HomeMy WebLinkAbout78-4-1547770
ORDINANCE NO. 78-4-1547
AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY AUTHORIZING AND
PROVIDING FOR THE ISSUANCE OF $1,275,000 PRINCIPAL AMOUNT (WHICH MAY BE
INCREASED OR REDUCED BY UP TO $25,000 TO AS MUCH AS $1,300,000 OR TO AS
LITTLE AS $1,250,000) OF CITY OF PADUCAH WATER WORKS REFUNDING REVENUE
BONDS, SERIES OF 1978, DATED APRIL 1, 1978, FOR THE PURPOSE OF REFUNDING
THROUGH ESCROW FOR RETIREMENT AT MATURITY (WITHOUT REDEMPTION IN ADVANCE
OF MATURITY) , THE OUTSTANDING CITY OF PADUCAH (A) WATER WORKS IMPROVE-
MENT AND REFUNDING REVENUE BONDS, SERIES 1965, AND (B) WATER WORKS
REVENUE BONDS, SERIES OF 1972, IN ORDER TO CANCEL CERTAIN RESTRICTIVE
PROVISIONS OF THE EXISTING BOND ORDINANCES AUTHORIZING SAID RESPECTIVE
BONDS AND TO PROVIDE GREATER FLEXIBILITY TO THE CITY IN FINANCING FUTURE
EXTENSIONS, ADDITIONS AND IMPROVEMENTS TO ITS WATER WORKS SYSTEM; PRO-
VIDING FOR THE INVESTMENT OF THE PROCEEDS OF SAID BONDS OF 1978 TO PROVIDE
FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS OF 1965
AND 1972, AS SAME MATURE IN ACCORDANCE WITH THE TERMS THEREOF; SETTING
FORTH THE TERMS AND CONDITIONS ON WHICH SAID BONDS OF 1978 AND ADDITIONAL
BONDS RANKING ON A PARITY THEREWITH ARE TO BE AND MAY BE ISSUED AND
OUTSTANDING; PROVIDING FOR THE CREATION OF CERTAIN FUNDS AND THE TRANSFERS
OF CERTAIN AMOUNTS FROM CERTAIN EXISTING FUNDS; PROVIDING FOR THE PAYMENT
OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS OF 1978; PROVIDING FOR THE
RIGHTS OF THE
HOLDERS OF SAID BONDS OF
1978 AND THE
ENFORCEMENT THEREOF;
AND PROVIDING
FOR AN ADVERTISED PUBLIC
COMPETITIVE
SALE OF SAID BONDS
OF 1978.
WHEREAS. the City of Paducah deems it advisable to issue its Water Works
Refunding Revenue Bonds, Series of 1978, for the purpose of cancelling certain
restrictive and burdensome provisions of the existing Bond Ordinances authorizing the
respective bond issues outstanding against its water works system, and to provide
greater flexibility to' the City in financing future extensions, additions and improvements
to such system, all as hereinafter set out.
NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE CITY OF
PADUCAH, KENTUCKY, DOES ORDAIN AS FOLLOWS:
SECTION 1. DEFINITIONS AND RECITALS.
I. DEFINITIONS
As used in this ordinance, unless the context requires otherwise:
"BOND COUNSEL" refers to the firm of Rubin & Hays, Municipal Bond
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Attorneys, Suite 300, Fireside Building, 209 South Fifth Street, Louisville, Kentucky,
40202, which firm has prepared the legal proceedings for the issuance of the Bonds,
has furnished all of the customary services of Bond Counsel in this financing and
will continue to furnish such services until the Bonds are delivered and paid for,
including the rendering of the final approving Legal Opinion with regard to the
legality of the Bonds and the tax exemption of the interest thereon. A separate legal
opinion will be rendered by the law firm of Haynes & Miller, Washington, D.C.
("Special Tax Counsel") , and relied upon by Bond Counsel, that the Bonds are not
"arbitrage bonds" within the meaning of Section 103 (c) of the Code.
"BONDS OF 1965" refers to the City of Paducah Water Works Improvement
and Refunding Revenue Bonds, Series 1965, dated July 1, 1965, in the original amount
of $2,850,000.
"BONDS OF 1972" refers to the City of Paducah Water Works Revenue Bonds,
Series of 1972, dated October 1, 1972, in the original amount of $685,000.
111965 BOND ORDINANCE" refers to the Ordinance enacted by the governing
body of the City on August 17, 1965, authorizing the Bonds of 1965.
111972 BOND ORDINANCE" refers to the Ordinance enacted by the governing
body of the City on October 10, 1972, authorizing the Bonds of 1972.
"CERTIFIED PUBLIC ACCOUNTANT (S)" refers to an independent Certified
Public Accountant or firm of Certified Public Accountants, duly licensed in Kentucky,
and may include Accountant (s) regularly employed to audit the financial affairs of
the system and/or of other financial matters of the Issuer.
"CITY" refers to the City of Paducah, Kentucky.
"CODE" or "INTERNAL REVENUE CODE" refers to the United States Internal
Revenue Code of 1954, as amended.
"COMMISSION" refers to the "Commissioners of Water Works" of the City
of Paducah, which Commission was created in Ordinance enacted on August 6, 1946,
as amended.
"CURRENT BOND ORDINANCE" refers to this Ordinance authorizing the
Current Bonds.
"CURRENT BONDS" refers to the $1,275,000 principal amount of City of
Paducah Water Works Refunding Revenue Bonds of 1978, dated April 1, 1978, authori-
zed herein, or any of said Bonds or appertaining coupons, or such additional or
reduced amount of said Bonds as may be issued and sold by the Issuer pursuant to
the provisions hereof.
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"DEBT SERVICE REQUIREMENTS" refers to the semi-annual interest require-
ments falling due and the annual principal requirements falling due with reference
to the particular -=bonds to which such phrase has reference at any point in this
Ordinance.
"DEPOSITORY BANK", - "ESCROW BANK" ' or "PAYEE BANK" refers to the
Citizens Bank & Trust Company, Paducah, Kentucky, which is (a) the Bank where'
funds will be escrowed in order to pay the principal of ' and the- interest on the Prior
Bonds, (b) the Bank in which all of the Funds created herein will be deposited and
maintained, (c) "one of the two banks -=where the Prior Bonds are payable, and (d)
the Bank where- the Current 'Bonds' are payable.
"FISCAL AGENT"` refers 'to'J .' J .- B-: Hilliard, W. L. Lyons, Inc . , 545 South
Third Street, Louisville, Kentucky -40202.
"'GOVERING BODY" refers' to the following:
(a) To the Board of Commissioners of -the City of Paducah, Kentucky-,
or such other body as shall be' the- governing" body of the City under- the -'laws of
Kentucky at any given time, with reference to:
(1) - - the issuance- of parity bonds or ' other bonds;
-.(2) the establishment --and adjustment or revision of rates and charges
for water service;
(3) the reserved right of the City to amend ordinances previously adopted
insofar ' as `same may relate to the terms of office ' of members of the
Commissioners of Water Works, the manner of electing or appointing
the same, and the number. thereof;
(4) the determination= that the amounts to be paid into the respective
funds are proper and sufficient for the respective purposes thereof,
as set out in Section 14 hereof; and
(5)' the responsibility of having each 'municipal officer having custody -
of any moneys administered under the provisions of this Ordinance
-'to be bonded in" accorda'nce with Section 15 hereof.
(b) To the "Commissioners of Water Works", established in the Ordinance
dated August 6, 1946, with reference to:
(1) general management, 'control and operation of the Water Works (other
than as specifically reserved to the City's Board of Commissioners);
(2) the adoption of a budget for current expenses, as set out in
Section 16 hereof,
(3) the responsibility of filing the reports as to "coverage" required
by Section 17 hereof;
(4) having jurisdiction to place, and purchase insurance on the System, . .
as set out in Section 21; and`
(5) to furnish the records, audits, reports, and arrangements for
engineering inspection, referred to in Section 22.
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"INDEPENDENT CONSULTING ENGINEER" refers to an Independent Consulting
Engineer or firm of Engineers of excellent . national reputation or of recognized
excellent reputation. in Kentucky in the fields of water. works system engineering
"INVESTED SINKING FUND" refers to the fund created under Section 13B
hereof, into which shall be placed --certain U. S. Obligations maturing November 15,
2007, bearing interest at the .rate of 7-7/8% per annum, --and which are subject to
prior.. redemption at, the option of .the U.; S.. Government -,on November 15, 2002, and
on any , interest payment date -thereafter and prior . to maturity. -
"INVESTED -SINKING FUND AGREEMENT" -refers-:_to-the Agreement between" -
the Trustee (designated as specified in Section ;13B hereof) , the_Issuer,- and the
person or persons who- have agreed to sell Invested Sinking Fund Investments- to
the Issuer, which Agreement is approved in Section 13B; hereof.
"INVESTED SINKING FUND INVESTMENTS" --:refers to the.. investments `in
U. S. Obligations- deposited in the Invested . Sinking Fund.
!'INVESTMENTS!' refers to investments .-of -funds on deposit in the 'various
funds created herein, and includes (a) direct obligations of or obligations .guaranteed
by the United States of America; including bookkeeping entries; and '(b) interest-
bearing time deposits or Certificates of Deposit -issued -by, FDIC Banks, fully secured,
to the extent of the amount in excess of the amount insured by the Federal Deposit
Insurance Corporation, by a pledge of direct obligations or obligations guaranteed
by the United States of America, having' a fair -market value; exclusive .of accrued
interest, equal to not :less than
100% of such excess
amount,- provided
that (i) invest-
ments of the Escrow Fund shall
be made only in U%
S. Obligations as
described in
" (a)",
to, the
extent of the allocated
proceeds of the Current-- Bonds invested in
the
Escrow
Fund,
and (ii) investments-
of the Invested Sinking_ Fund .- shall be made
only
in "U . -S. - Obligations"- as -hereinafter defined.
"ISSUER" refers to the City of Paducah, Kentucky.
Kentucky.
"ISSUER CHIEF OFFICER_'! refers to the Mayor.;,of the City of Paducah,
"ISSUER CLERK" refers to the City Clerk of the .City of. Paducah, Kentucky.
"NET ANNUAL DEBT SERVICE REQUIREMENTS" .refers .-to .gross annual
principal and interest requirements, adjusted for projected net annual cash flow
(positive or negative) of the Invested Sinking Fund,•
"OUTSTANDING BONDS" refers to the., outstanding Current .Bonds, and does
not refer to, nor include, any of the Prior Bonds, for the payment of the principal
and interest of which sufficient funds will have been escrowed, as provided herein.
"PARITY BONDS" means bonds issued in the future, which bonds issued in
the future will, pursuant to the provisions of this Ordinance, rank on a basis of
parity with rthe Current Bonds, and shall not be deemed to include, nor to prohibit
the issuance of, bonds ranking inferior in security to the Current Bonds.
"PRIOR BOND ORDINANCES" refers to the 1965 and 1972 Bond Ordinances,
authorizing the outstanding Prior Bonds.
"PRIOR BONDS" refers to the outstanding Bonds of 1965 and 1972.
"REQUIRED RESERVE" refers to the amount required to be accumulated
and maintained as the debt ' service reserve portion of the Current Sinking Fund,
which amount is the maximum Net Annual Debt Service Requirements falling due
on the Current Bonds and any parity bonds in any future years, as provided in
Section 13B 'hereof.
"SYSTEM" refers to the municipal water works system of the City.
"TRUSTEE" refers'tothe Trustee Bank which is designated as Trustee
in the 'Invested' Sinking Fund"Agreement, approved in Section 13B hereof; which
Trustee Bank -will be designated before the delivery of the Current Bonds.
"U . S. OBLIGATIONS" T -refers to bonds, notes or Treasury bills which are
direct obligations of the Unite d` States of America, including book -entry obligations
of the United States Treasury -- State and Local Government Series.
H. RECITALS
The factual background incident to the enactment of this Ordinance consists
of the following recitals (the "Recitals") :
A. The Issuer owns the existing water works system serving the Issuer and
its environs in McCracken County, Kentucky.
B. In connection with the existing water works system the Issuer has
outstanding and unpaid a total of $1,300,000 principal amount of bonds (the "Prior
Bonds") , maturing in various amounts in each of the respective years, 1978 through
1992, inclusive, bearing interest at rates ranging from 3.45% to 5% per annum, as
authorized by ordinances (the "Prior Bond Ordinances") adopted on the dates,
respectively,- "'as follows:
Names of
Bond
Issues
Water Works
Improvement and
Refunding Revenue
Bonds, Series 1965
(the "Bonds of
1965")
Dates Dates of Amounts Range of
of Adoption of Amounts Outstand- Interest
Bonds Ordinances Issued ing Rates
7/1/65 8/17/65 $2,850,000 $665,000 3.45%
Dates of
Final
Maturities
7/1/80
774
775
Water Works
Revenue Bonds,
Series of 1972.
(the "Bonds of
1972")
10/1/22 , 10/10/72
685,0010 635, 0010 4% to 5% 7/1/92
C. The. ,Bonds of 1965.and .1972 are payable on_ a parity from and _ secured .
by a first pledge-, of the revenues derived from the operation,: of the -.water .works system,
and are further secured, on a parity, by a statutory mortgage lien, against the system. ,
D ._ . The parity provisions set out in the Prior „1965 Bond: Ordinance (and re-
affirmed in the 1972 Bond Ordinance) require that _ before bonds ..may be -issued -so as to
rank on a parity with,the Prior_ Bonds, it .must be established that:. (a) , the, annual
net revenues -of the system for a period of_ twelve (12) ,consecutive months in the period
of eighteen .(18)- months immediately preceding the issuance of additional parity bonds,
have, without adjustment, been equal to at least 1.20 times the average annual require-
ments for principal and ,interest on all bonds then. outstanding,and . payable from the
revenues of the .system, and the parity bonds. then proposed to- be issued; and -�.(b) the
average annual net revenues, as, adjusted to reflect _additional. revenues. anticipated,--to-
result from (1) any then effective rate incr.eases,_ and: additional extensions, ,
„.. r
additions and/or improvements. financed by any _-such .parity. bonds, .to, be received
during the five. (5) complete fiscal years immediately following,_the date when, -the - -
facility or facilities to be built from the proceeds ,of such;,.additional parity bonds-,
shall be estimated to be completed and placed in operation, are shown _ tobe equal to
at least
1.40 times the average annual
Debt Service
RequirementsJor
principal. and
interest
on all bonds then outstanding
and payable,
from .the. -revenues
of the- system,
and on the parity bonds then proposed to be issued. _
E. It is deemed essential to the public interest to_ cancel the -restrictive,,
burdensome provisions of the initial 1965 Bond .Ordinance and the. subsequent 1972
Bond Ordinance by refunding both of .the aforesaid bond issues through -,the deposit and.,
investment in escrow of sufficient funds . to assure payment of all. of - the- Prior Bonds .as
they mature, without redemption in advance .of maturity, in order, to achieve the fol-
lowing:
(1) To enable the Issuer to adopt more modern, liberal, and _
uniform provisions in this Current Bond Ordinance so as to permit the
issuance , of future bonds on a parity with the Current_ Bonds upon the City's .,, -
establishing, the existence of net annual revenues, as .adjusted to reflect
additional revenues, anticipated to result -from,:,-
(a)
from;;(a) any then effective rate increases, and
(b) additional extensions, additions and/or
improvements financed in whole or in part
by any such parity bonds, _
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of at least 1.30 times the average Net Annual Debt Service Requirements, on
all bonds outstanding and payable from the revenues of the system and on any
parity bonds then proposed to be issued, instead of the requirements of the
Prior Bond Ordinance of both'
(A) 1.20 times the average annual Debt Service
Requirements on all bonds outstanding and
payable from the system, and on any parity
bonds then proposed to be issued, based on
-:actual revenues of the system fora period
of 12 consecutive months in the preceding
18 months; without permissible adjustments
to reflect anticipated additional revenues
resulting from either (i) - any newly -effective
rate increase, or from (ii) any additional
extensions, additions, and/or improvements
financed by any parity bonds, and
(B) 1.40 times the average annual Debt Service
Requirements on all bonds outstanding and
payable from the revenues of the system,
and on any parity bonds then proposed 'to be
issued, with permissible adjustments to
reflect anticipated additional . revenues
projected to result from (i) any newly -
effective rate increase, and from (ii) any
additional extensions, additions, and/or
improvements financed by any parity bonds-.
(2) To cancel all; existing restrictions,- including restrictions
on the use of accumulated reserves; and
(3) To re -structure the existing schedule of Debt Service
Requirements.
F. The Issuer has been advised by its Fiscal Agent that such reduction in
the required coverage (referred to in Recital E-(1) above) for the issuance of parity
bonds and the application of such permissible adjustments in the net annual revenues
for the purpose of such parity calculation would not adversely affect the future
salability of its (parity) water revenue bonds
G. All of the Prior Bonds are current as to the payment of both principal
and interest and for the security of same a certain sinking fund and certain reserves
are being maintained in the amounts and manner prescribed by the respective Prior
Bond Ordinances.
H. The Issuer has . been advised- by its Fiscal Agent and Bond Counsel that
such proposed refunding through escrow for the retirement of` the Prior_ 'Borids without
redemption in advance of maturity, may be accomplished at this time by the issuance
(at a minimum sale price of 98-140 of par value) of $1,275,000 of the Current Bonds, the
net proceeds of which may be invested, at an interest rate or rates sufficient to provide
funds to pay the principal and interest requirements on the Prior Bonds as same mature
until fully retired.
I. Such refunding is authorized by the provisions of Sections 58.010
through 58.140 and 58.440 of the Kentucky Revised Statutes, within the meaning of
the decision of the Supreme Court of Kentucky in the case of HEMLEPP v. ARONBERG,
Ky. , 369 S.W. 2d 121, and the decision of the Court of Appeals of Kentucky in the
case of LADT v. COUNTY OF McCRACKEN Ky. . App., 555 S.W. 2d 620.
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SECTION 2 . AUTHORIZATION OF CURRENT BONDS; ADOPTION OF RECITALS.
For the purpose set out in the Recitals in- Section 1 hereof, which Recitals
are hereby adopted, there are hereby authorized "to be presently issued and sold One
Million Two Hundred" Seventy-five Thousand Dollars ($1,275,000) principal amount of City
of Paducah Water Works --Refunding "Revenue Bonds of 19-78, dated April 1, 1978 (the
"Current Bonds"") ; . consisting of 255. Bonds. in the denomination of $5,000 each, numbered
1 to 255, inclusive; which amount may .be".increased or reduced by as much as $25,000
in any year or combination of years, as provided in Sections 7 and 8 hereof. Said
$1,275,000 of Current Bonds shall bear interest payable- semi-annually on
January 1 and July 1 of each year, except that -the first- interest coupon on each Bond
shall represent three monthsinterest falling due- on July 1, 1978, at a coupon rate or
rates to be fixed by Resolution of the Governing Body as" a result of the advertised
sale of said Bonds - -
The "numbering and principal m-aturities' (July 1) of $1,275,000 of
Current Bonds, are as follows:
Maturity
July 1,
1989
1990,
1991
1992-
1993
1994
1995
1996
199,7-
1998
99.71998
1999
2000 r'
2001
2002
2008 .-- .,
Numbering
1-9
10-19
20-30
31-40`
41-42
43-44
45-46
47-48
-49-5-0
51-53
54-56
57-59"
60-62
63-65
66-255 (Term Bonds)
Principal
Amount
$ 45,000
50,000
55,000
10,000
10,000
10,000
10,000
10,000
15,000
15,000
15;=000
15,000
15-,000"--
950,000
SECTION 3. 'PLACE OF PAYMENT; MANNER OF EXECUTION; AND PROVISIONS
AS TO PRIOR REDEMPTION.
Both principal of and interest on the Current Bonds shall be payable, with-
out deduction for exchange or collection charges, in lawful money of the United States of
America, at the main office of the Payee Bank, the Citizens Bank & Trust Company,
Paducah, Kentucky.
The Bonds shall be executed on behalf of the Issuer with the duly authorized
reproduced facsimile signature of the Issuer Chief Officer, and the reproduced facsimile
of its corporate seal shall be imprinted thereon, and attested by the reproduced
facsimile signature of the Issuer Clerk, and each Bond shall be signed manually by one
of said officials; and the interest coupons attached to said Bonds shall be executed with
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the duly authorized reproduced facsimile signatures of said Issuer Chief Officer and
said Issuer Clerk; and said officials, ,by the execution of appropriate certifications,
shall adopt as and for their own proper, signat-ur_es,_;their respective facsimile
signatures.
The Bonds and interest coupons shall be fully negotiable and shall pass
merely by delivery. -- -
Current Bonds shall be subject to. redemption. by the Issuer prior -to maturity,
in whole
or
in
part, in
the _inverse
.order of their maturities (less than
all of a.
single
maturity
to
be
selected
by lot) , on:
any interest payment date falling on
or. ,after
July 1,
1988, upon payment of face amount, plus .all-- accrued. interest evidenced by interest
coupons maturing on and prior to .the redemption date, plus a redemption premium
expressed in terms of a percentage of _the face amount of the Bonds called for
redemption, _as I follows:
3% from July_. 1, .1988, through -July 1,, 1993;.
2% from January 1, 1994, through July 1, 1998;
1.%,from January 1, 1999, through January 1, 2002;._and ,
0% -on July 1; 2002, or thereafter and prior to final maturity,
provided, however, that any redemption date after July 1, 2002, need not be an interest
payment date.
Notice of the redemption date of any Current Bonds shall be given by publi-
cation at least once not less than 30 days prior to the redemption date in (i) a news-
paper published in and of general circulation throughout Kentucky, and (ii) a news-
paper or financial journal of general circulation published in New York, New York.
Notice of redemption may be waived with the written consent of the holder (s)
of the Current Bonds called for redemption. Surrender of a Bond by the holder for
redemption constitutes a waiver of the necessity of publication of a notice of redemption.
SECTION 4. SECURITY; FUNDS AND REVENUES PLEDGED TO CURRENT BONDS.
All of the Current Bonds, together with the interest thereon, and any
additional bonds ranking on a parity therewith as may be issued and outstanding from
time to time under the conditions and restrictions hereinafter set forth shall be secured
by a first pledge of the gross revenues of the system and shall be payable on a first
lien basis out of the "Paducah Water Works Revenue Bond and Interest Redemption
Fund
of 1978"
(the "Current
Bond Fund" or the "Bond
Fund" or
the "Current
Sinking
Fund"
or the
"Sinking Fund")
, including the "Invested
Sinking
Fund" within
such
Bond Fund, created by this Bond Ordinance, as hereinafter specifically provided; and
the holders of the Current Bonds shall have a first claim against said Fund and
against the necessary designated portion or amount of the gross income and revenues
of the System pledged to such Fund.
SECTION 5. BOND FORM.
The Current Bonds, and appurtenant coupons, shall be in substantially the
following form:
779
UNITED STATES OF AMERICA
COMMONWEALTH OF KENTUCKY
COUNTY OF McCRACKEN
CITY' OF PADUCAH
% WATER WORKS REFUNDING
REVENUE BOND OF 1978
No. $51000
KNOW ALL MEN BY THESE PRESENTS:
That the City of Paducah, in the County of McCracken, in the Commonwealth
of Kentucky, for" value received, hereby promises to pay to "the bearer hereof, solely
from the special fund hereinafter identified'. the sum of
FIVE THOUSAND DOLLARS ($5,000)
on the first day of July, 19 ,
and to pay interest on said sum from the date hereof, at the rate of % per
annum, payable semi-annually, except that the first interest coupon appertaining hereto
represents three months' interest due July ' 1., 1978,_ interest being payable on,.January 1
and July 1 of each year until paid, except as the, provisions hereinafter set forth with
respect to prior redemption may be and become *applicable hereto, such interest as may
accrue on and prior to the maturity of this Bond to be paid upon presentation and
surrender of the annexed interest- coupons as
the
same severally mature,
both -principal
and interest being. payable, without deduction
for
exchange or collection
charges, in
lawful money of the United States of America, at the main office -of the Citizens- Bank
& Trust Company, Paducah, Kentucky . _,
This. Bond is part of an authorized issue of One Million Two Hundred
Seventy-five Thousand_ Dollars- ($1,275,000) principal amount of Bonds " (said Bonds_ and the
appertaining coupons and any bonds hereafter issued so as to, rank on.., a .parity there- .
with being_ hereinafter- sometimes collectively referred to _as. "the Bonds," "these
Bonds" or "the Current Bonds") authorized to be issued by said City pursuant to an
Ordinance (the "Current Bond Ordinance") of , the Board of Commissioners of the City,. ,under
the authority _of_ and in full compliance with the Constitution and Statutes of Kentucky,
including Sections 58.010, through 58.140 and 58.440 of the Kentucky, Revised Statutes,
and within the meaning of the decision of the Supreme Court of Kentucky in the case of
HEMLEPP v. ARONBERG, Ky., 369 S.W.-.2d 121, and the decision of„the Court -of Appeals
of Kentucky in the case of LADT v. COUNTY OF McCRACKEN, Ky .,, App. , ,555 - S.W. , 2d
620, for the purpose of refunding (defeasing) the outstanding (a)- City of Paducah Water
Works Improvement and. Refunding Revenue Bonds, Series ,1965, ,dated _July 1, 1963.and
(b) City of Paducah Water Works Revenue Bonds, Series of 1972., dated October 1, 1972
(said bond issues being hereinafter collectively referred to as the "Prior Bonds") ,,. in
order to cancel certain restrictive and burdensome provisions of ,the respective -Bond
Ordinances authorizing the Prior Bonds and to provide greater flexibility, to the- City in
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financing future extensions, additions and improvements to the water works system
(the "System") of the City.
The Prior Bonds were payable from and secured, on a parity, by a pledge
of the gross income and -revenues to be derived from the operation of the system,a
sufficient portion of which income and revenues to pay the principal of and interest on"
all of the Prior Bonds, as and when same become due and payable, is required (by the
Prior Bond Ordinances) to be set aside into a special Fund created and contractually
required for that -purpose. Through appropriate escrow arrangements, the City has
coveminted' 'to deposit "into said special Fund sufficient invested proceeds of these
Current Bonds (the "Escrowed -Funds") , which Escrowed Funds, together with the con-
tractual income therefrom, shall be adequate to pay -the principal of and interest on -all
of 'the Prior.Bonds, as same mature according to their terms, thereby defeasing
(terminating) the respective pledges of the income and revenues of the System securing
said respective outstanding -Prior Bonds.
These Current Bonds do not consititute ' an. indebtedness of the City - of -
Paducah; Kentucky, within _ the meaning of any Constitutional or statutory provisions
or limitations, but are secured by a first pledge of, and are payable as =to both -
principal and interest solely out of, the gross revenues of the System, a sufficient
portion of which gross revenues, to pay the principal of and in=terest on all of these
Bonds, as and when- the same become due and payable, shall be set aside and deposited
in the "Paducah Water Works Revenue Bond and Interest Redemption Fund of 1978" (the
"Current Bond Fund" or the !'Current Sinking Fund") "There is included in such Current
Bond Fund an Invested, Sinking Fund consisting of: cextain direct obligations of the U. S:
Government CIU.' , S. Obligations") which are required to be purchased with the gross
revenues of the System. Such Current Bond Fund, including -such Invested Sinking
Fund therein, is pledged for the payment of these Current Bonds.
The City. covenants that until July 1, 1992 (the date of final maturity of the
Prior Bonds) , it will invest the Escrowed Funds, and will account for and -apply: the
principal and interest earned thereon to the payment of .the principal of -and the interest
on the Prior Bonds, as same fall due according to their respective terms. As provided
in the Current Bond Ordinance, the City covenants that so long as any of the Current
Bonds are outstanding, the municipal water works System will be continuously owned
and operated by the City as ' a revenue-producing - undertaking" within the - meaning of - the
aforesaid Statutes for the security and source of payment of these Bonds; and that the
City_ will fix and charge- such fees, rates and charges *for the services and facilities
of the System and "will account for same so that the -income and - revenues therefrom will
be sufficient to pay all of . the Current Bonds, and the interest thereon, payable from
the Current Bond Fund, as the same -become due and payable, 'and also to pay the
781
cost of operation, maintenance and depreciation of the System.
The City has reserved the right to issue additional -bonds ,ranking on- a parity
with these Current- Bonds for the purpose- of (a) financing further extensions, additions
and improvements to the System upon establishing -compliance with the applicable terms
and conditions- of the Current Bond- Ordinance, -and/or (b) refunding or refinancing the
Current Bonds -and/or any then previously issued parity bonds,. upon establishing_ compli-
ance with the applicable terms and conditions of the Current -Bond Ordinance. .- . -
The-. City has also reserved the . right.. -to combine- and consolidate the existing
water works system. with -the existing sewer system into a new single, combinded ;and
consolidated system (the "Consolidated System"-):, after which the Current Bonds and any
additional -parity bonds would, be; secured- by and payable from the revenues of the -
Consolidated- System:., :The City, further, reserves the right, after such consolidation,, to
issue -additional -parity -bonds, for -the purpose of- (a) financing further extensions,
additions and/or improvements to the Consolidated System (water and/or sewer) i upon
establishing compliance with the .terms and conditions of the Current Bond Ordinance
and/or (b) refunding or refinancing the Current Bonds, any then previously -issued
parity bonds, and/or any bonds payable from the revenues of the sewer system, or
of the Consolidated System, upon compliance with the applicable terms and conditions
of the Current Bond Ordinance
This Bond -and the coupon (s) - appertaining hereto are fully negotiable and shall
be .transferable merely by delivery..
The Current Bonds are subject to -redemption by the City prior to maturity,
in whole or from time to time in part, in the inverse order of: their maturities (less
than _all of a single ,maturity to be selected by lot) on any interest payment date falling
on or after July 1, 1988, upon payment of -face amount plus all accrued interest evidenced
by interest coupons maturing on and prior to the redemption date; .-plus a redemption
premium expressed -in terms of a percentage of the - face amount of the Bonds called for
redemption, as follows:
3% - from July 1,: 1988, through July 1, 1993;
2% from January 1, 1994.; through July 1, 1998;
1% from January '1, 1999-, through January 1, 2002;- and :.
0 % on July 1, ` 20*02, - or -thereafter and - prior-- to -final -maturity,
provided, however, that, any redemption- date after July 1, 2002, -need not be an interest
payment date.
Notice
of -such redemption-;
identifying
the Bonds to be redeemed,
shall -be.
given at least once
not less than -thirty
(30) days
prior to the redemption date
(a,)- in -
a daily newspaper published: in and of general circulation throughout Kentucky, 7and
(b) in a financial journal published in New York, New -York. -
This Bond is exempt from taxation in the Commonwealth of Kentucky.
It is hereby certified, recited and declared that all acts, conditions and
things required to exist, happen and be performed precedent to and in the issuance
of these Bonds, do exist, have existed, have happened and have been performed in
due time, form and manner as required by law; that the amount of these Bonds, to-
gether with all other obligations of the City, does not exceed any limit prescribed by
the Constitution or Statutes of the Commonwealth of Kentucky; and that a sufficient
portion of the gross income and revenues of the System has been pledged to and will
be set aside into a special fund by the City for the prompt payment of the principal of
and interest on this Bond.
IN WITNESS WHEREOF, the City of Paducah has caused this Bond to be
executed on its behalf with the duly authorized reproduced facsimile signature of its
Mayor, and the reproduced facsimile of its corporate seal to be imprinted hereon,
attested by the reproduced facsimile signature of .its City Clerk, and signed manually
by one of said officials, and the coupons hereto attached to be executed with the duly
authorized reproduced facsimile signatures of ''said Mayor and said City Clerk, and
this Bond to 'bedated April 1, 1978.
ATTEST:
(Facsimile Signature)
City Clerk
CITY OF PADUCAH, KENTUCKY
BY (Facsimile Signature)
Mayor
Manual Signature of Mayor or City Clerk
(Facsimile Seal)
FORM OF COUPON.
COUPON NO. $
On the first day of 119 ,
Unless the Bond to which this coupon is attached is redeemable and shall
have been theretofore called for prior redemption, and the payment of the redemption
price shall have been duly made or provided for,
The City of Paducah, Kentucky, will, pay to the bearer the amount shown
hereon out of the "Paducah Water Works Revenue Bond and Interest Redemption
Fund of 1978", without deduction for exchange or collection charges, at the main
office of the Citizens Bank & Trust Company, Paducah, Kentucky, being interest
then due on its Water Works Refunding Revenue Bond of 1978, dated April 1, 1978,
numbered
CITY OF PADUCAH , KENTUCKY
782
783
By (Facsimile Signature)
Mayor ,
ATTEST:: "=
(Facsimile Signature) -
City Clerk
SECTION 6. SALE OF BONDS.
The Current Bonds shall be sold at public sale immediately after legal
advertising, and the Issuer Chief Officer and the Issuer Clerk are authorized and
directed to make such advertising of a Notice of Bond Sale in such form as may be
prepared by Bond Counsel and as may be recommended by the Fiscal Agent referred
to in Section 10 below.
The public offering of the Current Bonds shall be upon the following
specific provisions:
A. Bids. shall -be-required to be submitted upon a standard official. "Bid
Form" in order to provide for uniformity in submission of bids and
ready determination of the , best bid.
B. ..Bidders shall be„ required.: to bid for the. entire .issue a.. minimum price,.,
of not less than $1,252,687.50 (98-4 % of par) and not more than
$1,259,062.50 (98-3/4% of par) , plus accrued interest ,from ;the date, of ,the
Bonds (April 1, 1978) to the date of delivery, payable in Federal Funds.
C . The determination of the best bid will be made on the basis of all
bids submitted for exactly $1,275,000 of Bonds as offered for sale
under the terms and conditions herein specified. The Issuer will,
at the 'meeting of the Governing Body which will be held to act upon
the receipt of bids for the Bonds, accept or reject such best bid,
provided however, the Issuer reserves the right to increase or
decrease the total amount of Bonds sold to such best bidder in the
amount of up to $25,000 ($5,000 denomination) , with such increase
or decrease to be in any one or more of the years. .of, maturity -
(1989-2002 and 2008) , so that the total amount of Bonds ,.awarde-d to such
best bidder will be a minimum of $1,250,000 or a maximum of $1,300,000.
In the event of any such adjustment, no re -bidding or re -calculation
of the bid submitted- will be -,required or permitted. The price at
which such adjusted' amount of Bonds will be sold will be at the same
price per $1,000 of Bonds -as the price bid per $1,000 for the
$1,275,000 of Bonds.
D . Each purchase bid shall be accompanied by a good faith check in the
amount of $25,500, which shall be represented by a certified check
or bank cashier's check in that amount, payable to -the -order of the
City of Paducah, Kentucky. If it is intended -.that such check be
used to pay part of the purchase price for the Bonds, the check
must be in Federal funds.-.
E. B.idders must name an interest coupon rate or- rates in a ..multiple
of 1/8, 1/10, or 1/20 of 1
F. There shall be no limit on thenumber-_ of different interest rates
which may be specified by any bidder and there shall be no limi-
tation on the amount of -the. _difference between- the highest and lowest
interest rates stipulated in any bid.
G. Coupon rates must be on an ascending scale, in that the coupon rate
.for Bonds - of any maturity may not be less , than the coupon rate_
stipulated for any preceding maturity.
H . All Bonds of the same maturity shall bear the same and a single
interest coupon rate from the date thereof to maturity, and interest
becoming due on any interest payment date may not be represented
by more than one coupon on any Bond.
I. The right to reject bids for any reason deemed acceptable by the
Governing Body, and the right to waive any possible informalities
or irregularities in any bid, which in the judgment of the Governing
'Body, shall be minor or immaterial, shall be expressly reserved.
J . If a bid is accepted, the `Governing Body will adopt a Resolution
establishing the coupon rate or rates to conform thereto.
K. The purchaser of the Bonds will pay the CUSIP Service Bureau charge
for the assignment of CUSIP numbers, which numbers will be printed
on the Bonds at no expense or cost to the purchaser. Neither the
failure to print a CUSIP number on any Bond nor any error with respect
thereto shall constitute cause for a failure or refusal by the purchaser
thereof to accept delivery of and pay for the Bonds in accordance with
the terms of the purchase'agreement .
Upon five (5) days' notice from the City, or its Fiscal Agent, at any time
after the date of the sale, the purchaser shall be required to pay, the full purchase
price in Federal funds and to take delivery at that time of a single, fully registered
Bond at a Bank designated by such purchaser, in Louisville, Kentucky. Such single
Bond shall be payable to the purchaser and 11, shall be' exchangeable at any time for
negotiable coupon bonds of the form prescribed in the Current Bond Ordinance, on
30 days written notice to the City.
It shall- not be necessary that the -published "Notice of Bond Sale" set forth
any or all of the special conditions stated herein, but the substance thereof shall be
made apparent to prospective bidders -in one or more of the appropriate -documents,
viz., the "Notice of Bond Sale," the "Official Terms and Conditions of Sale of Bonds"
and/or in the "Bid Form"
A suggested form of "Notice of Bond Sale", a suggested form of "Official -
Terms and- Conditions of Sale of Bonds" and a suggested form of "Bid Form" having
been prepared in advance, in accordance with the instructions of the Fiscal Agent;
by Rubin & Hays, Municipal Bond Attorneys-,- Louisville, Kentucky, and the same- hav-
ing been found to conform to the above conditions, the same are hereby approved.
The Notice of Bond Sale shall be signed by the Issuer Clerk, -and, may be used for the
purpose of publishing notice of the- sale of the Bonds. Copies of said documents shall
be furnished- to 'a list'-o'f' known interested bidders and to any interested parties- who
may request same
Upon recommendation of the Fiscal Agent, the Issuer Chief Officer shall - be
authorized to approve a change in the required -minimum and/or maximum bid price,
and other terms and conditions of the sale; and also to change the date and hour of the
sale, and the Issuer' -Chief- Officer and/or the -Issuer Clerk are further authorized to
advertise such Bonds for public `sale and`'to approve a revised Notice of Bond' Sale,
Bid Form, and Official Terms and Conditions of Sale of Bonds,- and- to `'distribute - same
to prospective bidders, without the necessity of the 'Governing Body taking any further
action or granting, any further authority for such proceedings.
785
SECTION 7 . ACCEPTANCE OF BID FOR PURCHASE OF BONDS.
Upon the date and at the hour set forth for the opening and consideration
of purchase. bids, as provided in ..the instruments ,hereinabove _-approved, the sealed
bids theretofore, received by. the Issuer Clerk shall be publicly opened and publicly
read by the presiding officer. If there shall be one or more bids that conform in all
respects .to the, prescribed terms.., and, conditions, the- same shall be compared, and -the
Governing Body agrees that if it accepts: anybid„-it will, on the same day that such
bids are received, accept the best of _such bids,: as measured in terms of the lowest
interest cost to the Issuer, as calculated in the .manner prescribed in the "Official Terms
and Conditions ,of Sale of Bonds”. At that time the Board may accept the .successful
bid for not -exceeding $25, 000 more,. -or not exceeding $25, 00,0 less, in a multiple of
$5,000, than the stated amount ($1,275-,000) -of . Bonds; with such increase or de-
crease to be in .any one or more ,of the years of maturity (1989 -2002 -and 2008) .
If upon..the..basis of the foregoing the .Governing Body shall accept a purchase
bid for the Current Bonds, the Governing . Body -shall adopt a Resolution to that effect;
supply proper evidence of such acceptance to the bidder submitting the, accepted.
purchase- bid, and, thereupon -arrangements shall be made for the Bonds to .be printed
in accordance therewith.
SECTION 8. DETERMINATION THAT REFUNDING OF- PRIOR BONDS IS TO THE
BEST ADVANTAGE AND IN THE PUBLIC INTEREST OF THE ISSUER
EVEN AT SUBSTANTIALLY HIGHER INTEREST- RATES.
It is hereby determined that the Current Bonds shall be issued for the pur- .
pose of refunding and refinancing _the Prior -.Bonds., through. the escrow of the proceeds
of the Current Bonds, for the purpose of _providing for the payment of the• principal
of and interest on the Prior Bonds as they mature according to their terms., in order
to accomplish -.the public purposes listed in Recitals- E and I- hereof'. -
In accordance with .the provisions of :KRS. -58.440, it is hereby_
determined that in the, .refunding and refinancing.of _-the Prior Bonds, it is
in the best interest of the Issuer. that same be accomplished to the best
advantage._-and;.in the public interest at a rate or rates of interest: higher than the
rates now applicable to the Prior Bonds, in order to effect all of the public purposes
of Recitals - E and 1 hereof.
SECTION 9. CREATION OF. SPECIAL FUNDS.
From, and after, the date of delivery of the Current:.Bonds authorized herein,
the system shall be, operated as a water, works project or system,, for --the security and
source of payment of the: ;Current -,Bonds .and - any -parity bonds, - on .a fiscal year -basis
from July 1 of each year -..to June- 30 of each, respective ensuing -year, or on such other -
fiscal year basis as-- shall be adopted for the. operation .of the system, with the. initial
fiscal period being a three month .period .from April 1, 1978,; through June 30, 1978;
786
and the gross income and revenues of the system shall be set aside monthly and al-
located as set out below.
There are hereby established, to be deposited and maintained at the
Depository Bank, provided such Bank must comply with the provisions of this Ordi-
nance as to investment and security for funds so deposited, -the following funds or
accounts':
(1)' Paducah Water Works Revenue Fund of 1978 or Paducah Water Works
Revenue Fund (the "Current Revenue Fund" of the "Revenue Fund") ,
(2) Paducah Water Works.. Revenue Bond and Interest Redemption -Fund of
1978 or Paducah Water Works Revenue Bond and- Interest Redemption
Fund (the "Current Bond Fund" or the "Bond, Fund" or the "Current
Sinking Fund'' or the "Sinking Fund") ; and the debt service reserve
portion thereof, to be known, as the !'Bond Fund Reserve" or the "Sinking
Fund Reserve
(3) Paducah Water Works Depreciation Fund of 1978 or Paducah Water Works
Depreciation Fund (the "Current Depreciation Fund" or the "Depreciation
Fund") ,
(4) Paducah "Water Works Bond -Operation and Maintenance Fund of 1978 or
Paducah Water Works Bond Operation and Maintenance Fund (the "Current
Operation and'TMaintenance Fund" or "Operation and Maintenance Fund" ) .
Moneys deposited into °such respective Funds shall be maintained, invested- and ' applied
by the Depository Bank in the manner prescribed hereinafter in Section 13.
SECTION 10. TRANSFERS AND DEPOSITS FROM CURRENT BONDS
SIMULTANEOUSLY WITH DELIVERY OF CURRENT BONDS.
Simultaneously with the delivery of the Current Bonds, the Issuer covenants
that it will transfer from the various funds and accounts currently maintained by the
Issuer in connection with the operation of the system and deposit into the respective
Funds created by this ordinance, the respective amounts... (in cash and/or Investments) ,
on deposit in such respective Funds, on the date of delivery of the Current Bonds, as
follows:
A . Current Revenue Fund .
All amounts on deposit in the "Water Works Revenue Fund" (the "Prior
Revenue Fund") created in Section 10(a) of the 1965 Bond Ordinance, maintained in
connection with the Prior -Bonds, shall 'be transferred to the Current Revenue Fund,
created in Section 9 hereof.
B . Current Sinking Fund; Current Sinking Fund Reserve.
All amounts on deposit in' the Water Works Revenue Bond and Interest
Redemption Fund created"n Section 10(B) of the 1965 Bond Ordinance, shall be
transferred and deposited -into 'the Current Sinking Fund, created in Section 9 hereof,
and credited against the amounts required to be deposited therein for the initial three
months' period-. -ending July 1, AM All amounts on deposit in the Prior Sinking Fund
Reserve shall be transferred to the Reserve portion of the Current Sinking Fund as the
initial ' deposit "into the Current Sinking Fund Reserve, to be maintained as a reserve
787
to assure the availability- of sufficient funds to meet, the principal and interest require-,
ments falling due on the Current Bonds, in accordance with the provisions of Section
13B hereof.
C. _Current .-Depreciation Fund
All amounts- on deposit -in _the- Water Works Depreciation, Fund (the _ "Prior.
Depreciation Fund") created in Section 10 (c) of the 1965 Bond Ordinance, shall be-.,,.,,.-
transferred
e,.. _
transferred .and deposited into the Current .Depreciation Fund, created in Section 9
hereof.
D.. Current. Operation , and Maintenance_. Fund.-
-All.
und.,.-All amounts on- deposit, in the , P.rior_ Operation and _Maintep.. nce. Fund shall
be transferred and deposited into the Current Operation and Maintenance Fund,
created - in .Section .9_ hereof . _
E. Application of Remaining Balances.
All, . balances . then remaining., on,,- deposit. in any Funds of, the .System; other than
those..listed above, and other than any meter -,deposit funds (which__ shall, be continued)
may, at the option and.. direction.. of the ;Governing --Body ,of _ the City, be'. applied. as
follows:
(a)- -.to -incr-ease- ,the ;Current Sinking Fund Reserve;
(b) to increase the Current Depreciation Fund;
(c) to increase the amount of deposit in the Current
Operation and Maintenance Fund;. _ or... ,_.
„(d),. . to be transferred, to the General,Yund.of.the.Issuer_,
for any lawful purpose.
SECTION 11. DISPOSITION OF PROCEEDS OF BONDS; ESCROW FUND;
INVESTMENT P.ROV;ISIONS; ARBITRAGE LIMITATIONS.
Upon the sale and delivery of the Current Bonds and upon receipt by the
Issuer of the purchase price thereof, it is hereby acknowledged and ordered that:
A. _ _DISPOSI.TION OF. PROCEEDS
(1)_ . Payment , of Fees and -Expenses.
There_ shall first. be deducted .and paid therefrom the fee of,... -the -Fiscal Agent—
J.
gent,..
J. J. B. Hilliard, W. L. Lyons, Inc . , 545 South Third Street, Louisville, Kentucky
40202, according to the terms -.of the. approved, contract of said -Fiscal ,Agent, . as here-
tofore approved, and the, fee of W.. David- -Denton, . 1708 .-Broadway,, Paducah,, Kentucky
42001, City Attorney, and ther..e-shall-further be, paid the, inital.fee_of the Escrow -
(Agent) Bank, the ,rating agency fee,,and any:. -other .pertinent .expenses ;of the
issuance of -the -,Bonds ..
(2) ,_._Deposit of, Collected Accrued .Interest in . Current ,ainkiAg. Fund.—.-
An amount ,equal to. the accrued. interest collected from. the purchaser .of the,
Bonds for the period from the date of the Bonds : (April- 1., . 197-8)...to -the date.: of delivery; -
shall be deposited into the Current Sinking Fund created in Section 9 hereof.
788
(3) Escrow Fund.
The entire remainder of the moneys received- from. -the purchaser (s) of the
Bonds, shall be deposited in the Escrow Bank in a certain special Escrow Fund and
account hereby created and -established and - which is hereby designated as and shall
be known as the - "City of Paducah Water Works Refunding Revenue- Bond Escrow Fund
of 197811, hereinafter referred to as the "Escrow Fund"; provided, however, that
simultaneously with the delivery of the Current Bonds on behalf of the Issuer, the
Issuer shall obtain a commitment or commitments for the investment of such Escrowed
Funds in U. S. Obligations , -as defined in' Section 1 above (such U. S. Obligations, and
any uninvested cash in the Escrow Fund being hereinafter collectively referred to as
the "Escrow Investments") Escrowed Funds so invested shall be scheduled to mature
at such -times and in such amounts as are necessary to pay mich requirements of the
Prior Bonds and such fees of the Escrow Bank. The Issuer Chief Officer and/or
Issuer Clerk and Treasurer are hereby authorized to act upon behalf of the Issuer
in obtaining such a commitment or commitments directly or through the designee of
either of them. If, and to any extent that the Escrowed Funds shall be inadequate 'or
in excess of the amount necessary to accomplish the required objective, the Issuer
covenants as follows:
(4) Covenants of Issuer.'
(i) If and to the extent that same are inadequate,- the Issuer will
transfer or cause to be transferred sufficient funds from the
existing debt service reserve in the Prior Bond Fund, arid/or
from other available funds, to accomplish the purpose herein
after specified in subsection (2) of Subsection (3) .
(ii) If and to!'the extent'that' same are in excess -of the a -mount required,
such excess amount shall be transferred immediately to the Cur-
rent Sinking Fund, created in Section 9 hereof, and treated as a
part of the amount transferred pursuant to Section 10 hereof.
(iii) The Issuer certifies that the purpose of providing in Sections 6
and 7 for the possible increase or reduction in the amount of
Bonds to 'be sold through adjustment in the amount of Bonds
maturing in 1989 through 2002 and in 2008, is to eliminate or
reduce the possibility of there being an over -issuance or under -
issuance of the amount of Bonds necessary to accomplish the
requiredobjectives.
(5) Escrow Fund Earmarked to Pay Prior Bonds .
Amounts on deposit in the Escrow Fund shall be earmarked and held for
credit -to the accounts of the Sinking Funds created --in the respective Prior Bond
Ordinances, and
transferred in ample
time
to the respective Bank (s) holding the
respective funds
created in connection
with
the issuance of the respective Prior Bonds,
the same as if the
Escrow
Fund were physically divided, allocated in
proportionate
requirements and
actually
deposited in said respective Sinking Funds.
The amounts
so deposited in the Escrow Fund and all of the Escrow Investments therein shall be
held in the Escrow Fund, subject to the following substantial terms and conditions
which are not permitted to be modified:
789
The amount to be provided by the Escrow Investments shall be
sufficient to provide for the payment of the principal and interest
requirements of the outstanding Prior Bonds, as same become due.
The principal and interest of the Escrow Investments must be
-determined to. -be- -sufficient and -to be available in ample time, to
pay on each January 1, beginning January 1, 1979, and ending
and including January 1, 1992, interest coupons appurtenant to
the Bonds of 1965 (final maturity July 1, 1980) , and the Bonds
of 1972 (final maturity July 1; 1992) , and to pay on each July -1,
beginning July 1, 1978, and ending and including July 1, 1992,
the interest coupons and principal amounts of the Bonds of 1965
and 1972 becoming due and payable on each such July 1.
All of the Escrow Investments may, at the option of the City
(exercisable by and, through the governing body -of the City) ,
be redeemed, reinvested and/or applied to the purchase of
any of the Prior_ Bonds,.- to the extent consistent with the
foregoing and to the extent permissible without causing the
Current .Bonds, to- become:arbitragebonds within the meaning
of Section 103 of the Internal Revenue Code, as amended, and
..,.the applicable Arbitrage Regulations -thereunder; -and all such
Escrow Investments shall be made pursuant to the limitations
set - out -in- Section 11B hereof.
B:. ARBITRAGE LIMITATIONS..
The Issuer :covenants that- the proceeds of the Current Bonds shall not be
invested in investments which will cause any. of the Bonds to be treated as arbitrage
bonds, within the meaning of Section. 103 (c) (2) . of .the Code and the applicable. In-
come Tax Regulations thereunder.
On the basis of information furnished to the Issuer, on known facts,
circumstances,, and reasonable expectations on- the date of adoption of this Ordinance,
the Issuer certifies as follows:
(A) That it is not expected or- contemplated that the proceeds of the
Current Bonds will be used or invested in any manner which will
cause any of. the -Bonds to be treated as "arbitrage bonds" within
the meaning of -Section- 103 (c) (2) of the Code and the applicable
Regulations thereunder.
(B) That it is not expected or contemplated that the Issuer will make
any --use of the proceeds of the Bonds; which; if such use had been
reasonably anticipated on the -date of issuance of the Bonds, would
have- caused the Bonds: to be, arbitrage, bonds.
-(C) That it -is expected and contemplated --that- the Issuer will comply with
.(i) all of the requirements of Section 103 (c) of the Code; and (ii)
all of the requirements of the applicable Regulations thereunder, to
whatever extent is necessary to assure that the Bonds will not be
treated as arbitrage bonds
(D) That the Issuer- acknowledges that Section 103 (c){2) of the Code and
the applicable Regulations thereunder require that the portion of the
Curr.ent.. Bonds deposited in - the- Escrow- Fund be. invested at a .yield
no greater than the actuarial yield applicable to the Current Bonds.
Prior to or at the time of delivery of the Current Bonds, the Issuer Chief
Officer and/or the Issuer Treasurer is authorized to execute the appropriate
certification with reference to the matters referred to above, setting out all known
and contemplated facts concerning the anticipated investments of the proceeds of the
Current Bonds, including the execution of necessary and/or desirable certifications
of the type contemplated by the applicable "Proposed Arbitrage Regulations", as
790
amended, in order to assure that interest on the Current Bonds will be exempt from
all Federal income taxes . and that such Bonds will not constitute or be treated as
arbitrage bonds.
SECTION 12. PRIOR. BONDS . WILL BE- FULLY PROVIDED FOR -THROUGH _
ESCROW OF THE PROCEEDS OF THE CURRENT BONDS;
ISSUER RETAINS ALL OPTIONS TO PURCHASE_ AND/_OR
REDEEM - PRIOR BONDS.
Provisions thus having been made for the orderly payment until final
maturity of all of the -Bonds and interest coupons of the Prior Bonds, as same are
"scheduled to mature according to their terms, it is hereby recognized and acknowledged
that as of the date of delivery of the Current Bonds, provision will have been made for
the performance of all covenants and agreements of the Issuer incident to the issuance
of the respective Prior Bonds, and that accordingly, and in compliance with all that
has been heretofore provided, the Issuer will .have no -further- obligations with reference
to the Prior Bonds, except to assure that the Prior Bonds are ypaid from the funds so
escrowed i.n accordance with -the -provisions of such escrow arrangement.
It, is expressly provided and covenanted that all of the provisions for the
payment of -the principal of and interest on the Prior Bonds , from the Escrow Fund, shall
be strictly observed and followed in all respects, and the income,. -from the -Escrow Fund
shall not be applied for any „purpose . (except possibly for the, _purchase of any of the
Prior Bonds) other than the payment of principal of and interest on the Prior Bonds
as same mature_ according to .their terms until the final payment (or.: provision for payment)
of the Prior Bonds, after which time any surplus then- remaining in the Escrow Fund
shall be treated as current revenues _.of the system and so , applied .
The Issuer
expressly -retains all options and rights contained in
the
pro-
ceedings authorizing
the Prior Bonds to redeem the Prior Bonds, in whole
or
in part,
prior to the respective maturity dates thereof, provided no. such . redemption shall .be
made if the
effect .of such redemption would be -.to cause the Current Bonds,
or any part
thereof, to '
become arbitrage bonds within the meaning
of , Section 103 of the
Internal
Revenue Code.
SECTION 13. FLOW OF FUNDS.
A. Current Revenue Fund.
The gross income ' and revenues of the system shall be'' -set aside monthly into
the Current Revenue Fund and shall then be expended, used and apportioned as set
out in the ensuing subsections of this Section 13.
B . Current Sinking Fund; Invested Sinking Fund Investments;
Authorization of Execution of Invested Sinking Fund- Agreement.
There shall, be transferred on or before the ,first day of each month, from
the Current Revenue Fund, the amounts hereinafter specified,_ to pay the interest on
and principal of the Current Bonds as may be -outstanding from time to time, together
with any additional parity bonds and to accumulate a Sinking Fund Reserve (the
791
"Current ' Sinking Fund Reserve") as a debt service reserve. The amount to be so
set aside shall be amounts sufficient to pay the Net Annual Debt Service- Require-
ments of the Current Bonds, as same fall due, together with additional amounts,
sufficient, -_
when added_
to,- the initial,
amounts. ,dsited-in the Current Sinking Fund
Reserve ' as
provided 'in
Sections -10
and. ,13 hereof, _ :to;_ac' umulate, within 10 years from
the date of issuance of the Current Bonds, a total debt service reserve. in an amount
equal to not less than the maximum Net Annual Debt Service. Requirements (the Required
Reserve) falling due, in any twelve-month period thereafter on all of the outstanding_ Cur-
rent- Bonds and any Aparity bonds. Said monthly, installments shall be sums not less
than the following respective amounts:
(1) Monthly Interest Payments ;
An .amount equal to one-sixth (1/6) of .the, interest becoming
due 'on the ' Current Bonds -and any parity bonds on' the next
succeeding interest due date, except that for and in the period.
from `April 1; 1978, to July "1, 1978, but subject to a credit
for the amount of accrued interest collected on the Current
Bonds and deposited in the Current Sinking Fund, the amounts
to be deposited in each month, retroactively to April 1, 1978,.
shall be an amount equal to one -"third (1/3) of".
f the three (3)
months' interest becoming due on the Current Bonds, on July
1, 1978; plus'
(2) Monthly Principal'Payments
An amount equal to one -twelfth (1/12) of the principal amount of
_ all Current Bonds and any parity bonds maturing on the next
succeeding July 1, except that for and in the period from April 1,
1978, to July 1, 1978, the. amounts to .be deposited in each month,
retroactively to April 1, 1978, shall be an amount equal to one-
third_ (1/3) of the principal of the Current Bonds maturing on,
July 1, 1978, plus an amount equal to one -twelfth (142) of the
principal amount, or of such other amount as may be necessary,
in order ' to purchase the necessary Invested Sinking Fund Invest-
ments (described below). which are required to be purchased on
or before the next June 15 of each' year in which Invested Sinking
Fund Investments , are required to be purchased,. -as. hereinafter.-
specified.
ereinafter.-specified.
(3) Monthly Sinking Fund Reserve Payments
An amount equal -to 1/ 120 of the difference between the amount
initially deposited into the Sinking Fund Reserve, pursuant ,to
Sections 10 and 13- hereof, and the amount of the Required
Reserve specified above, so that such total Required Reserve
will be accumulated on or before 10 years from the date of
issuance of the Current Bonds.,
Whenever said Required Reserve shall have .,been accumulated, and; is being
maintained in the Current .Sinking Fund Reserve, the amount to be set .aside- thereafter
into the Current Sinking Fund on or before the first day-- of each month, from the
Current Revenue Fund, may be decreased to, the amounts required in (1) and (2) above;
and the
additional
amounts required by, (3) above, may then„
be discontinued;_. provided
further,
However,
that- additional monthly despo 'its equal to
1/120 of'' the additional
reserve to be accumulated to restore the Required Reserve shall be resumed if and when-
ever authorized disbursements from the Current Sinking Fund Reserve shall be reduce
the balance therein below the Required Reserve, such increased `deposits to be con-
792
tinued for such period of time as may then be required in order to restore the balance
in the Current Sinking Fund Reserve to such Required Reserve, after' which such
deposits may again be reduced to 100% of the current annual debt service requirements
as specified in (1) and (2) above.
As and. when additional parity bonds are issued, provisions shall be,
made for additional payments into the Current Sinking Fund to pay the interest on
and the principal :of such additional parity bonds as and when the same become due,
and for increasing the Current Sinking Fund Reserve by similarly calculated monthly
deposits, viz.,- the amounts required by (1) and (2) above plus 1/120 in each month
of the -total. additional amount- necessary to restore the Required Reserve to an amount
equal to not less than the maximum Net Annual Debt Service Requirements of
all bonds then scheduled to be outstanding (including such additional parity bonds)
falling due - in any twelve-month period thereafter, -which Current Sinking' -Fund Reserve
shall be similarly. maintained 'and restored -when necessary;. provided, however, -that if,
whenever; . and so- long as,, the total amount on deposit in the Current 1 Sinking Fund
Reserve is - equal to .the then:,Required. Reserve, the only amounts required to be
deposited in each month -into. the Current -Sinking Fund shall be the amounts specified in
subsections (1) and (2) of this Section 13 (1/6 of the next semi-annual interest payment
plus 1/12 of the next annual principal payment)..
-- g: The Current Sinking Fund and the Current Sinkin-Fund Reserve are
hereby, pledged for the payment of -the interest -on and .the principal: of the Current
Bonds and on any additional parity -bonds and are subject to a first and paramount
lien and charge in favor of --the holders of -the: Current Bonds.
- No- further payments need be - made into the ' Current Sinking Fund or into
the Current Sinking Fund Reserve (a) whenever and so long as such amount of the -
Current Bonds shall have been retired that the amount-isL then, held in the Current
Sinking Fund, including the Current Sinking Fund Reserve, are equal to the entire
amount of the interest and principal that will be payable to and at the time 'of the
retirement or maturity .of all- of- the. Current Bonds and any parity bonds then re=
maining outstanding, or: (b) . whenever the Current Bonds and any parity bonds shall
have been .defeased asset out in Section 20 hereof.
Such payments, into_ the -Current Sinking Fund and the Current Sinking
Fund Reserve shall be made in equal monthly installments on or before the first day
of each month, except that when -the, first day of -any month shall - be on a Sunday or
Legal Holiday, then such =paym-ents-:shall--be- made on the: next succeeding secular or
business- day.-
-
ay:
- In the event that, -the income and revenues during any month are inadequate
to make the :r,equired-payments -into-the•-!Curr ht Sinking Fund and/or .the- Current
793
Sinking Fund Reserve, the deficiency shall be made up and paid as aforesaid from
the first available -•income and revenues thereafter received, -. and same shall be in
addition ,-to .payments otherwise -provided to be made in such succeeding month or months.
All moneys held in the Current Sinking Fund and the Current- Sinking Fund
Reserve, -shall- be rdeposited in the Depository Bank: 'Said Bank shall invest for the
benefit of. said Fund such portion of said- Fund -as is designated -by the Governing body
of, the Issuer,: in direct obligations or guaranteed bonds or notes of the- United States of
America i. or in- Certificates .of Time Deposit -of -any FDIC - bank, - maturing as same will
be,. -needed for meeting interest and/or -principal- payments and any of such funds- on
deposit in said Bank or invested in. said -certificates- of time . deposit. (in excess of the
amount insured- by- the- FDIC)= shall, until expended, -be =earmarked and -secured .by a
pledge - of- an= equivalent- amount in -current market value - (.exclusive of accrued interest)
of direct .obligations=- or guaranteed --bonds or notes of the -United . States, of America .having
a maturity date or being- subject to redemption at the option of the holder not more than
five years from- the date of investment therein; -and all such income therefrom, shall be
credited to the Current Sinking Fund, and at the option 'of the governing body of the
Issuer, may be credited against currently required monthly deposits into the Current
Sinking Fund.
INVESTED SINKING FUND INVESTMENTS
The- Invested Sinking Fund Investments which -are' required to be purchased
on the respective - dates, consisting of- the designated principal- (par) amounts of U. S.
Obligations which mature on November 15, 2007, -bearing interest at the rate of 7-7/8$
per annum, and which are subs ect - to prior. redemption by the U. S . 'Government on-
November
n
November 15-,--2'002; and on any interest payment date thereafter and prior to maturity,
are as follows: --
DATE
June 15, 1978
June 15,`1979
June 15, 1980
June 15, 198-1
June 15, 1982
June ' 15, 1983
June 15, 1984
June 15, 1985
June 15, 1986
June 15,- 1987
June 15, 1988
PAR AMOUNT
-prices of such
Investments and of the
precise amount
PAR AMOUNT
PURCHASED
DATE
.than $1,.300, 000) ,
PURCHASED
$240,000
December
15,
1978
$105,000
105,000
December
15,
1979
115,000
115,000
December
15,.
1980
10,000
10;000
December
15,
1981-,
15,000
15,000
December
15,
1982
15,000
- 15;000
December
15,
1983
20,000-
20,000
December
15,
1984
20,000
20,000
December
1.5,
1985
'20, 000
20,000
December
15,
1986
20,000
20,000
December-
15;
1987
25, 000
25,000
-The total of such Investments is- $970,000, principal (par) amount.. After the
final, determination of the purchase.
-prices of such
Investments and of the
precise amount
of the Current Bonds to be issued
(not less than
$1,250, 000 and not more
.than $1,.300, 000) ,
the amounts and times ofpurchases of- such Investments may be revised to 'the extent
necessary to assure the adequacy of- the -Invested--Sinking--Fund Investments to, meet the
794
requirements of such Invested Sinking Fund.
After such Invested Sinking Fund Investments have been purchased, same shall
be held in escrow by the Trustee, which shall collect all interest thereon, which interest
shall be used only to pay the interest on and the principal of the Current Bonds until
November 15, 2007, the maturity date of such Investments, unless the U. S. Government
calls for prior redemption part or all of such Investments on or after November 15, 2002.
If the U. S. Government does call such Investments for prior redemption, the Current
Bonds which have a stated maturity of July 1, 2003, may be called for prior redemption at
face amount plus accrued interest, on or after November 15, 2002, at any time (which need
not be an interest payment date) upon at least thirty days' published notice, at such date
or dates to assure that there will be sufficient funds available to pay such Current Bonds
and all of the interest thereon. The Issuer is not required to call the Current Bonds in
the event of the call of such U. S. Obligations, but may reinvest the proceeds of such
U. S. Obligations in other U. S. Obligations, in which event amounts shall be paid into
the Bond Fund from the revenues of the system to provide for the payment of the Cur-
rent Bonds to the extent that the income from such new investments (in such other U. S.
Obligations) shall be less than the income from the original Invested Sinking Fund In-
vestments.
INVESTED SINKING FUND AGREEMENT
Prior to the date that the Current Bonds are delivered and paid for by the
successful purchaser (s) , an Agreement or Agreements entitled "Invested Sinking Fund
Agreement" shall be entered into between the Trustee, the Issuer and the person or
persons selling such Investments for the Invested Sinking Fund, setting out more
specifically the rights and duties of the respective parties consistent with the foregoing.
The Issuer Chief Officer is hereby authorized to execute such Agreement (s) in such form
as shall be recommended by the City's Fiscal Agent and by Bond Counsel, without the
necessity of any further proceedings authorizing such execution.
The balance of the income and revenues then remaining shall be set aside for
depreciation and operation and maintenance as - follows: "
C. Current Depreciation Fund.
Subject to the foregoing disposition of the revenues of the system, as set
out in Subsection B of this Section 13, there shall be set aside and paid into the
Current Depreciation Fund in each month, as the next payment from the Current Revenue
Fund, beginning on or before the first day of the month following the month in which
the Current Bonds are delivered, an amount equal to ten percent (10%) of the balance
on deposit in the Current Revenue Fund, if, whenever and so long as the amount on
deposit in said Depreciation Fund shall be less than the sum of $250,000; provided that
whenever and so long as said sum of $250,000 is maintained, no monthly deposits are
795
required to be made into the Current Depreciation Fund.
Moneys in the Depreciation fund may be withdrawn and used upon appropri-
ate certification by whatever official is duly authorized by the governing body of the
Issuer to make such certification, for the purpose of paying the cost of making unusual
or extraordinary maintenance, repairs, renewals and/or replacements to the system not
included in the Annual Budget of Current Expenses, which would be necessary to keep
the system in good operating condition, or for the purpose of paying the cost of
constructing extensions, additions and/or improvements to the system which will either
enhance the revenue-producing capacity of the system or provide a higher degree of
service; provided, however, that if the available balance in the Current Sinking Fund
and the Current Sinking Fund Reserve on any June 20 or December 20 shall be insuf-
ficient to pay the next maturing installment of interest and/or principal of the Current
Bonds, the Issuer shall withdraw and transfer from the Depreciation Fund such amounts
as may be required to eliminate the deficiency in the Current Sinking Fund and to avoid
a default. Provided further that any such withdrawals shall be promptly restored to
the Depreciation Fund from the first revenues of the system available after meeting all
current requirements of the Current Sinking Fund, including the Current Sinking Fund
Reserve.
There shall be deposited in the Current Depreciation Fund the proceeds of
any property damage insurance not immediately used to replace the damaged or destroyed
property.
As and when additional parity bonds are issued, provisions shall be made for
additional payments into the Current Depreciation Fund so that the additional amount,
if any, to be accumulated therein in approximately equal monthly installments over a
period of 120 months shall be a sum equal to four percent (4%) of the principal amount
of the additional parity bonds; provided however, that if and whenever the amount
accumulated in the Depreciation Fund shall equal either
(1) an amount equivalent to 10% of the total amount
of bonds outstanding --against and payable from
the revenues of the system; or
(2) the sum of $250,000, whichever is greater,
deposits into the Current Depreciation Fund may, at the option of the governing body
of the Issuer, be discontinued; provided, further, however, that if at the time of
issuance of such bonds, the Independent Consulting Engineers then employed by the
Issuer shall recommend the accumulation of a larger amount in the Current Depreci-
ation Fund than the amount specified in either (a) or (b) , then such deposits shall'
continue until such larger amount has been so accumulated.
All funds on deposit in the Current Depreciation Fund shall be kept
separate and apart from all other municipal funds and shall be deposited, secured
796
and/or invested in the manner provided herein for the deposit, security and/or
investment of the Current Sinking Fund.
D. Current Operation and Maintenance Fund.
The amounts transferred to the -Current Operation and Maintenance Fund,
as set out in Section 10D above; shall constitute the initial Current Operation and
Maintenance Fund. Subject to the foregoing disposition of the revenues- of the
system, and after transfer of the amounts required to be'transferred by. Sections
13B and 13C hereof,° ther""e shall be transferred from the Current- Revenue -Fund and
deposited; beginning on or before the first clay of the month" following the month of
enactment: of this Ordinance, fromL month to - month, or" gas needed, such amounts -as
are required -to pay-, as they accrue, the proper and- necessary- costs of"operating,
maintaining and insuring , the system,- as set- out in the "Current= Expenses" contained
in the Annual Budget. -Subject -to.-the foregoing requirements, all costs of operating,
maintaining and insuring-' saidsystem shall 'be paid from'the Current Operation and
Maintenance .Fund
Allfunds in the Current' Opera:tion7 and Maintenance Fund shall- be 'kept
separate and_ apart, from all other municipal funds and shall be deposited, secured
and/or- invested in the, manner provided -,herein for the deposit, security and/or
investment of the Current Sinking Fund.
E . Surplus Funds.
If, at the end of any fiscal year, after making the payments required by
the foregoing, there shall remain a balance in the Current Revenue Fund in excess
of the amounts required to be transferred during the ensuing year, such balance
within sixty (60) days after the end of such fiscal year, may be used as follows:
(1) To retire or redeem outstanding Current Bonds in inverse
order of maturities, to purchase `Bonds in the -open market,
or to purchase Bonds through advertisement for and receipt
of tenders of Bonds, at not exceeding the call price; as may
be determined by the governing body of the Issuer;
(2) To transfer additional amounts to the Current Sinking Fund
Reserve;
(3) To transfer additional amounts to the Current Depreciation
Fund;
(4) To transfer additional amounts to the Current Operation and
Maintenance Fund;
(5) To -pay principal .and interest requirements of any outstanding
junior and subordinate obligations against said system, or
any part -thereof. - _
(6) Provided further-, that afterthe following shall have been
accumulated and are being maintained:
(a) the Required Reserve (Current Sinking Fund Reserve);
(b) the amount required to be accumulated in the Depreciation
- = Fund.; as specified in Section -13C (1) and (2) above;
797
(c) an amount equal to one month's average requirements of
the Operation and Maintenance Fund,•- and -
(d) an amount in, the Sinking Fund (exclusive of the Required
Reserve) equal to the Net Annual Debt Service Reserve
- Requirements for the -ensuing year,
any surplus -in, the-, Currentrli;evenue Fund then remaining, may;.
at the direction of the Governing Body, be transferred and used
-for any - lawful purpose, of the: City.
F.,-_�Investm.ent ,-of :Funds
All. -moneys held- in.the _Revenue Fund', the Current Sinking Fund-, the Current
Debt Service. Reserve,; ---the Current Depreciation Fund and the Current Operation and
Maintenance -Fund shall be deposited in the Depository: Bank. -Said -Bank shall invest
such portion,of: such- Funds as -is designated ,by the Governing Body of the Issuer, in
Investments,., as defined in:- Section 1 -hereof, and any of :.such- funds: on deposit in -said-
Bank, or ---in -.such Investments, _ (in excess --of he-- -amount.: insured by the FDIC) shall, until
expended., be. earmarked and secured by a p1edige of an -equivalent amount- in current -
market value (exclusive of accrued interest) of U. S. Obligations, having : a maturity -
date or being subject to redemption -at the -option of the holder not more than five years
from the date; of investment therein; and all -:such income from such Investments shall
be treated as revenues of the System -and deposited- into the Current Revenue Fund.
SECTION 14. DETERMINATION BY ISSUER . THAT PROPORTIONS 'OF
DEPOSITS ARE CORRECT.
The Governing Body of the Issuer hereby finds and determines that,
exclusive of the payments required to be made into the Current Sinking Fund, the
amounts which are provided to be paid into the Current Sinking Fund Reserve and
into the Current Depreciation Fund are proper and sufficient for the purposes thereof,
and the amounts provided to be transferred and deposited into the Current Operation
and Maintenance Fund -are proper and -sufficient for the operation, maintenance and
insurance of the system -
SECTION 15. ISSUER OFFICIALS TO BE BONDED.
The Issuer will cause each municipal officer or other person having custody
of any moneys administered under the 'provisions of this- Ordinanceto: be-" bonded at
all times in an
amount
equal to the maximum amount of such moneys in his custody at
any time. The
Issuer
will segregate
and earmark such funds;, _consistent with this
Ordinance, in -such manner as to enable :the Jzsuer to obtain the benefit of the
lowest possible surety premium rates on such surety bond or bonds. -Each such
bond shall have a surety given; by a surety corporation:; qualified or authorized to do
business in Kentucky, and approved by the Governing Body of the Issuer, and the
premium of such surety bond shall constitute a proper expense of operating and
maintaining the system, and may be paid- from ;the moneys available in the "Operation
and Maintenance Fund"
798
SECTION 16'. ADOPTION OF BUDGET OF CURRENT EXPENSES.
The Issuer covenants and agrees that prior to the delivery of the Current
Bonds, the Commission will'adopt a Budget of Current Expenses forI the operation
of the system for the remainder of the then current fiscal year, and thereafter, on or
before the first day` of July of each year prior to the year of final maturity of said
Current Bonds., or of any bonds ranking on a parity therewith, the Governing Body of
the Issuer will adopt an=Annual Budget of Current Expenses for the ensuing fiscal year,
and will furnish a copy =of such Budget or amendments thereto, upon request, to any
bondholder--. Current Expenses shall include all reasonable and necessary costs of
operating, repairing, maintaining `and insuring the system, but shall exclude payments
into the Current Sinking Fund-. The Issuer further covenants that the Current Expenses
incurred in any year shall not exceed the necessary and reasonable amounts required
therefor, and that the- Issuer will hot expend any amount or incur any obligations
for operation; maintenance and repair in excess of -the amounts provided for Current
Expenses in the current Annual Budget; except on proper- justification and resolution
by the Governing Body of- tlie- Issuer, that such expenditures- are necessary to operate
and maintain the system . The Issuer further covenants that at the ' same- time and in
like manner,: the Governing Body of the Issuer shall prepare an estimate of Gross
'Revenues to be derived from the operation of the System for said fiscal year and . that
sufficient Gross Revenues shall be provided, through the maintenance of proper rates
and charges (and through the increase thereof if necessary) to satisfy the require-
ments of all of the provisions Lcontained in this Ordinance, including the accumulation
and maintenance of all - required reserves specified herein.
SECTION= I7 =RATES AND CHARGES FOR SERVICES OF' THE SYSTEM.
While the Current Bonds authorized hereunder, or any of -them, remain
outstanding and unpaid, the rates for all services and facilities rendered by the
system to 'the Issuer and to its citizens, corporations; or other's requiring the same,
shall be reasonable and just, taking 'into account and consideration -the -cost and value
of the system, the cost -of -maintaining and operating the same, the proper and necessary
allowances far depreciation thereof', -and the amounts necessary for the retirement of all
Bonds and the accruing interest on all such Bonds as may be outstanding under the
provisions of this Ordinance, and there shall be charged such rates and amounts as
shall be -adequate to- meet' all requirements of the provisions of this Ordinance. Com-
pensation for 'services and facilities- rendered- to the -Issuer, shall'be made by monthly
payments into the Current Revenue -Fund the' same as other income and revenues of the
system are paid, and shall then be ' apportioned as other income and revenues thereof
are required by this Ordinance to -be apportioned- among ' the various -funds. Prior to
the issuance -of the Current Bonds, a schedule of rates and charges for the services
799
rendered by the system to all users adequate to meet all requirements of this Ordinance
has been established :,and -adopted and is now in full force;, and effect
-The. Issuer covenants that. it -will.,-not, reduce the- rates and. charges for. .
services, rendered..: by the -,System, without first filing with. the Issuer Clerk. A. certi
fication of .an Independent Consulting Engineer,, ..as defined herein, to the effectthat
the annual, net revenues (defined_ as .gross revenues _less„ :essential., operation and ,
maintenance... expenses.) - of, the_ ,then 1. existing System. for, the, fiscal.., year preceding: the
date. on. which. such.. reduction .is. proposed, _ _as such annual revenues. ar_e . adjusted-,
after taking: into account the projected, reduction -,in; revenues anticipated to result from
such ,proposed rate decr:-ease,- -are equalto.: not less . than 130% -of -the, average Net. Annual
Debt Service. Requirements,_Athereafter. on all.,of- the then.. outstanding, bonds., payable from
the revenues of the System , - calculated. -in the. manner _specified in Section 18 ., hereof
The.;Issuer also covenants, -to cause a report,.to. be €iledwith the Governing
.B.ody ,within .four_ months..after, the end- of each fiscal. year by Certified Public
Accountants.. and/or. Independent, ._Consulting_ Engineers,- -.setting., forth what -was ;the.: .
precise percentage ("coverage.") of the- average, Net Annual;,Debt Service Requirements
falling due- in. -any. fiscal ;year thereafter .for. principal of and interest on all, of the then out-
standing bonds,.pay_able from the -revenues.. of the System, -produced or providedby- the net
revenues_ of.. the System in, that fiscal year,-, calculated in the manner specified_ .in . Section
18 hereof; -. and ,the. Issuer, _covenants that if and . whenever - such report so filed shall
establish that such coverage ,of net revenues for. such. year.- was-. less -.than 115%7 of the
average_ Net Annual Debt_ Service. Requirements thereafter, the Issuer., shall increase the
rates by an amount sufficient,, .in the;. opinion,- of such Engineers and/or Accountants,
to establish --the existence ofor -immediate projection of such mini -mum. 115% coverage.
SECTION ,18.. INFERIOR BO.NDS;. PARITY BONDS; AND SURPLUS FACILITIES.
(1) Inferior: -.Bonds.
Except,as provided below. in. this Section, the Issuer shall not,: so., long -as
any of the Current Bonds: (and any -bonds ranking. on..a parity):.are--outstanding, issue
any additional . bonds_ payable from- the r-evenues- of the System -.-or any part .thereof
unless the..lien or pledge of the revenues _to secure_., such additional-. bonds is made
inferior ,and subordinate. in_ .all respects to .,the security, of ..the- Current Bonds . and; any
parity bonds,,,,
The _Issuer. expressly reserves .the_right. at, anytime -or times to, issue its..
bonds or.. other obligations -,payable from -,the revenues -of :the .System and -not ranking
on a basis, of 'equality. and, parity, with _the ,.Current. Bonds without any proof - of _previous
earnings ornet net revenues.,. but, only if such _ bon.ds or . other `,obligations. =ar.e issued to
provide for- extensions, additions.,.. improvements and/or .other benefits. to the System,
and provided such inferior bonds whenever issued .may 'only be issued with express
800
recognition of the priorities, liens and rights created and existing for the security,
source ,of payment. and protection of the Current. Bonds and any parity bonds; provided,
however, that nothing in this Section is intended to restrict, or shall be construed as
a restriction .upon, the ..ordinary ..refunding of, ,the Current Bonds -and of such parity bonds.
(2) Parity Bonds to Finance -.Future -Extensions,-.Additions -and/or
Improvements; Conditions or Showings Required.
The Issuer further reserves the right to 'add new water works facilities,
and/or related auxiliary facilities, and/or to finance future extensions, additions
and/or improvements to said System by the issuance of one or more additional series
of bonds to be secured by a parity lien on and ratably payable from the revenues of
the System, provided that:
(a) The facility or facilities to be constructed from the proceeds of the
additional . parity bonds . issued for that purpose is or are made : a part
of the System and its or their revenues are pledged as additional
--security for,, the additional,_.parity bonds :and -the .outstanding Current
Bonds.
(b) There shall have been procured and filed with the Issuer Clerk a
statement . by .a Certified, Public. Accountant, -as- defined herein, re-
citing. the_ -opinion based upon .necessary investigation that the net
_ revenues. of the System- for_. 12 consecutive months.- out . of the pre-
ceding 18 months _(with adjustments. as hereinafter provided) were
equal .to -at-least 1.3.0 , times ,,the � average. Ann_ ual ,Debt ,Service Re-
quirements (as defined in Section, 1 hereof) on the Current Bonds
then outstanding and any parity bonds including the bonds then
proposed to be issed. (The calculation of average Net Annual Debt
Service,- Requirements for principal. of and interest on the additional
bonds to be issued shall be determined on the basis of the principal
of, , and interest on, such --bonds being payable in approximately
equal annual -installments . )
"Net revenues" as herein. used. are defined as -gross income and
revenues of the, system less operating .expenses., which shall
include. salaries, wages; cost of maintenance and operation, cost
of,water purchased,, if any,. materials,and supplies,,. -pumping costs,
insurance,, and all other - items that arenormally, and regularly so
included underrecognized zeal accounting . pra_ctices , . exclusive of
allowances for depreciation.
,"Gross income and revenues" shallinclude investment- income, con-
nection fees, disconnection fees, and all other items of income which
have. been established as "reasonably anticipated annual income of
the system", based upon a certification of Independent Consulting
.Engineers and/or.. Certified -Public Accountants.,. as .defined herein.
"Operating .expenses" shall.include only, those -.items-of-costs of
maintenance and operation which are "reasonably anticipated annual
operation and maintenance expenses- of .the. system", ,and shall -ex-
clude any unusual items of operation and maintenance expense which
are of -a-. generally: non-recurring nature, according to ,the certifi-
cation of Independent Consulting Engineers and/or of Certified Public
Accountants, as, defined herein.--
Such
erein.-Such "net revenues" ,may be, adjusted for - the purpose .of the fore-
going computations --to reflect,. -(i:), any revisions in the, schedule of
rates or charges being imposed at the time of the issuance of any
such additional_ parity -.bonds,_, and also .to reflect (ii) any increase
in such net revenues projected by reason of the . revenues anticipated
to be derived from the extensions, additions and/or improvements
to .the .system, or .any -separately acquired (or. to- be acquired)' water
works -system, or facilities - being- financed, -(in whole or... in part) by
such additional parity bonds;. provided such latter-. adjustment shall
-be- made- .only if,. contracts . ,- (secured, by .100 o performance. bond) for
the immediate acquisition. and/or. construction of such extensions,
additions _and/or. improvements,. or contracts. for the acquisition of
an existing water works system or existing water works facilities
801
have been or will have been entered into prior to the issuance of
such additional parity bonds. All of such adjustments shall be based
upon the' written certification of an Independent Consulting Engineer,
as defined herein.
(c) The interest payment dates for all such additional parity bonds shall
be semi=annually ori January 1 arid-` July J 1 of each year, and the "
principal maturities thereof shall be on July 1 of the year in which
any: such principal` is scheduled .to become .due .
(3) Parity Bonds to Refund or Refinance Outstanding Bonds.
The Issuer further reserves the right to issue one or more additional series
of bonds to be secured by a parity lien on and ratably payable from the revenues of
the System, for the purpose of refunding or refinancing the outstanding Current Bonds,
or any portion thereof, and/or any then previsouly issued parity bonds, provided
that prior to the issuance of such additional parity bonds for that purpose, there shall
have been procured and filed =with the Issuer Clerk 'a statement by a Certified Public
Accountant; as defined herein; reciting the opinion 'based upon necessary investigation
that:
(a)
after'the issuance --of such -parity bonds, the ,annual net revenues, as
'adjusted -and defined above, of the` then_ existing "System for the fiscal
year - preceding the 'date -of issuance of such parity bonds, after
taking into account the - revised Debt Service -Requirements resulting
from" the the 'of such parity bonds and, from the elimination of
the bonds' being refunded or refinanced thereby, are- equal to not
-Tess than 130 of the" average Net Annual Debt' Service Requirements
thereafter on all -of the -then outstanding bonds payable,- from the
revenues of the system, `calculated in the manner specified above; or
(b)''"
in the alternative, 'that the Debt Service Requirements for the Current
Bonds, any then previously issued parity -bonds and the proposed
parity refunding bonds, in any year of maturities thereof after the
redemption of the Current Bonds scheduled to - be refunded through
theissuance - of such proposed parity refunding bonds, shall not
exceed the scheduled Net Annual Debt Service Requirements applicable
to the, then outstanding Current Bonds and any then previously
issued parity °bonds for any corresponding year prior to the
issuance of such proposed - parity refunding bonds.
The
additional' parity bonds, the issuance of which is restricted and con-
ditioned by Ahis Section,` ' shall be understood to mean. bonds payable from the income
and revenues
of the System on a parity with the- Current- Bonds (and any parity bonds)
and shall not be deemed to include-- nor to prohibit the issuance of any other obli-
gations; the security and source of payment of which- is subordinate and subject to
the priority of the "payments -into the Current Sinking Fund for the Current Bonds.
(4) Reservation of Right to Combine and Consolidate Water Works System
with Existing Sewer System of the Issuer; Parity Bonds_. to Refund
or Refinance Outstanding -Sewer'Bonds; Parity Bonds to Finance
-Future Extensions, Additions and/or Improvements to Any Part of System.
The - Issuer -further reserves the right, ' following receipt of the written
recommendations of the Commissioners, as follows:
(a) to combine and 'consolidate its ' existing water works System with
its-= existing sewer system-, into a single, combined and' consolidated,
revenue-producing project o - system (the "Consolidated . System") ,
after which;' these Current Bonds'' and any additional parity bonds
would `be secured -by and payable from the revenues of the Consoli-
dated System. In' order to accomplish- such combining and consoli-
dating, the Issuer further reserves the -right to issue one or more
802
additional series of bonds to be secured by a parity lien on and
ratably payable .from the revenues, of the Consolidated System, for
the purpose, of refunding or .refinancing certain outstanding bonds
constituting a charge against the existing sewer system (the "Prior
S.e'wer Bonds") , 'provided that prior to the issuance of such parity
bonds ,for. that purpose, there shall have been procured and filed
with the, _Issuer Clerk .a statement by a Certified Public Accountant,
as defined herein, reciting the opinion based upon necessary
investigation that:
(i)
after the issuance of such parity bonds, the annual net
revenues, as adjusted and defined above, of:the then
existing water works System and the then existing sewer
system for the fiscal year preceding the date of issuance
of such parity bonds, after taking into account the revised
Net Annual Debt Service Requirements .resulting from the
issuance of such parity bonds and from the elimination of
the bonds being refunded or refinanced thereby, are equal
to not less than 130% of the average Net Annual Debt Service
Requirements thereafter on all of the then outstanding bonds
payable from the combined revenues of the Consolidated
System._, calculated in the manner specified in Section 18 (2)
above; or
(ii) in the alternative, that the Net Annual Debt Service Require-
ments for the Current Bonds, any then previously. issued
parity bonds and the proposed parity refunding bonds, in any
year of maturities thereof .after the. redemption of the Sewer
Bonds to' be -refunded through the issuance of such proposed
parity refunding, bonds, shall not exceed the. scheduled Net
Annual Debt Service Requirements applicable .to the then out-
standing Current Bonds and any then previously issued parity
bonds, plus the Prior Sewer Bonds, for. any_ corresponding
year prior to the issuance of such proposed parity refunding
bonds.
The additional parity bonds, the issuance, of which is restricted and
conditioned by this _Section, 8.hal 1 be understood to mean bonds payable
from the income and revenues of the Consolidated System on a parity
with the Current Bonds (and any parity bonds) and shall not be
deemed to include nor to prohibit., the issuance of any other, obligations,
the security and source. of payment of which is subordinate and subject
to the priority of the payments into the Current Sinking Fund for the
Current Bonds.
(b) . After the creation of such Consolidated System, the , Issuer
further reserves the right, following receipt of written recommendations
of the Commissioners, to add new water and/or sewer facilities, and/or
related auxiliary facilities, and/or to, finance future extensions, additions
and/or improvements to the Consolidated .System by the issuance of one
or more additional series of bonds to 'be secured by a parity lien on
and ratably payable from the revenues of the Consolidated. System, pro-
.- , ... .. _. .,.._.. .,
vided that:
(i) the facility. or -facilities to be constructed from the proceeds
'of the additional parity bonds 'issued for that purpose is or are
made a part of the Consolidated. System and its or their revenues
are pledged as additional security for the additional parity bonds
and the outstanding Current Bonds; and
(ii) there shall have been procured and filed with__ the Issuer Clerk
a statement by" a Certified Public -Accountant, as defined herein,
reciting. the opinion based upon necessary investigation that the
net revenues of the Consolidated System for 12 consecutive months
out of the preceding 18 months _ (with adjustments as provided above)
were equal to at least 1.30 times the -average Net Annual Debt
Service Requirements on the. Current Bonds then outstanding and
any parity bonds including the bonds then proposed to be issued.
The interest payment dates for all such additional parity bonds shall be
semi-annually on January 1 and July 1 of each year, and. the -principal
maturities thereof shall be on July 1 of the year in which any such
principal is scheduled to become due
803
(c) Also, -,after the ,creation. of the, Consolidated System, the Issuer further
reserves the right,. _following receipt- of -written recommendations of the
Commissioners, to combine_.parity__bonds, issued to refund outstanding
_ Sewer Bonds., pursuant_ to the provisions.. ,of. this Section, with parity
bonds issued to finance -future extensions,. additions and/or improvements
to the Consolidated _System, .anal/or to- accomplish the purposes set out
- above, through the issuance of a single . series-_ . of _parity refunding and
improvement bonds.
(5) Priority of_' Lien; -',Permissible_ Disposition_ of Sur,
)lus or Obsolete
Facilities;_:. Conditions .-
The Iss
uer covenants, and, agrees that sp long".as, any of the Current Bonds are
outstanding,, .the. Issuer will not sell. or, otherwise. dispose -of any- of the facilities of the
System, ,or any, part _thereof-, _and, _ exce11 pt as, provided for above, it will not create or
permit to. be created.,any charge _or "lien on -the revenues thereof. ranking equal or prior
to the charge or lien of the Current Bonds. Notwithstanding, the foregoing, the Issuer
may at _any: time permanently: abandon the use of, _ .or _ sell ,.at the - fair. market value, any
IT
part of the facilities of the. System ,- provided that:
17 ,
,.,
(a) .. It is in- compliance -with. all _covenants, and undertakings in connection
with all .of. the bonds,then_outstanding.-and .paya,,ble from the revenues
of, the.system. and. the,. Sinking.- Fund_ Reserve, for such Bonds is being
maintained therein_ at.- the stipulated level; .
,(b) It will,, -in the event of ,any such. sale, .apply, the proceeds to either
'(i) redemption of outstanding bonds in accordance with the provisions
governing prepayment of bonds in advance of maturity or purchase of
bonds -in-the open market atnot exceeding the next -applicable redemption
price, or --(ii) -replacement 'of. the facility .so disposed of by another
facility,-, the _revenues of which, shall, be .incorporated'.into the system as
hereinbefore -provided;_ _
(c) It certifies, ,in--goodfait' _prior .to..any abandonment of use, that the
facility or facilities to be .abandoned is or are. no longer economically
feasible of producing substantial net revenues; .
(d) _ It :certifies,- in -_good :faith, that ,the estimated.. net -revenues of the re-
maining _facilities of the .system„ for the - then next. succeeding fiscal
year, plus, the "estimated.. net revenues -of the, -.facility or facilities, if
y, _ - _ - added to the .
an to system,_ _com.ply with. the earnings requirements
hereinbefore -;provided _in .the provisions, and .,conditions governing the
issuance of additional parity bonds;,
(e) Such sale or disposition will not have the effect. of causing the Cur-
rent Bonds or any parity bonds to become arbitrage bonds.
SECTION. 19. ALL BONDS .OF ,THIS ISSUE- ARE EQUAL.
_.
The Current Bonds ;authorized; andpermitted to be issued . - ued hereunder, and
from time to time outstanding, shall not be entitled to priority one over the other in
the . application ..of the income and revenues,, -regardless : of the - time or times of their
issuance,- it being . the ,intention. that - there, shall. be. no .priority.. among the Current
Bonds authorized, .or permitted to be : issue..d : under the provisions. of this Ordinance,
regardless of.. the
g "fact that_, they may.. be ,actually issued and .-delivered at different
times, subject to_the provisions of Section -18, (Inferior- Bonds, Parity._ Bonds and
Surplus Facilities) z - .
SECTION 20. DEFEASANCE.
The Issuer reserves the right, at any time, to cause the pledge of the
revenues securing the Current Bonds to be defeased and released by paying an
804
amount into an escrow fund sufficient, when invested (or sufficient without such
investment, as the case may be) in Investments as defined in Section - 1' hereof, to
assure the availability -in such escrow fund of- an adequate amount (a)- to" call for
redemption .and to redeem and retire-. all of such -outstanding Current Bonds, both
as to principal-, and as- to interest'; : on- the. next, -optional redemption= date, including
all costs and 'expenses .in76onnection therewith.; and to:,pay all principal and interest
falling due on the Current Bonds to and on `said 1 date; -or (b) to pay, all principaland
interest" x.equiremenW on the Current Bonds as same mature, without redemption in
advance. of--maturity� ,the -determination of whether to defease under (a) or (b) or both
to be made by the Governing Body: of --the Issuer. - Such Investments - shall have such
maturities as _ to`' as'surb that th6re 'will be sufficient funds" _for such =purpose . If such
defeasance is to be accomplished pursuant to (a) , the Issuer shall take all steps
necessary to publish notice of the redemption of the Bonds on the next applicable
redemption date. Upon the proper amount of Investments being placed in escrow and
so secured, such revenue pledge shall be automatically fully defeased and released
without any further action being necessary. The Issuer reserves the same right
to defease and release the lien securing any parity bonds.
SECTION 21. INSURANCE.
(a) Fire and Extended Coverage.
If and to the extent that the system includes structures above ground level,
the Issuer shall, upon receipt of the proceeds of the sale of the Current Bonds, if
such insurance is not already in force, procure fire and extended coverage insurance
on the insurable portion of all of the facilities of the system.
The foregoing fire and extended coverage insurance shall be maintained so
long as any of the Current Bonds are outstanding and shall be in amounts sufficient
to provide for not less than full recovery whenever a loss
from
perils
insured against
does not exceed eighty percent (80%) of the full insurable
value
of the
damaged facility.
In the event of any damage to or destruction of any part of the system the
Issuer shall promptly arrange for the application of the insurance proceeds for the
repair or reconstruction of the damaged or destroyed portion thereof.
(b) Liability Insurance on Facilities.
Upon receipt of the proceeds of the sale of the Current Bonds, the Issuer
shall, if such insurance is not already in force, procure and maintain, so long as
any of the Current Bonds are outstanding, public liability insurance relating to the
operation of the facilities of the system, with limits of not less than $300,000 for one
person or for more than one person involved in one accident, to protect the Issuer
from claims for bodily injury and/or death; and not less than $200, 000 from claims
for damage to property of others which may arise from the Issuer's operations of the
805
system and any other facilities- constituting a portion of the system.
(c) Vehicle =Liability 1 Insurance:.
- If and WAhe. extent; -,that .the Issuer owns- or. operates -:vehicles- in the
operation 'of -thee system.. ; upon,. receipt_ off the proceeds-: of the .Current Bonds, the -;City., ,
shall, if such -,insurance. -,is -'riot -:already. -in force; :procure and- maintain, so. long -as
any- of the Bond's -are outstanding,-,, vehicular -pubrlic pliability insurance-with",hmits- of .-
not:
not; less ihan-, $300A00 for ;ohe person. or.. $300, 000 for more -than one person involved.
in one accidenti-tot. rotect .the -Issuer - from claims for•bodily -injury and,/or::death,.
and, not less than $200; 000 against claims for- damage- to -property :of others -which may
arise: from -the operation of such vehicles by the Issuer
SECTION:22::-RECORDS; AUDITS .AND REPORTS; MONTHLY REPORTS;--
ENGINEERING INSPECTION.
Insofar as consistent with the laws of Kentucky, the Issuer agrees that so
long as any of the Current Bonds remain outstanding, it will keep proper books of
records and account showing complete and correct entry of all transactions relating
to the system in accordance with generally accepted accounting principles (for
facilities of like type and size) , in which complete and correct entries shall be made
of all pertinent transactions. All such records and books of account shall at all times
during normal business hours be subject to inspection by the holders of 10% or more
of the principal amount of the Current Bonds then outstanding, or by their duly
authorized representatives.
The Issuer further covenants that as soon as may be feasible after the close
of each fiscal year, and in any event not later than sixty (60) days thereafter, the
Issuer will cause an audit of the financial affairs of the system to be prepared by a
Certified Public Accountant, covering the operation of the system for the preceding
fiscal year.
A copy of said audit report shall be kept on file in the office of the Issuer
Clerk, where it will be subject to inspection at any reasonable time by or on behalf
of any holder of outstanding Bonds or coupons. A condensation of the important
facts shown by such report will be mailed to any such bondholder or coupon holder
upon request.
The Issuer covenants and agrees to furnish monthly operating reports to
the Fiscal Agent, identified in Section 1 hereof, in such form as shall be
satisfactory to such Fiscal Agent, and to furnish such monthly operating reports
to any bondholder requesting same.
The Issuer further covenants and agrees to retain an Independent Con-
sulting Engineer or firm of Independent Consulting Engineers, as defined herein,
to inspect the system and its operation at least once in each period of five years and
to file with the Issuer Clerk and the original purchaser of the Current Bonds a
806
written report of the findings and recommendations resulting from such inspection.
I a ,f'_s`S,J� f`;= h"=tU'1 'r.1
h`?tfl'
Mori CiL7 ,. 'Jjr r� .{ l >' d 77Jit
SECTION 23. GENERAL COVENANTS. -
The, Issuer covenants that so long as any of the Current Bonds, and/or
any parity bonds, are outstanding, as follows:
A. It will at all times own and operate the system as a public project
on a revenue --producing basis, and will permit no services to be
rendered free of charge or without full compensation.
B . It will at all times maintain the system in good condition, through
application of revenues accumulat-ed 'and ,set aside for operation and
maintenance as herein provided, and will make renewals and re-
placements, as the same may be required, through application of
revenues accumulated and set aside into the Current Depreciation Fund.
C. It will not permit .any competing water system,, public or. private, to
sell or serve water to customers within . the corporate limits of the
Issuer and its outside service area, to the extent that the Issuer is
legally able to prevent same.
D. It will perform all duties with reference to the. system required by the
Statutes and Constitution of Kentucky and will not sell, lease, mortgage
or'`in 'any manner dispose -of the system—, --'or any part thereof, except
as authorized herein.
E. It will cause rates and charges for services furnished by the system
to be billed monthly (or bi-monthly) -to customers of the system, and
will provide that water . service will be discontinued to any premises
where there is a failure to pay any part of the charges so billed,
including such penalties and fees for disconnection and/or reconnection
as may be prescribed from time to time, to the greatest extent per-
mitted by law.
SECTION 24.. CONTRACTUAL NATURE OF ORDINANCE.
The provisions of this Ordinance shall constitute a contract between the
Issuer and the holders of the Current Bonds and any parity bonds; and after the
issuance of any of such Bonds, no change, variation, or alteration of any kind -in -the
provisions of this Ordinance shall be made in any manner except as herein provided
until such time as all of said Bonds and the interest thereon have been paid or pro-
vided for in full, by defeasance (as per Section 20) or as otherwise provided herein;
provided (a) that the Governing Body of the Issuer may adopt an Ordinance to evidence
the succession of another Bank (s) or Trust Company as payee bank and/or alternate
paying agent and may enact any other Ordinance for any other purpose not incon-
sistent with the terms of this Ordinance, and which shall not impair the security of
the holders of the Bonds and/or for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective or inconsistent provisions contained herein
or in any ordinance or other proceedings pertaining hereto; and (b)" provided further,
that the holders of eighty percent (80%) in principal amount of the Bonds At any time
outstanding shall have the right to consent to, and approve the adoption of ordinances,
resolutions or other proceedings, -modifying or amending any of the terms or pro-
visions contained in this Ordinance, subject to the condition that (1) this Ordinance
shall not be so modified in any manner that may adversely affect the rights of any
certain holders without similarly affecting the rights of all holders of the Current
Bonds (and any parity bonds) then outstanding, or (2) to reduce the percentage
807
of the number of holders whose consent is required to effect a further modification.
Issuer:
SECTION 25. EVENT OF DEFAULT; BONDHOLDERS' REMEDIES
The following items shall constitute an "event of default" on the part of the
(a), The, failure to pay -principal .;of any of the Current Bonds, or of
any.._parity_ bonds, when due and payable,,. either -at ,maturity or
by proceedings for redemption.
The failure to pay,.any installment, of -interest on the Bonds when
the same shall -become due and payable or within. 30 days thereafter.
(c) _ -,The ,failure ,of the issuer to fulfill _ any of its obligations pursuant
to this Ordinance.
(d) , _ The failure to promptly repair, replace, or, reconstruct needed or
essential facilities of the system that have been damaged and/or
destroyed.
(e) The _.entering. of an- order_ or decree -with-, the consent or acquiescence
of the Issuer, appointing a receiver; of all or any. part of the system
or, any revenues .,thereof; .or if- such order_ or decree having been
entered without the acquiescence or ,consent. of the Issuer, its
failure in not having the order vacated, discharged, or stayed on
appeal within, 60 days after entry...
;The. -default, by the _Issuer in, the due or punctual performance of any
other of ,the covenants,. conditions, agreements, and .provisions con-
tained_ in. the Current ,Bonds._ or in. this Ordinance.
Any holder of the Bonds, or of any of the coupons, -.may, -„either at law or
in equity, by suit, action, mandam-us,, or.- -other-; p-roceedings,. enforce and -compel
performance-.by-the,,Issuer and. its. officers and, agents of all duties- imposed or re-
quired by law ..or by -this Ordinance in_ connection„ with the.. _operation of the system,
including, _the_ making and .collection `of sufficient rates, the segregation of the income
and . revenues of . the system and, the application thereof ,in accordance with the. pro-
visions of this Ordinance.
Upon the occur-rence of an "event of default” as defined _above, then upon
the filing of , suit-- by any,,holder of said Bonds or . coupons, any . court having j.uris-
diction, of the action. _may appoint a _ Receiver pursuant to- KRS - 58.060 to administer
the system on behalf. of the. Issuer , -with power to charge and collect rates and charges
for the, :services- and., facilities provided. by ,the system, sufficient to -provide for. the
payment of any Bonds or .obligations outstanding,,, and the interest thereon,, together
with the -expenses of. operation. and maintenance, and to. apply the income and revenues
in accordance with theprovisions..of.this,Ordinance, and of the. applicable statutes
of Kentucky, ..and, to . take such ,other_ legal. action as may be appropriate. for the
protection_ of any, such holder.
The -Issuer. hereby agrees to transfer to any bona fide Receiver . or. -other
subsequent operator of the system, ,pursuant to, any valid court ,order- in .a, proceeding
brought to enforce.. collection. or payment of the Issuer's obligations, ,all contracts and
other. _rights of -the Issuer pertaining -to. the,, System, conditionally, for, such ,time only
as such Receiver or operator shall operate by authority of the Court. _In the event
808
of default, the holder of any of the Current Bonds may require the governing body of
the Issuer by injunction to raise the rates a reasonable amount.
SECTION 26. SUPERVISION OF WATER WORKS SYSTEM VESTED CON-
TRACTUALLY IN COMMISSIONERS OF WATER WORKS
Recognition is hereby taken of the fact that pursuant to an Ordinance
heretofore enacted, the supervision, management and conduct of the water works
System is vested in a municipal commission, designated as the "Commissioners
of Water Works", which Ordinance shall constitute a --contract between the Issuer
and the holders of. the: Current Bonds and any -additional-,parity bonds issued pur-
suant to this Current Bond Ordinances and said Ordinance may not be amended orr—
repealed so long as 'any of the Current Bonds and any parity bonds are outstanding
and unpaid (and have. not been defeased) , without the consent of at least- 80% in .
amount of the holders of all of such outstanding, bonds
SECTION 27. SUBROGATION.
-In the event of -the - invalidity of the Current Bonds_;. or of any, contractual -
provision. hereof, the holders of the Current Bonds' shall be subrogated to the rights
of the holders of the respective Prior Bonds.
SECTION 28.- PROVISIONS IN- CONFLICT REPEALED; -RIGHT TO ISSUE BONDS
ON A PARITY WITH PRIOR BONDS IS CANCELLED.
All ordinances, resolutions and orders, or parts thereof, in conflict here-
with, are, to the extent of -such-coinflict; hereby repealed; and it is hereby specifically
ordered and provided that any proceedings heretofore taken for the issuance of other
bonds payable or secured in any manner by all or any part of the income and revenues
of the system, or any part thereof, and which have not heretofore been issued and
delivered, are hereby revoked and rescinded, and none of such other bonds shall be
issued and delivered. The right to issue bonds ranking on a parity with any of the
Prior Bonds is hereby expressly cancelled.
SECTION 29. SIGNATURES OF OFFICERS.
If any of the officers whose signatures or facsimile signatures appear on
any of the Bonds or coupons cease to be such officers before delivery of the Bonds,
such signatures shall nevertheless be valid for all purposes the same as if such
officers had remained in office until delivery, as provided by KRS 58.040 and KRS
61.390.
SECTION 30. SEVERABILITY CLAUSE.
If any section, paragraph, clause or provision of this Ordinance shall be
held invalid, the invalidity of such section, paragraph, clause or provision shall
not affect any of the remaining provisions of this Ordinance.
SECTION 31. EFFECTIVE DATE OF ORDINANCE.
This Ordinance shall be introduced at a meeting of the Board of Commissioners
and- remain on file for at least one week for public inspection in the completed form
809
in which it shall be put on its final passage and if adopted shall be in full force and
effect ten days thereafter.
Mayor
Introduced and given first reading by the Board of Commissioners,
March 2,8, 19 78'
Passed by the Board of Commissioners April 5, 1978
Recorded 'b'y Louise McKinney, City Clerk, April. -5, 1978.
CERTIFICATE OF CITY CLERK
i, LOUISE McKINNEY, hereby:certify that I am the duly qualified and acting
City,, Clerkcofthe.: City of -,Paducah,)-- Kentucky, that..the:foregoing Or-dinanee:is a tr_uer�
and -correct copy of ,an" Ordinance authorizing the issuance of $1,275,000 of City of
Paducah - Water Works Refunding Revenue Bonds; Series of ' 1978, dated April 1, 1978,
that said Ordinance was introduced and given its first reading by the Board of
Commissioners of said City on March 28, 1978, that it Was placed and remained on
file in my office for public- inspection: in that identical ;° : completed form until April 5,
1978-;- on - which date it was given, its : second reading and final .passage and adaption
by said Board.
IN'- TESTIMONY WHEREOF, witness my signature as City Clerk and the
official Seal of said .City this 5th- day of April,. 1978.
Louise' 'McKinney, City Clerk
(Seal of City)
CERTIFICATE OF CITY CLERK
I, LOUISE McKINNEY, hereby certify that I am the duly qualified and
acting City Clerk of the City of Paducah, Kentucky, that the foregoing Ordinance
is a true and correct copy of an Ordinance authorizing the issuance of $1,275,000
of City of Paducah Water Works Refunding Revenue Bonds, Series of 1978, dated
April 1, 1978, that said Ordinance was introduced and given its first reading by
the Board of Commissioners of said City on March 28, 1978, that it was placed and
remained on file in my office for public inspection in that identical, completed form
until April 5, 1978, on which date it was given its second reading and final
passage and adoption by said Board, that it was published in the SUN DEMOCRAT
on April 10, 1978, that no petition protesting its passage in accordance with
KRS 89.600, was filed with said Board or with me as of 1978,
and that said Ordinance has now been recorded and appears as a matter of public
record in Ordinance Book 19, Page 770, of said City.
IN TESTIMONY WHEREOF, witness my signature as City Clerk and
the official Seal of said City this day of April, 1978.
(Seal of City)
Louise TvIcKinney, ulty ClerR