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HomeMy WebLinkAboutOrdinance 4159 ORDINANCE NO. 4159 AN ORDINANCE PROVIDING FOR THE ISSUANCE OF $8,365,000 PRINCIPAL AMOUNT OF WATER AND SEWER SYSTEM REFUNDING REVENUE BONDS, SERIES 1999, OF THE CITY OF FAYETTEVILLE, ARKANSAS; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT AND AN ESCROW DEPOSIT AGREEMENT IN CONNECTION THEREWITH; PROVIDING FOR CERTAIN OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City of Fayetteville, Arkansas (the "City"), a city of the first class, owns and operates a public water and sewer utility system (which system, together with all capital improvements thereto, is herein collectively called the "System"); and WHEREAS, the City is authorized under the Constitution and laws of the State of Arkansas (the "State"), particularly Arkansas Code Annotated §§ 14-234-201 et seq.; Arkansas Code Annotated §§ 14-235-201 et seq.; Arkansas Code Annotated §§ 14- 164-401 et seq.; and Arkansas Code Annotated § § 19-9-601 et seq. (collectively, the "Authorizing Legislation"), to acquire, construct, equip, improve, maintain, operate and repair the System and to issue its revenue bonds to finance and refinance capital improvements to the System; and WHEREAS, the City has previously issued its $10,000,000 Water and Sewer System Refunding and Improvement Revenue Bonds, Series 1992 (the "Series 1992 Bonds"), of which $8, 160,000 in aggregate principal amount remains outstanding, pursuant to the Authorizing Legislation and Ordinance No. 3638 of the City, adopted August 18, 1992; and WHEREAS, the City has previously issued its $5,500,000 Water and Sewer System Revenue Bonds, Series 1994 (the "Series 1994 Bonds'), of which $4,270,000 in aggregate principal amount remains outstanding, pursuant to the Authorizing Legislation and Ordinance No. 3829 of the City, adopted September 20, 1994; and WHEREAS, in order to realize debt service savings, the City Council (the "Council") has determined that it is in the best interests of the City and its citizens that the City authorize and issue its Water and Sewer System Refunding Revenue Bonds, Series 1999 (the "Series 1999 Bonds"), in the aggregate principal amount of $8,365,000 and with such terms as further described in Section 3 of this Ordinance, to provide funds, together with other available funds, to accomplish the refunding of all of the City's outstanding Series 1992 Bonds, to establish a debt service reserve for the Series 1999 Bonds, and to pay certain expenses incidental to the issuance thereof; and WHEREAS, arrangements have been made for the sale of the Series 1999 Bonds to Stephens Inc. (the "Underwriter") and in connection therewith there has been prepared and distributed a Preliminary Official Statement dated April 7, 1999 (the "Preliminary Official Statement"); and Page 2 Ordinance No. 15� 9 April 20, 1999 WHEREAS, there has been submitted to the City a Bond Purchase Agreement dated April 20, 1999 (the `Bond Purchase Agreement'), to be entered into between the City and the Underwriter, providing for the sale of the Series 1999 Bonds to the Underwriter; and WHEREAS, there has been submitted to the City an Escrow Deposit Agreement dated as of May 1 , 1999 (the "Escrow Deposit Agreement'), to be entered into between the City and Bank of Oklahoma, N.A., as escrow trustee (the "Escrow Trustee"), providing for the refunding of the Series 1992 Bonds; and WHEREAS, copies of the Preliminary Official Statement, Bond Purchase Agreement, Escrow Deposit Agreement, Continuing Disclosure Agreement (as defined herein) and Tax Regulatory Agreement (as defined herein) have been submitted to the City; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS, AS FOLLOWS: Section 1. Definitions. In addition to the terms defined in the preamble to this Ordinance, the following terms shall have the following meanings: "Accountant" shall mean a firm of independent certified public accountants of recognized national standing selected from time to time by the City, which may be the firm of accountants that regularly audits the books of the City. "Budget" shall mean the annual budget of the System adopted in accordance with Section 16 of this Ordinance. "Code" shall mean the Internal Revenue Code of 1986, as now or hereafter amended, and applicable regulations issued or proposed thereunder. "Consulting Engineer " shall mean a firm of independent engineers having recognized experience in municipal water and sewer systems selected from time to time by the City. "Continuing Disclosure Agreement " shall mean that Continuing Disclosure Agreement dated as of May 1 , 1999, by and between the City and the Trustee. "Escrow Trustee " shall mean Bank of Oklahoma, N.A. "Government Obligations" shall mean (i) direct obligations of, or obligations the payment of the principal of and interest on which is fully guaranteed by, the United States of America; (ii) obligations issued or guaranteed by any instrumentality or agency of the United States of America, whether now existing or hereafter organized, including, but not limited to those of the Federal Financing Bank, the members of the Farm Credit System, whether individually or consolidated, Federal Home Loan Banks, the Export-Import Bank, Government National Mortgage Association and the Tennessee Valley Authority; (iii) evidences of ownership of proportionate interests in future interest or principal payments on obligations specified in clause (i) of this definition held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor on the underlying obligations described in clause (i) of this definition, and which underlying obligations are not i r 7 Page 3 Ordinance No. 415 9 April 20, 1999 available to satisfy any claim of the custodian or any person claiming through the custodian or to whom the custodian may be obligated; (iv) municipal obligations, the payment of the principal of, interest on and redemption premium, if any, on which are irrevocably secured by obligations described in clause (i) of this definition and which obligations have been deposited in an escrow account, which is irrevocably pledged to the payment of the principal of, interest on and redemption premium, if any, on such municipal obligations; (v) obligations issued by any state of the United States; and (vi)municipal obligations the payment of the principal of and interest on which are insured; provided, however, the obligations described in clauses (v) and (vi) of this definition shall also be rated in one of the top two highest rating categories (without regard to any gradation within such category) by both Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services. "Gross Revenues" shall mean all fees, tolls, rates, rentals and charges levied and collected in connection with, and all other income and receipts of whatever kind or character derived by the City from, the operation of the System. Gross Revenues shall specifically include, but shall not be limited to, revenues from water sales, sewer service charges, fire protection charges and interest income on Revenue Fund balances. Notwithstanding the foregoing, Gross Revenues shall not include acreage, front-footage, tap-on, assessment and similar fees, charges, contributions or grants derived by the City in connection with the provision of or payment for capital improvements constituting a part of the System. "Guaranteed Investment Contract" shall mean investment agreements with any bank or trust company which has long-term obligations rated in one of the two highest rating categories by Moody' s and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services "Interest Payment Date" shall mean February 15 and August 15 of each year, commencing August 15, 1999. "Investment Obligations" shall mean any of the following, to the extent that the same are legal investments for the investment of public funds under State law: (a) Government Obligations; (b) banker's acceptances, certificates of deposit or time deposits of any bank, trust company or savings and loan association (including any investment in pools of such banker's acceptances, certificates of deposit or time deposits), which, to the extent that such obligations are not insured by the Federal Deposit Insurance Corporation, are collateralized at all times in amounts and by obligations as shall be permitted by State law; (c) any repurchase, reverse repurchase or investment agreement with any bank or trust company organized under the laws of any state of the United States or any national banking association, insurance company or government bond dealer reporting to, trading with and recognized as a primary dealer by the Federal Reserve Bank of New York and a member of the Security Investors Protection Corporation, which agreement is secured by any one or more of the securities described in clause (i), (ii) or (iii) of the definition of Government Obligations, provided that the City has a perfected first security interest in the collateral and that the City or its agent has possession of the collateral and that such collateral is held free and clear of claims by third parties; t I � Page 4 Ordinance No. 415 9 April 20, 1999 (d) Guaranteed Investment Contracts; and (e) any mutual fimd(s) rated in the highest applicable rating categories established by Moody's or S&P consisting entirely of Government Obligations. "Maximum Principal and Interest Requirements" shall mean the maximum amount of Principal and Interest Requirements for any fiscal year of the System. "Moody 's" shall mean Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Net Revenues" shall mean, for any period, Gross Revenues less Operating Expenses for such period. "Operating Expenses" shall mean, for any period, all ordinary and necessary expenses of operation, repair, maintenance and insuring of the System under generally accepted accounting principles, except that they shall not include (i) any allowance for depreciation, (ii) any deposits or transfers to the credit of (a) the Series 1994 Bond Fund or the Series 1999 Bond Fund or any other fund or account created for the payment of debt service on Parity Indebtedness or subordinated indebtedness secured by a pledge of Net Revenues as permitted hereunder, (b) the Series 1994 Debt Service Reserve Fund or the Series 1999 Debt Service Reserve Fund or any other debt service reserve fund or account created in connection with the issuance of Parity Indebtedness or subordinated indebtedness secured by a pledge of Net Revenues as permitted hereunder, or (c) the Renewal and Replacement Fund, or (iii) any payments with respect to obligations not payable in whole or in part under any circumstances from Gross Revenues. Operating Expenses shall specifically include obligations of the City to the Beaver Water District of Benton and Washington Counties, Arkansas. "Parity Indebtedness" shall mean the Series 1994 Bonds and other indebtedness of the City issued on a parity of security with the Series 1999 Bonds in accordance with Section 13 of this Ordinance. "Principal and Interest Requirements" for any fiscal year of the System, as applied to the Series 1999 Bonds, shall mean the sum of: (a) the amount required to pay the interest on the Series 1999 Bonds then outstanding which is payable on the Interest Payment Dates during such fiscal year; and (b) the amount required to pay the principal of the Series 1999 Bonds then outstanding which is payable on August 15 of such fiscal year. In calculating Principal and Interest Requirements, there may be excluded any principal and interest payments with respect to the Series 1999 Bonds which the City covenants to pay or satisfy with moneys in the Series 1999 Debt Service Reserve Fund which may be used for such purpose. "Principal and Interest Requirements" for any fiscal year of the System, as applied to the Series 1994 Bonds or any Parity Indebtedness, means the sum of the amounts required by the ordinance providing for the issuance of the Series 1994 Bonds or such Parity Indebtedness to pay or to provide for the payment of the interest on and principal of the Series 1994 Bonds or such Parity Indebtedness then outstanding with respect to such fiscal year. Page 5 Ordinance No. & i s 4 April 20, 1999 "Reserve Fund Requirement," with respect to the Series 1999 Bonds, shall mean $800,000. "S&P" shall mean Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., its successors and their assigns, and, if "S&P" shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "State" shall mean the State of Arkansas. "Tax Regulatory Agreement " shall mean that Tax Regulatory Agreement dated as of May 1 , 1999, by and between the City and the Trustee, relating to the Series 1999 Bonds. "Trustee" shall mean the Trustee serving as such under this Ordinance, whether original or successor. The original trustee is Bank of Oklahoma, N.A. Section 2. Refunding of the Series 1992 Bonds. The Council hereby determines that the refunding of the Series 1992 Bonds as provided in Section 22 hereof and in the Escrow Deposit Agreement is in the best interests of the City and its citizens and further determines that the refunding of the Series 1992 Bonds will result in the realization of debt service savings to the City. Section 3. Authorization and Terms of Bonds. (a) Under the authority of the Constitution and laws of the State, including particularly the Authorizing Legislation, there is hereby authorized the issuance of revenue bonds of the City to be designated "City of Fayetteville, Arkansas Water and Sewer System Refunding Revenue Bonds, Series 1999" in the principal amount of $8,365,000 (the "Series 1999 Bonds'). The Series 1999 Bonds shall be special obligations of the City and the principal of and the interest and any redemption premium on the Series 1999 Bonds shall be secured by a statutory mortgage lien upon the water transmission and distribution portion of the System and by a pledge of the Net Revenues as provided in this Ordinance. The Series 1999 Bonds shall be secured on a parity basis with the City's Water and Sewer System Revenue Bonds, Series 1994 (the "1994 Bonds"), presently outstanding in the aggregate principal amount of $4,270,000. The principal of, the interest and any redemption premium on the Series 1999 Bonds may also be paid as herein provided from moneys in the Series 1999 Debt Service Reserve Fund and certain other funds created hereby, including any income received from the investment of moneys deposited in such funds. (b) The Series 1999 Bonds shall be dated May 1 , 1999, and interest thereon shall be payable semiannually on February 15 and August 15 of each year, commencing August 15, 1999. The Series 1999 Bonds shall be issued as fully registered bonds, numbered consecutively from R- 1 upwards, and shall be in denominations of $5,000 or integral multiples thereof. Each Series 1999 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless it is authenticated as of 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 its date, or unless at the time of authentication interest on the Series 1999 Bonds shall be in default, in which event it shall bear interest from the date to which interest has been paid in full. Page 6 Ordinance No. 415 9 April 20, 1999 (c) The Series 1999 Bonds shall be issued in the principal amounts, shall mature, unless sooner redeemed in the manner set forth in this Ordinance, and shall bear interest, all as set forth in Exhibit A attached hereto (which Exhibit A is incorporated herein by this reference). (d) The Series 1999 Bonds shall be subject to redemption prior to maturity in accordance with the provisions pertaining thereto appearing in the form of Series 1999 Bond attached as Exhibit B to this Ordinance. Series 1999 Bonds shall be redeemed only from and to the extent funds on deposit in the Series 1999 Bond Fund are available and sufficient for such purpose. (e) The Series 1999 Bonds shall be payable, with respect to principal, premium, if any, and interest, in any coin or currency of the United States of America that at the time of payment is legal tender for the payment of public and private debts. The principal of and any redemption premium on each Series 1999 Bond shall be payable to the registered owner thereof or his registered assigns or legal representative at the corporate trust office of the Trustee upon the presentation and surrender thereof as the same shall become due and payable. Payment of the interest on each Series 1999 Bond shall be made by the Trustee on each Interest Payment Date to the person appearing on the registration books of the City as maintained by the Trustee hereinafter provided for as the registered owner of such Series 1999 Bond (or the previous Series 1999 Bond or Series 1999 Bonds evidencing the same debt as that evidenced by such Series 1999 Bond) at the close of business on the record date for such interest, which shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date, by check mailed to such person at his address as it appears on such registration books. (f) It is expected that the Series 1999 Bonds will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 1999 Bonds will be made so long as Cede & Co. or any successor nominee of DTC is the registered owner of the Series 1999 Bonds. (g) The Bonds shall bear the original or facsimile signatures of the Mayor and City Clerk of the City, and the official seal of the City shall be imprinted or embossed thereon. In case any officer whose signature shall appear on any of the Series 1999 Bonds shall cease to be such officer before the Series 1999 Bonds shall have been delivered, such Series 1999 Bonds may, nevertheless, be delivered as herein provided and may be issued as if the person whose signature appears on such Series 1999 Bonds had not ceased to hold such office. Any Series 1999 Bonds may bear the signatures of such persons who at the time of the execution of such Series 1999 Bonds shall be duly authorized or hold the proper office in the City although at the date of the Series 1999 Bonds such persons may not have been so authorized or have held such office. (h) The Series 1999 Bonds may be exchanged and registered and transfers of the Series 1999 Bonds may be registered in accordance with the provisions pertaining thereto appearing in the form of Series 1999 Bond attached hereto as Exhibit B to this Ordinance. (i) No Series 1999 Bond shall be valid or become obligatory for any purpose or be entitled to any benefit or security under this Ordinance until it shall have been authenticated through the execution by the Trustee of the Certificate of Authentication thereon. Page 7 Ordinance No. 415 9 April 20, 1999 Section 4. Series 1999 Bond Form. The Series 1999 Bonds and the Certificate of Authentication thereon shall be in substantially the form attached as Exhibit B to this Ordinance, and the Mayor and City Clerk of the City are hereby authorized and directed to make all recitals contained therein. Section 5, Rate Covenants. The City covenants that: (a) Subject to the provisions of Section 5(b), it will continue in effect the present schedules of rates for water and sewer services established by Ordinance No. 4059, adopted by the City on October 7, 1997 (which ordinance is hereby confirmed and incorporated herein by this reference and which rates are herein collectively called the "System Rates"). (b) Application of the System Rates will produce during each fiscal year of the System Gross Revenues of at least 110% of the amount required for such fiscal year to (i) pay Operating Expenses, (ii) pay Principal and Interest Requirements on all Series 1994 Bonds, all Series 1999 Bonds and all Parity Indebtedness then outstanding, (iii) pay any Trustee fees, (iv) make required deposits into any debt service reserve funds associated with the Series 1994 Bonds, the Series 1999 Bonds and all Parity Indebtedness then outstanding, and (v) make required deposits into the Renewal and Replacement Fund. The City shall increase System Rates from time to time, as and when necessary, to produce Gross Revenues in the amount specified above. Section 6. Creation and Confirmation of Funds. (a) The City hereby incorporates by reference City Ordinance No.3638, adopted on Augustl8, 1992 (the "1992 Ordinance"), which authorized the issuance of the Series 1992 Bonds and established and created the following funds relevant to the Series 1999 Bonds: (i) Revenue Fund; (ii) Operation and Maintenance Fund; and (iii) Renewal and Replacement Fund. (b) The City hereby incorporates by reference City Ordinance No. 3829, adopted on September 20, 1994 (the "1994 Ordinance'), which authorized the issuance of the Series 1994 Bonds and established and created the following funds relevant to the Series 1999 Bonds: (i) Series 1994 Bond Fund; and (ii) Series 1994 Debt Service Reserve Fund. (c) The City hereby creates and establishes the following funds: (i) Series 1999 Bond Fund; and (ii) Series 1999 Debt Service Reserve Fund. The Revenue Fund, Operation and Maintenance Fund and Renewal and Replacement Fund shall be maintained by the City as segregated funds. The Series 1994 Bond Fund, Series 1994 Debt Service Reserve Fund, Series 1999 Bond Fund and Series 1999 Debt Service Reserve Fund shall be maintained by the Trustee as segregated funds. Moneys deposited in each of such funds shall be expended only as set forth in this Ordinance. (d) The City may, in connection with the issuance of Parity Indebtedness, create other funds under this Ordinance as may be necessary or convenient. I Page 8 Ordinance No. 415 9 April 20, 1999 Section 7. Revenue Fund. (a) The City shall cause all Gross Revenues to be promptly deposited to the credit of the Revenue Fund. (b) Commencing on the fifth business day preceding the fifteenth day of the first month following delivery of the Series 1999 Bonds (unless delivery of the Series 1999 Bonds occurs on or prior to the fifth business day preceding the fifteenth day in a given month, in which case the date of commencement shall be the fifth business day preceding the fifteenth day of the month of delivery of the Series 1999 Bonds), and thereafter not later than the fifth business day preceding the fifteenth day of each month, the City shall transfer from the Revenue Fund to the following fiords, in the order indicated, the amounts set forth below: FIRST; as required by the 1992 Ordinance and the 1994 Ordinance, a deposit into the Operation and Maintenance Fund of the amount necessary to cause moneys therein to equal the System's anticipated Operating Expenses, as shown by the Budget of proposed Operating Expenses adopted by the City for the then current fiscal year, for the next succeeding two months; SECOND; to the Trustee, for deposit into the Series 1994 Bond Fund and the Series 1999 Bond Fund, an amount equal to one-sixth of the interest due on the outstanding Series 1994 Bonds and Series 1999 Bonds on the next Interest Payment Date plus one-twelfth of the principal due on the outstanding Series 1994 Bonds and Series 1999 Bonds on the next principal or sinking fund redemption payment date (provided, however, that the first payments hereunder into the Series 1999 Bond Fund shall be prorated from the date of the Series 1999 Bonds' issuance), after taking into account amounts held in the Series 1994 Bond Fund and the Series 1999 Bond Fund for the payment of such principal and interest, and, for deposit into a separate account, such amount as is required to make the amount in each other fund or account created for the payment of debt service on Parity Indebtedness equal to the amount then required to be in such debt service fund or account; THIRD; to the Trustee, for deposit into the Series 1994 Debt Service Reserve Fund and/or the Series 1999 Debt Service Reserve Fund, beginning in the month following the month in which a deficiency in the Series 1994 Debt Service Reserve Fund and/or the Series 1999 Debt Service Reserve Fund was created by a withdrawal, valuation or otherwise, an amount at least equal to one-twelfth of the amount of such deficiency until the amount in the Series 1994 Debt Service Reserve Fund and/or the Series 1999 Debt Service Reserve Fund, as the case may be, is equal to the Reserve Fund Requirement with respect to the Series 1994 Bonds or the Series 1999 Bonds, as applicable, and, for deposit into a separate account, such amount as is required to make the amount in each other debt service reserve fund or account created in connection with the issuance of Parity Indebtedness equal to the amount then required to be in such debt service reserve fund or account; and FOURTH; for deposit into the Renewal and Replacement Fund, to the extent moneys are available in the Revenue Fund, the amount necessary to cause the amount therein to equal $300,000 (as required by the 1992 Ordinance), or such greater amount as the City may determine from time to time to be appropriate, provided that the amount to be transferred from the Revenue Fund and deposited into such fund in any month need not exceed Page 9 Ordinance No. 4159 April 20, 1999 one-twelfth of the amount then required to be held for the credit of the Renewal and Replacement Fund. (c) If in any month there shall be a failure to transfer the required amount into any of the funds or accounts as described above, then the amount of any deficiency shall be added to the amount otherwise required to be transferred into said funds or accounts in the next succeeding month. (d) Any moneys remaining in the Revenue Fund immediately following the transfers required by the 1992 Ordinance, the 1994 Ordinance and this Ordinance, and before additional deposits of Gross Revenues are made into the Revenue Fund, may be used, at the option of the City, for any lawful purposes. (e) On or before the third business day preceding each redemption date for any Series 1999 Bonds called for redemption prior to maturity, the City shall transfer to the Trustee for deposit into the Series 1999 Bond Fund from any available funds of the City an amount sufficient, together with any other funds in the Series 1999 Bond Fund available for such purpose, to pay the interest on, the principal of and any premium on the Series 1999 Bonds to be redeemed pursuant to such call. Section 8. Operation and Maintenance Fund. (a) The City shall deposit to the credit of the Operation and Maintenance Fund moneys received therefor pursuant to Section 7 of this Ordinance and Section 8 of the 1994 Ordinance. (b) Moneys in the Operation and Maintenance Fund shall be expended solely for the purpose of paying Operating Expenses. Section 9. Series 1999 Bond Fund. (a) The Trustee shall deposit to the credit of the Series 1999 Bond Fund and any separate account with respect to a debt service fund or account created in connection with the issuance of Parity Indebtedness moneys received therefor pursuant to Section 7 of this Ordinance. (b) On or before the third business day preceding each Interest Payment Date or redemption date for any of the Series 1999 Bonds outstanding, the Trustee shall withdraw from the Series 1999 Bond Fund and deposit in trust in immediately available funds an amount sufficient to enable the Trustee to remit by mail or wire transfer, as the case may be, to the registered owners of the Series 1999 Bonds the amounts required to pay interest on the Series 1999 Bonds due on such date, and such amount shall be so applied. (c) On or before the third business day preceding each principal or sinking fund redemption payment date for any of the Series 1999 Bonds outstanding, the Trustee shall withdraw from the Series 1999 Bond Fund and deposit in trust in immediately available funds the amount required to pay principal of the Series 1999 Bonds due on such date, and such amount shall be so applied. (d) Additional moneys held in the Series 1999 Bond Fund may be applied at the option of the City as a credit toward the required payments into the Series 1999 Bond Fund pursuant to Section 7 hereof, to pay Trustee and paying agent fees and expenses, or, at the option of the City, to the retirement of the Series 1999 Bonds as follows: Page 10 Ordinance No. 415 9 April 20, 1999 (i) At the direction of the City, the Trustee shall endeavor to purchase any Series 1999 Bonds secured hereby and then outstanding, whether or not the Series 1999 Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, the price not to exceed the principal of and interest on the Series 1999 Bonds plus the amount of the redemption premium, if any, which might on the next redemption date be paid to the registered owners of the Series 1999 Bonds under the provisions of this Ordinance regarding redemption if the Series 1999 Bonds should be called for redemption on the date from moneys in the Series 1999 Bond Fund. However, no such purchase shall be made by the Trustee within the period of 45 days next preceding any Interest Payment Date on which the Series 1999 Bonds are subject to call for redemption under the provisions of this Ordinance, except from moneys other than moneys set aside or deposited for the redemption of Series 1999 Bonds. (ii) Series 1999 Bonds which are subject to extraordinary redemption at par plus accrued interest up to the date fixed for redemption pursuant to the Ordinance shall be called for redemption on the first Interest Payment Date for which the required notice can be given in the inverse order of their maturities. (iii) Subject to the provisions of this Ordinance regarding redemption, the Trustee may call for redemption, in inverse order of maturity, on each date on which Series 1999 Bonds are subject to redemption as provided in this Ordinance such amount of such Series 1999 Bonds as, with the redemption premium, if any, will exhaust the moneys which will be held for the credit of the Series 1999 Bond Fund on such date as nearly as may be; provided, however, that no less than $50,000 principal amount of Series 1999 Bonds shall be called for redemption at any one time unless a lesser amount shall retire all outstanding Series 1999 Bonds. On or before the third business day preceding each redemption date, the Trustee shall withdraw from the Series 1999 Bond Fund and set aside in separate accounts the respective amounts required for paying the interest on, the principal of and redemption premium of the Series 1999 Bonds so called for redemption. Upon the retirement of any Series 1999 Bonds by purchase or redemption, the Trustee shall file with the City Clerk a statement briefly describing such Series 1999 Bonds and setting forth the date of their purchase or redemption, the amount of the purchase price or the redemption price of such Series 1999 Bonds and the amount paid as interest thereon. The Trustee shall cancel said Series 1999 Bonds, in which event they will no longer be deemed outstanding obligations of the City. The expenses in connection with the purchase or redemption of any Series 1999 Bonds shall be paid by the City or the Trustee from Revenues after the application of the Revenues as required by subsections (a), (b) and (c) of Section 7 hereof. (e) All moneys that the Trustee shall have withdrawn from the Series 1999 Bond Fund or shall have received from any other source and deposited with the Trustee for the purpose of paying any of the Series 1999 Bonds hereby secured, either at the maturity thereof or upon call or redemption, or for the purpose of paying any interest or redemption premium on any of the Series 1999 Bonds hereby secured, shall be held in trust for the respective registered owners of such Series 1999 Bonds. But any moneys that shall be so set aside or deposited by the Trustee and that shall remain unclaimed Page 11 Ordinance No. 415 9 April 20, 1999 by the registered owners of such Series 1999 Bonds for the period of three years after the date on which such Series 1999 Bonds, the interest or any redemption premium thereon shall have become due and payable shall be remitted to the State Treasurer or to such other officer, board or body as may then be entitled by law to receive the same, and thereafter the registered owners of such Series 1999 Bonds shall look only to the State Treasurer or to such other officer, board or body, as the case may be, for payment and then only to the extent of the amounts so received without any interest thereon, and the Trustee shall have no responsibility with respect to such moneys. (f) If there shall be insufficient moneys in the Series 1999 Bond Fund, after all required transfers thereto have been made, to pay in full interest on, principal of and any premium due on any Interest Payment Date or principal payment date, the Trustee shall, on the second business day prior to such date, withdraw from the Series 1999 Debt Service Reserve Fund and deposit immediately available funds in the Series 1999 Bond Fund in an amount equal to such deficiency. (g) If there shall still be insufficient moneys on deposit with the Trustee, after all required deposits thereto have been made as provided above in this Section 9, to pay in full the interest on, principal of and any premium due with respect to the Series 1999 Bonds on any Interest Payment Date or principal payment date or redemption date, the City shall immediately withdraw from the Renewal and Replacement Fund and deposit in trust with the Trustee in immediately available funds an amount equal to such deficiency. (h) Moneys credited to a separate account with respect to a debt service fund or account created in connection with the issuance of Parity Indebtedness shall be transferred by the Trustee in accordance with the terms of the ordinance providing for the issuance of such Parity Indebtedness. Section 10. Renewal and Replacement Fund. (a) In accordance with the provisions of the 1992 Ordinance, if deductions are made therefrom, the Renewal and Replacement Fund shall be replenished in accordance with the provisions of the 1992 Ordinance. (b) Subject to the provisions of Section 9 of this Ordinance, moneys in the Renewal and Replacement Fund shall be used solely for the purpose of paying the cost of necessary repairs or replacements due to the depreciation of the System and not paid for with moneys in the Operation and Maintenance Fund and costs of damage caused to the System by unforeseen catastrophes. Section 11. Series 1999 Debt Service Reserve Fund. (a) The Trustee shall deposit to the credit of the Series 1999 Debt Service Reserve Fund and any separate account with respect to a debt service reserve fund or account created in connection with the issuance of Parity Indebtedness moneys received therefor pursuant to Sections 7 and 21 of this Ordinance. (b) Moneys credited to the Series 1999 Debt Service Reserve Fund shall be transferred as necessary, pursuant to Section 9 of this Ordinance, to provide for the payment of the principal of, interest on and premium, if any, on the Series 1999 Bonds when due. Moneys credited to the Series 1999 Debt Service Reserve Fund may also be transferred, at the option of the City, to the Series 1999 Bond Fund to provide for the payment of the final maturity of the principal of the Series 1999 Bonds and the respective interest thereon after all other principal of and interest on the Series 1999 Bonds Page 12 Ordinance No. 415 9 April 20, 1999 have been paid, except as may be otherwise provided in connection with any refunding of the Series 1999 Bonds. (c) Moneys credited to the Series 1999 Debt Service Reserve Fund in excess of the Reserve Fund Requirement and investment earnings on moneys credited to the Series 1999 Debt Service Reserve Fund in excess of the Reserve Fund Requirement shall be transferred to the Series 1999 Bond Fund. (d) Moneys credited to a separate account with respect to a debt service reserve fund or account created in connection with the issuance of Parity Indebtedness shall be transferred by the Trustee in accordance with the terms of the ordinance providing for the issuance of such Parity Indebtedness. Section 12. Investment of Moneys. (a) At the direction of the City or absent such direction, the Trustee shall invest moneys in funds or accounts held by the Trustee in Investment Obligations with maturity or redemption dates consistent with the times at which said moneys will be required for the purposes provided in this Ordinance; provided, however, the stated maturity dates of Investment Obligations of Series 1999 Debt Service Reserve Fund moneys shall not exceed five years from the date of investment therein. Moneys in separate funds or accounts may be commingled for the purpose of investment. The City may invest moneys held in the Revenue Fund, Operation and Maintenance Fund and Renewal and Replacement Fund in any investment obligations permitted by State law. (b) Obligations purchased as an investment of moneys in any fund or account created by this Ordinance shall be deemed at all times to be a part of such fund or account, and any income or loss due to an investment thereof shall be charged to the respective fund or account for which the investment was made except as otherwise provided in this Ordinance. (c) Investments in any fund or account shall be evaluated at least annually by the City or the Trustee, as may be appropriate. For the purpose of determining the amount in any fund or account, the City and the Trustee shall value all Investment Obligations credited to such fund or account at the price at which such Investment Obligations are redeemable by the holders or owners thereof at their option if so redeemable, or, if not so redeemable, at the lesser of (i) the cost of such Investment Obligations minus the amortization of any premium or plus the amortization of any discount thereon and (ii) the market value of such Investment Obligations, provided that Investment Obligations credited to the Series 1999 Debt Service Reserve Fund, if not so redeemable, shall be valued at the cost thereof minus the amortization of any premium or plus the amortization of any discount thereon. Section 13. Parity Indebtedness. (a) The City shall be entitled to issue and incur indebtedness secured on a parity with the Series 1994 Bonds and the Series 1999 Bonds to refund any outstanding Series 1994 Bonds, Series 1999 Bonds or Parity Indebtedness or to finance the cost of constructing any future extensions, betterments or improvements to the System. The amount of any Parity Indebtedness may provide for the funding of interest for such period as the City may determine, the funding of a debt service reserve in such amount as the City may determine and the payment of certain expenses in connection with the issuance of such Parity Indebtedness. (b) Prior to issuing Parity Indebtedness, the City shall obtain an Accountant's or Consulting Engineer's certificate to the effect that Net Revenues for each of the two fiscal years preceding the