by vessels, barges and other commercial watercraft and railroads; (i) Property resales to persons regularly engaged in the business of reselling the articles purchased; (j) Advertising space in newspapers and publications and billboard advertising • services; (k) Gate admissions at State, district, county or township fairs or at any rodeo if the receipts derived from gate admissions to the rodeo are used exclusively for the improvement, maintenance and operation of such rodeo, and if no part of the net earnings thereof inures to the benefit of any private stockholder or individual; (1) Property or services which the State is prohibited by the constitution or laws of the United States or by the constitution of the State from taxing or further taxing and tangible personal property exempted from taxation by the Arkansas Compensating (Use) Tax Act of 1949, as amended; (m) Isolated sales not made by an established business; (n) Cotton, seed cotton, lint cotton, baled cotton, whether compressed or not, or cotton seed in its original condition; seed for use in commercial production of an agricultural product or of seed; raw products from the farm, orchard or garden, where such sale is made by the producer of such raw products directly to the consumer and user; livestock, poultry, poultry products and dairy products of producers owning not more than five (5) cows; and baby chickens; (o) Foodstuffs to governmental agencies for free distribution to any public, penal and eleemosynary institutions or for free distribution to the poor and needy, and the rental or sale of medical equipment, for the benefit of persons enrolled in and eligible for Medicare or Medicaid programs; (p) Tangible personal property or services provided to any hospital or sanitarium operated for charitable and nonprofit purposes or any nonprofit organization whose sole purpose is to provide temporary housing to the family members of patients in a hospital or sanitarium; (q) Used tangible personal property when the used property was (1) traded in and accepted by the seller as part of the sale of other tangible personal property and (2) the Arkansas • Gross Receipts Tax was collected and paid on the total amount of consideration for the sale of the other tangible personal property without any deduction or credit for the value of the used tangible personal property; provided, however, this exemption does not apply to transactions involving used automobiles, used mobile homes, or used aircraft; (r) Unprocessed crude oil; (s) Tangible personal property consisting of machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at (i) new manufacturing or processing plants or facilities in the State or (ii) existing manufacturing or processing plants or facilities in the State if the tangible personal property is used to replace existing machinery and equipment; (t) Property consisting of machinery and equipment required by State law or regulation to be installed and utilized by manufacturing or processing plants or facilities to prevent or reduce air and/or water pollution or contamination; (u) Electricity used in the manufacture of aluminum metal by the electrolytic reduction process and sale of articles sold on the premises of the Arkansas Veterans Home; (v) Automobile parts which constitute "core charges," which are received for the purpose of securing a trade-in for the article purchased; (w) Bagging and other packaging and tie materials sold to and used by cotton gins for packaging and/or tying baled cotton and from the sale of twine which is used in the production of tomato crops; lft (x) Prescription drugs by licensed pharmacists, hospitals, oncologists or dispensing physicians, and oxygen sold for human use on prescription of a licensed physician; • (y) Property or services to humane societies; (z) Vessels, barges and towboats of at least fifty (50) tons load displacement and parts and labor used in the repair and construction of the same; (aa) Property or sales to all orphans' homes, or children's homes, which are not operated for profit and whether operated by a church, religious organization or other benevolent charitable association; (bb) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (cc) Sale of tickets or admissions, by municipalities, to places of amusement, to athletic entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes, tickets, admissions, dues or fees; (dd) Rental and/or lease of specialized equipment used in the filming of a motion picture; (ee) New and used farm machinery and equipment; (ff) New automobiles to a veteran of the United States Armed Services who is blind as a result of a service connected injury; (gg) Motor vehicles sold to municipalities, counties, school districts, and state • supported colleges and universities; (hh) School buses sold to school districts and, in certain cases, to other purchasers providing school bus service to school districts; (ii) Natural gas, LP gas, or electricity sold to a processor or mining company engaging in open pit and underground mining or processing of bauxite; (jj) Feedstuffs used in the commercial production of livestock or poultry; (kk) New custom manufactured homes constructed from materials on which the State sales tax has been paid; (11) The first 500 kilowatt hours of electricity per month and the total franchise taxes billed to each residential customer whose household income is less than $12,000 per year; (mm) Waste fuel used in producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State; (nn) Electricity and natural gas to qualified steel manufacturers; (oo) Tangible personal property lawfully purchased with food stamps, food coupons, food instruments or vouchers in connection with certain Federal programs; • (pp) Publications sold through regular subscriptions; 11 (qq) Tickets for admission to athletic events and interscholastic activities of public and private elementary and secondary schools in the State and tickets foradmission to athletic events at public and private colleges and universities in the State; (rr) Prescriptive adaptive medical equipment and prescriptive disposable medical equipment; (ss) Insulin and test strips for testing blood sugar levels in humans; (tt) Telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (uu) Industrial metal rollers sent into the State for repair or remanufacture and then shipped back to the state of origin; (vv) New motor vehicles purchased by non-profit organizations and used for the performance of contracts with the Department of Human Services, and new motor vehicles purchased with Urban Mass Transit Administration funds if (i) the vehicles are purchased in lots of ten (10) vehicles, (ii) meet minimum State specifications, and (iii) vehicles are used for transportation under the Department of Human Services' programs for the aging, disabled, mentally ill, and children and family services; (ww) Motor fuels to owners or operators of motor buses operated on designated streets according to regular schedule and under municipal franchise which are used for municipal transportation purposes; (xx) Parts or other tangible personal property incorporated into or which become a part of commercial jet aircraft component or subcomponent; • (yy) Transfer of fill material by a business engaged in transporting or delivering fill material;. (zz) Long-term leases, thirty (30) days or more, of commercial trucks used for interstate transportation of goods under certain conditions; (aaa) Foodstuffs to nonprofit agencies; (bbb) Tangible personal property consisting of forms constructed of plaster, cardboard, fiberglass, natural fibers, synthetic fibers or composites and which are destroyed or consumed during the manufacture of the item; (ccc) Natural gas used as a fuel in the process of manufacturing glass; (ddd) Sales to Fort Smith Clearinghouse; (eee) Substitute fuel used in producing, manufacturing, fabrication, assembling, processing, finishing or packaging of articles at manufacturing facilities or processing plants in the State; (fff) Railroad rolling stock used in transporting persons or property in interstate commerce; (ggg) Parts or other tangible personal property which become a part of railroad parts, railroad cars and equipment brought into the State for the purpose of being repaired, refurbished, • modified or converted within the State; 12 (hhh) Fire protection and emergency equipment to be owned by and exclusively used by a volunteer fire department, and supplies and materials to be used in the construction and maintenance of volunteer fire departments; and (iii) Gas produced from biomass and sold for the purpose of generating energy to be sold to the gas producer. Reference is made to "The Arkansas Gross Receipts Act of 1941," Title 26, Chapter 52 of the Arkansas Code of 1987 Annotated, for more information concerning the sales tax. Use Tax. The use tax portion of the Tax is levied on every person for the privilege of storing, using, distributing or consuming in the County any article of tangible personal property purchased for storage, use, distribution or consumption. The use tax applies to the use, distribution, storage or consumption of every article of tangible personal property except as hereinafter provided. The use tax does not apply to aircraft equipment, and railroad parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, automotive or railroad companies brought into the County solely and exclusively for refurbishing, conversion, or modification within the County or storage for use outside or inside the County regardless of the length of time any such property is so stored in the County. The use tax is levied on the following described tangible personal property: (a) Tractors, trailers, semi -trailers, trucks, buses and other rolling stock, including replacement tires, used directly in the transportation of persons or property in intrastate or interstate common carrier transportations; (b) Property (except fuel) consumed in the operation of railroad rolling stock; (c) Transmission or connected to the primary pil • transportation of property; (d) Airplanes and aircraft engaged in transportations common carrier transportation; lines and pumping or pressure control equipment used directly in feline facility engaged in intrastate or interstate common carrier navigation instruments used directly in or becoming a part of flight of persons or property in regular scheduled intrastate or interstate (e) Exchange equipment, lines, boards and all accessory devices used directly in and connected to the primary facility engaged in the transmission of messages; (f) Transmission and distribution pipelines in pumping or pressure control and equipment used in connection therewith used directly in primary pipeline facility for the purpose of transporting and delivering natural gas; (g) Transmission and distribution lines, pumping machinery and controls used in connection therewith in cleaning or treating equipment of primary water distribution system; (h) Property of public electric power companies consisting of all machinery and equipment including reactor cores and related accessory devices used in the generation and production of electric power and energy and transmission facilities consisting of the lines, including poles, towers and other supporting structures, transmitting electric power and energy together with substations located on or attached to such lines; and (i) Computer software. Exemptions from Use Tax. Some of the property exempted from the use tax by the General • Assembly of the State is as follows: 13 (a) Property, the storage, use or consumption of which the State is prohibited from taxing under the Constitution or laws of the United States of America or the State; (b) Sales of tangible personal property in which the tax under the Arkansas Gross Receipts Act of 1941 is levied; (c) Tangible personal property which is exempted from the sales tax under the Arkansas Gross Receipts Act of 1941; (d) Feedstuffs used in the commercial production of livestock or poultry in the State; (e) Unprocessed crude oil; (f) Machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants or facilities in the State, including facilities and plants for manufacturing feed, processing of poultry and/or eggs and livestock and the hatching of poultry and such equipment is either (1) purchased to create or expand manufacturing or processing plants in the State, (2) purchased to replace existing machinery and used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants in the State, or (3) required by State law to be installed and utilized by manufacturing or processing plants to prevent or reduce air and/or water pollution or contamination; (g) Custom manufactured homes constructed with materials on which the sales or use tax has once been paid; (h) Aircraft, aircraft equipment, railroad parts, cars, and equipment, and tangible personal property owned or leased by aircraft, au motive, or railroad companies, brought into the • State solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State; (i) Vessels, barges, and towboats of at least 50 tons load displacement and parts and labor used in the repair and construction of them; (j) Motor fuels to the owners or operators of motor buses operated on designated streets according to regular schedule, under municipal franchise, which are used for municipal transportation purposes; (k) Agricultural fertilizer, agricultural limestone, agricultural chemicals, including agricultural pesticides and herbicides used in commercial production of agricultural products, and vaccines, medications, and medicinal preparations, used in treating livestock and poultry being grown for commercial purposes and other ingredients used in the commercial production of yeast;. (1) All new and used motor vehicles, trailers or semi -trailers that are purchased for a total consideration of less than $2,000; and (m) Any tangible personal property used, consumed, distributed, or stored in this State upon which a like tax, equal to or greater than the Arkansas Compensating (Use) Tax, has been paid in another state. Reference is made to "The Arkansas Compensating (Use) Tax Act of 1949," Title 26, Chapter 53 of the Arkansas Code of 1987 Annotated, for more information concerning the use tax. Administration. Pursuant to the Authorizing Legislation, the Commissioner of Revenues of the State • (the "Commissioner") performs all functions incidental to the administration, collection, enforcement and operation of theTax. All of the City's share of Tax receipts collected, less certain charges 14 payable and retainage due the Commissioner for administrative services in the amount of 3% of the gross Tax receipts, shall be remitted by the State Treasurer to the City monthly. Historical Tax Receipts. The Tax became effective October 1, 1981. The City currently receives approximately 37% of collections of the Tax based upon the 1990 Federal census. Tax receipts received by the City since 1991. have been as follows: 20% of Average 20% of year Total Collections Total Collections Per Month Monthly Average 1991 $4,109,257 $ 821,851 $342,438 $ 68,488 1992 4,596,088 919,218 383,007 76,601 1993 5,162,539 1,032,508 430,212 86,042 1994 5,598,609 1,119,722 466,551 93,310 1995 6,139,688 1,227,938 511,641 102,328 1996 6,611,592 1,322,318 550,966 110,193 1997* 3,336,502 667,300 556,084 111,219 *Six () months' collections Future Tax Receipts. The City's share of Tax receipts will be contingent upon the City's population increasing as the County's population grows due to Tax collections being disbursed among the County and the municipalities therein based upon population. For instance, Tax receipts are distributed based on the latest decennial census or special census. In 1990, the City's population was 37% of the total County population. Based upon the preliminary results of the 1997 special census conducted by the U.S. Bureau of Census, the City's percentage of total population remained at 37%. See THE CITY AND THE COUNTY, Population. Tax receipts will also be contingent upon the sale and use of property and services within the County, which activity is generally dependent upon economic conditions within the County and surrounding trade area. Also, Tax receipts may be affected by changes to transactions exempted from the Tax made by legislation adopted by the General Assembly of the State or by the people of the State in the form of a constitutional amendment. In the past the General Assembly of the State has considered new exemptions to the Tax, such as food sales, which, if adopted, would materially reduce Tax receipts. In addition, an organized group has discussed circulating a proposed constitutional amendment for voter approval at the general election in 1998 exempting sales of food from the Tax. The City has no control over actions of the General Assembly or the people of the State and cannot predict whether changes to the Tax may be made. In addition, Tax receipts may be affected by litigation regarding taxation of certain items currently subject to the Tax. Accordingly, the City cannot predict with certainty the expected amount of Tax receipts to be received and, therefore, there can be no assurance that Tax receipts will be sufficient to pay the principal of and interest on the Bonds. The majority of the electors of the County voting on the question have the option to repeal the Tax. Pursuant to the Authorizing Legislation, if the County should repeal the Tax, the Tax will continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with the Authorizing Ordinance. There is no assurance that the collections will remain the same because the Tax will be levied only on sales and uses within the City. However, the levy of a 1% city-wide sales and use tax produced $9,030,172 in 1996 compared to $6,611,592 that the City received from the Tax for that same period. The City covenants in the'Authorizing Ordinance that, in the event the Tax is repealed or not collected by the County for any reason, the City will forthwith (a) notify the Arkansas Department •of Finance and Administration to continue to collect and disburse Tax receipts as authorized by Arkansas Code Annotated §14-164-337 and (b) take such action as is necessary for the Tax to 15 continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with the Authorizing Ordinance. THE AUTHORIZING ORDINANCE S Set forth below is a summary of certain portions of the Authorizing Ordinance. This summary does not purport to be comprehensive and reference is made to the full text of the Authorizing Ordinance for a complete description of its provisions. Unless the context clearly indicates otherwise, ll additional parity bonds. The City will covenant as set forth below in the Authorizing Ordinance. Establishment of Funds. The following funds are created by the Authorizing Ordinance and shall be held and maintained by the Trustee and the City pursuant to the provisions of the Authorizing Ordinance: (1) Revenue Fund; (2) Bond Fund; and (3) Debt Service Reserve Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund and the Debt Service Reserve Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any additional parity bonds, create additional funds and accounts as may be necessary or convenient. Revenue Fund. The City shall promptly deposit to the Revenue Fund all Pledged Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the amounts required for debt service on the Bonds as described below: (1) The City shall transfer to the Trustee for deposit to the Bond Fund an amount S equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one - twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee's fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first principal payment and the first interest payment on the Bonds offered hereby. (2) The City shall transfer to the Trustee, for deposit into the Debt Service Reserve Fund, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (3) Any moneys remaining in the Revenue Fund, following the transfers required by paragraphs (1) and (2) above, may be used for any lawful purpose as determined by the City. Bond Fund. The Trustee shall promptly deposit the following receipts to the Bond Fund: (1) Any accrued interest received as proceeds from the Bonds; (2) Any amounts required to be transferred from the Revenue Fund; (3) All amounts required to be transferred from the Debt Service Reserve Fund; and (4) All other amounts required to be transferred under the Authorizing Ordinance. • 16 The Trustee shall pay from moneys on deposit in the Bond Fund (i) on each interest payment date, •the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date. The Trustee shall pay, from moneys on deposit in the Bond Fund, any fees due the Trustee on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment, the Trustee shall on such payment date withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date, any balance remaining in the Bond Fund after all payments required by the Authorizing Ordinance have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. Debt Service Reserve Fund. The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal and interest requirements for the Bonds (the "Required Level"). Upon issuance of the Bonds offered hereby, there shall be deposited $204,680* into the Debt Service Reserve Fund from the proceeds of such Bonds. So long as the Debt Service Reserve Fund is maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of the principal of and interest on the Bonds in the event there is insufficient money available in the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held •in the Debt Service Reserve Fund shall ever be less than the Required Level, such fund shall be restored to the Required Level by transferring moneys from the Revenue Fund as described above until the Required Level is attained. Investments. (a) Moneys held for the credit of the funds created by the Authorizing Ordinance shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America ("Government Securities"), (ii) time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation, or (iii) money market funds comprised exclusively of Government Securities ("Permitted Investments"). The Trustee shall so invest and reinvest moneys in the funds held by the Trustee pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (b) Permitted Investments shall have maturity or redemption dates and be in amounts consistent with the times at which said moneys will be required for the purposes provided in the Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. (d) In determining the value of any fund held by the Trustee under the Authorizing Ordinance, the Trustee shall credit Permitted Investments at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than monthly, the Trustee shall determine the value of each fund held by it under the Authorizing Ordinance and shall report such determination to the City. To the extent that any loss or reduction in value reduces the value of any fund to a level lower than the level required under the • Authorizing Ordinance, such loss or reduction shall be made up as set forth above. *Subject to Change. 17 (e) The Trustee shall sell or present for redemption any Permitted Investments as necessary in order to provide money for the purpose of making any payment required under the Authorizing Ordinance, and the Trustee shall not be liable for any loss resulting from any such sale. • Certain Covenants. The City covenants that: (a) it will not take, suffer or permit any action which may cause the interest payable on the Bonds to be included in gross income for federal income tax purposes, including any use of proceeds of the sale of the Bonds or Pledged Revenues directly or indirectly in such manner as to cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. (b) It will not use or permit the use of the Improvements or the proceeds of the Bonds in such manner as to cause the Bonds to be private activity bonds within the meaning of Section 141 of the Code. (c) It will faithfully and punctually perform all duties with reference to the Tax and the Bonds, required by the Constitution and laws of the State and by the Authorizing Ordinance, including the future collection of Tax within the City, as therein specified and covenanted, the collection of the Pledged Revenues and the applying of the Pledged Revenues as provided in the Authorizing Ordinance. Parity Bonds. The City covenants that it will not issue any bonds, or incur any obligation, secured by a lien on or pledge of the Pledged Revenues, except the City may issue bonds or incur obligations subordinate to the payment of the Bonds. In addition, additional bonds may be issued on a parity of security with the bonds if Pledged Revenues for the preceding twelve consecutive months are in excess of 125% of the average annual debt service requirements for the outstanding Bonds and the additional bonds proposed to be issued. Defaults and Remedies. If there be any default in the payment of the principal of and interest on the Bonds, or if the City defaults in the performance of any covenant contained in the Authorizing • Ordinance, the Trustee may, and upon the written request of the owners of not less than ten percent (10%) in principal amount of the Bonds then outstanding shall, by proper suit compel the performance of the duties of the officials of the City and officials of the State, under the Authorizing Ordinance, to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under the Authorizing Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than ten percent (10%) in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of the Authorizing Ordinance or to any other remedy thereunder. No one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Authorizing Ordinance, or to enforce any right thereunder except in the manner therein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner therein provided and for the benefit of all owners of the outstanding Bonds, and any individual rights of action or other right given to one • or more of such owners by law are restricted by the Authorizing Ordinance to the rights and remedies therein detailed. 18 All rights of action under the Authorizing Ordinance or under any of the Bonds secured thereby, •enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of the Authorizing Ordinance. No remedy conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Authorizing Ordinance or given by any law or by the Constitution of the State. No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy given by the Authorizing Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. The Trustee may, and upon the written request of the owners of not less than a majority in principal amount of the Bonds then outstanding shall, waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provision of the Authorizing Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Defeasance. The Bonds shall be deemed paid when there has been deposited with the Trustee in the Bond Fund moneys sufficient to pay the principal or redemption price of and interest on the Bonds to the date of maturity or redemption. The Bonds shall also be deemed paid if there shall be irrevocably deposited with the Trustee Government Securities which are direct obligations of the •United States of America that mature according to their terms on or prior to the date of maturity or redemption of the Bonds and the principal or redemption price of and interest on which, together with any moneys on deposit with the Trustee, will provide an amount sufficient to pay in full the principal or redemption price of and interest on the. Bonds when due plus the necessary fees and expenses of the Trustee. On the payment of any Bonds within the meaning of the Authorizing Ordinance, the Trustee shall hold in trust, for the benefit of the owners of such Bonds, all such moneys and/or Government Securities. When all the Bonds and interest thereon shall have been paid within the meaning of the Authorizing Ordinance and if the Trustee has been paid its fees and expenses or provision has been made therefor, the Trustee shall take all appropriate action to cause (i) the pledge and lien of the Authorizing Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to the Authorizing Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. The Trustee. (a) The Trustee shall be responsible for the exercise of good faith and ordinary prudence in the execution of its trusts and duties. The recitals in the Authorizing Ordinance and in the Bonds are the recitals of the City and not of/the Trustee. (b) Any bank or trust company into which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges, and all other matters as was its predecessor without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such 19 successor trustee shall have capital and surplus of at least $15,000,000 or shall be the lead bank or trust company of a holding company having capital and surplus of at least $15,000,000. (c) In case the Trustee shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting under the Authorizing Ordinance, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal. Every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $15,000,000 or shall be the lead bank or trust company of a holding company having capital and surplus of no less than $15,000,000. The successor trustee shall also act as paying agent and bond registrar. (d) The Trustee and any successor trustee may at any time resign from the trusts created by the Authorizing Ordinance by giving 30 days' written notice to the City, and such resignation shall take effect at the end of such 30 days, or upon the earlier appointment of a successor trustee by the City; provided, however, such resignation shall not take effect until the successor trustee has accepted the trusts in writing. Such notice may be served personally or sent by registered mail. (e) Unless the City is in default, the Trustee may be removed at any time by an instrument in writing delivered to the Trustee with 90 days' notice signed by the City; provided, however, such removal shall not take effect until a successor trustee has accepted the trusts created by the Authorizing Ordinance in writing. Supplemental Ordinances. The terms of the Authorizing Ordinance constitute a contract between the City and the owners of the Bonds and no variation or change in the undertaking set forth in the Authorizing Ordinance shall be made while any of the Bonds are outstanding, except as hereinafter set forth. The owners of not less than seventy-five percent (75 %) in aggregate principal amount of the Bonds then outstanding shall have the right, from time to time, to consent to and approve the adoption by the City of a supplemental ordinance as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Authorizing Ordinance or in any supplemental ordinance. The Trustee may consent to any change without the consent of seventy-five percent (75 %) of the owners of the aggregate principal amount of Bonds outstanding in connection with the issuance of any additional parity bonds or in order to cure any ambiguity or formal defect or omission in the Authorizing Ordinance or any amendment thereto, provided, however, that nothing therein contained shall permit or be construed as permitting (a) an extension of the maturity of the principal of or the interest on any Bond issued thereunder, or (b) a reduction in the principal amount of any Bond or the rate of interest thereon, or (c) the creation of a pledge of Pledged Revenues superior to the pledge created by the Authorizing Ordinance, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental ordinance. [.1.1:1 U k1IIhLfl t_i O_ 1R • ul 3kP Purpose of the Continuing Disclosure Agreement. The Continuing Disclosure Agreement is executed and delivered by the City and the Trustee for the benefit of the Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with the Securities and Exchange Commission, Rule 15c2 -12(b)(5). Definitions. In addition to the definitions set forth in this Official Statement, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the City pursuant to, and • as described in, the Continuing Disclosure Agreement. 20 "Beneficial Owner" of a Bond shall mean any person who has or shares the power, •directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Dissemination Agent" shall mean the City, acting in its capacity as Dissemination Agent, or any successor Dissemination Agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed hereunder. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange. Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of Arkansas as a state repository for the purpose of the Rule. As of the date hereof, there is no State Repository. Provision of Annual Report. (a) The City shall, or cause the Dissemination Agent to, as soon as practicable but not later than two hundred ten (210) days after the end of the City's fiscal year (presently December 31), commencing with the report after the end of the 1997 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of the Continuing •Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in the Continuing Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date, but, in such event, such audited financial statements shall be submitted not less than thirty (30) days after receipt thereof by the City. If the City's fiscal year changes, it shall give notice of such change in the manner as for a Listed Event. (b) Not later than fifteen (15) business days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the City shall provide the Annual Report to the Dissemination Agent (if other than the City) and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City and the Dissemination Agent (if other than the City) to determine if the City is in compliance with the first sentence of this subsection (b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to each Repository and the Municipal Securities Rulemaking Board. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following: 1. Information of the type set forth in this Official Statement under the caption "THE CITY AND THE COUNTY" with respect to (i) City and County population in the latest year for which available and the four previous years for which figures are available; (ii) number of building permits in the City (excluding the University of Arkansas and renovations to existing structures) in the latest year for which available and the four (4) previous years; (iii) bank deposits for the latest 21 year for which available and the previous four (4) years; and (iv) unemployment rates in the latest year for which available and the four (4) previous years. 2. The City's portion of Tax revenues for the latest calendar year and the four (4) previous years and the percentage of the overall Tax revenues paid to the City in each of those years. 3. The annual audit of the City prepared in accordance with Government Auditing Standards issued by the Comptroller General of the United States and applicable state law. Any or all of the items above may be incorporated by reference from other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so incorporated by reference. Reporting of Significant Events. (a) This caption describes the giving of notices of the occurrence of any of the following events: 1. Principal and interest payment delinquencies. 2. Non-payment related defaults. 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions or events affecting the tax-exempt status of the security. • 7. Modification to rights of security holders. 8. Bond calls. 9. Defeasances. 10. Release, substitution, or sale of property securing repayment of the securities. 11. Rating changes. 12. Repeal of the Tax in the County. (b) When the City obtains knowledge of the occurrence of a Listed Event, the City shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence. (c) Whenever the Trustee obtains knowledge of the occurrence of a Listed Event, whether from notice by the City or otherwise, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board, each State Repository and the City. Notwithstanding the foregoing, notice of the Listed Event described in clause (a)8 need not be given any earlier than the notice for the underlying event is given to registered owners of affected Bonds pursuant to the terms of the Authorizing Ordinance. Each notice of the occurrence of a Listed Event shall be captioned "Notice of Material Event" and shall properly state the date, title and CUSIP number of • the Bonds. 22 Termination of Reporting Obligation. The City's obligations under the Continuing Disclosure Agreement for this issue shall terminate upon the defeasance, prior redemption or payment in full of all the Bonds. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to the Continuing Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be the City. Amendment; Waiver. Notwithstanding any other provision of the Continuing Disclosure Agreement, the City and the Trustee may amend the Continuing Disclosure Agreement, and any provisions of the Continuing Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the requirements for providing an Annual Report, to the contents of the Annual Report or the reporting of Listed Events, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and • (c) The amendment or waiver either (i) is approved by the Beneficial Owners of the Bonds in the same manner as provided in the Authorizing Ordinance for amendments to the Authorizing Ordinance with the consent of Beneficial Owners, or (ii) does not, in the opinion of the Trustee, materially impair the interests of the Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of the Continuing Disclosure Agreement, 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 Listed Event, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Additional nformation. Nothing in the Continuing Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by the Continuing Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by the Continuing Disclosure Agreement, the City shall have no obligation under the Continuing Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. • Default. In the event of a failure of the City or the Trustee to comply with any provision of the Continuing Disclosure Agreement, the Trustee, the City or any Beneficial Owner may (and the Trustee, at the request of the Underwriter or the Beneficial Owners of at least 25% aggregate principal amount of outstanding Bonds, shall) take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the City or the Trustee, as the case may be, to comply with its obligations under the Continuing Disclosure Agreement. A default under the Continuing Disclosure Agreement shall • not be deemed a default under the Authorizing Ordinance, and the sole remedy under the Continuing Disclosure Agreement in the event of any failure of the City or the Trustee to comply with the Continuing Disclosure Agreement shall be an action to compel performance. Duties of Trustee and Dissemination Agent and Right of Indemnity. The Dissemination Agent (if other than the Trustee or the Issuer) and the Trustee in its capacity as Dissemination Agent shall have only such duties as are specifically set forth in the Continuing Disclosure Agreement, and the City agrees to indemnify and save. the Dissemination Agent (if other than the Issuer) and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's (if other than the Issuer) or the Trustee's gross negligence or willful misconduct. Beneficiaries. The Continuing Disclosure Agreement shall inure solely to the benefit of the City, the Trustee, the Dissemination Agent, the Underwriter and the Beneficial Owners and shall create no rights in any other person or entity. DEBT SERVICE REQUIREMENTS it The following table shows amounts required to pay principal and interest on the Bonds during each year ending November 15: Year • (Ending November 15) Principal* Interest Total 1998 $290,000 $ $ 1999 305,000 2000 315,000 2001 330,000 2002 345,000 2003 360,000 2004 375,000 2005 290,000 TOTALS $2,610,000 $ $ *Subject to Change. DEBT SERVICE COVERAGE Set forth below is debt service coverage information for the Bonds. In arriving at the annual Pledged Revenues for this calculation, the City examined the Tax receipts it received for 1996, which totaled $6,611,592. See THE TAX, Historical Tax Receipts. Actual Tax receipts collected by the City will depend upon, among other things, the level of retail activity within the County, the economic health of the County and surrounding trade area, the City's population growth as compared with the County, possible future actions by the people of the State • or General Assembly of the State defining transactions subject to the Tax and granting exemptions 24 from the Tax, such as exemptions for food sales. There can be no assurance that actual Tax receipts will equal the amount shown below. See THE TAX, Future Tax Receipts. Based upon the pledge of 20% of the City's share of Tax receipts and an average coupon rate of 4.55 % for the Bonds, debt service coverage for the Bonds is as follows: Pledged Revenues Available for Debt Service $1,322,318 Maximum Annual Debt Service on Bonds* 409,360 Coverage 3.23X *Calculated for a year ending November 15. LEGAL MATTERS Legal Proceedings. Except as described in the next paragraph, there is no litigation pending seeking to restrain or enjoin the Tax or the issuance or delivery of the Bonds, or questioning or affecting the legality of the Tax or Bonds or the proceedings and authority under which the Bonds are to be issued, or questioning the right of the City to adopt the Authorizing Ordinance or to issue the Bonds. In the Washington County Chancery Court case of Shims v. Johnston, et al., the plaintiff taxpayer has alleged that the Tax is invalid under Article 16, §11 of the State Constitution because the ballot used at the election on the Tax did not specify the purposes for which Tax collections would be used or distributed. On April 28, 1997, the Arkansas Supreme Court ruled in a similar case filed in Pulaski County styled Oldner v. Villinca, 328 Ark. 296 (1997) that a local sales and use tax, similar •to the Tax, was valid even though the purposes and manner of distribution of tax collections were not stated on the ballot for the election approving the tax. The Arkansas Supreme Court held that if the ballot is silent as to the use of the tax collections, they may be used for general purposes. Therefore, Article 16, §11 of the State Constitution was not violated. Based upon the ruling in Oldner, supra, the trial court has ruled in favor of the defendants. The plaintiff is not expected to - appeal. Legal Opinions. Legal matters incident to the authorization and issuance of the Bonds are subject to the unqualified approving opinion of Gill Law Firm, a Professional Association, Little Rock, Arkansas, Bond Counsel. Certain matters will be passed upon for the Underwriter by its counsel, Friday, Eldredge & Clark, Little Rock, Arkansas. Tax Exemption. In the opinion of Gill Law Firm, a Professional Association, Bond Counsel, under existing law the interest on the Bonds is exempt from all Arkansas state, county and municipal taxes. Also, in the opinion of Bond Counsel, interest on the Bonds under existing law is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. These requirements generally relate to arbitrage, the use of the proceeds of the Bonds and the Improvements. Failure to comply with • certain of such requirements could cause the interest on the Bonds to be so included in gross income retroactive to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements in the Authorizing Ordinance. 25 Prospective purchasers of the Bonds should be aware that (i) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds, (ii) interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by Section 59A of the Code, (iii) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (iv) passive investment income including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income and (v) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account in determining gross income, receipts or accruals of interest on the Bonds. Prospective purchasers of the Bonds should be further aware that Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of a holder's interest expense allocated to interest on the Bonds, except with respect to certain financial institutions (within the meaning of Section 265(b)(5) of the Code). An exception allows a deduction of 80% of interest expense allocable to "qualified tax-exempt obligations." Under the Code, the term includes any obligation which (1) is not a "private activity bond" within the meaning of the Code (excluding from that term "qualified 501(c)(3) bonds"), (2) is issued by an issuer (and subordinate entities) which reasonably anticipates to issue not more than $10,000,000 of tax-exempt obligations (other than private activity bonds (excluding from that term "qualified 501(c)(3) bonds" under Section 145 of the Code) during the calendar year, and (3) is so designated by the issuer. The City has designated the Bonds as "qualified tax-exempt obligations" and has covenanted not to use the Improvements and the proceeds of the Bonds in a manner which would cause the Bonds to be "private activity bonds," and has represented that the City and its subordinate entities have not and do not expect to issue more than $10,000,000 of such tax-exempt obligations during calendar year 1997. Prospective purchasers of the Bonds should also be aware that Section 17 of Act 785 of the Acts of Arkansas of 1993 added new subsections (b) and (c) to Section 26-51-431 of the Arkansas Code of 1987 Annotated. Subsection (b) states that Section 265(a) of the Internal Revenue Code is adopted for the purpose of computing Arkansas corporation income tax liability. Subsection (c) provides that in computing Arkansas corporation income tax liability, no deduction shall be allowed for interest "on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by Arkansas law." On December 8, 1993, the Arkansas Department of Finance and Administration Revenue Division issued Revenue Policy Statement 1993- 2, which provides in part: Financial institutions may continue to deduct interest on indebtedness incurred or continued to purchase or carry obligations which generate tax-exempt income to the same extent that the interest was deductible prior to the adoption of Section 17 of Act 785 of 1993. MISCELLANEOUS Underwriting. Under a Bond Purchase Agreement (the "Agreement") entered into by and between the City, as issuer, and Stephens Inc., as underwriter (the "Underwriter"), the Bonds are being purchased at % plus accrued interest. The Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the Underwriters to accept delivery • of the Bonds is subject to various conditions contained in the Agreement, including the absence of pending or threatened litigation questioning the validity of the Bonds or any proceedings in 26 connection with the issuance thereof, and the absence of material adverse changes in the financial or business condition of the City. The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering price. Enforceability of Remedies. Rights of the registered owners of the Bonds and the enforceability of the remedies available under the Authorizing Ordinance may depend on judicial action and may be subject to the valid exercise of the constitutional powers of the United States of America and of the sovereign police powers of the State or other governmental units having jurisdiction, and to the application of federal bankruptcy laws or other debtor relief or moratorium laws in general. Therefore, enforcement of those remedies may be delayed or limited, or the remedies may be modified or unavailable, subject to the exercise of judicial. discretion in accordance with general principles of equity. Bond Counsel expresses no opinion as to any effect upon any right, title, interest or relationship created by or arising under the Authorizing Ordinance resulting from the application of state or federal bankruptcy, insolvency, reorganization, moratorium or similar debtor relief laws affecting creditors' rights which are presently or may from time to time be in effect. Information in Official Statement. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Bonds. • The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the undersigned the Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The execution of this Official Statement has been duly authorized by the City. CITY OF FAYETTEVILLE, ARKANSAS By Mayor Dated: As of the Cover Page hereof. C1 27 9 [THIS PAGE INTENTIONALLY LEFT BLANK] r LJ r L.J • [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] • BOND PURCHASE AGREEMENT • $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 City of Fayetteville, Arkansas August 19, 1997 Attention: Mayor Gentlemen: The undersigned Stephens Inc. (the "Underwriter") hereby offers to enter into this Bond Purchase Agreement (the "Agreement") with you, the City of Fayetteville, Arkansas (the "Issuer"), for the purchase by the Underwriter and the sale by you of the Bonds of the Issuer more particularly described below. Upon approval by you and by the execution of the acceptance hereof by the Mayor this Agreement shall be in full force and effect in accordance with its terms and shall be valid, binding and enforceable upon both the Issuer and the Underwriter. The further terms of this Agreement are: 1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Underwriter hereby agrees to purchase from the Issuer and the Issuer hereby agrees to sell to the Underwriter the entire principal amount of an issue of bonds designated "City of Fayetteville, Arkansas Sales Tax Capital • Improvement Refunding Bonds, Series 1997" (the "Bonds") to be issued under and secured by Ordinance No. 4050 of the Issuer (the "Bond Ordinance") substantially in the form heretofore delivered to the Underwriter, with only such changes therein as shall be mutually agreed upon between the Issuer and the Underwriter. 2. The Bonds are being issued for the purpose of refunding the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986 (the "Bonds Refunded"), providing for a debt service reserve and paying costs incidental thereto and to the issuance of the Bonds. 3. The Bonds shall be secured by a first and prior pledge of 20% of the Issuer's share of collections of the county- wide one percent (1%) sales and use tax (the "Tax") levied by Washington County, Arkansas (the "County") and approved by the voters of the County at a special election held July 28, 1981. 4. The Bonds shall be dated September 1, 1997. Interest on the Bonds shall be payable on May 15 and November 15 of each year, commencing November 15, 1997. The Bonds shall be authorized in the principal amount of $2,610,000 bearing interest at the rates per annum and maturing on November 15 in each of the years and in the amounts as set forth in the schedule attached hereto, Exhibit A. First Commercial Trust Company, National Association, Little Rock, Arkansas shall be Trustee, Paying Agent • and Registrar for the Bonds (the "Trustee"). 5. The Underwriter hereby agrees to purchase all of the • Bonds from the Issuer and the Issuer hereby agrees to sell all of the Bonds to the Underwriter at a price of 99.15% of par ($2,587,815), plus interest accrued thereon from September 1, 1997 to the date of Closing as hereinafter defined. The sale and purchase of the Bonds shall take place at a closing (the "Closing") at 10:00 a.m., prevailing local time, on September 23, 1997, or at such other time or on such earlier or later date as is mutually agreed upon, and at the offices of Gill Law Firm, a Professional Association, 3801 TCBY Tower, Capitol and Broadway, Little Rock, Arkansas. The Issuer will cause the Trustee to authenticate and deliver printed Bonds with CUSIP numbers to the Depository Trust Company, New York, New York ("DTC"), with instructions to place the Bonds in safekeeping and await further instructions from the Trustee. The Bonds shall be received by DTC not later than 1:15 P. M. Eastern Standard Time on the last business day preceding the date of Closing. Prior to delivery to DTC, the Bonds shall be prepared in such authorized denominations and registered in such names as the Underwriter may request at least five (5) business days prior to the Closing. At the Closing, and subject to satisfaction (or proper waiver by the Underwriter) of the conditions to its obligations to purchase the Bonds, the Underwriter will pay the purchase price of the Bonds in federal reserve funds payable to the order of the Trustee for the account of the Issuer. Upon receipt of the purchase price the Trustee shall authorize DTC to release the Bonds to the Underwriter. • 6. The Issuer has delivered to the Underwriter, prior to the date of this Agreement, a Preliminary Official Statement relating to the Bonds dated September 1, 1997 (the "Preliminary Official Statement"). In accordance with Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the "Rule"), the Issuer deems the Preliminary Official Statement final as of its date, except for omissions of no more than the following information: the offering prices, interest rates; Underwriter's discount, aggregate principal amount per maturity, delivery date, and other terms of the Bonds depending on such matters. 7. Should the Issuer fail to cause the Trustee to deliver the Bonds to DTC as provided herein, or should the Issuer be unable to satisfy the conditions set forth in this Agreement (unless waived by the Underwriter), or should any obligation of the Underwriter hereunder be terminated for any reason permitted by this Agreement, except as set forth in Paragraph 15 hereof, neither party hereto shall have any further rights against the other hereunder. The Underwriter and the Issuer understand that in any of such events the Issuer's and the Underwriter's actual expenses, costs, or damages may be unequal, and any such amounts incurred by either party may be greater or may be less than those amounts incurred by the other. Accordingly, and subject to Paragraph 15, the Underwriter hereby waives any right to claim that the Underwriter's actual expenses, costs, or damages are or will be • greater than the actual expenses, costs, or damages incurred or suffered by the Issuer, and the Issuer hereby waives any right to 3 claim that the Issuer's actual expenses, costs, or damages are or • will be greater than any actual expenses, costs, or damages incurred or suffered by the Underwriter, and neither party shall be entitled to claim any damages from the other. 8. The Issuer will sell the Bonds to the Underwriter and the Underwriter will make a public offering thereof in reliance upon representations and agreements herein set forth solely pursuant to the Official Statement hereinafter described at the initial offering price or yields set forth in the Official Statement, reserving, however, the right to change such initial offering prices as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Issuer shall deliver or cause to be delivered to the Underwriter, within seven (7) business days after acceptance of this Agreement, at least 50 copies of the Official Statement, substantially in the form of the Preliminary Official Statement, with only such changes therein as shall be accepted by us (such Official Statement with, such subsequent modifications and changes, if any, and including the cover page and all appendices, exhibits, reports and statements included therein or attached thereto being herein called the "Official Statement"), signed on behalf of the Issuer by its Mayor. The Issuer authorizes the use of copies of the Official Statement and Bond Ordinance in connection with the public offering and sale of the Bonds. The Issuer ratifies the lawful use by the Underwriter prior to the date hereof of the Preliminary Official • Statement. 9. The Issuer represents and warrants to, and agrees with, the Underwriter that: (a) The Issuer is a city of the first class, duly organized and existing under the laws of the State of Arkansas, and has, and at the date of Closing will have, full legal right, power, and authority (i) to enter into this Agreement, (ii) to adopt the Bond Ordinance, (iii) to issue, sell, and deliver the Bonds to the Underwriter as provided herein, (iv) to pledge 20% of its share of collections of the Tax (the "Pledged Revenues"), and (v) to carry out and consummate the transactions contemplated by this Agreement, the Bond Ordinance, and the Official Statement; (b) The Issuer has complied, and will at the Closing be in compliance, in all respects, with Amendment No. 62 to the Constitution of the State of Arkansas ("Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation"); (c) By adoption of the Bond Ordinance, pursuant to the Authorizing Legislation, the Issuer has duly authorized and approved the Official Statement, has duly authorized and approved the execution and delivery of, and the performance by the Issuer of the obligations contained in the Bonds and this Agreement and has • duly authorized the consummation by it of all other transactions contemplated by the Official Statement. When delivered to and paid 3 for by the Underwriter at the Closing in accordance with the • provisions of this Agreement, the Bonds will have been duly authorized, executed, authenticated, issued, and delivered and will constitute valid and binding obligations of the Issuer in accordance with their terms, in conformity with the Authorizing Legislation, entitled to the benefit and security of the Bond Ordinance; (d) The execution and delivery of this Agreement, the Bonds, the adoption of the Bond Ordinance, the pledge of the Pledged Revenues and the carrying out and consummation of the transactions contemplated by the Official Statement, will not conflict with or constitute a breach of or default under any applicable law of administrative regulation of the State of Arkansas or the United States or any judgment or decree or any agreement or other instrument to which the Issuer is a party or is otherwise subject; (e) At the time of the Issuer's acceptance hereof and at all times subsequent thereto, to and including the time of the Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; • (f) The Issuer will immediately notify the Underwriter of any adverse change of a material nature in the financial or economic condition of the Issuer; (g) There is no action, suit, proceeding, or investigation involving the Issuer before or by any court, public board, or body pending or, to the knowledge of the Issuer, threatened wherein an unfavorable decision, ruling, or finding would: (i) affect the creation, organization, existence or powers of the Issuer or the titles of its officials to their offices, (ii) enjoin or restrain the issuance, sale, and delivery of the Bonds or the pledge of the Pledged Revenues, (iii) in any way question or affect any of the rights, powers, duties, or obligations of the Issuer with respect to the Pledged Revenues or the Tax, (iv) in any way question or affect any authority for the issuance of the Bonds or the validity or enforceability of the Bonds or the Bond Ordinance, or (v) in any way question or affect this Agreement or the transactions contemplated by this Agreement, the Official Statement, the Bond Ordinance or any other agreement or instrument relating thereto to which the Issuer is a party; (h) The Issuer shall enter into a Continuing Disclosure Agreement (the "Disclosure Agreement") with the Trustee as required by the Rule and as described in the Official Statement; (i) The Pledged Revenues have not been pledged to any • other obligation of the Issuer, except the Bonds Refunded; C! (j) The Pledged Revenues have been duly pledged to the • payment of the Bonds under the Bond Ordinance pursuant to the authority granted by the Authorizing Legislation; and (k) The Issuer will furnish such information, execute such instruments, and take such other action in cooperation with Underwriter, as the Underwriter may reasonably request, to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate and will assist, if necessary therefor, in the continuance of such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that Issuer shall not be required to qualify as a foreign corporation or to file any general consents to service of process under the laws of any state. 10. The Issuer covenants and agrees with the Underwriter that: (a) It will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement or any part thereof. If between the date of this Agreement and ninety (90) days after the end of the underwriting period an event occurs which is materially adverse to the purpose for which the Official Statement is to be used and is not disclosed in the Official Statement, or if there shall exist any event which in the reasonable judgment of the Underwriter makes untrue or incorrect in • any material respect any statement or information contained in the Official Statement, or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect, the Issuer will supplement or amend the Official Statement in a form and in a manner approved by the Underwriter, the expense of which shall be paid by the Issuer. The "end of the underwriting period" shall mean the later of (i) the date of the -delivery of the Bonds by the Issuer to the Underwriter, or (ii) the date the Underwriter no longer retains (directly or as a syndicate member) an unsold balance of the securities for sale to the public. The Underwriter agrees to notify the Issuer in writing when the underwriting period has ended and if no such notification is given within 90 days after the date of the Closing, the Issuer may assume that the underwriting period ended on the date of the Closing; (b) It will indemnify and hold harmless the Underwriter and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) the Underwriter against any and all losses, claims, damages, and liabilities of any kind, including the expenses of defense thereof, (i) arising out of any statement or information contained in the Official Statement relating to the Issuer, the Bond Ordinance, the Bonds, security for the Bonds and use of Bond proceeds that is untrue or incorrect in any material respect or the omission from the Official Statement of any statement or information relating to • the Issuer, the Bonds, security for the Bonds, use of Bond proceeds 5 and the Bond Ordinance, which is necessary to make the statements • therein not misleading in any material respect, and (ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission if such settlement is effected with the written consent of the Issuer (which consent shall not be unreasonably withheld). In case any claim shall be made or action brought against the Underwriter or any controlling person (as aforesaid) based upon the Official Statement, in respect of which indemnity may be sought against the Issuer, the Underwriter shall promptly notify the Issuer in writing, setting forth the particulars of such claim or action, and the Issuer shall assume the defense thereof, including the retaining of counsel and the payment of all expenses. The Underwriter or any such controlling person shall have the right to retain separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the Underwriter's expense or the expense of such controlling person unless the retaining of such counsel has been specifically authorized by the Issuer. 11. The Underwriter has entered into reliance upon the representations and agreemer herein and the performance by the Issuer of hereunder, both as of the date hereof and as of Underwriter's obligations under this Agreement subject to the following further conditions: this Agreement in is of the Issuer its obligations the Closing. The are and shall be • (a) At the Closing, the Bond Ordinance shall be in full force and effect and shall not have been amended, modified or supplemented after the date hereof except as may have been agreed to by the Underwriter, and the Issuer shall have duly adopted and there shall be in full force and effect such other ordinances and resolutions as, in the opinion of Gill Law Firm, a Professional Association, Little Rock, Arkansas ("Bond Counsel"), the Underwriter and Friday, Eldredge & Clark, Little Rock, Arkansas ("Underwriter's Counsel"), shall be necessary in connection with the transactions contemplated hereby; (b) The representations and warranties of the Issuer contained herein shall be true, complete, and correct on the date hereof and on and as of the date of the Closing, as if made on and as of the date of the Closing; (c) At or prior to the Closing, the Underwriter shall have received the following: (1) The Official Statement of the Issuer executed on behalf of the Issuer by its Mayor; (2) The Bond Ordinance, certified by the Issuer under its seal as having been duly adopted and as being in full force and effect, with only • such amendments as may have been agreed to by the Underwriter; (3) An unqualified approving opinion, dated • the date of the Closing, of Bond Counsel, in form and substance satisfactory to the Underwriter and Underwriter's Counsel, and a supplemental opinion of Bond Counsel, dated the date of the Closing, in form and substance satisfactory to the Underwriter and Underwriter's Counsel, to the effect that, (i) this Agreement has been duly authorized, executed, and delivered by the Issuer and, assuming due execution by the Underwriter, and subject to the extent that (A) the enforceability of the rights and remedies set forth herein may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally and (B) that the rights to indemnification hereunder may be limited by federal or state securities laws or public policy underlying such laws and may not be enforceable, constitutes a valid and binding agreement in accordance with its terms, (ii) the Issuer has ratified the distribution of the Preliminary Official Statement, (iii) the Bond Ordinance conforms as to form and tenor with the terms and provisions thereof as summarized and set out in the Official Statement, (iv) the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Bond Ordinance is exempt from qualification under the Trust Indenture Act of • 1939, as amended, and (v) the Disclosure Agreement has been duly authorized, executed and delivered by the Issuer and, assuming due execution by the Trustee, and subject to the extent that the enforceability of the rights and remedies set forth therein might be limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally, constitutes a valid and binding agreement in accordance with its terms. In addition, such counsel shall state in the opinion or in a separate letter, or letters, dated the date of the Closing and addressed to the Underwriter, that based upon the examinations which they have made as Bond Counsel, which shall be specified, nothing has come to their attention which would lead them to believe that the Official Statement (except for the statistical data included in the Official Statement, as to which no view need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (4) A certificate dated the date of the • Closing and signed by the Mayor and City Clerk of the Issuer to the effect that, (i) the • representations and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing, (ii) there is no action, suit, proceeding, or investigation involving the Issuer before or by any court or public board or body pending or, to the knowledge of the Issuer, threatened wherein an unfavorable decision, ruling, or finding would: (A) affect the creation, organization, existence, or powers of the Issuer or the titles of its officials to their respective offices, (B) enjoin or restrain the issuance, sale, and delivery of the Bonds, or the pledge of the Pledged Revenues, (C) in any way question or affect any of the rights, powers, duties, or obligations of the Issuer with respect to the Pledged Revenues or the Tax, (D) in any way question or affect any authority for the issuance of the Bonds or the validity or enforceability of the Bonds or the Bond Ordinance, or (E) in any way question or affect this Agreement or the transactions contemplated hereby, or by the Official Statement, or any other agreement or instrument to which the Issuer is a party and relating to the Bonds, (iii) the Issuer has complied with all agreements and covenants and • satisfied all conditions on its part to be complied with or satisfied at or prior to the Closing, and (iv) to the best of their knowledge, neither the Official Statement nor any amendment or supplement thereto, as of their issue dates, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained• -•therein, in the light of the circumstances under which they were made, not misleading; (5) A copy of the proceedings of the County levying the Tax, certified by the County Clerk of the County; (6) A certificate from the County Judge and County Clerk of the County certifying to the following: (A) There is no action, suit, proceeding, or investigation involving the County before or by any court, public board, or body pending or, to the knowledge of the County, threatened wherein an unfavorable decision, ruling, or finding would: (i) affect the creation, organization, existence or powers of the County or the titles of its officials to their offices, (ii) 0 enjoin or restrain the levy and collection of the • Tax, (iii) in any way question or affect any of the rights, powers, duties, or obligations of the County with respect to the Tax, or (iv) in any way question or affect any authority for the levy and collection of the Tax or the validity of the Tax; (B) That the Tax has not been repealed, modified or rescinded and no petition has been filed to abolish the Tax or to refer the ordinance levying the Tax to the people under the legislation authorizing the County to levy the Tax or under Amendment No. 7 to the Constitution of the State of Arkansas; and (C) within the Cou share of money authorized by County and each law; and That the my since received law, has municipal Tax has been collected 1981 and the per capita therefor, less deductions been distributed to the ity therein as provided by (7) The Disclosure Agreement executed by the Issuer and the Trustee, with only such amendments as may have been agreed to by the Underwriter; • (8) An opinion of the City Attorney, dated the date of the Closing, in form and substance satisfactory to the Underwriter and Underwriter's Counsel; (9) An opinion of Underwriter's Counsel, dated the date of the Closing, in form and substance satisfactory to the Underwriter; and T-- (10) Such additional legal opinions, certificates, proceedings, instruments, and other documents as Bond Counsel, Underwriter's Counsel or the Underwriter may reasonably request to evidence compliance by the Issuer with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the Issuer herein contained, and the due performance or satisfaction by the Issuer at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Issuer. All of the opinions, letters, certificates, instruments, and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter and its counsel. The performance of any and all • obligations of the Issuer under this Agreement and the performance of any and all conditions contained herein for the benefit of the L•' Underwriter may be waived by the Underwriter in its sole • discretion. If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of, and to pay for the Bonds contained in this Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of, and to pay for the Bonds shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the Issuer shall be under further obligation hereunder, except that the obligations of the Issuer and the Underwriter set forth in Paragraph 15 hereof shall continue in full force and effect. 12. The Underwriter shall have the right to cancel and terminate its obligations under this Agreement at any time before the Closing if any of the following occurs: (a) Legislation shall have been enacted by the Congress of the United States, or adopted by either House or any committee thereof, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or a ruling shall have been made or regulations shall have been proposed or made by the Treasury Department of the United States, the Internal Revenue Service or any other governmental agency with respect to federal taxation upon revenues or other income of the general • character to be derived by the Issuer or by any similar body, or upon interest received on obligations of the general character of the Bonds which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds or the market price generally of obligations of the general character of the Bonds; or (b) Any legislation, ordinance, rule or regulation shall be enacted or be actively considered for enactment by any governmental body, department or agency of the State of Arkansas, or a decision by any court of competent jurisdiction within the State of Arkansas shall be rendered which, in the opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (c) A stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Bonds, or of obligations of the general character of the Bonds, as contemplated hereby, is in violation of any provisions of the Securities Act of 1933, as amended, or the Trust Indenture Act of 1939, as amended; or (d) (i) Any restriction on, or general suspension of, trading in securities on the New York Stock Exchange or any banking moratorium, or the establishment by the New York Stock Exchange, by the Securities and Exchange Commission, by any federal or state • agency, or by the decision of any court, of any limitation on prices for such trading or (ii) any new outbreak of hostilities or 10 other national or international calamity or crisis, the effect of • which on the financial markets of the United States shall be such as to make it impracticable, in the reasonable judgment of the Underwriter, for the Underwriter to enforce contracts for the sale of the Bonds; or (e) Any event or condition which, in the judgment of the Underwriter, renders untrue or incorrect, in any material respect as of the time the same purports to speak, the information, including the financial data, contained in the Official Statement, or which requires that information not reflected in the Official Statement should be reflected therein in order to make the statements and information contained therein not misleading in any material respect as of such time; provided the Issuer and the Underwriter will use their best efforts to amend or supplement the Official Statement to reflect, to the satisfaction of the Underwriter, such changes in or additions to the information contained in the Official Statement. 13. All notices, demands and formal actions hereunder will be in writing mailed, telegraphed or delivered to: The Issuer: City of Fayetteville, Arkansas 113 West Mountain Fayetteville, Arkansas 72701 Attention: Mayor • The Underwriter: Stephens Inc. P. O. Box 3507 Little Rock, Arkansas 72203 Attention: Dennis R. Hunt 14. All representations, warranties and covenants of the Issuer contained herein shall remain operative and in full force and shall survive (a) the execution and -delivery of this Agreement, (b) any investigation made by or on behalf of the Underwriter, (c) the purchase of the Bonds hereunder, and (d) any disposition of or payment for the Bonds. 15. The Underwriter shall be under no obligation to pay and the Issuer shall pay any expenses incident to the performance of its obligations hereunder including, but not limited to: (i) the cost of the preparation and distribution of this Agreement, the Bond Ordinance, the cost of the preparation, printing and delivery of the Bonds, and the cost of printing of the Official Statement (in such reasonable quantities as may be requested by the Underwriter); (ii) the fees and disbursements of Bond Counsel, Underwriter's Counsel and any counsel to the Issuer; (iii) the fees and disbursements of any other experts or consultants retained by the Issuer; (iv) the charges for obtaining CUSIP numbers for the Bonds; (v) legal publication costs; (vi) the Trustee's authentication fee and expenses; (vii) the fees payable to DTC; and • (viii) other costs of the Underwriter incurred in connection with the Closing, including day loan and ticket charges. 11 The Underwriter shall pay: (i) the cost of the • preparation and printing of any amendment or supplement to the Official Statement resulting from a determination by the Underwriter to change the initial offering prices or yields set forth in the Official Statement; (ii) all advertising expenses in connection with the public offering of the Bonds; (iii) the cost of preparation of Blue Sky and Legal Investment Memoranda; and (iv) all other expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds except as described above. 16. This Agreement may be executed in any number of counterparts with each executed counterpart constituting an original but all of which together shall constitute one and the same instrument. 17. This Agreement will inure to the benefit of and be binding upon the parties hereto and their successors and will not confer any rights upon any other person. This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas. STEPHENS INC. By i1 1��...5. lZ.6- • Authorized Representative ACCEPTED this 19th day of August, 1997. CITY OF FAYETTEVILLE, ARKANSAS By _—i /ll�C /�► 4'/ Mayor 12 EXHIBIT A • Year (November 151 Amount Interest Rate 1998 $290,000 4.15% 1999 305,000 4.25 2000 315,000 4.30 2001 330,000 4.40 2002 345,000 4.50 2003 360,000 4.55 2004 375,000 4.60 2005 290,000 4.65 • • 13 9 • NEW ISSUE In the opinion of Bond Counsel, based on existing statutes, regulations, rulings and coup decisions, the interest on the Bonds is excluded from gross income for federal income tax purposes, subject to the condition that the City comply with all requirements of the Internal Revenue Code that must be satisfied subsequent to the issuance of the Bonds, and the Bonds and interest thereon are exempt from all Arkansas state, county and municipal taxes. In the opinion of Bond Counsel, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although it is included in adjusted current earnings in calculating the corporate alternative minimum taxable income, and the Bonds are qualified tax-exempt obligations' within the meaning of Section 265 of the Internal Revenue Code. See LEGAL MATTERS, Tax Exemption. herein. $2,610,000 CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 Dated: September 1, 1997 Due: November 15, as shown below Principal of and interest on the Bonds are payable from a pledge of 20% of the receipts derived by the City of Fayetteville, Arkansas from a 1% sales and use tax levied in Washington County, Arkansas. Interest on the Bonds is payable semiannually on May 15 and November 15 in each year, commencing November 15, 1997, and the Bonds mature (on • November 15 of each year), bear interest and are priced as follows: MATURITY SCHEDULE Maturity 1998 Amount $290,000 Rate 4.15 (%) Maturity 2002 Amount $345,000 Rate 4.50 (%) 1999 305,000 4.25 2003 360,000 4.55 2000 315,000 4.30 2004 375,000 4.60 2001 330,000 4.40 2005 290,000 4.65 Price: 100% (Accrued interest from September 1, 1997 to be added) The Bonds are offered, subject to prior sale, when, as and if issued and received by the Underwriter named below, subject to the approval of legality by Gill Law Firm, a Professional Association, Little Rock, Arkansas, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by its counsel, Friday, Eldredge & Clark, Little Rock, Arkansas. It is expected that the Bonds will be available for delivery in New York, New York, on or about September 23, 1997. This cover page contains information for quick reference only. It is not a summary of the issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Dated: August 19, 1997. STEPHENS INC. No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give •any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or other solicitation of an offer to buy, nor shall there be any sale of the Bonds by any persons in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the City or Washington County since the date hereof. TABLE OF CONTENTS INTRODUCTION TO THE OFFICIAL STATEMENT THE BONDS 2 Generally 2 Purpose for Bonds 3 Security 3 THE CITY AND THE COUNTY 3 Generally 3 Population 4 Transportation 4 Government 4 • Medical Facilities 4 Education 4 Litigation 5 Financial Institutions 5 Economy 5 County Economic Data 6 County Tax Assessments 7 Building Permits 7 THE TAX 7 Generally 7 Sales Tax 8 Exemptions from Sales Tax 9 Use Tax 13 Exemptions from Use Tax 13 Administration 14 Historical Tax Receipts 15 Future Tax Receipts 15 THE AUTHORIZING ORDINANCE 16 Establishment of Funds 16 Revenue Fund 16 Bond Fund 16 • Debt Service Reserve Fund 17 Investments 17 Certain Covenants 18 •Parity Bonds 18 Defaults and Remedies 18 Defeasance 19 The Trustee 19 Supplemental Ordinances 20 CONTINUING DISCLOSURE AGREEMENT 20 Purpose of the Continuing Disclosure Agreement 20 Definitions 20 Provision of Annual Report 21 Content of Annual Reports 21 Reporting of Significant Events 22 Termination of Reporting Obligation 22 Dissemination Agent 22 Amendment; Waiver 23 Additional Information 23 Default 23 Duties of Trustee and Dissemination Agent and Right of Indemnity 24 Beneficiaries 24 DEBT SERVICE REQUIREMENTS 24 DEBT SERVICE COVERAGE 24 LEGAL MATTERS 25 • Legal Proceedings 25 Legal Opinions 25 Tax Exemption 25 MISCELLANEOUS 26 Underwriting 26 Enforceability of Remedies 27 Information in Official Statement 27 OFFICIAL STATEMENT $2,610,000 • CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BONDS SERIES 1997 INTRODUCTION TO THE OFFICIAL STATEMENT This Introduction is subject in all respects to the more complete information contained in this Official Statement. The offering of the bonds to potential investors is made only by means of the entire Official Statement, including the cover page hereof. A full review should be made of the entire Official Statement, as well as the Authorizing Ordinance described herein. This Official Statement of the City of Fayetteville, Arkansas (the "City") is furnished in connection with the offering by the City of its $2,610,000 principal amount of Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"), dated September 1, 1997 (the "Bonds"). The Bonds are being issued for the purpose of refunding the City's Sales Tax Capital Improvement Bonds, Series 1986 (the "Bonds Refunded") which will be redeemed on or about September 23, 1997 at par. The Bonds Refunded were issued to finance a portion of the cost of acquiring, constructing and equipping an arts center in the City, in a joint venture with the University of Arkansas, known as the "Walton Arts Center" (the "Improvements"). See THE BONDS, Purpose for Bonds. The City is a city of the first class organized under the laws of the State of Arkansas (the "State") and is located in Washington County (the "County") in northwestern Arkansas. The City is authorized under Amendment No. 62 to the Constitution of the State ("Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation") to issue capital improvement bonds and to expend the proceeds thereof for the intended purposes. See THE CITY • AND THE COUNTY. The Bonds are not general obligations of the City, but are special obligations payable solely from 20% of the City's share (the "Pledged Revenues") of collections of a 1% sales and use tax levied in the County (the "Tax"). Tax collections are divided among the County and each municipality in the County based upon population. See THE TAX and THE BONDS, Security. The Tax is levied under Title 26, Chapter 74 of the Arkansas Code of 1987 Annotated (the "Tax Legislation"), Ordinance No. 97-16 of the County adopted on June 12, 1997 (the "Tax Ordinance") and a special election held in the County on July 28, 1981. Pledged Revenues not needed to pay the principal of and interest on the Bonds when due may be used by the City for any lawful purpose. The issuance of the Bonds Refunded and the pledging of the Pledged Revenues to the payment of the principal of and interest on the Bonds Refunded were approved at a special election held October 7, 1986. The Bonds are being issued pursuant to and in full compliance with Amendment 62 and the Authorizing Legislation and Ordinance No. 4050 of the City, adopted on August 19, 1997 (the "Authorizing Ordinance"). See THE AUTHORIZING ORDINANCE. The City is authorized to issue additional bonds on a parity of security with the Bonds. See THE AUTHORIZING ORDINANCE, Parity Bonds. The Bonds are issuable only as fully registered bonds, without coupons, in the denomination of $5,000 or integral multiple thereof. Interest is payable November 15, 1997, and semiannually thereafter on each May 15 and November 15. Principal is payable at the principal office of First Commercial Trust Company, National Association, Little Rock, Arkansas, as trustee, bond registrar and paying agent (the "Trustee"). Interest is payable by check mailed by the Trustee to the registered owners as of the record date for each interest payment date. The record date for payment of interest on the Bonds shall be the last day of the calendar month next preceding each interest payment date. A Bond may be transferred, •in whole or in part (in integral multiples of $5,000), but only upon delivery of the Bond, together with a written instrument of transfer, to the Trustee. See THE BONDS, Generally. Under existing law and assuming compliance with certain covenants described herein, (i) interest on the •Bonds is excluded from gross income for federal income tax purposes, (ii) interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (iii) with respect to corporations, interest on the Bonds will be taken into account in determining adjusted current earnings for the purpose of computing the federal alternative minimum tax, (iv) the Bonds are "qualified tax-exempt obligations" within the meaning of Section 265 of the Internal Revenue Code of 1986, as amended (the "Code"), and certain financial institutions are allowed a deduction of 80% of that portion of their interest expense allocable to interest on the Bonds, and (v) the Bonds and interest thereon are exempt from all State, county and municipal taxes. See LEGAL MATTERS, Tax Exemption. It is expected that the Bonds will be available for delivery on or about September 23, 1997, through the facilities of the Depository Trust Company in New York, New York. The City and the Trustee have entered into a Continuing Disclosure Agreement in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5) (the "Continuing Disclosure Agreement"). See CONTINUING DISCLOSURE AGREEMENT. This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Authorizing Ordinance and the Continuing Disclosure Agreement summarized herein are available upon request from Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, Attention: Public Finance. THE BONDS Generally. The Bonds are dated, mature and bear interest as set forth on the cover page hereof. The principal of the Bonds is payable upon presentation and surrender at the principal office of the Trustee. • Payment of interest on the Bonds will be made to each registered owner thereof by check or draft mailed by the Trustee to such owner at his address as such name and address appear on the registration book of the City kept by the Trustee on the record date which is the last day of the calendar month next preceding the calendar month in which such interest payment date falls. All such payments will be made in lawful money of the United States of America. The Bonds are issuable in the form of registered Bonds without coupons in the denomination of $5,000 each or any integral multiple thereof, interchangeable in accordance with the provisions of the Authorizing Ordinance. In the event any Bond is mutilated, lost or destroyed, the City shall, if not then prohibited by law, execute and the Trustee may authenticate a new Bond in accordance with the provisions therefor in the Authorizing Ordinance. Each Bond is transferable by the registered owner thereof or by his attorney duly authorized in writing at the principal office of the Trustee. Upon such transfer a new fully registered Bond or Bonds of the same maturity, of authorized denomination or denominations, for the same aggregate principal amount will be issued to the transferee in exchange therefor. No charge shall be made to any owner of any Bond for the privilege of registration, but any owner of any Bond requesting any such registration shall pay any tax or other governmental charge required to be paid with respect thereto. Except as otherwise provided in the immediately preceding sentence, the cost of preparing each new Bond upon each exchange or transfer and any other expenses of the City or the Trustee incurred in connection therewith shall be paid by the City. Neither the City nor the Trustee shall be required to transfer or exchange any Bonds selected for redemption in whole or in part. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute • owner thereof for all purposes, and payment of or on account of the principal or premium, if any, or interest of any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, but such registration may be changed as hereinabove provided. All such payments shall 2 be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. • In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a Saturday or Sunday or shall be in the State a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after the date of maturity or date fixed for redemption. Purpose for Bonds. The Bonds Refunded are in the outstanding principal amount of $2,940,000 and are to be paid as they are called for redemption on or about September 23, 1997 at par. A portion of Bond proceeds and available funds of the City will be deposited with First Commercial Trust Company, National Association, Little Rock, Arkansas, as trustee for the owners of the Bonds Refunded (the "Bonds Refunded Trustee"), and used to redeem the Bonds Refunded. The sources and uses of funds to accomplish the refunding of the Bonds Refunded, fund a debt service reserve and pay costs of issuing the Bonds are estimated by the City as follows: SOURCES: Principal Amount of Bonds $2,610,000 Existing Funds Held by Bonds Refunded Trustee 671,963 Total Sources $3,281,963 USES: • Cost of Refunding $3,012,573 Deposit to Debt Service Reserve 204,334 Costs of Issuance and Underwriter's Discount 60,185 Contingency 4.871 Total Uses $3,281,963 The payment of Underwriter's discount and the costs of issuing the Bonds relating to the payment of professional fees will be contingent on the Bonds being issued. See MISCELLANEOUS, Underwriting for a description of the Underwriter's discount. Security. The Bonds are not general obligations of the City but are special obligations, secured by a pledge of the Pledged Revenues which consist of 20% of the City's share of Tax collections. Collections of the Tax are divided among the County and each municipality in the County based upon population. The City will maintain a debt service reserve in an amount equal to one-half of the maximum annual debt service requirement on the Bonds. The Bonds are secured under the Authorizing Ordinance. For a description of pending litigation challenging the validity of the Tax, see LEGAL MATTERS, Legal Proceedings herein. For a summary of the terms of the Authorizing Ordinance, see THE AUTHORIZING ORDINANCE. The City may issue additional bonds on a parity of security with the Bonds. See THE AUTHORIZING ORDINANCE, Parity Bonds. THE CITY AND THE COUNTY Generally. The City is the seat of government of Washington County (the "County") and is located in • the northwest portion of the State about 194 miles northwest of Little Rock, Arkansas and 121 miles east of Tulsa, Oklahoma. 3 Population. According to the United States Department of Commerce, Bureau of Census, the following • table sets forth the population trends for the City and County since 1960: Xe& Clix County 1960 20,274 55,797 1970 30,729 77,370 1980 36,608 100,494 1990 42,099 113,409 1994 49,219* 127,613* 1997 52,662** 142,737** * Estimatei **Preliminary results of special County -wide census. Transportation. The City is served by U.S. Highway Nos. 62 and 71 and State Highway Nos. 16, 45, 112, 156,180 and 265. The City owns a municipal airport with a 6,006 -foot paved runway that has charter and commercial air service. A commercial jet service/commuter airport is proposed to be constructed in the County. The new airport will be known as the Northwest Arkansas Regional Airport. Approximately twenty-six (26) motor freight carriers and the Arkansas Missouri Railroad make daily shipments from the City to major cities across the United States. Government. The City currently operates under the Mayor -Council form of government pursuant to which a Mayor, City Attorney, City Clerk/Treasurer, and eight Aldermen are elected. The Mayor, City Attorney, and City Clerk/Treasurer are full-time positions elected to four year -terms. The eight Aldermen represent the four wards of the City with two positions being elected from each ward, each serving a two year term. The City's elected officials, the dates on which their terms expire and their principal occupations are as follows: 1@ Term Expires Principal Occupation Fred B. Hanna 12/98 Mayor Jerry Rose 12/98 City Attorney Traci Paul 12/98 City Clerk & Treasurer Stephen Miller 12/98 Alderman, Microbiologist Kit Williams 12/98 Alderman, Attorney Heather Daniel 12/98 Alderman, School Teacher Cyrus Young 12/98 Alderman, Engineer Randy Zurcher 12/98 Alderman, School Teacher Len Schaper 12/98 Alderman, Professor of Electrical Engineering Trent Trumbo 12/98 Alderman, Stockbroker Donna Pettus 12/98 Alderman, Attorney Medical Facilities, The City has one general, acute care hospital with 294 beds. The City is served by approximately 254 physicians and surgeons. Education. Primary and secondary education for the City's inhabitants are provided by a public school system which is accredited by the North Central Association of Secondary Schools and Colleges. Located within the Fayetteville School District, there are ten elementary schools, two junior high schools • and one high school. In addition, the University of Arkansas at Fayetteville is located in the City (approximate enrollment - 12,394). 4 Litigation. There is no material litigation or administrative proceedings pending or threatened against the City except for the following cases in which the City is a defendant: Chancery Court of Washington County, Arkansas, Case No. E-94,1783. On June 18, 1994, the City, by Ordinance No. 3806, established a design overlay district for the U.S. Highway 71 corridor. The ordinance added regulations and standards to the properties lying within 660 feet of each side of the right of way of U.S. Highway 71. The lawsuit challenging the ordinance was first filed in November 1994. Through a series of amendments the suit is now a class action with a class of property owners within the overlay district. The third amended petition makes five claims: that the ordinance is vague, arbitrary, and capricious; that the ordinance constitutes an unconstitutional taking of property without compensation; that the ordinance seizes and confiscates property; that the ordinance violates the Arkansas Civil Rights Act; and that the ordinance was passed with improper notice. The case has not been set for trial. Regulations of land through zoning ordinances have rarely been held by the courts to constitute an unconstitutional taking. Should the plaintiff class be successful, separate trials would have to be held to determine what damages resulted to each piece of property. It is impossible at this time to predict with any degree of accuracy potential damage amounts. Hick et at. v. City of Fayetteville et al. Circuit Court of Washington County, Arkansas, Case No. CIV 97-500. This class action suit was filed in April of 1997 challenging the real property tax millage levied by the cities of Fayetteville and Springdale and the respective school districts of those cities. The suit seeks to make these governmental entities "roll back" real property taxes to conform to statutory and constitutional limits. •The City has only one mill of real property tax. It collects by ordinance .5 mill for police retirement and .5 mill for firemen's retirement. Should the plaintiffs be successful the total exposure to the City would approximate $70,000 plus a proportionate share of attorney's fees. Financial Institutions. According to the Arkansas Bankers Association, the City is currently served by four banks having their principal offices in the City. These banks had the following aggregate deposits and assets for the years indicated: 1992 $764,172,000 852,932,000 1993 823,479,000 967,933,000 1994 820,376,000 982,981,000 1995 868,699,000 1,008,992,000 1996 915,949,000 1,091,898,000 Economy. The economy of the City and the County is a mixture of agriculture, industry and commerce. The principal campus of the University of Arkansas is located in the City and had total enrollment for the Fall of 1996 of 12,394. For the 1996-97 fiscal year ending June 30, 1997, the University of Arkansas at Fayetteville had an operating budget of approximately $125,000,000. The University of Arkansas at Fayetteville employs approximately 3,100 full-time and part-time faculty, administrative, secretarial, clerical, and maintenance personnel making the University of Arkansas at Fayetteville the largest employer in the community. • Other entities that employ over 300 persons in the City, their products or services and approximate number of employees are set forth below: Appx. Number Organization Name Product or Service oror tmpio_yees Campbell Soup Company Manufacturing 1,000-2,500 Washington Regional Medical Center Health Care 1,000-2,500 Superior Industries International Manufacturing 1,000-2,500 Fayetteville School District Education 500-999 Tyson Entree Division Manufacturing 500-999 Tyson Mexican Original Manufacturing 500-999 Arkansas Western Gas Company Utility 300-499 City of Fayetteville Government 300-499 Levi Strauss and Company Manufacturing 300-499 Veterans' Admin. Medical Center Health Care 300-499 Wal-Mart Stores Retail Sales 300-499 Washington County Government 300-499 County Economic Data. Total personal income estimates for the County are as follows (1): Yew Total Personal Income Average Annual Growth (%) 1970 $ 207,310,000 ---- 1980 718,278,000 13.2 1990 1,736,176,000 9.2 1994 2,365,272,000 8.0 • Per capita personal income estimates for the County are as follows(1): Year Per Capita Personal Income Average Annual Growth (%) 1970 $ 2,669 ---- 1980 7,137 10.3 1990 15,211 7.9 1994 18,595 5.2 Set forth below is a breakdown of retail sales in the County(1): 1977 $ 322,172,000 ---- 1982 498,362,000 9.1 1987 750,240,000 8.5 1992 1,113,157,000 8.2 (1)Source: Arkansas State and County Economic Data. Institute for Economic Advancement, College of Business Administration, University of Arkansas at Little Rock (June 1996). 6 The annual average unemployment rates for the City, the County and the State since 1992 are as follows according to the Arkansas Employment Security Division: • Annual Average Unemployment Rate%) Year City State County 1992 4.0 3.8 7.3 1993 3.2 3.1 6.2 1994 2.6 2.5 5.3 1995 2.6 2.5 4.9 1996 3.0 2.9 5.4 1997* 3.1 2.9 4.6 *Aso Apri , 1997. County x Assessments. The real and personal property tax assessments for the County for the years listed are is as follows(1): Year Total Assessments Average Annual Growth (%) 1970 $ 94,450,000 ---- 1980 196,488,000 7.6 1990 650,101,000 12.7 1994 875,295,000 7.7 1995 1,031,798000 17.9 (1)Source: Arkansas State and County Fcpponilc Date. Institute for Economic Advancement, College of Business Administration, University of Arkansas at Little Rock (June 1996). Building Permits. Building permits issued by the City(1) are shown below for the years indicated: Year Commercial Permits Residential Permits Value of Permits 1996 44 551 $64,057,664 1995 54 616 90,946,650 1994 76 633 97,389,564 1993 55 596 87,005,237 1992 48 425 56,279,064 1) Does not include activity of the University of Arkansas and renovations to existing structures THE TAX Generally. Pursuant to the Tax Legislation and the Tax Ordinance, the County has levied the Tax, which is a tax within the County on all items which are subject to taxation under The Arkansas Gross Receipts Act of 1941 and a tax on the receipts from storing, distributing, using or consuming tangible personal property under The Arkansas Compensating (Use) Tax Act of 1949. The Tax is limited to a maximum of $25 for any single transaction. Pursuant to the Authorizing Ordinance, the City has pledged 20% of its share of Tax receipts to the payment of the Bonds. The Tax was approved at a special election held July 28, 1981 and became effective October 1, 1981. Pursuant to the Tax Legislation, Tax receipts are divided among the County and the municipalities therein based upon the population in the unincorporated areas of the County and the population of each municipality according • to the latest official federal decennial census or latest special census in the County as a whole. 7 S lames Tax. The sales tax portion of the Tax is generally levied upon the gross proceeds and receipts • derived from all sales to any person within the County of the following: (a) Tangible personal property; (b) Natural or artificial gas, electricity, water, ice, steam, or any other utility or public service except transportation services, sewer services and sanitation or garbage collection services; (c) (i) Service by telephone, telecommunications and telegraph companies to subscribers or users, including transmission of messages or images, whether local or long distance, including all service, installation, construction and rental charges having any connection with transmission of any message or image; (ii) Service of furnishing rooms, suites, condominiums, townhouses, rental houses or other accommodations by hotels, apartment hotels, lodging houses, tourist camps, tourist courts, property management companies, or any other provider of accommodations to transient guests; (iii) Service of cable television, community antenna television, and any and all other distribution of television, video, or radio services with or without the use of wires provided to subscribers, paying customers or users, including installation, service, rental, repair and other charges having any connection with the providing of the said services; (iv) Service or alteration, addition, cleaning, refinishing, replacement and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; however, the tax does not apply to (A) coin operated car washes, (B) the maintenance or repair of railroad parts, railroad cars and equipment brought into the County solely and exclusively for the purpose of being repaired, refurbished, modified, or converted within the County, (C) the service of alteration, addition, cleaning, refinishing, replacement or repair of commercial jet aircraft or commercial jet aircraft components or subcomponents, (D) the repair or remanufacture of industrial metal rollers or platens that have a remanufactured non-metallic material covering on all or a part of the roller or platen surface, or (E) the alteration, addition, cleaning, refinishing, replacement or repair of non -mechanical, passive or manually operated components of buildings or other improvements or structures affixed to real estate; (v) Service of providing transportation or delivery of money, property or valuables by armored car; service of providing cleaning or janitorial work; service of pool cleaning and servicing; pager services; telephone answering services; landscaping and non- residential lawn care services; service of parking a motor vehicle or allowing a motor vehicle to be parked; service of storing a motor vehicle; service of storing furs; and the service of providing indoor tanning at a tanning salon; (d) Printing of all kinds, types and characters, including the service of overprinting, and photography of all kinds; (e) Tickets or admissions to places of amusement, to athletic, entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes and tickets, • admissions, dues or fees; (f) Dues and fees to health spas, health clubs and fitness clubs; dues and fees to •private clubs which hold any permit from the Alcoholic Beverage Control Board allowing the sale, dispensing or serving of alcoholic beverages of any kind on the premises; and (g) Lease or rental of motor vehicles, other than diesel trucks rented for residential moving or commercial shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 days, or purchase of motor vehicles for rental or lease regardless of the length of the rental or lease. Exemptions from Sales Tax. As summarized below, several types of transactions have been exempted from the sales tax by the General Assembly of the State. Some of the current exemptions include the sale of: (a) New or used house trailers, mobile homes, aircraft, motor vehicles, trailers or semi -trailers and a used house trailer, mobile home, aircraft, motor vehicle, trailer or semi -trailer is taken as a credit or part payment of the purchase price, when the total consideration is less than the following: $2,000 for aircraft, house trailers and mobile homes (or $10,000 in case the house trailer or mobile home is a "manufactured home"); and $2,500 for motor vehicles, trailers and semi- trailers; (b) Aircraft held for resale and used for rental or charter, whether by a business or an individual for a period not to exceed one (1) year from the date of purchase of aircraft; (c) Tangible personal property or services by churches, except where such organizations may be engaged in business for profit; (d) Tangible personal property, or service by charitable organizations, except where • such organizations may be engaged in business for profit; (e) Food in public, common, high school or college cafeterias and lunchrooms operated primarily for teachers and pupils, and not operated primarily for the public or for profit; (f) Newspapers; (g) Property or services to the United States Government; motor vehicles and adaptive equipment to disabled veterans who have purchased said vehicles or equipment with financial assistance of the Veterans Administration; tangible personal property to the Salvation Army, Heifer Project International, Inc., Habitat for Humanities, the Boy Scouts of America, the Girl Scouts of America or any of the Scout Councils in the State; tangible personal property or service to the Boys Clubs of America or any local councils or organizations of the Boys Clubs of America, the Girls Clubs of America or any local councils or organizations of the Girls Clubs of America, to the Poets' Roundtable of Arkansas; to 4-H Clubs and FFA Clubs, to the Arkansas 4-H Foundation, the Arkansas Future Farmers of America Foundation and the Arkansas Future Farmers of America Association; (h) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax has been paid to the State and special fuel or petroleum products sold for consumption by vessels, barges and other commercial watercraft and railroads; (i) Property resales to persons regularly engaged in the business of reselling the articles purchased; (j) Advertising space in newspapers and publications and billboard advertising • services; W (k) Gate admissions at State, district, county or township fairs or at any rodeo if the •receipts derived from gate admissions to the rodeo are used exclusively for the improvement, maintenance and operation of such rodeo, and if no part of the net earnings thereof inures to the benefit of any private stockholder or individual; (1) Property or services which the State is prohibited by the constitution or laws of the United States or by the constitution of the State from taxing or further taxing and tangible personal property exempted from taxation by the Arkansas Compensating (Use) Tax Act of 1949, as amended; (m) Isolated sales not made by an established business; (n) Cotton, seed cotton, lint cotton, baled cotton, whether compressed or not, or cotton seed in its original condition; seed for use in commercial production of an agricultural product or of seed; raw products from the farm, orchard or garden, where such sale is made by the producer of such raw products directly to the consumer and user; livestock, poultry, poultry products and dairy products of producers owning not more than five (5) cows; and baby chickens; (o) Foodstuffs to governmental agencies for free distribution to any public, penal and eleemosynary institutions or for free distribution to the poor and needy, and the rental or sale of medical equipment, for the benefit of persons enrolled in and eligible for Medicare or Medicaid programs; (p) Tangible personal property or services provided to any hospital or sanitarium operated for charitable and nonprofit purposes or any nonprofit organization whose sole purpose is to provide temporary housing to the family members of patients in a hospital or sanitarium; •(q) Used tangible personal property when the used property was (1) traded in and accepted by the seller as part of the sale of other tangible personal property and (2) the Arkansas Gross Receipts Tax was collected and paid on the total amount of consideration for the sale of the other tangible personal property without any deduction or credit for the value of the used tangible personal property; provided, however, this exemption does not apply to transactions involving used automobiles, used mobile homes, or used aircraft; (r) Unprocessed crude oil; (s) Tangible personal property consisting of machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at (i) new manufacturing or processing plants or facilities in the State or (ii) existing manufacturing or processing plants or facilities in the State if the tangible personal property is used to replace existing machinery and equipment; (t) Property consisting of machinery and equipment required by State law or regulation to be installed and utilized by manufacturing or processing plants or facilities to prevent or reduce air and/or water pollution or contamination; (u) Electricity used in the manufacture of aluminum metal by the electrolytic reduction process and sale of articles sold on the premises of the Arkansas Veterans Home; (v) Automobile parts which constitute "core charges," which are received for the purpose of securing a trade-in for the article purchased; (w) Bagging and other packaging and tie materials sold to and used by cotton gins for • packaging and/or tying baled cotton and from the sale of twine which is used in the production of tomato crops; _ 10 (x) Prescription drugs by licensed pharmacists, hospitals, oncologists or dispensing • physicians, and oxygen sold for human use on prescription of a licensed physician; (y) Property or services to humane societies; (z) Vessels, barges and towboats of at least fifty (50) tons load displacement and parts and labor used in the repair and construction of the same; (aa) Property or sales to all orphans' homes, or children's homes, which are not operated for profit and whether operated by a church, religious organization or other benevolent charitable association; (bb) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (cc) Sale of tickets or admissions, by municipalities, to places of amusement, to athletic entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes, tickets, admissions, dues or fees; (dd) Rental and/or lease of specialized equipment used in the filming of a motion picture; (ee) New and used farm machinery and equipment; (ff) New automobiles to a veteran of the United States Armed Services who is blind as a result of a service connected injury; •(gg) Motor vehicles sold to municipalities, counties, school districts, and state supported colleges and universities; (hh) School buses sold to school districts and, in certain cases, to other purchasers providing school bus service to school districts; (ii) Natural gas, LP gas, or electricity sold to a processor or mining company engaging in open pit and underground mining or processing of bauxite; (jj) Feedstuffs used in the commercial production of livestock or poultry; (kk) New custom manufactured homes constructed from materials on which the State sales tax has been paid; (11) The first 500 kilowatt hours of electricity per month and the total franchise taxes billed to each residential customer whose household income is less than $12,000 per year; (mm) Waste fuel used in producing, manufacturing, fabricating, assembling, processing, fuushing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State; (nn) Electricity and natural gas to qualified steel manufacturers; (oo) Tangible personal property lawfully purchased with food stamps, food coupons, food instruments or vouchers in connection with certain Federal programs; • (pp) Publications sold through regular subscriptions; 11 (qq) Tickets for admission to athletic events and interscholastic activities of public and •private elementary and secondary schools in the State and tickets for admission to athletic -events at public and private colleges and universities in the State; (rr) Prescriptive adaptive medical equipment and prescriptive disposable medical equipment; (ss) Insulin and test strips for testing blood sugar levels in humans; (tt) Telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (uu) Industrial metal rollers sent into the State for repair or remanufacture and then shipped back to the state of origin; (vv) New motor vehicles purchased by non-profit organizations and used for the performance of contracts with the Department of Human Services, and new motor vehicles purchased with Urban Mass Transit Administration funds if (i) the vehicles are purchased in lots of ten (10) vehicles, (ii) meet minimum State specifications, and (iii) vehicles are used for transportation under the Department of Human Services' programs for the aging, disabled, mentally ill, and children and family services; (ww) Motor fuels to owners or operators of motor buses operated on designated streets according to regular schedule and under municipal franchise which are used for municipal transportation purposes; (xx) Parts or other tangible personal property incorporated into or which become a part • of commercial jet aircraft component or subcomponent; (yy) Transfer of fill material by a business engaged in transporting or delivering fill material; (zz) Long-term leases, thirty (30) days or more, of commercial trucks used for interstate transportation of goods under certain conditions; (aaa) Foodstuffs to nonprofit agencies; (bbb) Tangible personal property consisting of forms constructed of plaster, cardboard, fiberglass, natural fibers, synthetic fibers or composites and which are destroyed or consumed during the manufacture of the item; (ccc) Natural gas used as a fuel in the process of manufacturing glass; (ddd) Sales to Fort Smith Clearinghouse; (eee) Substitute fuel used in producing, manufacturing, fabrication, assembling, processing, finishing or packaging of articles at manufacturing facilities or processing plants in the State; (fff) Railroad rolling stock used in transporting persons or property in interstate commerce; (ggg) Parts or other tangible personal property which become a part of railroad parts, • railroad cars and equipment brought into the State for the purpose of being repaired, refurbished, modified or converted within the State; 12 (hhh) Fire protection and emergency equipment to be owned by and exclusively used by a volunteer fire department, and supplies and materials to be used in the construction and • maintenance of volunteer fire departments; and (iii) Gas produced from biomass and sold for the purpose of generating energy to be sold to the gas producer. Reference is made to "The Arkansas Gross Receipts Act of 1941," Title 26, Chapter 52 of the Arkansas Code of 1987 Annotated, for more information concerning the sales tax. Use Tax. The use tax portion of the Tax is levied on every person for the privilege of storing, using, distributing or consuming in the County any article of tangible personal property purchased for storage, use, distribution or consumption. The use tax applies to the use, distribution, storage or consumption of every article of tangible personal property except as hereinafter provided. The use tax does not apply to aircraft equipment, and railroad parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, automotive or railroad companies brought into the County solely and exclusively for refurbishing, conversion, or modification within the County or storage for use outside or inside the County regardless of the length of time any such property is so stored in the County. The use tax is levied on the following described tangible personal property: (a) Tractors, trailers, semi -trailers, trucks, buses and other rolling stock, including replacement tires, used directly in the transportation of persons or property in intrastate or interstate common carrier transportations; (b) Property (except fuel) consumed in the operation of railroad rolling stock; (c) Transmission lines and pumping or pressure control equipment used directly in • or connected to the primary pipeline facility engaged in intrastate or interstate common carrier transportation of property; (d) Airplanes and navigation instruments used directly in or becoming a part of flight aircraft engaged in transportations of persons or property in regular scheduled intrastate or interstate common carrier transportation; (e) Exchange equipment, lines, boards and all accessory devices used directly in and connected to the primary facility engaged in the transmission of messages; (f) Transmission and distribution pipelines in pumping or pressure control and equipment used in connection therewith used directly in primary pipeline facility for the purpose of transporting and delivering natural gas; (g) Transmission and distribution lines, pumping machinery and controls used in connection therewith in cleaning or treating equipment of primary water distribution system; (h) Property of public electric power companies consisting of all machinery and equipment including reactor cores and related accessory devices used in the generation and production of electric power and energy and transmission facilities consisting of the lines, including poles, towers and other supporting structures, transmitting electric power and energy together with substations located on or attached to such lines; and (i) Computer software. Exemptions from Use Tax. Some of the property exempted from the use tax by the General • Assembly of the State is as follows: 13 (a) Property, the storage, use or consumption of which the State is prohibited from • taxing under the Constitution or laws of the United States of America or the State; (b) Sales of tangible personal property in which the tax under the Arkansas Gross Receipts Act of 1941 is levied; (c) Tangible personal property which is exempted from the sales tax under the Arkansas Gross Receipts Act of 1941; (d) Feedstuffs used in the commercial production of livestock or poultry in the State; (e) Unprocessed crude oil; (t) Machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants or facilities in the State, including facilities and plants for manufacturing feed, processing of poultry and/or eggs and livestock and the hatching of poultry and such equipment is either (1) purchased to create or expand manufacturing or processing plants in the State, (2) purchased to replace existing machinery and used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants in the State, or (3) required by State law to be installed and utilized by manufacturing or processing plants to prevent or reduce air and/or water pollution or contamination; (g) Custom manufactured homes constructed with materials on which the sales or use tax has once been paid; (h) Aircraft, aircraft equipment, railroad parts, cars, and equipment, and tangible • personal property owned or leased by aircraft, airmotive, or railroad companies, brought into the State solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State; (i) Vessels, barges, and towboats of at least 50 tons load displacement and parts and labor used in the repair and construction of them; (j) Motor fuels to the owners or operators of motor buses operated on designated streets according to regular schedule, under municipal franchise, which are used for municipal transportation purposes; (k) Agricultural fertilizer, agricultural limestone, agricultural chemicals, including agricultural pesticides and herbicides used in commercial production of agricultural products, and vaccines, medications, and medicinal preparations, used in treating livestock and poultry being grown for commercial purposes and other ingredients used in the commercial production of yeast;. (1) All new and used motor vehicles, trailers or semi -trailers that are purchased for a total consideration of less than $2,000; and (m) Any tangible personal property used, consumed, distributed, or stored in this State upon which a like tax, equal to or greater than the Arkansas Compensating (Use) Tax, has been paid in another state. Reference is made to "The Arkansas Compensating (Use) Tax Act of 1949," Title 26, Chapter 53 of the Arkansas Code of 1987 Annotated, for more information concerning the use tax. • Administration. Pursuant to the Authorizing Legislation, the Commissioner of Revenues of the State (the "Commissioner") performs all functions incidental to the administration, collection, enforcement and operation of the Tax. All of the City's share of Tax receipts collected, less certain charges E payable and retainage due the Commissioner for administrative services in the amount of 3% of the gross Tax receipts, shall be remitted by the State Treasurer to the City monthly. • Historical Tax Receipts. The Tax became effective October 1, 1981. The City currently receives approximately 37% of collections of the Tax based upon the 1990 Federal census. Tax receipts received by the City since 1991 have been as follows: 20% of Average 20% of Year Total Collections Total Collections Per Month Monthly Average 1991 $4,109,257 $ 821,851 $342,438 $ 68,488 1992 4,596,088 919,218 383,007 76,601 1993 5,162,539 1,032,508 430,212 86,042 1994 5,598,609 1,119,722 466,551 93,310 1995 6,139,688 1,227,938 511,641 102,328 1996 6,611,592 1,322,318 550,966 110,193 1997* 3,336,502 667,300 556,084 111,219 *Six () months' collections Future Tax Receipts. The City's share of Tax receipts will be contingent upon the City's population increasing as the County's population grows due to Tax collections being disbursed among the County and the municipalities therein based upon population. For instance, Tax receipts are distributed based on the latest decennial census or special census. In 1990, the City's population was 37% of the total County population. Based upon the preliminary results of the 1997 special census conducted by the U.S. Bureau of Census, the City's percentage of total population remained at 37%. See THE CITY AND THE COUNTY, Population. Tax receipts will also be contingent upon the sale and use of property and services within the County, which activity is generally dependent upon economic conditions within the County and surrounding trade area. Also, Tax receipts may be affected by changes to transactions exempted from the Tax made by legislation adopted by the General Assembly of the State or by the people of the State in the form of a constitutional amendment. In the past the General Assembly of the State has considered new exemptions to the Tax, such as food sales, which, if adopted, would materially reduce Tax receipts. In addition, an organized group has discussed circulating a proposed constitutional amendment for voter approval at the general election in 1998 exempting sales of food from the Tax. The City has no control over actions of the General Assembly or the people of the State and cannot predict whether changes to the Tax may be made. In addition, Tax receipts may be affected by litigation regarding taxation of certain items currently subject to the Tax. Accordingly, the City cannot predict with certainty the expected amount of Tax receipts to be received and, therefore, there can be no assurance that Tax receipts will be sufficient to pay the principal of and interest on the Bonds. The majority of the electors of the County voting on the question have the option to repeal the Tax. Pursuant to the Authorizing Legislation, if the County should repeal the Tax, the Tax will continue to be collected in the City until the Bonds are retired or provision is made for their payment in accordance with the Authorizing Ordinance. There is no assurance that the collections will remain the same because the Tax will be levied only on sales and uses within the City. However, the levy of a 1% city-wide sales and use tax produced $9,030,172 in 1996 compared to $6,611,592 that the City received from the Tax for that same period. The City covenants in the Authorizing Ordinance that, in the event the Tax is repealed or not collected by the County for any reason, the City will forthwith (a) notify the Arkansas Department of Finance and Administration to continue to collect and disburse Tax receipts as authorized by • Arkansas Code Annotated §14-164-337 and (b) take such action as is necessary for the Tax to continue to be'collected in the City until the Bonds are retired or provision is made for their payment • in accordance with the Authorizing Ordinance: THE AUTHORIZING ORDINANCE Set forth below is a summary of certain portions of the Authorizing Ordinance. This summary does not purport to be comprehensive and reference is made to the full text of the Authorizing Ordinance for a complete description of its provisions.. Unless the ontext clearly indicates otherwise references under this heading to the "Bonds" shall include the bonds offered hereby and any additional parity bonds. The City will covenant as set forth below in the Authorizing Ordinance. Establishment of Funds. The following funds are created by the Authorizing Ordinance and shall be held and maintained by the Trustee and the City pursuant to the provisions of the Authorizing Ordinance: (1) Revenue Fund; (2) Bond Fund; and (3) Debt Service Reserve Fund. The Revenue Fund shall be maintained by the City as a segregated fund and the Bond Fund and the Debt Service Reserve Fund shall be maintained by the Trustee as segregated funds. The City may, in connection with the issuance of any additional parity bonds, create additional funds and accounts as may be necessary or convenient. Revenue Fund. The City shall promptly deposit to the Revenue Fund all Pledged Revenues as received and shall transfer to the Trustee, before the fifteenth day of each month, the amounts • required for debt service on the Bonds as described below: (1) The City shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one - twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The City shall also transfer any amount required to pay any Trustee's fees for the Bonds. Notwithstanding the above, the City shall increase the monthly deposits into the Bond Fund in order to make the first principal payment and the first interest payment on the Bonds offered hereby. (2) The City shall transfer to the Trustee, for deposit into the Debt Service Reserve Fund, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). (3) Any moneys remaining in the Revenue Fund, following the transfers required by paragraphs (1) and (2) above, may be used for any lawful purpose as determined by the City. Bond Fund. The Trustee shall promptly deposit the following receipts to the Bond Fund: (1) Any accrued interest received as proceeds from the Bonds; (2) Any amounts required to be transferred from the Revenue Fund; (3) All amounts required to be transferred from the Debt Service Reserve Fund; and (4) All other amounts required to be transferred under the Authorizing Ordinance. 16 The Trustee shall pay from moneys on deposit in the Bond Fund (i) on each interest payment date, • the amount required for the payment of interest on the Bonds due on said interest payment date, and (ii) on any principal payment date, the amount required for the payment of principal due on the Bonds on said principal payment date. The Trustee shall pay, from moneys on deposit in the Bond Fund, any fees due the Trustee on any interest payment date or principal payment date. Whenever the moneys in the Bond Fund are insufficient to pay the interest and principal due on the Bonds on any interest payment date or principal payment, the Trustee shall on such payment date withdraw from the Debt Service Reserve Fund and deposit into the Bond Fund an amount equal to the deficiency. On each interest payment date, any balance remaining in the Bond Fund after all payments required by the Authorizing Ordinance have been made less amounts on deposit for the next principal payment, shall be transferred to the City to be used for any lawful purpose as determined by the City. Debt Service Reserve Fund. The Debt Service Reserve Fund is created for the purpose of providing a reserve for payment of principal and interest on the Bonds. The Debt Service Reserve Fund shall be maintained in an amount equal to one-half of the maximum annual principal and interest requirements for the Bonds (the "Required Level"). Upon issuance of the Bonds offered hereby, there shall be deposited $204,334 into the Debt Service Reserve Fund from the proceeds of such Bonds. So long as the Debt Service Reserve Fund is maintained at the Required Level, all excess moneys in the Debt Service Reserve Fund shall be transferred into the Bond Fund on a monthly basis. Moneys held in the Debt Service Reserve Fund shall be used for payment of the principal of and interest on the Bonds in the event there is insufficient money available in the Bond Fund when payment of principal and interest on the Bonds is due and for no other purposes. If the amount held • in the Debt Service Reserve Fund shall ever be less than the Required Level, such fund shall be restored to the Required Level by transferring moneys from the Revenue Fund as described above until the Required Level is attained. Investments. (a) Moneys held for the credit of the funds created by the Authorizing Ordinance shall be invested and reinvested in (i) direct or fully guaranteed obligations of the United States of America ("Government Securities"), (ii) time deposits or certificates of deposit of banks, including the Trustee, that are insured by the Federal Deposit Insurance Corporation, or (iii) money market funds comprised exclusively of Government Securities ("Permitted Investments"). The Trustee shall so invest and reinvest moneys in the funds held by the Trustee pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (b) Permitted Investments shall have maturity or redemption dates and be in amounts consistent with the times at which said moneys will be required for the purposes provided in the Authorizing Ordinance. (c) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. (d) In determining the value of any fund held by the Trustee under the Authorizing Ordinance, the Trustee shall credit Permitted Investments at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than monthly, the Trustee shall determine the value of each fund held by it under the Authorizing Ordinance and shall report such determination to the City. To the extent that any loss or reduction in value reduces the value of any fund to a level lower than the level required under the • Authorizing Ordinance, such loss or reduction shall be made up as set forth above. 17 (e) The Trustee shall sell or present for redemption any Permitted Investments as necessary in order to provide money for the purpose of making any payment required under the • Authorizing Ordinance, and the Trustee shall not be liable for any loss resulting from any such sale. Certain Covenants. The City covenants that: (a) it will not take, suffer or permit any action which may cause the interest payable on the Bonds to be included in gross income for federal income tax purposes, including any use of proceeds of the sale of the Bonds or Pledged Revenues directly or indirectly in such manner as to cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. (b) It will not use or permit the use of the Improvements or the proceeds of the Bonds in such manner as to cause the Bonds to be private activity bonds within the meaning of Section 141 of the Code. (c) It will faithfully and punctually perform all duties with reference to the Tax and the Bonds, required by the Constitution and laws of the State and by the Authorizing Ordinance, including the future collection of Tax within the City, as therein specified and covenanted, the collection of the Pledged Revenues and the applying of the Pledged Revenues as provided in the Authorizing Ordinance. Parity Bonds. The City covenants that it will not issue any bonds, or incur any obligation, secured by a lien on or pledge of the Pledged Revenues, except the City may issue bonds or incur obligations subordinate to the payment of the Bonds. In addition, additional bonds may be issued on a parity of security with the bonds if Pledged Revenues for the preceding twelve consecutive months are in excess of 125% of the average annual debt service requirements for the outstanding Bonds and the additional bonds proposed to be issued. Defaults nd Remedies. If there be any default in the payment of the principal of and interest on the • Bonds, or if the City defaults in the performance of any covenant contained in the Authorizing Ordinance, the Trustee may, and upon the written request of the owners of not less than ten percent (10%) in principal amount of the Bonds then outstanding shall, by proper suit compel the performance of the duties of the officials of the City and officials of the State, under the Authorizing Ordinance, to take any action or obtain any proper relief in law or equity available under the Constitution and laws of the State. No owner of any Bond shall have any right to institute any suit, action, mandamus or other proceeding in equity or in law for the protection or enforcement of any right under the Authorizing Ordinance or under the Constitution and laws of the State unless such owner previously shall have given to the Trustee written notice of the default on account of which such suit, action or proceeding is to be taken, and unless the owners of not less than ten percent (10%) in principal amount of the Bonds then outstanding shall have made written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers herein granted or granted by the Constitution and laws of the State, or to institute such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the cost, expense and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to comply with such request within a reasonable time, and such notification, request and offer of indemnity are in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trust of the Authorizing Ordinance or to any other remedy thereunder. No one or more owners of the Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Authorizing Ordinance, or to enforce any right thereunder except in the manner therein provided, that all proceedings at law or in equity shall be instituted, had and maintained in the manner therein provided and for the benefit of •all owners of the outstanding Bonds, and any individual rights of action or other right given to one or more of such owners by law are restricted by the Authorizing Ordinance to the rights and remedies therein detailed. 18 All rights of action under the Authorizing Ordinance or under any of the Bonds secured thereby, • enforceable by the Trustee, may be enforced by it without the possession of any of the Bonds, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name and for the benefit of all the owners of the Bonds, subject to the provisions of the Authorizing Ordinance. No remedy conferred upon or reserved to the Trustee or to the owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Authorizing Ordinance or given by any law or by the Constitution of the State. No delay or omission of the Trustee or of any owners of the Bonds to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy given by the Authorizing Ordinance to the Trustee and to the owners of the Bonds, respectively, may be exercised from time to time and as often as may be deemed expedient. The Trustee may, and upon the written request of the owners of not less than a majority in principal amount of the Bonds then outstanding shall, waive any default which shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted under the provision of the Authorizing Ordinance or before the completion of the enforcement of any other remedy, but no such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Defeacanc e. The Bonds shall be deemed paid when there has been deposited with the Trustee in the Bond Fund moneys sufficient to pay the principal or redemption price of and interest on the Bonds to the date of maturity or redemption. The Bonds shall also be deemed paid if there shall be irrevocably deposited with the Trustee Government Securities which are direct obligations of the • United States of America that mature according to their terms on or prior to the date of maturity or redemption of the Bonds and the principal or redemption price of and interest on which, together with any moneys on deposit with the Trustee, will provide an amount sufficient to pay in full the principal or redemption price of and interest on the Bonds when due plus the necessary fees and expenses of the Trustee. On the payment of any Bonds within the meaning of the Authorizing Ordinance, the Trustee shall hold in trust, for the benefit of the owners of such Bonds, all such moneys and/or Government Securities. When all the Bonds and interest thereon shall have been paid within the meaning of the Authorizing Ordinance and if the Trustee has been paid its fees and expenses or provision has been made therefor, the Trustee shall take all appropriate action to cause (i) the pledge and lien of the Authorizing Ordinance to be discharged and canceled, and (ii) all moneys held by it pursuant to the Authorizing Ordinance and which are not required for the payment of such Bonds to be paid over or delivered to or at the direction of the City. The Trustee. (a) The Trustee shall be responsible for the exercise of good faith and ordinary prudence in the execution of its trusts and duties. The recitals in the Authorizing Ordinance and in the Bonds are the recitals of the City and not of the Trustee. (b) Any bank or trust company into which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, • powers, discretions, immunities, privileges, and all other matters as was its predecessor without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such 19 successor trustee shall have capital and surplus of at least $15,000,000 or shall be the lead bank or • trust company of a holding company having capital and surplus of at least $15,000,000. (c) In case the Trustee shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting under the Authorizing Ordinance, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal. Every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $15,000,000 or shall be the lead bank or trust company of a holding company having capital and surplus of no less than $15,000,000. The successor trustee shall also act as paying agent and bond registrar. (d) The Trustee and any successor trustee may at any time resign from the trusts created by the Authorizing Ordinance by giving 30 days' written notice to the City, and such resignation shall take effect at the end of such 30 days, or upon the earlier appointment of a successor trustee by the City; provided, however, such resignation shall not take effect until the successor trustee has accepted the trusts in writing. Such notice may be served personally or sent by registered mail. (e) Unless the City is in default, the Trustee may be removed at any time by an instrument in writing delivered to the Trustee with 90 days' notice signed by the City; provided, however, such removal shall not take effect until a successor trustee has accepted the trusts created by the Authorizing Ordinance in writing. Supplemental Ordinances. The terms of the Authorizing Ordinance constitute a contract between the City and the owners of the Bonds and no variation or change in the undertaking set forth in the •Authorizing Ordinance shall be made while any of the Bonds are outstanding, except as hereinafter set forth. The owners of not less than seventy-five percent (75%) in aggregate principal amount of the Bonds then outstanding shall have the right, from time to time, to consent to and approve the adoption by the City of a supplemental ordinance as shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Authorizing Ordinance or in any supplemental ordinance. The Trustee may consent to any change without the consent of seventy-five percent (75 %) of the owners of the aggregate principal amount of Bonds outstanding in connection with the issuance of any additional parity bonds or in order to cure any ambiguity or formal defect or omission in the Authorizing Ordinance or any amendment thereto, provided, however, that nothing therein contained shall permit or be construed as permitting (a) an extension of the maturity of the principal of or the interest on any Bond issued thereunder, or (b) a reduction in the principal amount of any Bond or the rate of interest thereon, or (c) the creation of a pledge of Pledged Revenues superior to the pledge created by the Authorizing Ordinance, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental ordinance. CONTINUING DISCLOSURE AGREEMENT Purpose of the Continuing Disclosure Agreement. The Continuing Disclosure Agreement is executed and delivered by the City and the Trustee for the benefit of the Beneficial Owners of the Bonds and in order to assist the Underwriter in complying with the Securities and Exchange Commission, Rule 15c2 -12(b)(5). Definitions. In addition to the definitions set forth in this Official Statement, the following capitalized terms shall have the following meanings: • "Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, the Continuing Disclosure Agreement. 'I,] "Beneficial Owner" of a Bond shall mean any person who has or shares the power, •directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Dissemination Agent" shall mean the City, acting in its capacity as Dissemination Agent, or any successor Dissemination Agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed hereunder. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of Arkansas as a state repository for the purpose of the Rule. As of the date hereof, there is no State Repository. Provision of Annual Report. (a) The City shall, or cause the Dissemination Agent to, as soon as practicable but not later than two hundred ten (210) days after the end of the City's fiscal year (presently December 31), commencing with the report after the end of the 1997 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of the Continuing • Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in the Continuing Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date, but, in such event, such audited financial statements shall be submitted not less than thirty (30) days after receipt thereof by the City. If the City's fiscal year changes, it shall give notice of such change in the manner as for a Listed Event. (b) Not later than fifteen (15) business days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the City shall provide the Annual Report to the Dissemination Agent (if other than the City) and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City and the Dissemination Agent (if other than the City) to determine if the City is in compliance with the first sentence of this subsection (b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to each Repository and the Municipal Securities Rulemaking Board. Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the following: 1. Information of the type set forth in this Official Statement under the caption "THE CITY AND THE COUNTY" with respect to (i) City and County population in the latest year for which available and the four previous years for which figures are available; (ii) number of building • permits in the City (excluding, the University of Arkansas and renovations to existing structures) in the latest year for which available and the four (4) previous years; (iii) bank deposits for the latest 21 year for which available and the previous four (4) years; and (iv) unemployment rates in the latest • year for which available and the four (4) previous years. 2. . The City's portion of Tax revenues for the latest calendar year and the four (4) previous years and the percentage of the overall Tax revenues paid to the City in each of those years. 3. The annual audit of the City prepared in accordance with Government Auditing Standards issued by the Comptroller General of the United States and applicable state law. Any or all of the items above may be incorporated by reference from other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so incorporated by reference. Reporting of Significant Events. (a) This caption describes the giving of notices of the occurrence of any of the following events: Principal and interest payment delinquencies. 2. Non-payment related defaults. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. • 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions or events affecting the tax-exempt status of the security. 7. Modification to rights of security holders. 8. Bond calls. 9. Defeasances. 10. Release, substitution, or sale of property securing repayment of the securities. 11. Rating changes. 12. Repeal of the Tax in the County. (b) When the City obtains knowledge of the occurrence of a Listed Event, the City shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence. (c) Whenever the Trustee obtains knowledge of the occurrence of a Listed Event, whether from notice by the City or otherwise, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board, each State Repository and the City. Notwithstanding the foregoing, notice of the Listed Event described in clause (a)8 need not be given any earlier than the notice for the underlying event is given to registered owners of affected Bonds pursuant to the •terms of the Authorizing Ordinance. Each notice of the occurrence of a Listed Event shall be captioned "Notice of Material Event" and shall properly state the date, title and CUSIP number of the Bonds. 22 Termination of Reporting Obligation. The City's obligations under the Continuing Disclosure Agreement for this issue shall terminate upon the defeasance, prior redemption or payment in full of all the Bonds. Dissemination_ Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to the Continuing Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be the City. Amendment: Waiver. Notwithstanding any other provision of the Continuing Disclosure Agreement, the City and the Trustee may amend the Continuing Disclo ur ed the Agreement, the re , and diaconditions are any nnof the Continuing Disclosure Agreement may be waived, p satisfied: (a) If the amendment or waiver relates to the requirements for providing an Annual Report, to the contents of the Annual Report or the reporting of Listed Events, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and • (c) The amendment or waiver either (i) is approved by the Beneficial Owners of the Bonds in the same manner as provided in the Authorizing Ordinance for amendments to the Authorizing Ordinance with the consent of Beneficial Owners, or (ii) does not, in the opinion of the Trustee, materially impair the interests of the Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of the Continuing Disclosure Agreement, 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 Listed Event, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Additional Information. Nothing in the Continuing Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in the Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by the Continuing Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by the Continuing Disclosure Agreement, the City shall have no obligation under the Continuing Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Default. In the event of a failure of the City or the Trustee to comply with any provision of the Continuing Disclosure Agreement, the Trustee, the City or any Beneficial Owner may (and the 23 Trustee, at the request of the Underwriter or the Beneficial Owners of at least 25 % aggregate principal amount of outstanding Bonds, shall) take such actions as may be necessary and appropriate, • including seeking mandamus or specific performance by court order, to cause the City or the Trustee, as the case may be, to comply with its obligations under the Continuing Disclosure Agreement. A default under the Continuing Disclosure Agreement shall not be deemed a default under the Authorizing Ordinance, and the sole remedy under the Continuing Disclosure Agreement in the event of any failure of the City or the Trustee to comply with the Continuing Disclosure Agreement shall be an action to compel performance. Duties of Trustee and Dissemination Agent and Right of Indemnity. The Dissemination Agent (if other than the Trustee or the Issuer) and the Trustee in its capacity as Dissemination Agent shall have only such duties as are specifically set forth in the Continuing Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent (if other than the Issuer) and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's (if other than the Issuer) or the Trustee's gross negligence or willful misconduct. Beneficiaries. The Continuing Disclosure Agreement shall inure solely to the benefit of the City, the Trustee, the Dissemination Agent, the Underwriter and the Beneficial Owners and shall create no rights in any other person or entity. DEBT SERVICE REQUIREMENTS The following table shows amounts required to pay principal and interest on the Bonds during each year ending November 15: • Year (Ending November 15) Principal Interest low 1997 $23,783.29 $23,783.29 1998 $290,000 115,702.50 405,702.50 1999 305,000 103,667.50 408,667.50 2000 315,000 90,705.00 405,705.00 2001 330,000 77,160.00 407,160.00 2002 345,000 62,640.00 407,640.00 2003 360,000 47,115.00 407,115.00 2004 375,000 30,735.00 405,735.00 2005 290,000 13,485.00 303,485.00 TOTALS $2,610,000 $564,993.29 $3,174,993.29 DEBT SERVICE COVERAGE Set forth below is debt service coverage information for the Bonds. In arriving at the annual Pledged Revenues for this calculation, the City examined the Tax receipts it received for 1996, which totaled $6,611,592. See THE TAX, Historical Tax Receipts. Actual Tax receipts collected by the City will depend upon, among other things, the level of retail activity within the County, the economic health of the County and surrounding trade area, the City's population growth as compared with the County, possible future actions by the people of the State or General Assembly of the State defining transactions subject to the Tax and granting exemptions •from the Tax, such as exemptions for food sales. There can be no assurance that actual Tax receipts will equal the amount shown below. See THE TAX, Future Tax Receipts. Based upon the pledge of 20% of the City's share of Tax receipts, debt service coverage for the Bonds is as follows: • Pledged Revenues Available for Debt Service $1,322,318 Maximum Annual Debt Service on Bonds 408,668 Coverage 3.24X *calculated for a year ending November 15. LEGAL MATTERS Viral Proceedings. Except as described in the next paragraph, there is no litigation pending seeking to restrain or enjoin the Tax or the issuance or delivery of the Bonds, or questioning or affecting the legality of the Tax or Bonds or the proceedings and authority under which the Bonds are to be issued, or questioning the right of the City to adopt the Authorizing Ordinance or to issue the Bonds. In the Washington County Chancery Court case of . hirkev v. Johnston, et al., the plaintiff taxpayer has alleged that the Tax is invalid under Article 16, §11 of the State Constitution because the ballot used at the election on the Tax did not specify the purposes for which Tax collections would be used or distributed. On April 28, 1997, the Arkansas Supreme Court ruled in a similar case filed in Pulaski County styled Oldner v. Villines, 328 Ark. 296 (1997) that a local sales and use tax, similar to the Tax, was valid even though the purposes and manner of distribution of tax collections were not stated on the ballot for the election approving the tax. The Arkansas Supreme Court held that if the ballot is silent as to the use of the tax collections, they may be used for general purposes. Therefore, Article 16, §11 of the State Constitution was not violated. Based upon the ruling in • Old, supra, the trial court has ruled in favor of the defendants. The plaintiff is not expected to appeal. Legat-Opinions. Legal matters incident to the authorization and issuance of the Bonds are subject to the unqualified approving opinion of Gill Law Firm, a Professional Association, Little Rock, Arkansas, Bond Counsel. Certain matters will be passed upon for the Underwriter by its counsel, Friday, Eldredge & Clark, Little Rock, Arkansas. Tax Exemption. In the opinion of Gill Law Firm, a Professional Association, Bond Counsel, under existing law the interest on the Bonds is exempt from all Arkansas state, county and municipal taxes. Also, in the opinion of Bond Counsel, interest on the Bonds under existing law is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be (or continue to be) excluded from gross income for federal income tax purposes. These requirements generally relate to arbitrage, the use of the proceeds of the Bonds and the Improvements. Failure to comply with certain of such requirements could cause the interest on the Bonds to be so included in gross income retroactive to the date of issuance of the Bonds. The City has covenanted to comply with all such requirements in the Authorizing Ordinance. • Prospective purchasers of the Bonds should be aware that (i) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds, (ii) 25 interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by Section 59A of the Code, (iii) interest on the Bonds earned by certain foreign corporations doing • business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (iv) passive investment income including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25 % of the gross receipts of such Subchapter S corporation is passive investment income and (v) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account in determining gross income, receipts or accruals of interest on the Bonds. Prospective purchasers of the Bonds should be further aware that Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of a holder's interest expense allocated to interest on the Bonds, except with respect to certain financial institutions (within the meaning of Section 265(b)(5) of the Code). An exception allows a deduction of 80% of interest expense allocable to "qualified tax-exempt obligations." Under the Code, the term includes any obligation which (1) is not a "private activity bond" within the meaning of the Code (excluding from that term "qualified 501(c)(3) bonds"), (2) is issued by an issuer (and subordinate entities) which reasonably anticipates to issue not more than $10,000,000 of tax-exempt obligations (other than private activity bonds (excluding from that term "qualified 501(c)(3) bonds" under Section 145 of the Code) during the calendar year, and (3) is so designated by the issuer. The City has designated the Bonds as "qualified tax-exempt obligations" and has covenanted not to use the Improvements and the proceeds of the Bonds in a manner which would cause the Bonds to be "private activity bonds," and has represented that the City and its subordinate entities have not and do not expect to issue more than $10,000,000 of such tax-exempt obligations during calendar year • 1997. Prospective purchasers of the Bonds should also be aware that Section 17 of Act 785 of the Acts of Arkansas of 1993 added new subsections (b) and (c) to Section 26-51-431 of the Arkansas Code of 1987 Annotated. Subsection (b) states that Section 265(a) of the Internal Revenue Code is adopted for the purpose of computing Arkansas corporation income tax liability. Subsection (c) provides that in computing Arkansas corporation income tax liability, no deduction shall be allowed for interest "on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by Arkansas law." On December 8, 1993, the Arkansas Department of Finance and Administration Revenue Division issued Revenue Policy Statement 1993- 2, which provides in part: Financial institutions may continue to deduct interest on indebtedness incurred or continued to purchase or carry obligations which generate tax-exempt income to the same extent that the interest was deductible prior to the adoption of Section 17 of Act 785 of 1993. MISCELLANEOUS Underwriting. Under a Bond Purchase Agreement (the "Agreement") entered into by and between the City, as issuer, and Stephens Inc., as underwriter (the "Underwriter"), the Bonds are being purchased at 99.15% plus accrued interest. The Agreement provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation of the Underwriters to accept delivery of the Bonds is subject to various conditions contained in the Agreement, including the absence of pending or threatened litigation questioning the validity of the Bonds or any proceedings in •connection with the issuance thereof, and the absence of material adverse changes in the financial or business condition of the City. 26 The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on • the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering price. FnforceahSlity of Remedies. Rights of the registered owners of the Bonds and the enforceability of the remedies available under the Authorizing Ordinance may depend on judicial action and may be subject to the valid exercise of the constitutional powers of the United States of America and of the sovereign police powers of the State or other governmental units having jurisdiction, and to the application of federal bankruptcy laws or other debtor relief or moratorium laws in general. Therefore, enforcement of those remedies may be delayed or limited, or the remedies may be modified or unavailable, subject to the exercise of judicial discretion in accordance with general principles of equity. Bond Counsel expresses no opinion as to any effect upon any right, title, interest or relationship created by or arising under the Authorizing Ordinance resulting from the application of state or federal bankruptcy, insolvency, reorganization, moratorium or similar debtor relief laws affecting creditors' rights which are presently or may from time to time be in effect. Information in Official C� ta�ment. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Bonds. The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the undersigned the Official • Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The execution of this Official Statement has been duly authorized by the City. CITY OFF YETTEV LARKANSAS By / Hanna Mayor Dated: As of the Cover Page hereof. 27 • • i • CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by the City of Fayetteville, Arkansas (the "Issuer") and First Commercial Trust Company, National Association, Little Rock, Arkansas (the "Trustee")in connection with the issuance of the Issuer's Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"). The Bonds are being issued pursuant to Ordinance No. 4050 of the Issuer, adopted August 19, 1997 (the "Authorizing Ordinance"). The Issuer and the Trustee covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer and the Trustee for the benefit of the Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Securities and Exchange Commission, Rule 15c2 - 12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Authorizing Ordinance, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: • "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Beneficial Owner" of a Bond shall mean any person who has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "County" shall mean Washington County, Arkansas. "Dissemination Agent" shall mean the Issuer, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Currently, the following are National Repositories: u Bloomberg Municipal Repositories Phone: 609-279-3200 P. O. Box 840 Fax: 609-279-5962 Princeton, New Jersey 08542-0840 Internet: MUNI @ Bloomberg. corn Kenny Information Systems, Inc. Phone: 212-770-4595 Attn: Kenny Repository Service Fax: 212-797-7994 65 Broadway - 16th Floor New York, New York 10006 Thomson NRMSIR Phone: 212-807-3814 Attn: Municipal Disclosure Fax: 212-989-9282 395 Hudson Street Internet: Disclosure @ New York, New York 10014 Muller.com Moody's NRMSIR Phone: 800-339-6306 Public Finance Information Center Fax: 212-553-1460 99 Church Street New York, New York 10007 Disclosure, Inc. Phone: 301-951-1450 Attn: Document Acquisitions/ (for issuer -related Municipal Securities questions) • 5161 River Road 800-638-8241 Bethesda, Maryland 20816 (for purchase of documents) Fax: 301-718-2329 R. R. Donnelly Financial Phone: 800-580-3670 Municipal Securities Fax: 508-562-1969 Disclosure Archive Internet: HTTP\\WWW. 559 Main Street Municipal.com Hudson, Massachusetts 01749 "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2 -12(b) (5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of Arkansas as a state • 2 • repository for the purpose of the Rule. As of the date of this Disclosure Agreement, there is no State Repository. "Tax" shall mean the sales and use tax levied by the County, of which 20% of the Issuer's share is pledged to the Bonds under the Authorizing Ordinance. (a) The Issuer shall, or cause the Dissemination Agent to, as soon as practicable but not later than two hundred ten (210) days after the end of the Issuer's fiscal year (presently December 31), commencing with the report after the end of the 1997 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross- reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date, but, in such event, such audited financial statements shall be submitted not less than thirty (30) days after receipt • thereof by the Issuer. If the Issuer's fiscal year changes, the Issuer shall give notice of such change in the manner as for a Listed Event. (b) Not later than fifteen (15) days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Issuer shall provide the Annual Report to the Dissemination Agent (if other than the Issuer) and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the Issuer and the Dissemination Agent (if other than the Issuer) to determine if the Issuer is in compliance with the first sentence of this subsection (b). (c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Trustee shall send a notice to each Repository and the Municipal Securities Rulemaking Board in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (1) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; 3 • (2) file a report with the Issuer (if the Dissemination Agent is other than the Issuer) and (if the Dissemination Agent is other than the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or incorporate by reference the following: 1. Information of the type set forth in the Official Statement dated August 19, 1997 describing the Bonds under the caption "THE CITY AND THE COUNTY" with respect to (i) the Issuer and County population in the latest year for which available and the four previous years for which figures are available; (ii) number of building permits in the Issuer (excluding the University of Arkansas and renovations to existing structures) in the latest year for which available and the four previous years; (iii) bank deposits for the latest year for which available and the previous four years; and (iv) unemployment rates in the latest year for which available and the four previous years. 2. The Issuer's portion of Tax revenues for the latest . calendar year and the four (4) previous years and the percentage of overall Tax revenues paid to the Issuer in each of those years. 3. The annual audit of the Issuer prepared in accordance with Government Auditing Standards issued by the Comptroller General of the United States and applicable state law. Any or all of the items above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a,final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so incorporated by reference. SECTION 5. Reporting of ignificant Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events: Principal and interest payment delinquencies. 2. Non-payment related defaults. C L 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions or events affecting the tax- exempt status of the security. 7. Modification to rights of security holders. 8. Bond calls. 9. Defeasances. 10. Release, substitution, or sale of property securing repayment of the securities. 11. Rating changes. 12. Repeal of the Tax in the County. • (b) When the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall promptly notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence. (c) Whenever the Trustee obtains knowledge of the occurrence of a Listed Event, whether notice from the Issuer or otherwise, the Trustee shall file a notice of such occurrence with the Municipal Securities Rulemaking Board, each State Repository and the Issuer. Notwithstanding the foregoing, notice of the Listed Event described in subsection (a)(8) need not be given under this subsection any earlier than the notice for the underlying event is given to registered owners of affected Bonds pursuant to the terms of the Authorizing Ordinance. Each notice of the occurrence of a Listed Event shall be captioned "Notice of Material Event" and shall properly state the date, title and CUSIP number of the Bonds. SECTION 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all the Bonds. • 5 SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination Agent shall be the Issuer. SECTION 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Trustee may amend this Disclosure Agreement, and any provisions of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; • (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Beneficial Owners of the Bonds in the same manner as provided in the Authorizing Ordinance for amendments to the Authorizing Ordinance with the consent of Beneficial Owners, or (ii) does not, in the opinion of the Trustee, materially impair the interests of the Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer 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 Issuer. 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 Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made • 6 should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer or the Trustee to comply with any provision of this Disclosure Agreement, the Trustee, the Issuer or any Beneficial Owner may (and the Trustee, at the request of the Participating Underwriter or the Beneficial Owners of at least 25% aggregate • principal amount of outstanding Bonds, shall) take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer, the Dissemination Agent or the Trustee, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed a default under the Authorizing Ordinance, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer, the Dissemination Agent or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties of Trustee and Dissemination Agent and Right of Indemnity. The Dissemination Agent (if other than the Trustee or the Issuer) and the Trustee in its capacity as Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent (if other than the Issuer) and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's (if other than the Issuer) or the Trustee's gross negligence or willful misconduct. The obligations of the Issuer • 7 under this Section shall survive resignation or removal of the Trustee or the Dissemination Agent (if other than the Issuer) and payment of the Bonds. SECTION 12. Notices. Any notices/or communications to or among any of the parties to this Disclosure Agreement may be given as follows: To the Issuer: City of Fayetteville, Arkansas 113 West Mountain Fayetteville, Arkansas 72701 Attention: Mayor Telephone/Fax: 501-521-7700/501-575-8257 To the Trustee: First Commercial Trust Company, National Association P. O. Box 1471 Little Rock, Arkansas 72203 Attention: Corporate Trust Telephone/Fax: 501-371-6700/501-371-8827 Any person may, by written notice to the other persons listed above, designate a different address or telephone or fax number(s) to which subsequent notices or communications should be sent. • SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to.the benefit of the Issuer, the Trustee, the Dissemination Agent, the Participating Underwriter and the Beneficial Owners and shall create no rights in any other person or entity. • 8 SECTION 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but on and the same instrument. Dated: September 1, 1997. CITY OF FAYETTEVILLE, ARKANSAS BY /(:%1�j'l4✓ Mayor FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION By Authorized Officer 0 • 9 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of City: City of Fayetteville, Arkansas Name of Bond Issue: City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Date of Issuance: September 23, 1997 NOTICE IS HEREBY GIVEN that City has not provided an Annual Report with respect to the above -named Bonds as required by the Continuing Disclosure Agreement between the City and the undersigned dated September 1, 1997. Dated FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION • By Authorized Officer • . 10 11 CERTIFICATE OF ISSUER PURSUANT TO PARAGRAPH 1 1(C)(4) • OF THE BOND PURCHASE AGREEMENT The undersigned, the duly elected Mayor of the City of Fayetteville, Arkansas, and the acting City Clerk of the City of Fayetteville, Arkansas, hereby certify and attest that: the representations and warranties of the City of Fayetteville, Arkansas (the "Issuer") contained in the Bond Purchase Agreement dated August 19, 1997, between the Issuer and Stephens Inc. (the "Bond Purchase Agreement") are true and correct in all material respects as of this date; 2. there is no action, suit, proceeding, or investigation involving the Issuer before or by any court or public board or body pending or, to the best of our knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence, or powers of the Issuer or the titles of its officials to their respective offices, (b) enjoin or restrain the issuance, sale, and delivery of the Bonds, or the pledge of the Pledged Revenues, (c) in any way question or affect any of the rights, powers, duties, or obligations of the Issuer with respect to the Pledged Revenues or the Tax, (d) in any way question or affect any authority for the issuance of the Bonds or the validity or enforceability of the Bonds or the Bond Ordinance, or (e) in any way question or affect the Bond Purchase Agreement or the transactions contemplated by it, or by the Official Statement, or any other agreement or instrument to which the Issuer is a party and relating to the Bonds; • 3. the Issuer has complied with all agreements and covenants and satisfied all conditions on its part to be complied with or satisfied at or prior to the Closing; and to the best of our knowledge, the Official Statement does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein, in the fight of circumstances under which they were made, not misleading. Terms used herein and not otherwise defined have the meanings described in the Bond Purchase Agreement and Ordinance 4050 of the Issuer duly adopted on August 19, 1997.. This Certificate is executed by the undersigned on this 23rd day of September, 1997. Fred . Hanna, Mayor t: 7Qt.. Traci Paul, City Clerk • P:'DOCUMENflCTBIFAYE I LEV\CERTI I C4.CTB September 10. 1997 (4:54pm) r 12J S CERTIFICATE OF COUNTY PURSUANT TO PARAGRAPH 11(C)(6) OF THE BOND PURCHASE AGREEMENT The undersigned, the duly elected County Judge of Washington County, Arkansas, and the acting County Clerk of Washington County, Arkansas, hereby certify and attest that: there is no action, suit, proceeding, or investigation involving Washington County (the "County') before or by any court or public board or body pending or, to the best of our knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence, or powers of the County or the titles of its officials to their respective offices, (b) enjoin or restrain the levy and collection of the 1% sales and use tax within the County (the "Tax"), (c) in any way question or affect any of the rights, powers, duties, or obligations of the County with respect to the Tax, or (d) in any way question or affect any authority for the levy and collection of the Tax or the validity of the Tax; 2. the Tax has not been repealed, modified or rescinded and no petition has been filed to abolish the Tax or to refer the ordinance levying the Tax to the people under the legislation authorizing the County to levy the Tax or under Amendment No. 7 to the Constitution of the State of Arkansas; and 3. the Tax has been collected within the County since 1981 and the per capita share of money received therefor, less deductions authorized by law, has been distributed to the County and • each municipality therein as provided by law. This Certificate is executed by the undersigned on this 23rd day of September, 1997. County Judge oun c • P: JDOCUMENTCTB\FAYETIENCERTI IC5.CTB September 16, 1997 (12:14pm) NO ARBITRAGE CERTIFICATE • The City of Fayetteville, Arkansas (the "Issuer"), by its Mayor and City Clerk, hereby certifies as follows: General 1.1. This certificate is executed for the purpose of setting forth the facts, estimates, and expectations of the Issuer on the date hereof as to future events regarding the Issuer's $2,610,000 Sales Tax Capital Improvement Refunding Bonds, Series 1997, dated September 1, 1997 (the "Bonds"), which bonds are being delivered to the initial purchaser thereof, Stephens Inc. (the "Purchaser"), on this date. 1.2. The undersigned are the duly elected Mayor and City Clerk of the Issuer, and are familiar with the facts, estimates, and expectations set forth herein. 1.3. To the best knowledge, information, and belief of the undersigned, the expectations contained in this certificate are reasonable. 1.4. The Issuer is not aware of any facts or circumstances that would cause it to question the accuracy of the representations described in Section 3.2 hereof made by the Purchaser and set forth in Exhibit "A" attached hereto. • 1.5. Terms not otherwise defined herein have the meanings defined in Ordinance No. 4050, authorizing the issuance and sale of the Bonds (the "Authorizing Ordinance"). 2.1. The purpose of issuing the Bonds is to provide funds to the Issuer to refund the Issuer's outstanding $2,940,000 Sales Tax Capital Improvement Bonds, Series 1986 (the "Refunded Bonds"), paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. 3.1. The Bonds were sold to the Purchaser for a price of $2,610,000, less a discount of $22,185 plus accrued interest from September 1, 1997, to September 23, 1997, the date of delivery, in the amount of $7,070.71, for a total purchase price of $2,594,885.71. 3.2. The Purchaser has represented to the Issuer that the Bonds were the subject of a bona fide offering to the public at the prices set forth on the cover of the Issuer's Official Statement dated August 19, 1997, resulting in an initial offering price to the public of $2,610,000 plus accrued interest in the amount of $7.070.71 for a total reoffering price of $2,617,070.71, and a Yield on the Bonds of 4.5048%. The difference between the reoffering price to the public and the purchase price to the Issuer (viz., the sum of $22,185) will be retained by the Purchaser as its underwriter's fee. • 3.3. There are currently on deposit in the funds and accounts established under the Trust • Indenture dated as of November 15, 1986, pursuant to which the Refunded Bonds were issued (the "Trust Indenture") the amounts described in (i), (ii), and (iii). Such amounts constitute all of the funds and accounts in existence which contain moneys that are proceeds of the Refunded Bonds or are otherwise available to pay the principal of or interest on the Refunded Bonds. (i) From moneys attributable to the Refunded Bonds, there is currently on deposit in the Debt Service Reserve Fund held under the Trust Indenture, immediately available moneys in the amount of $377,000; (ii) From moneys attributable to the Refunded Bonds, there are currently on deposit in the Redemption Fund held under the Trust Indenture, immediately available moneys in the amount of $38,079.55; and (iii) From moneys attributable to the Refunded Bonds, there are currently on deposit in the Bond Fund held under the Trust Indenture, immediately available moneys in the amount of $257,056.25. (iv) The moneys held pursuant to (i), (ii), and (iii) above total $672,135.80 and are referred to as "Transferred Proceeds." 3.4. The proceeds of the sale of the Bonds and Transferred Proceeds will be used as follows: • (a) The accrued interest in the amount of $7,070.71 will be deposited into the Bond Fund held by the Trustee and will be used to pay part of the interest due on the Bonds on the first interest payment date of November 15, 1997. (b) A portion of the proceeds of the Bonds ($2,544,770.58), plus $467,802.05 of the Transferred Proceeds will be disbursed to First Commercial Trust Company, National Association, in the City of Little Rock, Arkansas, as Trustee, to provide for the payment of the principal of and interest on the Refunded Bonds. (c) Transferred Proceeds in the amount of $204,333.75 will be deposited into the Debt Service Reserve Fund for the Bonds; (d) Bond Proceeds in the amount of $43,044.42 will be used to pay the expenses of authorizing and issuing the Bonds, including Trustee's fees, printing and legal fees. Any balance of Bond Proceeds will be used to pay interest on the Bonds. 4. Funds Securing the Bonds 4.1. Pledge: Revenues. The Bonds are secured by a pledge of 20% of the Issuer's share of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of Title 26, Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated ("Pledged Revenues"). The • obligation of the Issuer to make transfers of the Pledged Revenues to the Revenue Fund and Bond Fund in an amount sufficient to provide for the payment of the principal and interest on the Bonds constitutes a first pledge of and charge against Pledged Revenues prior to all other uses to which said • moneys are devoted, either under present law or under any laws that may be enacted in the future. 4.2. Revenue Fund. The Authorizing Ordinance creates a Revenue Fund into which the Issuer will promptly deposit all Pledged Revenues; moneys will be transferred from the Revenue Fund before the fifteenth day of each month, as follows: FIRST: The Issuer shall transfer to the Trustee for deposit to the Bond Fund an amount equal to one -sixth (1/6th) of the interest due on the Bonds on the next interest payment date plus one -twelfth (1/12th) of the principal due on the Bonds on the next principal payment date, after taking into account amounts held in the Bond Fund for the payment of such principal and interest on the Bonds. The Issuer shall also transfer any amount required to pay any Trustee and Paying Agent fees for the Bonds. Notwithstanding the above, the Issuer shall increase the monthly deposits into the Bond Fund in order to make the first interest payment on the Bonds. SECOND: The Issuer shall transfer to the Trustee, for deposit into the Debt Service Reserve Fund for the Bonds, beginning in the month in which a deficiency in the Debt Service Reserve Fund was created by a withdrawal, valuation change or otherwise, an amount equal to at least one -twelfth (1/12th) of the amount of such deficiency until the amount in the Debt Service Reserve Fund is equal to the Required Level (as hereinafter defined). THIRD: Any moneys remaining in the Revenue Fund, following the transfers required by • Section 8 of the Authorizing Ordinance, may be used for any lawful purpose as determined by the Issuer. 4.3. Debt Service Reserve Fund. Under the Authorizing Ordinance, the Debt Service Reserve Fund is created and has been funded in the amount of $204,333.75 (the "Required Level"). Investment of Funds Securing the Bonds 5.1. Revenue Fund: Pledged Revenues deposited into the Revenue Fund are expected primarily to be used to pay for debt service on the Bonds. Moneys will be disbursed monthly from the Revenue Fund monthly for the purposes set forth in Section 4.2 above. Moneys deposited in the Revenue Fund may be invested for a temporary period, until expended for the stated purposes, in investment obligations that bear a Yield that is materially higher than the Yield on the Bonds. 5.2. Bond Fund: The Bond Fund will be used primarily to achieve proper matching of revenues and debt service, and it is expected that all moneys in the Bond Fund will be expended for debt service on the Bonds within thirteen months of the date of deposit. Amounts deposited in the Bond Fund may be invested for a temporary period, until expended to pay debt service on the Bonds, in obligations that bear a Yield that is materially higher than the Yield of the Bonds, for a period not exceeding thirteen months from the date of the first deposit of such amounts to the Bond Fund. 5.3. Debt Service Reserve Fund: Amounts in the Debt Service Reserve Fund may be • invested in investment obligations that bear a Yield that is materially higher than the yield in the Bonds. 6. Temporary Period - Refunding of the Refunded Bonds • 6.1. Refunded Bonds. In accordance with the Authorizing Ordinance, the Issuer is required to pay to the Trustee the sum stated in paragraph 3.4(b) above, and such sum is calculated to be sufficient to pay immediately the principal of and premium, if any, and interest on the Refunded Bonds. The Refunded Bonds have been called and are to be redeemed in full immediately. 6.2. Sums deposited with the Trustee for redemption of the Refunded Bonds may be invested by the Trustee at an unrestricted yield for a period not exceeding thirty days from September 23, 1997. 7. Miscellaneous 7.1. Other than the Revenue Fund, there are no funds or accounts in existence or that are expected to be established in addition to the Bond Fund or Debt Service Reserve Fund that the Issuer reasonably expects will be available to pay the principal of or interest on the Bonds. 7.2. No portion of the amounts received from the sale of the Bonds will be used as a substitute for other funds which have been or will be used to acquire, directly or indirectly, obligations producing a Yield in excess of the Yield on the Bonds. 7.3. There are no other governmental obligations of the Issuer: (i) issued at materially the same time as the Bonds, (ii) sold pursuant to a common plan of financing with the Bonds, and (iii) • to be paid out of materially the same source of funds (or which will have materially the same claim to be paid out of materially the same source of funds) as will be used to pay the Bonds. 7.4. The Bonds are not and will not be part of a transaction or series of transactions that attempt to circumvent the provisions of Section 148 of the Code or the Regulations, enabling the Issuer to exploit the difference between tax-exempt and taxable interest rates to gain a material financing advantage, or increasing the burden on the market for tax-exempt obligations. 8. General 8.1. Except for the Bond Fund, from which semiannual interest payments and annual principal payments will be made on the Bonds, the Issuer has not created or established and does not expect to create or establish any sinking fund or similar fund. Expenditures from the Bond Fund representing payments of accrued interest on the Bonds will be made not less frequently than each May 15 and November 15, commencing November 15, 1997. Any interest or other earnings from temporary investment of moneys in the Bond Fund are not expected to be held for a period greater than one year from the receipt thereof. All moneys in the Bond Fund will be expended for debt service on the Bonds within thirteen (13) months of the date of deposit. The Authorizing Ordinance contains a covenant by the Issuer that it will not make any investment which would cause the Bonds to be arbitrage bonds. 8.2. The Issuer has not been notified of any listing or proposed listing of it in the Internal • Revenue Bulletin by the Internal Revenue Service as an issuer whose arbitrage certificates may not be relied upon. 8.3. The Issuer is a city of the first class and a political subdivision of the State of • Arkansas, and it represents as follows: (a) Neither 10% or more of the net proceeds of the Bonds (including the Transferred Proceeds) will be, nor 10% of the net proceeds of the Refunded Bonds were, used in the trade or business of any person other than the Issuer or its political subdivisions or agencies or instrumentalities thereof, nor is 10% or more of the payment of principal or interest on the Bonds or the Refunded Bonds secured, directly or indirectly, by the property of any person other than the Issuer or its political subdivisions or agencies or instrumentalities thereof, and, therefore, the Bonds are not private activity bonds within the meaning of Section 141(a) of the Internal Revenue Code of 1986 (the "Code"). Not less than 95% of the net proceeds of the Bonds (including the Transferred Proceeds) will be used by the Issuer or its political subdivisions or agencies or instrumentalities thereof in the governmental activity of providing of services to the general public. (b) The Issuer has not used or permitted the use of, and covenants that it will not use or permit the use of the Walton Arts Center or the proceeds of the Bonds, in such manner as to cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (c) In the year 1986, the Issuer designated the Refunded Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b) of the Code, and it is not aware of any additional bonds issued by the Issuer in that year after December 11, 1986. 8.4. The Issuer has covenanted in the Authorizing Ordinance to comply with the • requirements for rebate of excess investment earnings to the United States. Not less often than every five years, unless the Issuer receives an opinion of bond counsel that no rebate is due, the rebatable amount will be computed and amounts will be transmitted when and as due to the United States in compliance with rebate requirements. Such amounts are not expected to be used for debt service on the Bonds. 8.5. This Certificate is being executed and delivered pursuant to Sections 1.148-0 through -I 1, inclusive, and 1.150-0 and -2 of the Income Tax Regulations under Section 148 of the Code for the purpose of setting forth the facts, estimates, and expectations of the Issuer as to future events regarding the Bonds. Dated: September 23, 1997. City Clerk EXHIBIT A TO ARBITRAGE CERTIFICATE The undersigned, a duly authorized officer of Stephens Inc. (the "Purchaser"), hereby certifies as follows: I To the best of the knowledge and belief of the undersigned, the facts, estimates, expectations, and circumstances set out in this certificate are true, correct, complete, and reasonable, and there are no other facts, estimates, expectations, or circumstances which would materially change those set forth. 2. All of the $2,610,000 City of Fayetteville, Arkansas, Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"), were offered to the public (excluding bondhouses, brokers, or similar persons or organizations) at prices not greater than, or yields no lower than those shown on the cover of the Official Statement describing the Bonds dated August 19, 1997 (the "Official Statement"), plus accrued interest to date of delivery. A substantial portion (being not less than 10% in par amount) of each maturity of the bonds was sold to the public (excluding bondhouses, brokers, or similar persons or organizations) at prices not greater than those shown on the cover of the Official Statement, plus accrued interest. At the time the Bonds were priced and sold, the pricing of the Bonds was such that the Purchaser would not expect any Bonds to be sold to the public (excluding bondhouses, brokers, or similar persons or organizations) at prices greater than the prices, or yields less than the yields, shown on the cover of the Official Statement, plus accrued interest, under the market conditions then prevailing. • 3. It is understood that this certificate will be relied upon by the Issuer in giving its certificate under the regulations relating to arbitrage bonds as defined in Section 148 of the Internal Revenue Code of 1986, as amended. Dated: September 23, 1997. STEPHENS INC. 9 A 4Atee.. ~ • • CERTIFICATE OF COUNTY PURSUANT TO PARAGRAPH 11(C)(6) OF THE BOND PURCHASE AGREEMENT The undersigned, the duly elected County Judge of Washington County, Arkansas, and the acting County Clerk of Washington County, Arkansas, hereby certify and attest that: there is no action, suit, proceeding, or investigation involving Washington County (the "County') before or by any court or public board or body pending or, to the best of our knowledge, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence, or powers of the County or the titles of its officials to their respective offices, (b) enjoin or restrain the levy and collection of the 1% sales and use tax within the County (the "Tax"), (c) in any way question or affect any of the rights, powers, duties, or obligations of the County with respect to the Tax, or (d) in any way question or affect any authority for the levy and collection of the Tax or the validity of the Tax; 2. the Tax has not been repealed, modified or rescinded and no petition has been filed to abolish the Tax or to refer the ordinance levying the Tax to the people under the legislation authorizing the County to levy the Tax or under Amendment No. 7 to the Constitution of the State of Arkansas; and 3. the Tax has been collected within the County since 1981 and the per capita share of money received therefor, less deductions authorized by law, has been distributed to the County and • each municipality therein as provided by law. This Certificate is executed by the undersigned on this 23rd day of September, 1997. v�J County Judge oun c • p\DOCUMENT\CTB\FAYE II hVICERTI IC5.CTB Scptanbcr 16. 1997 (12:14pm) 0 F!LE0 CERTIFICATE PURSUANT TO ACT NO. 69 of 1959.. 970C1-8 PH 3:51 STATE OF ARKANSAS ) EESHAR0N PRIEST STATE u1RY 0( NSAS COUNTY OF WASHINGTON ) .k , BY f(; I, Fred B. Hanna, the undersigned, official of the City of Fayetteville, Arkansas, do hereby certify under oath to the Secretary of State pursuant to the provisions of Act No. 69 of the Acts of Arkansas of 1959 that my manual signature is as follows: I certify that in the future public securities and instruments of payment (as defined in Act No. 69 of 1959) of the City of Fayetteville, Arkansas may be executed and delivered containing my facsimile signature which, pursuant to the provisions of Act No. 69 of 1959, shall have the same force and effect as if I have personally signed each such public security or instrument of payment manually. CERTIFIED this II day of ScP-r 1997. • TITL : Mayor SUBSCRIBED and SWORN to before me, the undersigned Notary Public within and for the State of Arkansas and,CbQunty of Washington, this day of 1997. • P:\DOCUMENTICTB\FAYE II LV\FACSIG.MAY ARY PUBLIC I -I LED L CERTIFICATE PURSUANT TO ACT NO. 69 b11959 •- - STATE OF ARKANSAS COUNTY OF WASHINGTON 970C1-8 PH 3: 51 SHARON PRIEST SECRETARY OF STATE STAT€ r ^^ , k5AS BY. I, Fred B. Hanna, the undersigned, official of the City of Fayetteville, Arkansas, do hereby certify under oath to the Secretary of State pursuant to the provisions of Act No. 69 of the Acts of Arkansas of 1959 that my manual signature is as follows: I certify that in the future public securities and instruments of payment (as defined in Act No. 69 of 1959) of the City of Fayetteville, Arkansas may be executed and delivered containing my facsimile signature which, pursuant to the provisions of Act No. 69 of 1959, shall have the same force and effect as if I have personally signed each such public security or instrument of payment manually. CERTIFIED this II day of SepT , 1997. TITL : Mayor SUBSCRIBED and SWORN to before me, the undersigned Notary Public within and for the State of Arkansas and C,qunty of Washington, this day of T- 1997. •' .CPi ll,._.: ._ ARY PUBLIC PQ; A?0N • P:\DOCUMENTCTB\FAYETlEV\FACSIG.MAY ' J^fpj�,��! i'�g? rte'\iiw" �'~„` -r �,."t r• "V"+ ku't=:%n i"'�"� Osf" ._ Eja+Ifa �i S• tpn m I.�3m5me m �c�—q So^Q S?$a$D$pS 9 9 -SI �R aR&m 66 0 d5 ' r� O.? '�mm�a� �S9Jm 3a1i4 6 m .. I r. t IY .: t^! YY 3 m Q I Qq 2b6R y gg a ° mb 56.c n� .m 4m.2 111 T /✓" :.l �u e :gym >>o 3m�'$iw$R�.m$mm o3g0°4433y Xs'sr 3 ° m 'am$Fo u°imfqqf(('"���O Smo^$. goom So$ ° RR° O 0 yy `b t Sg6g'd'� em Zb. 1�� ,3m��gp 3g ma�8ms - m a[a =�+ �0 y� {0{��b �n O0 [$ m3ps�ps`m 0 C m$a mQ .._ .(1J I.. ...i Rm m ie'� 3i@10g5 m�2 �c1° 00 m �m$emsgm���88 ml�mm SO?o- Op Nd '-� iHiu u.am gpBm=m mWIul°ma$ag 6 'r. S$ 4Ya [� 6-ayp> om 5�5=R%lo aR$ ESx m a3. to $5*'g°mm �'o y m $L'n�n$v$ c_ N zM m� -.y m$ C �m�'$4� thin 63$ jj$iop�GRm o'm S�s6yp,33o �g a..m �ROm @m@ &q�C4go- AD v N Dn I yx m-�!w dm.A ma},2'3Sm4mv D lDir3 ~ 0 yY°y 3io Soa O� m 0 .,°m$ 3� � mai�°$°253 mr tip fi D fl aq,a .t p$ om �uan- 50 I .tt'1 IatR t 1 an d 0 $ y� 3a z a�04 R5gmm6 m L°mo }bi Sp°SNb °GOm $ QQ o �8om33�.'�.e �.mmggm'.dFagg a IFifiah1u1 g ?6 mg#��y11Y*w ₹m4�.m3 �$o °Fo°5J4 n a.Hmg m G g c N wte G �mN pE C2 m2Q@.q� = O'm;T'4�m 8j z ' a ci Z o°^1 r llnuuuoo, 0m 4y 6m �, mo$w q�0 �JB mm°7019}Fffic 6=mb ;354m cir1,, .Q�• a 1001 m im II m8gmo_� b=_�� g a. 8 g 1-0= Rmb50 pa Q"$9 t•.� ci y m N J Yv ; . J� V ��11°GSY a �.�1!Sg§°m i �m l ..'�. ~f 3 - T ...z \C�Y+ "' . •. $-,m $ QQ' eym�mm§Cj6 mz (1) r = 1 , , b m m m F $ _ 3 8 a 0 O'm 8 0333Sam §¢_gB m =mod D $3m HI HI 3 ng@�'' a a 'a m m �s a� " m m jw 4- 8 s3 cn G M n £. [ a o n m m z� m_. t 1. 2 ^ •�t .'. p mcm L m 5 m i 1$ d11��1�1�4y mm gSO r56cy i;mD1njl 0b hl ]m ZZI O.(J'QjNia cm aQgn E 53 Jfmna c� 3_m {am(mJ Om m n mco m 3F 5"� m mi nFyu �o>5, N y c� a m m�1°32 oT m-, O 4Z °c �O $$b} �a 5. JP �Q '° yy20 lam G my m' 3 4a \. Um mD b = ago Omd �� rJTz TT a� tea° \ It Gm ..m.�. T9 Am�ga 5O��('('�(�(,(Q1 a`O a y m_3,S fl m1 n&' iiB M so °. S.22 t�g,Zm F e5e�.5 m0 c m ap m0 l gF 3 0 4T amQ 4ym $ '.. ///''11T��''' D Cy ON amg5m moan a 3&� mozm mampp$4CZC 3>yJ4Gd ft �_ m S al�m zx �5 R� eiim9..2o @�@ mS 55 t �� '� °i mq q m Omam . r n 1SS�Qo� m•l I�Om O£ N M.Q j '3 it m : o e " h` iF.t an u _ 8 5up a° mmp6m m ma 6a yaa$m nyym•3Vm OT n3g35CQm O I ray '� C S m300m mw'i�2°mmla(�/ UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT REFUNDING BOND SERIES 1997 FURTHER PROVISIONS The bonds are special obligations of the City payable from the revenues generated denomination or denominations, for the same aggregate principal amount, will be issued by the Twenty percent (20%) of Me City's share of the Tax. The bonds are further secured to the transferee in exchange therefor. This bond is issued with the intent that the laws of by amounts maintained in the Debt Service Reserve Fund established by the Authorizing the State shall govern its construction. Ordinance. Moneys in the Debt Service Reserve Fund may be used only for payment of principal of and interest on the bonds and additional parity bonds in the event moneys in The City and the Trustee may deem and treat the Registered Owner shown above the Bond Fund are insufficient for such purposes or to pay the final maturity of and the as the absolute owner hereof for the purpose of receiving payment of or on account of respective interest on the bonds and additional parity bonds, principal hereof and interest due hereon and for all other purposes, and nether the City nor the Trustee shall be allected by any notice to the contrary. This bond is transferable by the Registered Owner shown above in person or by his attorney -in -fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in Me manner, subject to Me limestone and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new fully registered bond or bonds of the same maturity, of authorized September 23, 1997 First Commercial Trust Company, National Association Little Rock. Arkansas Re. $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds. Series 1997 Gentlemen The bonds are astral only as fully registered bonds in the denomination of $5.000, and any integral multiple thereof. Subject to Me limitations and upon payment of the charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a like aggregate principal amount of fully registered bonds of the same maturity of other authorized denominations. LEGIAL OPINION We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issuer") of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the Bonds"), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ('Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987Annotated, as amended (the "Authorizing Legislation'), and City of Fayetteville, Arkansas, Ordinance No. 4050 dated as of August 19, 1997 (the "Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds. Series 1986. paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the caddied proceedings and other certifications of public officials furnished to us without undertaking to verify Me same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based on our examination, we are of the opinion, as of the date hereof and under existing law, tat: L The Bonds have been lawfully authorized and issued under the Constitution and laws of the State of Arkansas now in force. including particularly Amendment 62 and the Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas. under the authority of Title 26, Chapter 74, Subchapter 3 of rite Arkansas Code of 1907 Annotated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. 4 The Authorizing Ordinance has been duty passed and constitutes a valid and binding ordinance in accordance with its terms. 5. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item ortax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations: it should be noted, however. that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject lathe condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986. as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to me date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are qualified tax exempt obligationswithin the meaning of Section 265(b)(3) of the Code, and, in Me case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Bonds. B. The Bonds and interest income therefrom are exempt from all Arkansas stale. county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization. moratorium and other similar laws affecting creditors' rights heretofore or hereinafter enacted in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours, 3 The Issuer has full legal right power and authority to authorize and issue the Bonds, and to carry out Me transactions contemplated by the Authorizing Ordinance and Me Bonds. GILL LAW FIRM, a professional association ASSIGNMENT FOR VALUE RECEIVED.__ _ _ _(Transferor'), hereby sells, assigns and transfers unto . the within bond and all rights thereunder and hereby irrevocably constitutes and appoints as attorney _ _ _ to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises. DATE'. Transferor NOTICE'. The signature(s) to this assignment must correspond with the names appearing upon the face of the within bond in every particular, without alternation or enlargement of any change whatever. GUARANTEED BY. NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. R 116 1 • CERTIFICATE OF PRINTER Paragon/Progressive Printing & Stationery, hereby certifies that in connection with the $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997, dated September 1, 1997, there were 1010 bonds printed, of these 1000 were numbered 1 to 1000 inclusive, and 10 were clearly marked as specimens and furnished to Gill Law Firm, a professional association. Dated this 23rd day of September, 1997. By:�il Authorized Representative of Paragon/Progressive Printing & Stationery 1000 East 2nd Street Little Rock, Arkansas 72201 (501) 375-1281 Fax: (501)375-9170 • , P:\DOCUMENT\CTB\FAYETTEV\PRINTER.CER 172 CERTIFICATE OF UNDERWRITER Stephens Inc. (the "Underwriter") does hereby certify in connection with the issuance of the $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series • 1997 (the "Bonds") that: To the best of its knowledge and belief, the facts, estimates and statements contained in that No Arbitrage Certificate executed by the City of Fayetteville (the "City") of even date herewith are true and correct and it has no knowledge of any circumstances that would materially change the accuracy or truthfulness of the statements contained therein. 2. It has been informed regarding the purpose and scope of Section 148 of the Internal Revenue Code of 1986, and the Treasury Regulations relating to "arbitrage bonds" and arbitrage calculations. This Certificate can be relied on by the City in making the certifications contained in the City's No Arbitrage Certificate, and in filing Form 8038-G with the Internal Revenue Service. 4. Based upon its records and information available to it, which it believes to be correct, at least 25 percent of the Bonds were sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at an initial offering price equal to the price of such Bonds set forth on the cover of the Official Statement relating to the Bonds. • 5. The remaining weighted average maturity of the outstanding City of Fayetteville, Arkansas, Sales Tax Capital Improvement Bonds, Series 1986 (the "Old Bonds"), is 5.99 years. 6. The weighted average maturity of the Bonds from the date hereof is 4.74 years. The yield on the Bonds is 4.5049%. 8. The net interest cost of the Bonds for purposes of Form 8038-G is 4.5097%. The last date on which the Old Bonds will be called for redemption is September 23, 1997. 10. The debt service reserve has been required by us for the marketing of the Bonds and is a reasonably required debt service reserve. CERTIFIED this 23rd day of September, 1997. STEPHENS INC. BY: it • Auth rized Representative P:\DOCUMENT\CTB\FAYEflEV\UNDCERT.CTB September 23, 1997 (7:20am) i • CERTIFICATE OF TRUSTEE AS TO INCUMBENCY AND AUTHORITY We, the undersigned officers of First Commercial Trust Company, National Association (the "Trustee"), hereby certify that: The Trustee has been appointed Trustee for the City of Fayetteville, Arkansas, Sales Tax Capital Improvement Refunding Bonds in the aggregate principal amount of $2,610,000 (the "Bonds") authorized pursuant to Ordinance No. 4050 passed August 19, 1997 (the "Ordinance") and hereby accepts the trust and agrees to execute the trusts and duties and obligations of the Trustee imposed upon it by the Ordinance upon the terms and conditions set forth in the Ordinance and subject to the provisions of the Ordinance. 2. The Continuing Disclosure Agreement between the City of Fayetteville, Arkansas, and the Trustee, as Dissemination Agent, dated as of September 1, 1997 (the "Disclosure Agreement") has been executed by Debi DeHan, whose manual signature appears in Paragraph 3 below. 3. The following are the officers and specimen signatures of the officers of the Trustee authorized to authenticate and execute the Bonds on behalf of the Trustee, and the signature set forth opposite their respective names is a correct specimen of their respective signatures: Name Office p��nature • Debi DeHan Corporate Trust Manager G('C,t✓LL f4:( 7 Lauretta Tedford Assistant Corporate Trust Operations Manager 4. The above named officers of the Trustee were at the times of the acts mentioned above duly elected or appointed, qualified and acting officers of the Trustee and duly authorized to perform such acts. 5. The Trustee is a banking corporation duly organized, validly existing and in good standing under the laws of the State of Arkansas and the United States of America, and the Trustee is legally qualified to act as Trustee and has all requisite power and authority to carry out its obligations as Trustee and Dissemination Agent 6. The Trustee hereby acknowledges receipt of the Bonds. The Trustee acknowledges receipt of a copy of the Issuer's No Arbitrage Certificate executed in connection with the issuance of the Bonds. • P:IDOCUMERIICPBWAYEITEV�TRUSrCER.I Scpimbcr 21. 1991 (808m) 8. Attached hereto are true copies of the resolutions of the Trustee, duly adopted and currently • in effect, authorizing the Trustee, through the below -named officers, to accept and carry out the duties of the Trustee for the Registered Owners of the Bonds. IN WITNESS WHEREOF, we have hereunto affixed our signatures and the corporate seal of the Trustee, this 23rd day of September, 1997. FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION, Trustee BY: D42j A- &)Jet"" Title: Debi DeHan, Corporate Trust Manager BY: Title: Tedford, Assistant Corporate Trust Operations Manager • P:IDOCUMFInCr'BIFAYEITEVITRUSTCER. I '2 Scylmbcr 21. 199! (BOBam) c RESOLUTION OF BOARD OF DIRECTORS GRANTh iG AUTHORITY TO SIGN ON BEHALF OF FIRST COMMERCIAL TRUST COMPANY, N.A. BE IT RESOLVED, That the President and CEO of First Commercial Trust Company, N.A., is hereby empowered to designate officers authorized to execute various documents on behalf of said Trust Company. In extension, but not in limitation of the foregoing, this power to execute documents shall include execution of agreements and acceptance of judicial appointments under which the Trust Company shall act as Executor, Administrator, Trustee, Guardian, Receiver Agent, Custodian, or in such other capacity as permitted by law; evidencing decisions to buy, • sell, transfer, assign, lease, mortgage, release or discharge in whole or in part any mortgage, and convey any real or personal property, including endorsing of signing certificates of stocks, bonds, other securities, and checks, regardless of whether endorsed in blank or to a named person, held by said Bank as nominee or in any of its various fiduciary capacities. Written lists designating the individuals so authorized to sign shall: be provided from time to time and no less often than every six (6) months to the Secretary, the Controller, and the Auditor of First Commercial Trust Company, NA. Any officer is hereby authorized to certify the individual's authority to sign on behalf of First Commercial Trust Company, N.A. and all parties shall be fully protected in relying on such certification. CERTIFICATE I hereby certify that I am a duly elected and acting officer of First Commercial Trust Company, N.A., a National Banking Association organized and existing under and by virtue of the. laws of the United States of America, and that the above is a true and correct copy of a Resolution duly adopted by the Directors of said Bank at a meeting duly called and held on April JC) , 1996, that a majority and quorum of Directors were present at said meeting and voted in favor of the above Resolution and that the same remains in full force and effect, unamended and unrepealed, all of which appears from the records of said Bank now in my custody and control. I further certify that t/ ell i is one of the persons authorized to sign on behalf of First Commercial Trust Company, N.A., in accordance with the above and foregoing Resolution. IN WITNESS WHEREOF, I haven hereunto set my hand and affixed seal of said Bank at Little Rock, Arkansas this pt____ day of J her , 19'97 FIRST COMMERCIAL TRUST COMPANY NATIONAL -ASSOCIATION Y•,- BM:ccj 03/191j SPECIMEN SIGNATURES IT . I 1c. r • Michael A. O'Brien, President and Chief Executive Officer Charles A. Hadden, President, First Commercial Capital Management Dale J. Wintroath, Executive Vice President and Chief Administrative Officer Al Crawford, Senior Vice President and Employee Benefits Manager Vickie Vanness, Senior Employee Benefit Officer Bonnie L. Evans, Senior Employee Benefit Officer Leon Helms, Senior Vice President and Personal Trust Manager Robert D. Grant, Vice President and Trust Officer Karen Narrell, Vice President and Trust Tax Administrator Rebecca Parcher, Senior Trust Officer Debi DeHan, Senior Vice President and Corporate Trust Manager Charla Birch, Senior Employee Benefit Officer George A. Prange, Vice President and Trust Officer Bonnie McKenzie, Senior Vice President and Trust Operations Manager «ualadminlbd 1 u Sheila Mayden, Vice President and Operations Officer Lauretta Tedford, Corporate Operations Officer Lisa McDaniel, Vice President and Investment Officer Dwight Goodwin, Vice President and Trust Officer James T. Chalikis, Senior Trust Marketing Officer William Kerst, Jr., Senior Vice President and Trust Officer Jay White, Vice President and Investment Officer Rob Bischof, Senior Trust Officer Ron Campbell, Senior Trust Officer M. M. Croom, Jr., Senior Trust Officer Susan Gammill, Investment Officer for Trading Gregory S. Torrance, Executive Vice President James P. Bell, Vice President and Trust Officer Betty G. Anthony, Trust Officer David Ross, Vice President and Investment Officer Jerry Harrison, Senior Corporate Trust Officer Judy W. Gray, Senior Trust Officer oust\admin\bd 2 • Rodney D. Todd, Senior Trust Officer Julie A. Humphrey, Vice President and Trust Compliance Officer Monty Watts, Trust Officer Marla K. Palmer, Corporate Trust Officer R. Chris Jones, Senior Trust Officer Douglas B. May, Vice President and Investment Officer Pamela Hamby, Senior Employee Benefit Officer tsust\admin\bd 3 I l� • DELIVERY INSTRUCTIONS First Commercial Trust Company, National Association Little Rock, Arkansas Re: $2,610,000 Sales Tax Capital Improvement Refunding Bonds, dated September 1, 1997 (the "Bonds") Dear Trustee: We hand you herewith 1,000 blank certificates evidencing the Bonds. You are instructed to: Complete certificates in the aggregate principal amount equal to the principal amount of the Bonds by inserting interest rates, principal amount, maturities, registered owners and CUSIP numbers. The registered owners and principal amounts (which shall be $5,000 or an integral multiple thereof) will be designated by Stephens Inc. (the "Purchaser"), who will furnish you a list or lists showing the address and social security or federal employer identification number of each registered owner. The balance of the insertions shall be made in accordance with the provisions of Ordinance No. 4050. You are to register the Bonds in the names of the registered owners in a Bond registration book to be maintained by you as Bond Registrar in • accordance with Ordinance No. 4050. 2. Authenticate the completed certificates evidencing the Bonds and deliver them to the Purchaser on payment of $2,587,815 plus $7,070.71, the accrued interest from the date of the Bonds to September 23, 1997 (the "total sales proceeds"). 3. Deposit $7,070.71, representing accrued interest on the Bonds into a special trust account of the City established at your bank under Ordinance No. 4050 and designated "Bond Fund" for partial payment of the first interest payment on the Bonds. 4. Transfer $204,333.75 from the debt service reserve fund held by your bank pursuant to the Trust Indenture dated as of November 15, 1986 (the "Indenture") into a special trust account of the City established at your bank pursuant to Ordinance No. 4050 and designated the "Debt Service Reserve Fund" for use as set forth in Ordinance No. 4050. 5. Transfer from the revenue fund held by your bank pursuant to the Indenture, an amount of immediately available moneys sufficient to raise the balance of the bond fund held by your bank pursuant to the Indenture to an amount equal to $257,056.25. 6. Apply from the total sales proceeds the amount set forth in Exhibit A to the redemption of the City Sales Tax Capital Improvement Bonds, Series 1986 (the "Bonds Refunded"). • • Apply from monies in the redemption fund held by your bank under the Indenture, the amount set forth in Exhibit A to the redemption of the Bonds Refunded on the date hereof. 8. Apply the remaining monies in the debt service reserve fund held by your bank under the Indenture, the amount set forth on Exhibit A, to the redemption of the Bonds Refunded on the date hereof. 9. Apply the $257,056.25 from the bond fund held by your bank under the Indenture to the redemption of the Bonds Refunded on the date hereof. 10. Pay to the persons set forth on Exhibit B attached hereto, the amounts set forth in said exhibit as expenses of issuing the Bonds. 11 Deposit the remaining total sales proceeds into a special trust account of the City established at your bank pursuant to Ordinance No. 4050 and designated "Cost of Issuance Fund" for payment of the costs of issuance that are not paid pursuant to Paragraph 9 above. 12. Pay all remaining moneys in the revenue fund held by your bank under the Indenture to the City. The Bond Fund is to be funded, invested, and disbursed by you in accordance with the provisions of Ordinance No. 4050 which is a part of the transcript in your possession as Trustee. DATED: September 23, 1997 CITY OF FAYETTEVILLE, ARKANSAS City Clerk The above instructions are acknowledged and have been complied with this 23rd day of September, 1997. FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION By: By: o XJrXJI K�(-QJJdh4' r LJ C • EXHIBIT A SOURCE OF FUNDS USE OF FUNDS AMOUNT Sale Proceeds Redemption of Bonds Refunded $2,544,770.58 Redemption Fund held by your bank under the Indenture Redemption of the Bonds Refunded $38,079.55 Debt Service Reserve Fund held by your bank under the Indenture Redemption of the Bonds Refunded $172,666.25 C • EXHIBIT B COST OR EXPENSE PAYEE Trustee's Authentication Fee First Commercial Trust Company, National Association Prepaid Trustee's Fees First Commercial Trust Company, National Association Bond Counsel's Fee and Expenses Gill Law Firm, a professional association Underwriter's Counsel's Fee and Expenses Bond Printing Costs Underwriter Expenses Preliminary Official Statement and Official Statement Printing Costs Friday, Eldredge & Clark Paragon Printing Stephens Inc. Paragon Printing AMOUNT $1,500.00 $1,087.50 $18,944.56 $11,217.95 $593.69 $786.08 $695.48 I I I I S • Form 8038-C Information Return for Tax -Exempt Governmental Obligations ► Under Internal Revenue Code section 149(e) OMB No. 1645-0720 (Rev. May 1995) ► See separate Instructions, oap.mre a tti Trauuy .. .Yi Malaria soviet (Note: Use Form 8038-0cIf the Issue pdce Is under $100,000.) • Reporting Authority If Amended Return, check here ► ❑ 1 Issuer's name City of Fayetteville. Arkansas. 2 Issuers employer Identification number 71: 601846-2 3 Number and street (or P.O. box N mauls not delivered to street address) Room/sufte 4 Report number 113 West Mountain Street G19 97 -1 6 City, town, or post office, state, and ZIP code 6 Date of Issue September 23, 1997 7 ' Name of Issue 8 CUSIP number Refufldjp2 Bonds. er es 1997 312673CKO •i11&Ii lYpe of Issue check applicable box(es) and enter the issue price) .9 ❑. Education (attach schedule see instructions) . . . . . . . . . . . . . . . 10 ❑ Health.and hospital (attach schedule -see instructions). . . . .1 . . . . 11 0 Transportation ., . . . . . . . . . . . . . . . . .•. . . . .. . 12 ❑ Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . 9 $ 10 11 12 13 ❑ Environment (including sewage bonds) . . . . .. . . . . . . _ 13 14 ' ❑ Housing . . ' . . . . . . .. . . . .. . . . . 16 ❑-tftilities ". .•. . . . .• . . . . . . . . 16 .' Q{;Qther. Describe (see instructions) ► Art G Canter .14 15 16 17 If obligations are tax or other. revenue anticipation bonds, check box ► 0 18- N obligations the in the form of a lease or installment sale, check box ► ❑ ••nuiii Description -of Obligations-__- - . Maturity date. ' Interest rate • Issue price Stated •ion mdema price at maturity- (e) -. Weighted average ""afty . Ylmold ' Net Merest cost 19 • Flnal"maturity': 11/15/05 4.65% 290;000 290;000 2 610 000 2 610 000 20 Entire issue 4.74 years 45049% 4.5097% • . Uses of Proceeds of Bond:Issue-including -underwriters' discount 21 Proceeds used.for accrued interest; . . . .. . . . . 22 Issue price of entire issue (enter amount from line 20, column (c)) . . 23 Proceeds used for bond.issuance costs (including.underwriters' discount) 23 65,229 2,610,000 24 Proceeds used for credit enhancement . . . . .. 24 .0- 25 Proceeds allocated to reasonably required reserve or replacement fund 26 —0—. V61 26 Proceeds used to currently refund prior issues . . . ... . 26 2,544,771 27 . ' Proceeds used to advance refund prior issues . , . . . •. _ 27 —0- 28 Total (add lines 23 through 27) . . .. . . . . . . 29 Nonrefundi proceeds of the issue (subtract line 28 from line 22 and anter amount here . . 29 • Description of Refunded Bonds (Complete this p�rt only for refunding bonds.) 30 Enter the remaining weighted average maturityof the bonds to be currently refunded . .•► ` 5.99 31 Enter the remalrgng'weighted average maturity of the bonds to be advance refunded • • • ► N/A 32 :. Enter the last date on -which the refunded bonds will be called . ► 09/23/97 33 Enter the datefs) the refunded bonds were Issued R 12/11/86 Part VI r: > • • I • • • • • •: e • 1 I • • 1 •• •C •:.• • • • 1�\ •: MI• • • V •:•I• ® • I III ,st'j: •I • O•p•••L:•CI :P•• , • •• I :.Y -1�1 YI• � n•Y• •: • • •Y::• • •14:. • - •• • - • • • • • •.wSl• • r • • • • 1 1 • s : 1 < : ijiG • f . • 1' .1 •' A_31 ny [KVIFD[.TM,3IMt r -WIM) 31I.);1 tI'M:£tl I, the undersigned employee of Gill Law Firm, a professional association, certify that I have mailed an executed copy of the attached Form 8038-G, by certified mail, return receipt requested, to: Internal Revenue Service Center, Philadelphia, PA 19255. Dated: September 23, 1997 - 41:2 . („U • • P:\DOCUMENT\CFB\FAYETTEV%CERT8038.WPD ` i. ... iYa l � ♦ ..n _... M1.Ylrvi/N ¼. .. . -.. .'.: Cam:: -. _ ITK/Hyl! . �J:� A / E NOTICE OF FULL REDEMPTION TO THE REGISTERED OWNERS OF CITY OF FAYETTEVILLE, ARKANSAS SALES TAX CAPITAL IMPROVEMENT BONDS, SERIES 1986, DESCRIBED BELOW Notice is hereby given that, pursuant to the terms of the Bonds of the issue described above, the undersigned hereby calls for redemption on September 23, 1997 all of the outstanding City of Fayetteville, Arkansas Sales Tax Capital Improvement Bonds, Series 1986. The principal amounts, interest rates and CUSIP Numbers of the Bonds being redeemed per maturity are as follows: Maturity (November 15) Interest Rate Principal Amount CUSIP Number 1997 6.30% $ 155,000 312673BG0 1998 6.45 170,000 312673BH8 1999 6.60 195,000 312673BJ4 • 2000 6.75 225,000 312673BK1 2001 6.90 260,000 312673BL9 2007 7.10 1,935,000 312673BM7 The bonds being redeemed are payable at a redemption price of 100 cents on the dollar and accrued interest upon presentation of the Bonds at the Corporate Trust office of First Commercial Trust Company, National Association (as successor to McIlroy Bank & Trust), 400 West Capitol, Little Rock, Arkansas 72201 (the "Truste"), such presentation to be made on or after September 23, 1997 provided funds for their payment are on deposit with the Trustee on that date. FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION By /s/ Diane Davis Authorized Officer GILL LAW FIRM a ptdes oral assodation ATTORNEYS 3801 TCBY TowER JOHN P. GILL CAPITOL AND BROADWAY CHARLES C. OWEN, P.A. LITTLE Rocx, ARKANSAS 72201 W. W. ELROD 11 TELEPHONE (501) 376-3800 HEARTSILL RAGON III, P.A. TELEFAx (501) 372-3359 JOSEPH D. CALHOUN Ill* W. BRADFORD SHERMAN JOHN A. FOGLEMAN, OF COUNSEL BENJAMIN F. ARNOLD September 23, 1997 JAMES E. SMITH, JR. JUDY P. MCNEIL MARIE -B. MILLER C. TAD BOHANNON First Commercial Trust Company, National Association M. J. WILSON Little Rock, Arkansas CHRISTOPHER L. TRAVIS *registered patent atlomey Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: We have acted as bond counsel in connection with the issuance by the City of Fayetteville, Arkansas (the "Issuer") of Sales Tax Capital Improvement Refunding Bonds, Series 1997 in the total principal amount of $2,610,000 (the "Bonds"), pursuant to Amendment No. 62 to the Constitution of the State of Arkansas ("Amendment 62") and Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated, as amended (the "Authorizing Legislation"), and City of Fayetteville, Arkansas, Ordinance • No. 4050 dated as of August 19, 1997 (the "Authorizing Ordinance"). The Bonds are being issued to provide sufficient funds to accomplish the refunding of the Issuer's outstanding Sales Tax Capital Improvement Bonds, Series 1986, paying expenses incidental thereto, and paying expenses of authorizing and issuing the Bonds. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. We have not been engaged or undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and we express no opinion relating thereto. Based on our examination, we are of the opinion, as of the date hereof and under existing law, that: The Bonds have been lawfully authorized and issued under the Constitution and laws of the State of Arkansas now in force, including particularly Amendment 62 and the Authorizing Legislation, and are valid and binding obligations of the Issuer enforceable in accordance with their terms. 2. The Bonds are secured by a pledge of 20% of the Issuer's share of collections of the 1% sales and use tax duly levied in Washington County, Arkansas, under the authority of Title 26, • Chapter 74, Subchapter 3 of the Arkansas Code of 1987 Annotated, as amended. The Bonds are not secured by any lien on or security interest in any physical properties of the Issuer. P: \DOCUMENTCfB\FAYETTEV\OPIN.STD 3. The Issuer has full legal right, power and authority to authorize and issue the Bonds, and to carry out the transactions contemplated by the Authorizing Ordinance and the Bonds. 4. The Authorizing Ordinance has been duly passed and constitutes a valid and binding ordinance in accordance with its terms. The Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the sources provided therefor in the Authorizing Ordinance. 6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal • tax consequences arising with respect to the Bonds, except as specified in paragraph 7. 7. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest on the Bonds. 8. The Bonds and interest income therefrom are exempt from all Arkansas state, county and municipal taxes. 9. It is to be understood that the rights of the registered owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency and reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereinafter enacted in that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur. Sincerely yours, GILL LAW FIRM, a professional association GILL LAW FIRM a pro(aaiond.+eotlatim. ATTORNEYS • • I 3801 TCBY TOWER CAPITOL AND BROADWAY LITTLE ROCK, ARKANSAS 72201 TELEPHONE (501) 376.3800 TELEFAX (501) 372-3359 JOHN A. FOGLEMAN, OF COUNSEL September 23, 1997 JOHN P. GILL CHARLES C. OWFN, PA. W. W. ELROD 11 I-IEARTSILL RADON 111, P.A. JOSEPH D. CALHOUN In' W. BRADFORD SHERMAN BENJAMIN F. ARNOLD JAMES E. SMITH, JR. JUDY P. MCNEIL MARIE -B. MILLER C. TAD BOHANNON M. J. WILSON CHRISTOPHER L. TRAVIS Stephens Inc. .reg,tered p1te11t at,o,,,el. Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 Gentlemen: This supplements our bond approving opinion of this date. Reference is made thereto for the details of the Bonds and the various documents referred to and described therein. A copy of the approving opinion is attached and you may rely upon it to the same extent as if it were addressed to you. Terms used herein and not otherwise defined have the meanings described in the Bond Purchase Agreement dated August 19, 1997, between you and the City of Fayetteville, Arkansas (the "Issuer"). As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the Official Statement, Ordinance No. 4050 of the Issuer, duly adopted on August 19, 1997 (the "Authorizing Ordinance"), and in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. The Bonds are authorized under the Authorizing Ordinance. The Bonds are described in the Official Statement, dated August 19, 1997. Based on our examination of the proceedings and of the documents referred to herein and of the opinions and other matters necessary or advisable for the purpose of this opinion, we are of the opinion that: (i) the Issuer has full legal right, power and authority to authorize and issue the Bonds, and to I carry out the transactions contemplated by the Authorizing Ordinance and the Bonds; (ii) the Bond Purchase Agreement has been duly authorized, executed and delivered by the Issuer and, assuming due execution by you, and subject to the extent that (a) the enforceability of the rights and remedies set forth in the Bond Purchase Agreement may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally and (b) the rights to indemnification under the Bond Purchase Agreement may be limited by federal or state securities laws or public policy underlying such laws and may not be enforceable, constitutes a valid and binding agreement in accordance with its terms; P:ID0CUMENDCIE\FAYERENOPIN.SUP Scpnnber 23. 1997 (8:m) (iii) the Authorizing Ordinance has been duly passed, and subject to the extent that the • enforceability of the rights and remedies set forth in the Authorizing Ordinance maybe limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally, constitutes a valid and binding ordinance in accordance with its terms; (iv) the Issuer has ratified the distribution of the Preliminary Official Statement and the Official Statement; (v) the Authorizing Ordinance conforms as to form and tenor with the terms and provisions thereof as summarized and set out in the Official Statement; (vi) the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Authorizing Ordinance is exempt from qualification under the Trust Indenture Act of 1939, as amended; (vii) the Issuer has duly performed all obligations to be performed by it pursuant to the Authorizing Ordinance and the Bond Purchase Agreement on or prior to the date of the Closing; (viii) the Disclosure Agreement has been duly authorized, executed and delivered by the Issuer and, assuming due execution by the Trustee, and subject to the extent that the enforceability of the rights and remedies set forth therein might be limited by bankruptcy, insolvency, or other laws affecting creditors' rights generally, constitutes a valid and binding agreement in accordance with its terms. • (ix) based upon a review of the Authorizing Ordinance, the ordinances of the County relating to the Tax, minutes of the Issuer and the County, certifications of the Issuer's officials and the County's officials furnished to us and conferences held with the Issuer's officials in our role as Bond Counsel, nothing has come to our attention which would lead us to believe that the Official Statement (except for the statistical data included in such Official Statement, including, but not limited to, that information contained under the captions "Debt Service Requirements" and "Debt Service Coverage", as to which no view is expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (x) to the best of our knowledge, there is no action, suit, proceeding or investigation at law or in equity before or by any court or public board or body, pending or threatened, against or affecting the Issuer, challenging the validity of the transactions contemplated by the Official Statement, or the validity of the Bonds, the Authorizing Ordinance, or the Bond Purchase Agreement. Sincerely yours, F GILL LAW FIRM, a professional association • P:\DOCUMENTCrB\FAYEITENOPIN.SUP Seymnba 23. 1997 (7:52am) FRIDAY. ELDREDGE & CLARK A PARTNERSHIP OF INDIVIDUALS AND PROFESSIONAL ASSOCIATIONS HERSCHEL L H. FRIOSY (IDDD-I BBK) SCOTT J. LANCASTER, P. A. H. SOTTON,P A. ATTORNEYS AT LAW E OORLEY. P. A. JAMES JAMES W. MOORE ROBERB. BEACH. JR., P. A. ROBERT BYRON M EISEMAN. JR„ P. A. 2000 FIRST COMMERCIAL BUILDING J. LEE BROWN, P. A. O, BELL. P. A. JAMES C. BAKER, JR„ P. A. N C. ECHOES, P. A. 400 WEST CAPITOL HARRY A. LIGHT. P. A. ES ST P. A. R. A. IR cD ERICK5.UR 9E RV, P. A. E I K LITTLE ROCK. ARKANSAS 72201-3493 RAP. JOHNTL.TTON JOHN ONRAN DOLPN. P. A. .-., T. LARZELERE, P. A. Guy ALTON WADE, P. A. OSCAR E. DAVIS, JR., P. A. PRICE C, QARON5R, P. A. JAMES C. CLARK, JR,. P. A. TELEPHONE 501-376-20)1 TONIA P. JONES. JONES, P. A. THOMAS P. LEGGETT, P. A. DAVID 0. WILSON. P. A. JOHN DEWEY WATSON, P. A, VAX NO. 501-376-2147 JEFFREY H. MOORS, P. A. PAUL B, BENHAM 111, P. A, ANDREW T. TORNER. P. A. LARRY W. BURK3, PA. DAVID M, ORAF, P. A. A. WYCICLIFF NISBET. JR.. P. A. OARLA 0. SPAINHOUR JAMES EDWARD HARRIS, P. A. JOHN C. FENDLEY. JR. PHILLIP MAL0OM, P. A. ALLISON GRAVES GRAVES JAMES M. SAXTON., P. A. JONANNC. JAMES M. SAXTON. P. A. TOPHEREVELT R. CHRISTOPHER LAWSON J, SHEPHERD RUSSELL M. P. A. Septembel 23, 1997 GREGORY D, TAYLOR DONALD H. BACON, P. A. TONY L. WILCOX WILLIAM THOMAS BAXTER. P. A. FRAN C. HICKMAN WALTER A, PAULSON 11. P. A. BETTY J. DEMORY BARRY E. COPLIN. P. A. BARBARA J. RAND RICHARD 0. TAYLOR. P. A. JAMES W. SMITH JOSEPH B. HURST. JR.. P. A. CLIFFORD W. PLUNKETT ELIZABETH ROBBEN MURRAY. P. A. DANIEL L. HERRINGTON CHRISTOPHER HELLER. P. A. ALLISON J. CORNWELL LAURA HENSLEV SMITH. P. A. TODD A. CREEK ROBERT 3. SHAFER. P. A. ELLEN M. OWENS WILLIAM M. GRIFFIN III, P. A. THOMAS N. ROSE. P. A. OF COUNSEL MICHAEL S. MOORE. P. A_ WILLIAM J. SMITH DIANE S. MACKEY, P. A, B. S. CLARK WALTER M. EBEL M. P. A. WILLIAM L. TERRY, P. A, KEVIN A. CRASS, P. A. WILLIAM L. PATTON, JR.. P. A, WILLIAM A. WADDELL. JR„ P. A. W ITR'E OIRif.T NO. Stephens Inc. Little Rock, Arkansas Re: $2,610,000 City of Fayetteville, Arkansas Sales Tax Capital Improvement • Refunding Bonds, Series 1997 (the "Bonds") Gentlemen: We have acted as your special counsel in connection with the issuance and sale of the above -captioned Bonds to you and, in that capacity, have examined an executed counterpart of the Bond Purchase Agreement dated August 19, 1997 between the City of Fayetteville, Arkansas (the "Issuer") and Ordinance No. 4050 of the Issuer, adopted August 19, 1997 authorizing the issuance of the Bonds (the "Authorizing Ordinance''). We have also examined the originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and other instruments as we have deemed necessary or advisable for purposes of this letter. Upon the basis of our examination and review, as indicated above, we advise you that, in our opinion: (1) The Bonds constitute exempt securities within the meaning of the Securities Act of 1933, as amended (the "1933 Act"), and accordingly it is not necessary, in connection with any public offering and sale of the Bonds, to register the Bonds under the 1933 Act; and (2) The Bonds are exempt securities within the meaning of the Trust Indenture Act of 1939, as amended (the I' 1939 Act"), and accordingly, it is not necessary to qualify the • Authorizing Ordinance under the 1939 Act. L Stephens Inc. September 23, 1997 Page 2 In connection with the preparation of the final Official Statement dated August 19, 1997 (the "Official Statement"), we have generally reviewed information furnished to us by, and have participated in conferences with your representatives, and representatives of the Gill Law Firm, a Professional Association, Bond Counsel. We have also reviewed other records relating to the authorization, issuance and sale of the Bonds and have relied upon certificates of officials of the Issuer, of Washington County, Arkansas and of other public officials and upon written opinions and letters received from Bond Counsel. We have considered the information contained in the Official Statement and, based upon our review and discussions and in reliance upon the accuracy of the information contained in the aforementioned certificates, written opinions and letters, nothing has come to our attention which leads us to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. We express no opinion as to any financial or statistical data included in the Official Statement. • In rendering the opinions in Paragraphs (1) and (2) above, we have, with your approval, relied upon the opinions of this date, addressed to you, of the Gill Law Firm, a Professional Association, in their capacity as Bond Counsel, that the interest on the Bonds is excluded from gross income for federal income tax purposes under existing law, assuming compliance with certain covenants. This letter is furnished by us solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any purpose other than in the offering of the Bonds, nor is it to be relied upon by any other person, except that reference may be made to it in the Bond Purchase Agreement, in a list of closing documents relating to delivery of the Bonds and in the Official Statement. The scope of our engagement has extended solely to the examination of the facts and law incident to rendering the opinions set forth above, and we express no opinion with respect to any other matters. In addition, we undertake no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein. Very truly yours, '�. PP y, S?Pct'evy, .'- FRIDAY, ELDREDGE & CLARK JSR/nkf FAYETTEVILLE • JERRY E. ROSE, CITY ATTORNEY LaGAYLE D. McCARTY, ASSISTANT CITY ATTORNEY September 23, 1997 First Commercial Trust Company, National Association 400 West Capitol Little Rock, AR 72201 Gill Law Firm 425 West Capitol 3801 TCBY Tower Little Rock, AR 72201 Stephens Inc. • 21 West Mountain, Ste. 300 Fayetteville, AR 72701 Ladies and Gentlemen: THE CITY OF FAYETTEVILLE. ARKANSAS CITY ATTORNEY DIVISION 113 WEST MOUNTAIN, 72701 PHONE: 501.575.8313 FAX: 501-575-8315 I am the city attorney for the City of Fayetteville, Arkansas ( the "Cityy-and have acted in that capacity in connection with the issuance and sale by the City of its $2,610,000 Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"), which bonds are being sold pursuant to Bond Purchase Agreement date August 19, 1997 (the "Bond Purchase Agreement") between Stephens, Inc. (the "Underwriter") and the City. The terms defined in the Bond Purchase Agreement are used in this letter with the meaning assigned to them in the Bond Purchase Agreement. In this connection, I have reviewed certain documents with respect to the Bonds, and such records, certificates and other documents as I have considered necessary or appropriate for the purposes of this opinion, including Ordinance No. 4050 adopted by the City on August 19, 1997 (the "Authorizing Ordinance"), Preliminary Official Statement and the final Official Statement, dated August 19, 1997 with respect to the Bonds (collectively with the Preliminary Official Statement, the "Official Statement"), and a closing certificate of the City. Based on such review and such other consideration of law and fact as I believe to be relevant, I am of the opinion that: • Page 2 • First Commercial Trust Co. Gill Law Firm Stephens, Inc. September 23, 1997 1. The City has been properly formed and is validly existing as a city of the first class and political subdivision of the State of Arkansas and had the full power and authority to adopt the Authorizing Ordinance and to execute and deliver the Bonds, the Official Statement, and the Bond Purchase Agreement. 2. The adoption of the Authorizing Ordinance, the issuance of the Bonds, and the execution and deliver of the Bond Purchase Agreement, and the performance of the City's obligations thereunder did not, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or a default under any indenture, deed of trust, or other instrument to which the City is a party, or conflict with, violate, or result in a breach of any court decree applicable to the City. 3. Excepting those matters discussed in the Official Statement, under "THE CITY AND COUNTY", Litigation, the City is not in violation of any provision of any agreement or instrument the violation of or default of which would materially adversely affect the business, properties, assets, liabilities, or condition (financial or other) of the City. • 4. Excepting those matters discussed in the Official Statement, under "THE CITY AND COUNTY", Litigation, there are no legal or governmental actions, proceedings, inquiries or investigations pending or threatened by governmental authorities or to which the City is a party or to which any property of the City is subject which, if determined adversely, would individually or in the aggregate (i) materially and adversely affect the validity or the enforceability of the Bonds or the Bond Purchase Agreement, (ii) otherwise materially and adversely affect the ability of the City to comply with its obligations on the Bonds or under the Authorizing Ordinance, or the Bond Purchase Agreement, or (iii) materially adversely affect the transactions contemplated by the Official Statement to be engaged in by the City. 5. I have reviewed and considered the information contained in the Official Statement under the captions "THE CITY AND THE COUNTY," Litigation, and "LEGAL MATTERS" therein, and nothing has come to my attention that leads me to believe that those captioned sections of the Official Statement contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. I express no opinion as to the information included in the Official Statement under other captions. 6. The Authorizing Ordinance was duly passed and has not been amended, modified, repealed, revoked or rescinded, and is in full force and effect. • Page 3 First Commercial Trust Co. Gill Law Firm Stephens, Inc. September 23, 1997 7. No petition has been filed to refer to the people, under Amendment No. 7 to the Constitution of the State of Arkansas, the Authorizing Ordinance, and the time period for filing such a petition has expired. I hereby consent to the references made to me in the Official Statement. Very truly yoT J rryE. Rose, City Attorney • /cbp CERTIFICATE • I, Harold Criswell, Deputy Treasurer of the State of Arkansas, hereby certify (1) that there has been filed in the Office of the State Treasurer a copy of Ordinance Nos. 3206, 3224 and 4050 of the City of Fayetteville, Arkansas (the "City"), and Ordinance Nos. 81-27 and 83-16 of Washington County, Arkansas (the "County"), and (2) that pursuant to Section 8 of Ordinance No. 4050 of the City the City's share of the collections of the 1% sales and use tax levied in the County shall be sent directly to the City, and no longer sent to First Commercial Trust Company, National Association, in Little Rock, Arkansas. Certified this day of , 1997. -cc Cl puty Treasurer • - I CERTIFICATE I, Ed Hicks, Excise Tax Administrator of the Arkansas Department of Finance and Administration, hereby certify (1) that there has been filed in my office a certified copy of Ordinance Nos. 4050 of the City of Fayetteville, Arkansas, a certified copy of Ordinance Nos. 81-27 and 83-16 of Washington County, Arkansas (the "County"), a copy of the Proclamation of Election Results executed by the County Judge and a copy of the proof of publication of such Proclamation and (2) that according to the records of the Department of Finance and Administration, Sales Tax Division, the levy of the County's I% sales and use tax was effective ljavenifer of 1981, and continues in effect. -f Certified this .3 day of , 1997. `Excise Tax Administrator • 3 S SATISFACTION OF BONDS REFUNDED We, the undersigned officers of First Commercial Trust Company, National Association, as successor to Mcllroy Bank & Trust (the "Trustee"), hereby certify that: 1. The Trustee was appointed and has served as Trustee for the City of Fayetteville, Arkansas Sales Tax Capital Improvement Bonds, Series 1986, in the aggregate outstanding principal amount of $2,940,000 (the "Bonds Refunded") authorized by Ordinance No. 3224 of the City of Fayetteville, Arkansas (the "City") adopted November 6, 1986. 2. In August 1997, the Trustee, on behalf of the City, mailed a Notice of Full Redemption to each of the registered owners of the Bonds Refunded announcing that the Bonds Refunded were called for redemption on September 23, 1997. 3. The Trustee has received from the City sufficient monies to redeem the Bonds Refunded at a redemption price of 100 cents on the dollar plus accrued interest through September 23, 1997. 4. Pursuant to the terms of the Trust Indenture dated November 15, 1986 between the • City and the Trustee, there is sufficient money on deposit to redeem the Bonds Refunded, all action required to be taken by the City to redeem and satisfy the Bonds Refunded has been taken, and the City has paid in full for the redemption of the Bonds Refunded. IN WITNESS WHEREOF, we have hereunto affixed our signatures and the corporate seal of the Trustee this 23rd day of September, 1997. FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION, Trustee Title: Debi DeHan, Corporate Trust Manager ., �., Title: Laurett Tedford, Assistant Corporate Trust Operations Manager • P:(DOCUMENIICTBWAYEITEV(APP.CTB Sep.embe• 22, 199'1(1 Olpm) • CROSS RECEIPT Stephens Inc., as underwriter (the "Underwriter"), of the City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds") hereby certifies that on the date hereof, the Underwriter or its representative, has received the Bonds from First Commercial Trust Company, National Association in the aggregate principal amount of $2,610,000. Dated this 23rd day of September, 1997. STEPHENS INC. (� By: ![ • Title: First Commercial Trust Company, National Association, as trustee (the "Trustee") for the owners of the City of Fayetteville, Arkansas Sales Tax Capital Improvement Refunding Bonds, Series 1997 (the "Bonds"), hereby certifies that the Trustee has received from Stephens Inc. on this date the sum of $2,587,815, which payment constitutes 99.15% of the par amount of the Bonds, plus accrued interest of $7,070.71 from September 1, 1997 to the date hereof. Dated this 23rd day of September, 1997. FIRST COMMERCIAL TRUST COMPANY, NATIONAL ASSOCIATION, Trustee By: 4&& 42 A Title: 104AM l t.(i J4tqaW 179 �,/r� IC M M S M M PA 001 - REOI1 ON CERTIFICATES FOR RETURN TO ISSUER JULY 29 9 9��� PAGE 6 FOR PERIOD JAN 30,1999 THROUGH JUL 29,1999 7 2000009095 FAYETTEVILLE, AR COPY ACCT 2000009095 CIT _J.R G �AY'EIIEVIL c II 9 ISSUE 9256 CAPITAL EREFUNDINGSBON055 TAX REPORT ROUTE I FAYETTEVVILLEEETTA, IMPROVEMENT AR 72701 11 SERIES 1997 11 SEP ]0 I2 13 1. REGISTERED BONDS I. 1s A. PAID CERTIFICATES AQAF€E 0EV II DATE INTEREST" RATE Bk-00SIP BOND RURBER RAFCEB BDNDENlINATION TOTAL BID AMOIMT 20 ---------- ------------- ---------------- ------------ ----------------- -------- ------------------ ------------------ 21 MATURITY NOV IS, 1998 04.1500000000000 01 312673CC8 000002/000003 2 5.000.00 10,000.00 2Z 000004/000007 4 10,000.00 40,000.00 Lj 000008/000009 2 25,000.00 50,000.00 24 0000 00 0 2 2 50.000.00 100.000_00 25 0 0 00 ,00 . 0 40,000.00 26 000100/000100 1 50,000.00 50,000.00 27 28 TOTAL FOR PAID CERTIFICATES 1 12 290,000.00 TOTALS290,000.00 31flc1ATED 32 DES R ION WITl1(�) SED Y. DA } f ^ V v�/ \: 2i/iJ REGISTEREDLS NBR OF BONDS NOR OF COUPONS 70TA290N000.00 E PAID 12 290,000.00 } PANNS R 0 .00 37 EG 38 PAID 0 0.00 39 TRANSFERRED 0 0.00 40 TOTAL BONDS 12 290,000.00 g! TOTAL COUPONS 0 0.00 33 RRR 6F'BbRBS—NBR-OF-tb iPDNs TOTAL AMOUSI 44 REGISTERED 35 630,000.00 4 PAID 35 630,000.00 40 TRANSFERRED 0 0.00 M17 BEARER 0. TALD � 39 50 TOTAL BONDS 35 . 630,000.00 TOTAL COUPONS 0 D.00 52 �S 1557 58 5 at-; 1.