HomeMy WebLinkAbout91-4-4594ORDINANCE NO. 91-4-4594
ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY,
AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF
$10,755,000 PRINCIPAL AMOUNT (WHICH MAY BE
INCREASED OR REDUCED BY AS MUCH AS 10%) OF
CITY OF PADUCAH, KENTUCKY WATER WORKS REVENUE
REFUNDING BONDS, SERIES 1991, DATED APRIL 1,
1991, FOR THE PURPOSE OF REFUNDING A PORTION
OF THE OUTSTANDING CITY OF PADUCAH WATER
WORKS REVENUE REFUNDING BONDS, SERIES 1985,
DATED APRIL 1, 1985 AND PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON
SAID SERIES 1991 BONDS; PROVIDING FOR THE
RIGHTS OF THE OWNERS OF SAID SERIES 1991
BONDS AND THE ENFORCEMENT THEREOF; AND
PROVIDING FOR AN ADVERTISED, PUBLIC,
COMPETITIVE SALE OF SAID SERIES 1991 BONDS.
WHEREAS, the existing water works system of the City of
Paducah, Kentucky (the "City") is a revenue producing public
project or system (the "System"), and
WHEREAS, in that connection, the City presently has
outstanding and payable from the revenues of said System:
$10,710,000 principal amount of City of
Paducah Water Works Revenue Refunding Bonds,
Series 1985, dated April 1, 1985 (the "Series 1985
Bonds") now scheduled to mature on July 1 in each
of the years 1991 through 2009, and
WHEREAS, the City deems it advisable to authorize the
issuance and sale of $10,755,000 of City of Paducah Water Works
Revenue Refunding Bonds, Series 1991, dated April 1, 1991, for
the purpose of providing funds for refunding $9,330,000 of the
Series 1985 Bonds maturing in the years 1996 through 2009
inclusive;
BE IT ORDAINED BY THE CITY OF PADUCAH,-KENTUCKY, AS
FOLLOWS:
Section 1. Definitions and Recitals. As used in this
Ordinance, unless the context requires otherwise:
"ACT" refers to Sections 82.082, 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.
"BONDHOLDER" or "BONDOWNER" means and contemplates
unless the context otherwise indicates, the registered owner of
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the Bonds at the time issued and outstanding hereunder, or any
one of them.
"BOND COUNSEL" refers to a nationally recognized firm
of Bond Counsel, including the firm of Rubin Hays & Foley,
Municipal Bond Attorneys, First Trust Centre, 200 South Fifth
Street, Louisville, Kentucky, which firm has prepared the legal
proceedings for the issuance of the Current Bonds, has furnished
all of the customary services of Bond Counsel in this financing
and will continue to furnish such services until the Current
Bonds are delivered and paid for, including the rendering of the ! )
final approving -legal opinion with regard to the legality of the
Current Bonds and the tax exemption of the interest thereon. A
"BONDS" refers to the Current Bonds and the Prior
Bonds.
"1985 BOND ORDINANCE" refers to the Ordinance enacted
by the Governing Body of the City, authorizing the Series 1985
Bonds.
"BOND REGISTER" means the books and records maintained
by the Bond Registrar as to the registered ownership and
transfers of ownership of the Bonds from time to time.
"BOND REGISTRAR", "REGISTRAR", TRANSFER AGENT or PAYEE
BANK" refers to the bank which shall constitute the Bond
Registrar, Transfer Agent and Payee Bank with respect to the
Bonds, which Bank shall have the duties and responsibilities of
(a) issuing semiannual checks in payment of interest requirements
as to the Bonds, (b) paying the principal (and premium, if any)
of same at maturity or applicable redemption prior to maturity
upon surrender of the Bonds, (c) authenticating, issuing and
delivering the Bonds to the original purchasers of same in
accordance with the sale of the Bonds, at the direction of the
City, (d) maintaining the Bond Register, (e), handling exchanges,
cancellations, reissuance, redemption and all appurtenant duties
of a bond registrar and transfer agent with respect to the Bonds,
as hereinafter set out. The initial Bond Registrar,'Transfer
Agent and Payee Bank hereby designated is The Paducah Bank and
Trust Company, Paducah, Kentucky; provided, however, it is
understood that the Commission reserves the right to designate a
different FDIC instrumentality to perform any and all of such
functions of Bond Registrar, Transfer Agent and Payee Bank as to
the Bonds.
"CERTIFIED PUBLIC ACCOUNTANT refers to an independent
Certified Public Accountant or firm of Certified Public
Accountants, duly licensed in Kentucky, and may include
Accountants regularly employed to audit the financial affairs of
the City's System and/or of other financial matters of the City.
"CITY" or refers to the City of Paducah, Kentucky.
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"CODE" or "INTERNAL REVENUE CODE" refers to the United
States Internal Revenue Code of 1986, as amended.
"COMMISSION" or "COMMISSIONERS OF WATER WORKS" refers
to the Paducah Commissioners of Water Works created by an
ordinance enacted by the City vesting the management, control and
operation of the System, in such Commission.
"CURRENT BOND ORDINANCE" or "ORDINANCE" refers to this
� Ordinance authorizing the Current Bonds.
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"CURRENT BONDS" refers to City of Paducah, Kentucky
Water Works Revenue Refunding Bonds, Series 1991, dated April 1,
1991, authorized herein, which will be issued in the principal
amount of not less than $9,679,500 and not more than $11,880,200,
in such amount as may be issued and sold by the City (within such
limits) pursuant to the provisions hereof.
"DEPRECIATION FUND DEPOSITORY" refers to the bank at
which the Depreciation Fund shall be deposited, which initially
shall be Peoples First National Bank and Trust Company, Paducah,
Kentucky; provided, however, the Commission shall have the right
to designate from time to time a different FDIC instrumentality
for such purpose.
"ESCROW AGREEMENT" refers to the agreement between the
City and the Escrow Bank, authorized pursuant to Section 15(a)(3)
of this Ordinance, providing for the deposit of sufficient funds
in the Escrow Account created in the Escrow Agreement for the
purpose of providing for the payment of principal of and interest
on the Refunded Bonds as same mature and/or as same may be called
for redemption prior to maturity.
"ESCROW BANK" refers to the Paducah Bank and Trust
Company, Paducah, Kentucky, where funds will be escrowed to pay
% all principal and interest of the Refunded Bonds as same become
due and/or as part of such Refunded Bonds may be called for
redemption in advance of maturity.
"ESCROW FUND" refers to the City of Paducah, Kentucky
Water Works Revenue Bond Escrow Fund) created in the Escrow
Agreement, and discussed in detail in Section 15 of this
Ordinance.
"FDIC" refers to the Federal Deposit Insurance
Corporation or its successors or assigns.
"FISCAL AGENT" refers to J.J.B. Hilliard, W.L. Lyons,
Inc., Hilliard -Lyons Center, Louisville, Kentucky 40202.
"FUNDS" refers to the General Fund, the Sinking Fund,
the Depreciation Fund and the Operation and Maintenance Fund
described in Section 14 of this Current Bond Ordinance.
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"GENERAL FUND DEPOSITORY" refers to the bank at which
the General Fund shall be deposited,which initially shall be
Citizens Bank and Trust Company, Paducah, Kentucky, provided,
however, the Commission shall have the right from time to time to
designate a different FDIC instrumentality for such purpose.
"GENERAL MANAGER" refers to the General Manager of the
System.
"GOVERNING BODY" refers to the Board of Commissioners
of the City, or such other body as shall be the governing body of
the City under the laws of Kentucky at any given time. JJ
"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 field of waterworks system engineering.
"INTEREST PAYMENT DATE" shall mean January 1 and July 1
of each year, commencing July 1, 1991.
"INVESTMENTS" refers to investments of funds on deposit
in the various funds created herein, and includes: (a) U.S.
Obligations, 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
FDIC 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.
"MAXIMUM ANNUAL DEBT SERVICE" refers to the maximum
amount falling due in any Sinking Fund Year for payment of
interest on and principal of the Bonds, including both principal
falling due and principal due by reason of call for mandatory
redemption, less any amounts provided by an invested sinking fund %
established in conjunction with the issuance of the City of
Paducah Water Refunding Revenue Bonds, Series of 1978, dated
April 1, 1978.
"MUNICIPAL BOND GUARANTY POLICY" refers to one or more
insurance policies issued by MBIA, guaranteeing the payment of
whatever principal amount of Current Bonds or commitments related
thereto are described in such insurance policies.
"MBIA" refers to the Municipal Bond Investors Assurance
Corporation, Armonk, New York, which is a corporation engaged in
the business, among other things, of insuring or guaranteeing the
payment of the principal of and interest on municipal bond issues
and/or of certain funds created or required to be maintained in
connection therewith or its predecessor, Municipal Bond Insurance
Association.
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"OPERATION AND MAINTENANCE FUND DEPOSITORY" refers to
the bank at which the Operation and Maintenance Fund shall be
deposited, which initially shall be Citizens Bank and Trust
Company, Paducah, Kentucky; provided, however that the Commission
reserves the right from time to time to designate a different
FDIC instrumentality for such purpose.
"ORIGINAL PURCHASERS" or "PURCHASERS" refers to the
Original Purchasers of the Current Bonds at the public sale,
including all members of their purchasing syndicate or group.
"OUTSTANDING BONDS" refers to the outstanding Current
Bonds, Prior Bonds and Parity Bonds, if any, and does not refer
to, nor include, (1) any of the Refunded Bonds for the payment of
the principal and interest of which sufficient funds will have
been escrowed, as permitted herein, or (2) any of the Previously
Issued Bonds.
"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 the Bonds, and
shall not be deemed to include, nor to prohibit the issuance of,
bonds ranking inferior in security to the Bonds.
"PREVIOUSLY ISSUED BONDS" refers to the following bonds
previously effectively defeased:
(a) The City of Paducah Water Works Revenue Bonds,
Series 1965, dated July 1, 1965;
(b) The City of Paducah Water Works Revenue Bonds,
Series 1972, dated October 1, 1972; and
(c) The City of Paducah Water Refunding Revenue Bonds,
Series of 1978, dated April 1, 1978.
"PRIOR BOND ORDINANCES" refers to the 1985 Bond
Ordinance authorizing the outstanding Series 1985 Bonds.
"PRIOR BONDS" refers to the outstanding Series 1985
Bonds maturing in the years 1991 through 1995, .inclusive.
"REFUNDED BONDS" refers to the outstanding Series 1985
Bonds maturing in the years 1996 through 2009, inclusive, which
are being refunded by the Current Bonds.
"REGULAR RECORD DATE" shall mean with respect to any
Interest Payment Date, the close of business on June 15 or
December 15, as the case may be, next preceding such Interest
Payment Date, whether or not such June 15 or December 15 is a
business day.
"RESERVE ACCOUNT INSURANCE POLICY" refers to an
insurance policy issued by the MBIA, guaranteeing the payment of
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whatever reserve account or commitment related thereto is
described in such insurance policy.
"SERIES 1985 BONDS" refers the outstanding City of
Paducah Water Works Revenue Refunding Bonds, Series 1985, dated
April 1, 1985.
"SINKING FUND DEPOSITORY" refers to the bank at which
the Sinking Fund will be deposited. Initially such Sinking Fund
Depository shall be The Paducah Bank and Trust Company, Paducah,
Kentucky; provided, however it is understood that the Commission
reserves the right to designate a different FDIC instrumentality
for such purpose.
"SINKING FUND YEAR" refers to July 1 through the
ensuing June 30.
"SYSTEM" refers to the water works system of the City.
"U.S. OBLIGATIONS" refers to bonds, notes or Treasury
Bills which are direct obligations of the United States of
America or obligations fully guaranteed by the United States of
America, including book -entry obligations of the United States
Treasury State and Local Government Series and Trust Receipts
representing an ownership interest in direct obligations of the
United States of America.
Section 2. Authorization of Bonds. There are hereby
authorized to be presently issued and sold Ten Million Seven
Hundred Fifty -Five Thousand Dollars ($10,755,000) principal
amount of City of Paducah, Kentucky Water Works Revenue Refunding
Bonds, Series 1991, dated and bearing interest from April 1,
1991, which amount may be increased or reduced by as much as
$1,075,500, as provided in Sections 11 and 12 hereof. Said
Current Bonds shall mature serially on July 1 of the respective
years, as set forth in Exhibit A attached hereto, and shall bear
interest payable semiannually on the first days of January and
July of each year (with the first interest payment representing
three months interest from the date of the Current Bonds),
beginning on July 1, 1991, at an interest rate or rates to be
fixed by Order of the Governing Body as a result of the adverti-
sed sale of the Current Bonds.
The principal amount and the maturities of the Current
Bonds are subject to revision based on the increased or reduced
principal amount of the Current Bonds shall be set forth in the
Municipal Order approving the successful bid for the purchase of
the Current Bonds.
Section 3. Current Bonds to be Issued as Fully
Registered Bonds; Registered Owners. The Current Bonds shall be
issued only in fully registered form, without coupons, in the
denomination of $5,000 or any integral multiple thereof within a
single maturity, and shall be numbered consecutively from R-1
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upward. Each initially issued Current Bond and each Current Bond
issued prior to the first Interest Payment Date on the Current
Bonds, July 1, 1991, shall be dated as of and shall bear interest
from April 1, 1991. Each Current Bond issued (as a result of
exchange or transfer) after such first Interest Payment Date on
the Bonds shall be dated as of and shall bear interest from the
Interest Payment Date next preceding the date on which such
Current Bond is issued, unless such Current Bond is issued on an
Interest Payment Date, in which case it shall be dated as of and
shall bear interest from such date of issue; provided, however,
that if at the time of issuance of any Current Bonds the interest
thereon is in default, such Current Bond shall be dated as of the
date to which interest has been paid in full.
The person in whose name any Bond is registered on the
Bond Register maintained by the Bond Registrar, on the Regular
Record Date with respect to an Interest Payment Date, shall be
entitled to receive the interest payable on such Interest Payment
Date (unless such Bond shall have been called for redemption on a
redemption date which is prior to such Interest Payment Date)
notwithstanding the cancellation of such Bond upon any
registration of transfer or exchange thereof subsequent to such
Regular Record Date and prior to such Interest Payment Date,
except in the event of default.
Section 4. Place of Payment and Manner of Execution.
The principal of, premium, if any and interest on the Current
Bonds shall be payable in lawful money of the United States of
America as they respectively become due, whether at maturity or
by prior redemption. Principal of each Bond is payable upon
surrender of same at the principal corporate trust office of the
Payee Bank and Bond Registrar. Interest on the Bonds shall be
paid by check mailed by the Payee Bank to the persons entitled
thereto as of the end of business on the Regular record Date
preceding each applicable Interest Payment Date, at the
respective addresses appearing on the Bond Register.
So long as any Bonds or Parity Bonds remain
outstanding, the Registrar shall keep at its principal office a
Bond Register showing and recording a register of the owners of
the Bonds and shall provide for the registration and transfer of
Bonds in accordance with the terms of this Ordinance, subject to
such reasonable regulations as the Bond Registrar may prescribe.
The Bonds shall be executed on behalf of the City with
the duly authorized reproduced facsimile signature of the Mayor
of the City (the "Mayor"), and the reproduced facsimile of the
City's corporate seal shall be imprinted thereon and attested by
the reproduced facsimile signature of the City Clerk of the City
(the "City Clerk") and said officials, by the execution of
appropriate certifications, shall adopt as and for their own
proper signatures, their respective facsimile signatures on said
Bonds; provided the Authentication Certificate of Bond Registrar
must be executed by the manual signature of the Registrar on each
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Bond before such Bond shall be valid, as set out in Section 8
below.
The Bond Registrar shall have the right to order the
preparation of whatever number of printed bond certificates as,
in the sole discretion of the Bond Registrar, shall be deemed
necessary in order to enable the Bond Registrar to maintain an
adequate reserve supply of such bond certificates to effect
properly the continuing transfers and exchanges of ownership of
bond certificates as same are sold, exchanged, and/or otherwise
surrendered in the future. No further action regarding the
authorization or execution of additional bond certificates shall =y,
be required by the Governing Body, the Mayor or the City Clerk.
All Bonds shall be exchangeable and transferable upon
the presentation and surrender thereof at the office of the Bond
Registrar, duly endorsed for transfer or accompanied by an
assignment duly executed by the registered owner or his .
authorized representative, for a Bond or Bonds of the same
maturity and interest rate and in the denomination of $5,000
and/or a multiple thereof within a single maturity, in an
aggregate principal amount or amounts equal to the unpaid
principal amount of the Bond or Bonds presented for exchange.
The Bond Registrar shall be and is hereby authorized to
authenticate and deliver exchange Bonds in accordance with the
provisions of this Section 4. Each exchange Bond delivered in
accordance with this Section 4 shall constitute an original
contractual obligation of the City and shall be entitled to the
benefits and security of this Ordinance to the same extent as the
Bond or Bonds in lieu of which such exchange Bond or Bond is
delivered.
In the event of non-payment of interest on one or more
maturities on a scheduled Interest Payment Date, and for 30 days
thereafter, a new record date for such interest payment for such
maturity or maturities (the "Special Record Date") will be
established by the Bond Registrar, if and when funds for the
payment of such interest shall have been received from the City.
Notice of the Special Record Date and of the scheduled payment
date of the past Due interest (the "Special Payment Date"), which
shall be fifteen days after the Special Record Date) shall be
sent at least five business days prior to the Special Record Date
by United States mail, first class postage prepaid, to the
address of each owner of a Bond, as shown on the Bond Register,
of such maturity or maturities appearing on the books of the
Transfer Agent at the close of business on the last business day
next preceding the date of mailing of such notice.
Section 5. Provisions as to Mandatory and Optional
Redemption. (a) Mandatory Redemption. Bidders for the Current
Bonds may require that a portion of the Current Bonds be term
bonds maturing on one or more dates (the "Term Bonds") provided
however, that the City may require such Term Bonds to be subject
to mandatory redemption by lot at a redemption price of 100% of
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the principal amount thereof plus accrued interest to the date of
redemption on July 1 of the years and in the principal amounts
set forth in the Order of the City awarding the purchase of the
Current Bonds to the Original Purchaser.
If the Current Bonds shall include Term Bonds, then
at the option of the City, to be exercised at least 45 days prior
to the date for application of the mandatory redemption of the
Current Bonds, the City may receive a credit against the
mandatory redemption requirement for Term Bonds of the same Term
Bonds subject to the application of such mandatory redemption
requirement which, prior to the date for application of such
requirement (and for which a credit has not previously been
taken) (i) have been redeemed other than through the application
of such mandatory redemption procedure, and cancelled by the
Registrar or (ii) have been delivered to the Bond Registrar by
the City for cancellation.
(b) Optional Redemption. The Current Bonds maturing
on and after July 1, 2002, are subject to redemption prior to
maturity, at the option of the City, on any Interest Payment Date
on and after July 1, 2001, in inverse order of maturities and by
lot within a single maturity at the following redemption prices
(expressed as a percentage of principal amount) plus accrued
interest to the date of redemption as follows:
Redemption Date
July 1, 2001 through and
including January 1, 2003
July 1, 2003 through and
including January 1, 2005
July 1, 2005 and thereafter
Redemption Price
102%
101%
100%
The City has entered into an agreement with MBIA to the
effect that the City shall not exercise its option to redeem any
of the Current Bonds without the consent of MBIA if and whenever
the Debt Service Reserve Fund is not fully insured, or if any
amount is owed to MBIA with respect to the Reserve Account
Insurance Policy.
(c) Redemption of Less Than All of Single Bond. In
the event that a Bond subject to redemption is in a denomination
larger than $5,000 a portion of such Bond may be redeemed, but
only in a principal amount equal to $5,000 or any integral
multiple thereof, if the Bond is one of the maturities or amounts
or part of the maturities or amounts called for redemption. Upon
surrender of any Bond for redemption in part, the Bond Registrar
shall authenticate and deliver an exchange Bond or Bonds in an
aggregate principal amount equal to the unredeemed portion of the
Bond so surrendered.
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(d) Notice of Redemption. The Bond Registrar shall
give notice of any redemption by sending at least one such notice
by certified or registered mail not less than 30 and not more
than 60 days prior to the date fixed for redemption to the
registered owner of each Current Bond to be redeemed in whole or
in part at the address shown on the Bond Register as of the date
of mailing of such notice. The Bond Registrar may furnish one
other form of such notice more than 60 days prior to the date
fixed for redemption, provided at least one such notice shall be
sent not less than 30 nor more than 60 days prior to such date.
Such notice shall state the redemption date, the Redemption
Price, the amount (or number of months) of accrued interest
payable on the redemption date, the place at which the Bonds are
to be surrendered for payment, and, if less than all of the Bonds
outstanding are to be redeemed, an identification of the Bonds or
portions thereof to be redeemed. Any notary mailed as provided
in this Section shall be conclusively presumed to have been duly
given, whether or not the Bondowner receives such notice. Prior
to each redemption date, the Bond Registrar shall make provision,
to the extent funds are then available therefor for the payment
of the Redemption Price of the Bonds to be redeemed on such date
by setting aside and holding in trust an amount sufficient to pay
such Redemption Price. Upon presentation and surrender of any
such Bond at the principal corporate trust office of the Bond
Registrar on or after the date fixed for redemption, the Bond
Registrar shall pay the Redemption Price of such Bond (including
accrued interest) from the funds set aside for such purpose.
All of said Bonds as to which the City reserves and
exercises the right of redemption and as to which notice as
aforesaid shall have been given, and for the retirement of which,
upon the terms aforesaid, funds are duly provided, shall cease to
bear interest on the redemption date.
The required notice shall be deemed to have been given
upon the City furnishing notice of redemption to the Bond
Registrar and upon the Bond Registrar acknowledging that it has
instructions to send such notice and that it will do so at the
proper time, even if the time for furnishing such notice has not
yet arrived.
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Section 6. Refinancing in the Public Interest. In
accordance with the provisions of Section 58.440 of the Kentucky
Revised Statutes, it is hereby determined that in the refunding
of said Refunded Bonds, it is to the best interest of the City
that same be accomplished.
Section 7. Mutilated, Lost, Stolen, or Destroyed
Bonds. If any Current Bond shall be mutilated, lost, stolen or
destroyed, the City may execute, authenticate and deliver a new
Bond of like maturity and tenor in lieu of and in substitution
for the Bond mutilated, lost, stolen, or destroyed; provided
that, in the case of any mutilated Bond, such mutilated Bond
shall first be surrendered to the City, and in the case of any
lost, stolen or destroyed Bond, there shall be first
furnished to the City satisfactory evidence of the ownership of
such Bond and of such loss, theft or destruction, together with
indemnity satisfactory to the Bond Registrar. If any such Bond
shall have matured, the City (through the Bond Registrar) may pay
the same instead of issuing a new Bond. The City and/or the Bond
Registrar may charge the owner of such Bond its reasonable fees
and expenses in thin connection.
Section 8. Authentication of Bonds. The Bonds, after
execution by the City, shall be delivered to the Bond Registrar.
No Bond shall be valid or obligatory for any purpose or be
entitled to any security or benefit of this Ordinance unless and
until such Bond has been duly authenticated by the Bond Registrar
by the execution of the Authentication Certificate of Bond
Registrar appearing on such Bond. Such Certificate appearing on
any Bond shall be deemed to have been duly executed by the Bond
Registrar if manually signed by an authorized officer of the Bond
Registrar. It shall not be required that the same officer of the
Bond Registrar sign such Certificate on all of the Bonds.
Section 9. Current Bonds Secured by and Payable From
L First Lien on Revenues of System. All of the Current Bonds, with
interest thereon, and any additional Parity Bonds that may be
issued and outstanding under the conditions and restrictions of
this Current Bond Ordinance, are to be issued in anticipation of
the revenues to be derived from the operation of the System, all
as hereinafter more specifically provided, shall be payable on a
first lien basis out of the "City of Paducah, Kentucky Water
Works Sinking Fund" (the "Sinking Fund"), created by the 1985
Bond Ordinance, as hereinafter specifically provided, and shall
be a valid first lien of the owners thereof against said Sinking
Fund and against a sufficient portion of the gross revenues of
the System pledged to said Sinking Fund.
Section 10. Bond Form. The aforesaid authorized issue
of Current Bonds shall be in substantially the following form set
forth in Exhibit B attached hereto.
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Section 11. Sale of Bonds. The Current Bonds shall
be sold at public sale at a regular, adjourned regular or
special, called meeting of the Governing Body, after public
advertisement as required by law, informing prospective bidders
that they may obtain from the City Clerk or from the Fiscal
Agent, a copy of the Official Statement, containing the Official
Terms and Conditions of Sale of Bonds, setting out the following
specific terms and conditions:
(a) Bids shall be required to be submitted upon a
standard official "Bid Form" in order to provide for
the 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 $10,539,900 (98%
of par) for the $10,755,000 of Current Bonds, plus
accrued interest from the date of the Current Bonds.
(c) The determination of the best bid will be made on
the basis of all bids submitted for exactly $10,755,000
of Current Bonds as offered for sale under the terms
and conditions herein specified. The City will, at the
meeting of the Governing Body which will be held to act
upon the receipt of bids for the Current Bonds, accept
or reject such best bid, provided, however, the City
reserves the right to increase or decrease the total
amount of Current Bonds sold to such best bidder in the
amount of up to $1,075,500 (in $5,000 denominations),
so that the total amount of bonds awarded to such best
bidder will be a minimum of $9,679,500 or a maximum of
$11,830,500. In the event of any such adjustment, no
rebidding or recalculation of the bids submitted will
be required. 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 in the successful bid
per $1,000 for the $10,755,000 of Current Bonds
initially offered for sale.
(d) The successful bidder shall be required to deposit
with the City immediately available funds in the amount
of $216,000. Such good faith deposit shall be received
by the City by the close of business on the day
immediately succeeding the award of the bid, pursuant
to funds being wire transferred to the City to its
account at the Payee Bank.
(e) Bidders must state an interest rate or rates in a
multiple of 1/8, 1/10, or 1/20 of 1%.
(f) There shall be no limit on the number of different
rates which may be specified in any bid and there shall
be no maximum differential between the highest and
lowest interest rates stipulated in any bid.
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131
(g) All Current Bonds of the same maturity shall bear
the same and a single interest rate from the date
thereof to maturity.
(h) Interest rates must be on an ascending scale, in
that the interest rate for Current Bonds of any
maturity may not be less than the interest rate
stipulated for any preceding maturity.
(i) The right to reject bids for any reason deemed
advisable by the Governing Body, and the right to waive
any possible informalities, irregularities or defects
in any bid which, in the judgment of the Governing
Body, with the advice of the Fiscal Agent, shall be
minor or immaterial, is expressly reserved.
(j) Bids must be made on forms, which, together with
an Official Statement, may be obtained at the office of
the City Clerk or from the Fiscal Agent. Bids must be
enclosed in sealed envelopes marked "Proposal for City
of Paducah, Kentucky Water Works Revenue Refunding
Bonds, Series 199111, and bids must be received by the
City Clerk prior to the date and hour set for the sale.
(k) The Original Purchasers of the Current Bonds will
pay the CUSIP Service Bureau charge for the assignment
of CUSIP numbers, which numbers will be printed on the
Current Bonds at no expense or cost to the Purchasers.
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 Purchasers
thereto to accept delivery of and pay for the Bonds in
accordance with the terms of the purchase agreement.
(1) Delivery will be made at the office of Rubin Hays
& Foley, 200 South Fifth Street, Louisville, Kentucky
40202 on the closing date, provided, however, the
Purchasers shall bear any bank service charge, if any,
for processing the delivery of the Current Bonds and
closing the transaction. Deposit shall be forfeited by
the successful bidder, and such amount shall be deemed
liquidated damages for such default, provided, however,
if said Current Bonds are not ready for delivery and
payment within forty-five (45) days from the date of
sale herein provided for, said successful bidder shall
be relieved of any liability to accept the Current
Bonds hereunder.
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".
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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 & Foley, Municipal Bond Attorneys, Louisville, Kentucky, and
the same having been found to conform to the above conditions,
the same are hereby approved. The Notice of Bond Sale shall be
signed by the City Clerk, and may be used for the purpose of
publishing notice of the sale of the Current Bonds. Copies of
said documents shall be furnished to a list of known interested
bidders and to any interested parties who may request same.
If, for any reason, it is determined that no bids
should be accepted when the Current Bonds are first offered for
public sale, then, upon recommendations of the Fiscal Agent, the
Mayor shall be authorized to approve a change in the required
minimum bid price, and also to change the date and hour of the
sale (upon observing all notice requirements of Kentucky law),
and the Mayor and/or the City Clerk are further authorized to
readvertise such Current Bonds for public sale and to approve a
revised Notice of Bond Sale, Bid Form and Official Terms and
Conditions of Bond Sale, 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, except that no bid may be accepted for the sale of
such Current Bonds without the specific approval of the Governing
Body.
Section 12. Acceptance of Bid for Purchase of Bonds;
Determination of Amount of Bonds to be Issued and Sold. 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 received by the City 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 any
bid, 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 City, as calculated in the manner prescribed
in the Official Terms and Conditions of Sale of Bonds. At that
time, the Governing Body may accept the successful bid for the
principal amount of Current Bonds, which amount may be increased
or reduced by up to $1,075,500 (in $5,000 denomination). Also,
at that time, the Governing Body may determine whether to provide
for the redemption of part of the Refunding Bonds in advance of
maturity and if so, which of such Refunding Bonds shall be
redeemed and on what date.
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 Municipal Order to that effect, supply proper
evidence of such acceptance to the bidder submitting the accepted
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133
purchase bid, and thereupon arrangement shall be made for the
Bonds to be printed in accordance therewith.
Section 13. Determination that Refunding is a Public
Purpose. It is hereby determined that the Current Bonds shall
be issued for the public purpose of providing for the refunding
of the Refunded Bonds through the escrow of a sufficient portion
of the Current Bonds, for the purpose of providing for the
payment of the principal of and interest on the Refunded Bonds as
same mature and/or as same are redeemed according to their terms
and that the City shall receive substantial debt service savings
through the refunding.
Section 14. Reaffirmation of Special Funds. From and
after the delivery of the Current Bonds, the System shall
continue to be operated as a water works system for the security
and source of payment of the Bonds and any Parity Bonds, on a
fiscal year basis from July 1 of each year to June 30 of each
ensuing year, or on such other fiscal year basis as shall be
adopted for the operation of the System:
There are hereby reaffirmed the following funds or
accounts which were created and established in the 1985 Bond
Ordinance:
(1). City of Paducah Water Works General Fund (the
"General Fund").
(2). City of Paducah Water Works Bond Sinking Fund
(the "Sinking Fund"), consisting of the Interest
Account, Principal Account and the Debt Service Reserve
Account as set forth in Section 20 of the 1985 Bond
Ordinance.
(3). City of Paducah Water Works Depreciation Fund
(the "Depreciation Fund").
(4). City of Paducah Water Works System Operation and
Maintenance Fund (the "Operation and Maintenance
Fund").
Moneys deposited into such respective Funds shall be
maintained, invested and applied by the respective banks acting
as depositories in the manner prescribed hereinafter in Section
20.
Section 15. Disposition of Proceeds of Current Bonds;
Escrow Fund; Investment Provisions; Arbitrage Limitations.
(a) Disposition of Proceeds. Upon the sale and delivery of the
Current Bonds and upon receipt by the City of the purchase price
thereof, it is hereby acknowledged and ordered that:
(1) Payment of Fees and Expenses. There shall first be
paid therefrom the fee of the Fiscal Agent, the fee of the
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134
attorney for the Commission, the initial fee of the Escrow Bank,
to the extent not otherwise provided herein, the insurance
premium of the MBIA for the issuance of its Reserve Account
Insurance Policy, any applicable rating agency fee, and any other
pertinent expenses of the issuance of the Current Bonds.
(2) Deposit of Collected Accrued Interest. An amount
equal to the accrued interest collected from the Original
Purchasers of the Current Bonds for the period from the date of
the Current Bonds to the date of delivery, shall be deposited
into the Sinking Fund.
(3) Deposit into Escrow Fund; Approval of Escrow
Agreement. There shall next be deposited in the Escrow Bank in a
certain Escrow Fund created in the Escrow Agreement, between the
City and the Escrow Bank, which Agreement is hereby authorized to
be executed by the Mayor following the acceptance by the City of
the successful bid for the purchase of the Current Bonds, and
which Escrow Agreement and Escrow Fund, a portion of the proceeds
of the Current Bonds, which, when added to whatever sum is
otherwise transferred into such Escrow Fund at that time,
together with the contractual investment income to,be realized
from such total amount, will be sufficient, to provide for the
payment of the principal of and interest on the Refunded Bonds at
maturity and/or with partial redemption in advance of maturity,
and to pay the annual fees of the Escrow Bank in connection with
such escrow. It is acknowledged that Section 19 of this
Ordinance provides for certain transfers of funds which may have
an effect on the provisions of this paragraph.
(b) Escrow Fund. A special Escrow Fund shall be
created in the Escrow Agreement, and said Escrow Fund shall be
maintained on deposit at the Escrow Bank, which Escrow Fund shall
be designated and known as the City of Paducah, Kentucky Water
Works Revenue Bond Escrow Fund (the "Escrow Fund"), and it is
provided in Section 15(b)(2) below that there shall be deposited^'
into said Escrow Fund whatever portion of the proceeds of the
Current Bonds shall be sufficient, when added to any other funds,
if any, made available by the City and deposited in said Escrow
Fund (hereinafter collectively referred to as the "Escrowed
Funds") together with the contractual investment income to be
realized from.such Escrowed Funds, to provide for the payment of
the principal of and interest on the Refunded Bonds at maturity
and/or with partial redemption in advance of maturity, and to pay
the annual fee of the Escrow Bank.
Simultaneously with the delivery of the Current Bonds
on behalf of the City, the City shall obtain a commitment or
commitments for the investment of such Escrowed Funds in U. S.
Obligations, (such investments and any uninvested cash in the
Escrow Fund being hereinafter collectively referred to as the
"Escrow Investments"). Escrow Investments so invested shall be
scheduled to mature at such time and in such amounts as are
necessary to pay such requirements of the Refunded Bonds and such
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(�1
135
fees of the Escrow Bank. The Mayor, City Clerk and/or Chairman
of the Commission are hereby authorized to act on behalf of the
City 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 City
covenants as follows:
(1) Excess or Inadequate Amount in Escrow Fund.
(i) If and to the extent that the Escrowed Funds are inadequate,
the City will transfer or cause to be transferred sufficient
funds from the existing surplus funds of the System and/or from
other available funds, to accomplish the purpose hereinafter
specified in Subsection 15(b)(2).
(ii) If and to the extent that the Escrowed Funds are
in excess of the amount required, after the final maturity date
and/or applicable redemption date of the Refunded Bonds, for the
retirement and/or redemption of the Refunded Bonds, including
those matured and/or called Refunded Bonds not yet presented for
payment, as provided in the Escrow Agreement, such excess amount
shall be transferred immediately to the Revenue Fund and treated
as a part of the amount transferred pursuant to Section 20(b)
hereof.
(iii) The City certifies that the purpose of providing
in Section 12 for the possible increase or reduction in the
amount of the Current Bonds to be sold is to eliminate or reduce
the possibility of there being an overissuance or underissuance
of the amount of Current Bonds necessary to accomplish the
required objectives.
(2) Escrow Fund Earmarked and Pledged to Pay Prior
Bonds. Amounts on deposit in the Escrow Fund shall be earmarked,
pledged and held for credit to the account of the Escrow Fund
created in the Escrow Agreement and shall be applied in
accordance therewith.
Section 16. Federal Limitations on Investment of
Funds. The City covenants and certifies, in compliance with
Federal arbitrage regulations, on the basis of known facts and
circumstances in existence on the date of enactment of this
Current Bond Ordinance, that it is not expected that the proceeds
of the Current Bonds or the revenues of the System will be used
in a manner which would cause such Bonds to be "arbitrage bonds",
within the meaning of Section 148 of the Code and the applicable
regulations. The City covenants to the purchasers and/or holders
of the Current Bonds that (1) the City will make no use of the
proceeds of said Bonds, or the revenues of the System, which, if
such use had been reasonably expected on the date of issue of
such Bonds, would have caused such Bonds to be "arbitrage bonds",
and (2) that the City will comply with (i) all of the
requirements of Section 148 of the Internal Revenue Code, and
(ii) all of the requirements of applicable Income Tax Regulations
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136
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thereunder, to whatever extent is necessary to assure that the
Current Bonds shall not be treated as "arbitrage bonds".
The City acknowledges that the Code and the applicable
regulations thereunder require that the portion of the Current
Bonds deposited in the Escrow Fund be invested at a yield no
greater than the actuarial yield applicable to the Current Bonds.
The City reserves the right to make any investment
permitted by State Law if, whenever, and to the extent that
Section 148 or regulations promulgated thereunder shall be
repealed, amended or relaxed, or shall be held void by a final
decision of a court of competent jurisdiction, but only if any
investment made by virtue of such repeal, or relaxation,
amendment or decision would not, in the opinion of recognized
Bond Counsel, result in making the interest on the Bonds or any
Parity Bonds subject to Federal income taxation.
Prior to or at the time of delivery of the Current
Bonds, the Mayor and the City's Treasurer, who are jointly and
severally charged with the responsibility for the issuance of the
Current Bonds, are jointly and severally authorized to execute
the appropriate certification with reference to the matters
referred to above, setting out all known and contemplated facts
(apart from legal conclusions) concerning such anticipated
expenditures and investments, including the execution of
necessary and/or desirable certifications of the type
contemplated by the "Arbitrage Regulations", as amended, in order
to assure that interest on the Current Bonds will be exempt from
all Federal income taxes and that such Current Bonds will not be
treated as "arbitrage bonds".
Section 17. Defeasance of Bonds. The City reserves
the right, at any time, to cause the pledge of the revenues
securing the Bonds and all Parity Bonds, to be defeased and
released by paying an amount into an irrevocable escrow
sufficient, when invested (or sufficient without such investment,
as the case may be) in cash and/or U.S. Obligations (the "Future
Escrow"), to assure the availability in such Future Escrow of an
adequate amount (a) to call for redemption and to redeem and
retire all of such Outstanding Bonds, both as to principal and as
to interest, on any optional redemption date, including all costs
and expenses in connection therewith, and to pay all principal
and interest falling due on such Outstanding Bonds to and on said
date, or (b) to pay all principal and interest requirements on
such Outstanding Bonds as same mature, without redemption in
advance of maturity (other than by scheduled mandatory
redemption) the determination of whether to defease under (a) or
(b) or both to be made by the Governing Body of the City. Such
Future Escrow -shall have such maturities as to assure that there
will be sufficient funds for such purpose. If such defeasance is
to be accomplished pursuant to (a) the City shall take all steps
necessary to publish appropriate notice of the redemption of such
Outstanding Bonds on whatever redemption date is determined.
137
Upon the proper amount of such investments being placed in escrow
and so secured, such revenue pledge shall be automatically fully
defeased and released without any further action being necessary.
Provided (1) no such defeasement shall be accomplished through
the use of amounts on deposit in the Debt Service Reserve Account
or through any other funds if such defeasement would, in the
opinion of recognized Bond Counsel, adversely affect the
exemption of interest on any of the Outstanding Bonds from
Federal income taxation, and (2) no such defeasement shall
require that any Bonds be redeemed in advance of maturity if a
right to defease the Bonds without redemption in advance of
maturity shall have become vested.
Section 18. Refunded Bonds will be Fully Provided for
through Escrow of the Proceeds of the Current Bonds. Provisions
thus having been made for the orderly payment until final
maturity and/or redemption of•all of the principal of and
interest on the Refunded Bonds, as same are scheduled to mature
and/or are called for prior redemption 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 City
incident to the issuance of the Refunded Bonds, and that
accordingly, and in compliance with all that has been heretofore
provided, the City will have no further obligation with reference
to the Refunded Bonds, except to assure that the Refunded Bonds
are paid from the funds so escrowed in accordance with the
provisions of the Escrow Agreement.
It is expressly provided and covenanted that all of the
provisions for the payment of the principal of and interest on
the Refunded 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 other than the
payment of principal of and interest on the Refunded Bonds at
maturity and/or with partial redemption in advance of maturity
according to their terms until the date of scheduled final
payment of the Refunded Bonds which have matured and/or have been
called for prior redemption, after which time any surplus then
remaining in the Escrow Fund in access of the amount earmarked
for matured and/or called Refunded Bonds not yet presented for
payment, shall be treated as current revenues of the System and
so applied.
Section 19. Existing Funds and Deposits.
Simultaneously with the delivery of the Current Bonds, the City
covenants that all amounts remaining, in the funds, accounts and
reserves created and maintained in connection with the 1985 Bond
Ordinance will be continued to be maintained in said funds,
accounts and reserves in accordance with the 1985 Bond Ordinance
and this Current Bond Ordinance.
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138
Section 20. Flow of Funds.
(a) General Fund. From and after the delivery of the
Current Bonds, the System shall continue to be operated as a
revenue producing public project or system and shall be operated
for the purpose of this Ordinance on a Sinking Fund Year basis
commencing on July 1 of each calendar year and ending on the next
succeeding June 30, (the "Sinking Fund Year") or such other
appropriate fiscal year as shall be designated by the Governing
Body, and all of the gross income and revenues of the System
shall be set aside into the separate and special fund designated
as the "City of Paducah Water Works General Fund (the "General
Fund") from which fund sums deposited therein shall be
apportioned to the various funds and accounts as set out in the
ensuing subsections of this Section 20.
(b) Sinking Fund. There was created in the 1985 Bond
Ordinance a special fund to be known as the City of Paducah Water
Works Bond Sinking Fund" (the "Sinking Fund"), which Sinking Fund
shall consist of three separate accounts, viz. an Interest
Account, a Principal Account and a Debt Service Reserve Account
(which latter account shall be known as the "Sinking Fund
Reserve" or as the "Debt Service Reserve"). Hereinafter said
three accounts will sometimes be referred to as (the "Three
Sinking Fund Accounts").
There shall be transferred on or before the 25th day of
each month from the General Fund and deposited into the Sinking
Fund, to be apportioned as hereinafter set out, an amount
sufficient to satisfy the amounts required to be deposited from
the General Fund into the Three Sinking Fund Accounts. The
amounts to be so set aside and paid into the Sinking Fund in each
month, in equal installments shall be amounts to pay the annual
debt service requirements of the Bonds as same fall due, which
amounts are more specifically determined to be as follows:
y,
1
(1) Interest Account: Amounts sufficient in the
aggregate, to pay the interest on the Bonds and on any
outstanding Parity Bonds (if any) falling due on the
next succeeding Interest Payment Date. Amounts on
deposit in the Interest Account shall be used solely
for the payment of interest currently falling due on
the Bonds and on any additional Parity Bonds.
(2) Principal Account: Amounts sufficient in the
aggregate, to pay the principal of the Current Bonds
and any outstanding Parity Bonds maturing, or falling
due by reason of the mandatory redemption, on the next
succeeding July 1 (the "Principal Payment Date").
Amounts on deposit in the Principal Account shall be
used solely for the purpose of paying the principal of
the Bonds and any additional Parity Bonds when due at
maturity or pursuant to any mandatory call for
redemption.
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139
(3) Debt Service Reserve Account: This account shall
be held for the benefit of the holders of the Bonds and
any additional Parity Bonds and shall be used solely
for the purpose of paying principal of or interest on
such Bonds or Parity Bonds as to which there would
otherwise be a default. There shall be deposited into
the Debt Service Reserve Account in each month an
amount equal to at least 1/12 of the required Maximum
Annual Debt Service until such Maximum Annual Debt
Service shall have been accumulated; provided, however,
that the foregoing requirement for monthly deposits
into this account shall be considered satisfied so that
no deposit shall be required to be made into that
account so long as the amount on deposit therein
(including the maximum amount then payable under all
Reserve Account Insurance Policies) shall equal the
Maximum Annual Debt Service.
Provided, that in the event that any funds shall be
paid by any Reserve Account Insurance Policy or funds then on
deposit shall be withdrawn from the Debt Service Reserve Account,
the City shall be obligated to transfer funds from the General
Fund to the Debt Service Reserve Account in each month in an
amount equal to at least 1/12 of the Maximum Annual Debt Service
until such Maximum Annual Debt Service has been restored or until
the face amount of the Reserve Account Insurance Policy (together
with the amount then on deposit in the Debt Service Reserve
Account) shall equal the Maximum Annual Debt Service.
Provided, however, that no further payments need be
made into the Sinking Fund after and so long as such amount of
the Bonds shall have been retired that the amount then held in
the Sinking Fund, including the Debt Service Reserve Account,
shall be equal to the entire amount required to retire and/or
redeem all Bonds and any Parity Bonds then outstanding and paying
all interest that will accrue to or at the time of such
retirement and/or redemption.
If for any reason the City shall fail to pay into the
Sinking Fund the amount required to be paid into such Sinking
Fund in any month, then an amount equal to such deficiency shall
be set apart from the gross revenues of the System and paid into
the Sinking Fund from the first available income and revenues.
All amounts on deposit in the Sinking Fund, including
all Three Sinking Fund Accounts, shall constitute a trust fund
and shall be and are hereby earmarked and pledged for the
security and source of payment for the Bonds and any Parity
Bonds.
Amounts on deposit in the Debt Service Reserve Account,
including amounts available under the Reserve Account Insurance
Policy, may be withdrawn and used by the City, when necessary,
and shall be so withdrawn and used if and to the extent necessary
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140
to prevent the occurrence of an Event of Default, for the purpose
of making payments of principal of and interest on the Bonds
(including both principal maturities and mandatory redemptions)
if the amounts on deposit in the Sinking Fund are not sufficient
to make such payments.
On or before the 26th days of December and June in each
year, the Sinking Fund Depository shall transfer from the Sinking
Fund (and from the Debt Service Reserve Account therein if
necessary) a sum equal to the interest or a sum equal to the
principal and interest, as the case may be, becoming due on the
next following respective January 1 or July 1, and deposit the
same in an account hereby created and identified as "City of
Paducah Water Works Revenue Bond and Interest Payment Account"
and shall notify the Payee Bank that the same is held as a trust
fund to be drawn upon by the Payee Bank to pay maturing interest
installments, and/or principal and interest installments, as the
case may be, in accordance with the terms of the Bonds. The
Sinking Fund Depository, the Payee Bank and the City Clerk shall
keep appropriate records as to payment of principal and interest
installments.
In the event that the Sinking Fund Depository does not
have sufficient funds to transfer the required amounts to the
Payee Bank as specified in the foregoing, the Sinking Fund
Depository shall advise the Payee Bank of the amount of any
deficiency in the amount so transferred so that the Payee Bank
may give appropriate notice required to provide for the payment
of such deficiency from any Reserve Account Insurance Policy on
deposit in the Debt Service Reserve Account.
No distinction or preference shall exist in the use of
moneys on deposit in the General Fund for payment into the
Interest Account and the Principal Account, such accounts being
on a parity with each other.
As and when additional Parity Bonds are issued,
provision shall be made similarly for increasing the Debt Service
Reserve Account, if necessary and to the extent not fully funded
concurrently with the issuance of such Parity Bonds, to not less
than the Debt Service Reserve applicable to all bonds then
scheduled to be outstanding (including the Prior Bonds, the
Current Bonds and such additional Parity Bonds) falling due in
any 12 month period thereafter, by deposit of monthly amounts
equal to at least 1/12 of the amount necessary to accumulate such
additional Debt Service Reserve within a period of two years.
Income from any investment of the proceeds of any
Parity Bonds deposited in the Debt Service Reserve may be
credited to the then current construction account until
completion of the then current construction project, and after
such completion, as certified by the Engineers, such income shall
be credited to the Interest Account in the Sinking Fund; interest
received from any investment of collected accrued interest and
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the proceeds of such Parity Bonds representing interest during
construction deposited in the Interest Account may also be
credited to the then current construction Account pending
disbursement of such sums and proceeds to pay the
investment income shall be so credited to the then current
construction account unless all payments otherwise required to be
made into the particular accounts in the Sinking Fund are current
and there are no deficiencies in any of such Accounts.
(c) Depreciation Fund. Whenever the balance on
(� deposit in the Depreciation Fund created in the 1985 Bond
Ordinance shall be less than $500,000, or such greater amount as
may be determined by the City (the "Required Depreciation
Balance"), there shall be transferred from the General Fund and
deposited into the Depreciation Fund, on or before the 25th day
of each month, an amount equal to ten percent (10%) of the
balance on deposit in the General Fund, which deposits shall
continue until there has been accumulated not less than the sum
of $500,000.
Provided that so long as the Required Depreciation
Balance shall be maintained in such Depreciation Fund, no further
deposits shall be required to be made therein. Moneys in the
Depreciation Fund may be withdrawn and used upon appropriate
certification by whatever City official of the City is duly
authorized by the Governing Body of the City to make such
certification, for the purpose of paying the costs 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, only when there is not sufficient money
for such purpose included in the Annual Budget, or for paying the
costs 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 Sinking
Fund and the Debt Service Reserve Account on June 15 or
December 15 shall be insufficient to pay the next maturing
installment of interest.and/or principal (including mandatory
redemption payments) falling due on the Bonds, the City shall
withdraw and transfer from the Depreciation Fund such amounts as
may be required to eliminate the deficiency in the Sinking Fund
and to avoid a default. Provided, further, that any such
withdrawal shall be promptly restored to the Depreciation.Fund
from the first revenues of the System available (1) in the event
that other legally available moneys of the System, including the
proceeds of Reserve Account Insurance Policy, if any, shall be
available, (2) if any surplus funds are available after meeting
all current requirements of the Sinking Fund, including the Debt
Service Reserve Account, or (3) as shall be determined by the
Board. However, it is not anticipated that any sums in the
Depreciation Fund will be used to meet requirements of the
Sinking Fund.
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There shall also be deposited in said Depreciation Fund
the proceeds of any property damage insurance not immediately
used to replace the damaged or destroyed property of the System.
Such deposits shall not reduce or serve as a credit against the
amount of the Required Depreciation Balance otherwise required or
any other amounts required to be deposited into the Depreciation
Fund.
As and when additional Parity Bonds are issued,
provision shall be made for additional payments into the
Depreciation Fund (thus increasing the Required Depreciation
Balance) in whatever amount shall be recommended by the Engineers
and/or determined by the Governing Body of the City, provided
such additional amounts shall be accumulated therein as provided
above.
All funds on deposit in the Depreciation Fund shall be
kept separate and apart from all other municipal funds and shall
be deposited, secured and/or invested in the manner provided in
Section 20(f) hereof.
(d) Operation and Maintenance Fund. After the
requirements of the preceding two funds described above have been
satisfied, there shall be transferred from the balance of the
income and revenues remaining in the Revenue Fund on or before
the 25th day of each month, into the Operation and Maintenance
Fund, such amount as shall be determined by the Governing Body to
be necessary and sufficient to pay the reasonable and current
expenses of operating, maintaining and insuring the System for
the two months following such 25th day. After the 25th day of
each month, further transfers may be made in like manner only if
and to the extent that it shall become necessary to pay such
expenses actually accrued and payable.
All costs of operating, maintaining and insuring the
System, shall be paid from the Operation and Maintenance Fund.
All funds in the Operation and Maintenance Fund shall
be maintained separate and apart from all other municipal funds
and shall be deposited, secured and/or invested in the manner
provided hereinafter in Section 20(f).
(e) Surplus Balances in the General Fund. If and
whenever, on July 1 of any year, all specified and required
transfers and payments into the special funds provided have been
made and there is a balance on deposit in the General Fund in
excess of the amount required to be transferred during the
ensuing three months of the ensuing Sinking Fund Year into said
special funds, all or any part of such excess may, within 60 days
after such July 1, be used as follows:
(1) To retire or redeem outstanding Bonds in inverse
order of maturities in accordance with the terms
thereof;
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143
(2) To purchase Bonds or Parity Bonds, at the sole
option and discretion of the City, at a price not to
exceed the then applicable or next applicable
redemption price of such respective series of Bonds;
(3) To transfer additional amounts to the Debt Service
Reserve Account, the Operation and Maintenance Fund or
the Depreciation Fund;
(4) To repay any amounts, if any, drawn under the
Reserve Account Insurance Policy, including interest
thereon;
(5) To pay the debt service requirements of any
outstanding subordinate obligations payable from the
income and revenues of the System; or
(6) For any other lawful corporate purpose of the City
related solely to the System.
Except as otherwise provided expressly herein, the
determination of what and how funds are to be invested, and
without limiting the generality of the foregoing, how any excess
or surplus funds shall be invested, shall be as directed by the
Commission, unless there is a question as to whether such action
might cause the Bonds to be "arbitrage bonds" within the meaning
of Section 148 of the Code, as amended, in which event such
action shall not be taken without first obtaining the opinion of
recognized Bond Counsel to the effect that such action will not
cause the Bonds to become "arbitrage bonds".
(f) Security for and Investment of Deposits. The City
covenants and agrees to establish and maintain the respective
Funds as provided herein and all funds so deposited, to the
extent that same shall cause deposits of the City in the
J Depository Bank to exceed the amount insured by the FDIC shall be
continuously secured by a valid pledge of bonds or notes of the
United States of America having an equivalent market value; or
same shall be secured by a surety bond or bonds furnished by a
surety company or companies qualified or authorized to do
business in Kentucky; or such portion of such Funds as shall be
designated by the Commission shall be invested in Investments as
defined herein, maturing as needed under this Ordinance; provided
no investment shall be made in any obligations maturing later
than five years from the date of investment. All such
Investments shall be valued for the purposes hereof in terms of
their market value on the then next preceding January 1 or
July 1, whichever is later.
Said Depository Bank shall be obligated to send written
notice to the City of the need for investment directions if and
whenever funds in excess of $10,000 shall remain uninvested for a
period of more than 5 days.
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Section 21. Determination by City that Proportions of
Revenues to be Deposited are Correct. The Governing Body of the
City hereby finds and determines that, exclusive of the payment
its required to be made into the Sinking Fund, the amounts which
are provided to be paid into the Depreciation Fund and into the
Operation and Maintenance Fund are proper and sufficient for the
purposes thereof.
Section 22. City Officials to be Bonded. The City
will cause each municipal officer or other person having custody,
of any moneys administered under the provisions of this Ordinance
to be bonded at all times in an amount equal to the maximum
amount of such moneys in his custody at any time. The City will
segregate and earmark such funds, consistent with this Ordinance
in such manner to enable the City to obtain the benefit of the
lowest possible surety premium: rates on such surety bond or
bonds. Each such surety 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 City, and the
premium of such surety bond shall constitute a proper expense of
operating and maintaining the System, and may be paid from
amounts available in the Operation and Maintenance Fund.
Section 23. Adoption of Budget of Current Expenses;
Fiscal Year. The City covenants and agrees that prior to the
delivery of the Current Bonds, the Governing Body of the City or
the Commission will adopt a Budget of Current Expenses for the
operation of the System for the remainder of the then fiscal
year, and thereafter on or before the first day of September of
each year prior to the year of final maturity of the Bonds or of
any Parity Bonds, the Governing Body of the City or the
Commission will adopt an Annual Budget of Current Expenses for
the ensuing fiscal year, and will furnish a copy of such Budget
or amendment thereto, upon request, to any Bondowners. 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 City
further covenants that the Current Expenses incurred in any year
shall not exceed the necessary and reasonable amounts required
therefore, and that the City will not expend any amount or incur
any obligation for operation, maintenance and repair in excess of
the amounts provided for Current Expenses in the current Annual
Budget, accept on proper justification and resolution (or
ordinance) by the Governing Body of the City, as such
expenditures are necessary to operate and maintain the System.
The City further covenants that at the same time and in like
manner, the Governing Body of the City or the Commission 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 requirements of all of the provisions
contained in this Ordinance, including the accumulation and
maintenance of all required reserves specified herein.
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Section 24. Rates and Charges for Services of the
System. while the Bonds or any Parity Bonds remain outstanding
and unpaid, the rates for all services and facilities rendered by
the System to the City and to its citizens, corporations or
others 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, and proper and
necessary allowances for 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 the 1985 Bond Ordinance and this Current Bond
Ordinance, and there shall be charged such rates and amounts as
shall be adequate to meet all requirements of the provisions of
such 1985 Bond Ordinance and this Current Bond Ordinance.
The City covenants that it will not reduce the rates
and charges for services rendered by the System without first
filing with the City Clerk a Certification of an Independent
Consulting Engineer to the effect that the annual net revenues
(defined as gross revenues less essential operation and
maintenance expenses) of the then existing System for the fiscal
year preceding the date on which such reduction is proposed, as
such annual revenues are adjusted, after taking into account the
projected reduction in revenues anticipated to result from such
proposed rate decrease, are equal to not less than 130% of the
required Maximum Annual Debt Service thereafter on all of the
then outstanding bonds payable from the revenues of the System.
The City also covenants to cause a report to be filed
with the Governing Body within 90 days after the end of each
fiscal year by Certified Public Accountants and/or Independent
Consulting Engineers, setting forth what was the precise
percentage of the required Maximum Annual Debt Service falling
due in any fiscal year thereafter for principal of and interest
on all of the then Outstanding Bonds payable from the revenues of
the System, produced or provided by the net revenues of the
System in that fiscal year; and the City covenants that if and
whenever such report so filed shall establish that such coverage
of net revenues for such year was less than 130% of the required
Maximum Annual Debt Service thereafter, the City shall increase
the rates to be effective not later than six months from the end
of such fiscal year, by an amount sufficient, in the opinion of
such Independent Consulting Engineers and/or Certified Public
Accountants, to establish the existence of or immediate
projection of, such minimum 130% coverage.
Such coverage report and rate increase shall take into
account estimates and projections of such Certified Public
Accountants and/or Independent Consulting Engineers relating to
income and expenses for the System for the current fiscal year
then in effect. In any event, such rate increases will not be
less than five percent (5%) higher than the rates previously in
effect.
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Section 25. Provision Permitting Additional Parity
Bonds. The Bonds shall not be entitled to priority one over the
other in the application of the income and revenues of the
System, regardless of the time or times of their issuance, it
being the intention that there shall be no priority among the
Bonds, regardless of the fact that they may be actually issued
and delivered at different times, and provided further that the
lien and security of and for any bonds or obligations hereafter
issued that are payable from the income and revenues of the
System shall, except as set out herein, be subject to the
priority of the Bonds and any Parity Bonds as may from time to
time be outstanding; provided the City hereby reserves the right
and privilege of issuing additional bonds from time to time
payable from the income and revenues of the System ranking on a
parity with the Bonds, for the purpose of financing the cost, not
otherwise provided, of new waterworks facilities, and/or related
auxiliary facilities, and/or to finance future extensions,
additions, and/or improvements to the System, or any part
thereof, provided in each instance that:
(a) The facility or facilities to be constructed from
the proceeds of the additional Parity Bonds 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 then Outstanding
Bonds.
(b) There shall have been procured and filed with the
City Clerk a statement by a Certified Public Accountant reciting
the opinion that the "net income and revenues" (as defined below)
of the System for 12 consecutive months of the 18 months
preceding the issuance of said additional Parity Bonds (with
adjustments as hereinafter provided) were equal to at least one
hundred and thirty percent (130%) of the Maximum Annual Debt
Service requirements for all then Outstanding Bonds plus the
Parity Bonds then proposed to be issued. The calculation of
Maximum Annual Debt Service requirements of the additional Parity
Bonds then proposed to be issued shall be determined on the basis
of the principal of, and interest on, such Parity Bonds being
payable in approximately equal annual installments, with the
amounts of the respective mandatory redemption installments of
any then proposed term bonds which are to be part of such
additional Parity Bonds, being treated as principal maturities of
such Parity Bonds for the purpose of calculating Maximum Annual
Debt Service Requirements.
"Net income and revenues" as herein used are defined as
gross income and revenues 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 costs that are normally and
regularly so included under recognized accounting practices,
exclusive of allowances for depreciation.
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147
"Gross income and revenues" shall include investment
income, disconnection fees, and all other items of income which
have been established as "reasonably anticipated annual income of
the System" (except for connection fees), based upon a
certification of Independent Consulting Engineers and/or
Certified Public Accountants, as defined herein; provided (1) all
"investment income" shall be adjusted in any such calculation or
projection to reflect the market rate currently available from
such investments, and (2) there shall be excluded any unusual
items of income and revenues which are of a generally
non-recurring nature, according to the certification of
Independent Consulting Engineers and/or Certified Public
Accountants.
"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 exclude any unusual items of operation and
maintenance expense which are of a generally non-recurring
nature, according to the certification of Independent Consulting
Engineers and/or Certified Public Accountants. Such "net
revenues" may be adjusted for the purpose of the foregoing
computations to reflect (i) any revisions in the schedule of
rates and charges being imposed for the services of the System at
the time of issuance of any such additional Parity Bonds,
including any revised schedule of rates established by the City
providing for rate increases to "be phased in" over a two or
three year period, and also to reflect (ii) any increase in such
net revenues projected to be produced in any Sinking Fund Year
within three years after the issuance of such proposed Parity
Bonds by reason of the revenues anticipated to be derived from
the extensions, additions and/or improvements to the System being
financed (in whole or in part) by such additional Parity Bonds,
provided (A) no projection for such latter adjustment shall be
made as to any customers other than structures, dwellings,
businesses and/or manufacturing establishments located on or
which will abut on extensions, additions and/or improvements to
the System in existence at the time of the issuance of such
Parity Bonds and/or being financed (in whole or in part) by such
additional Parity Bonds; and (B) such latter adjustment shall be
made only if contracts for the immediate acquisition and/or
construction of such extensions, additions and/or improvements
have been or will have been entered into (secured by 100%
performance bond) prior to the issuance of such additional Parity
Bonds. All adjustments provided for in this paragraph shall be
based upon the written certification of an Independent Consulting
Engineer.
(c) The payments required to be made into the various
Funds and accounts created under the 1985 Bond Ordinance must be
certified as current by the General Manager of the System.
(d) The face amount of the Reserve Account Insurance
Policy will be increased and/or an additional guaranty agreement,
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148
surety bond or insurance policy will be obtained from an
insurance company or surety company having an insurance rating at
least as high as the rating of MBIA at that time, in a face
amount such that the aggregate of the maximum amount payable by
the issuers of all such instruments is equal to not less than the
Maximum Annual Debt Service for all bonds which are scheduled to
be outstanding under the terms of the bond ordinance then
contemplated to be enacted to authorize the issuance of such then
proposed Parity Bonds; or the aggregate value of the maximum
amounts payable by the issuers of the Reserve Account Insurance -T
Policy and all similar instruments then in effect and on deposit
in the Debt Service Reserve Account plus the amount of money _ y
which is required to be deposited in the Debt Service Reserve
Account immediately upon the issuance of the Parity Bonds then
proposed to be issued must be equal to at least the Maximum Debt
Service Requirements for all bonds then scheduled to be
outstanding under the terms of the then proposed Parity Bond
Ordinance immediately following the issuance of such proposed
Parity Bonds.
(e) If City cannot obtain a Reserve Account Insurance
Policy or elects not to obtain a Reserve Account Insurance
Policy, the requirement as to funding of the Debt Service Reserve
Account shall be satisfied if a cash (and/or Investments) amount
equal to not less than the Maximum Annual Debt Service of all
Outstanding Bonds, including the proposed Parity Bonds, shall be
deposited or be on deposit in the Debt Service Reserve Account.
(f) The amount available to be paid by MBIA to the
Transfer Agent under the terms of the Reserve Account Insurance
Policy issued by MBIA or to be paid by the issuer of any other
similar guaranty agreement, surety bond or insurance policy under
the respective terms thereof, shall be equal to the maximum limit
specified in such Reserve Account Insurance Policy or such other
guaranty agreement, surety bond or insurance policy which is then
in effect. y'
The City 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 Bonds or any
portion thereof, and/or any then previously 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 City Clerk a statement by a Certified Public Accountant
reciting the opinion based upon necessary investigation that:
(1) 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 issuance of such Parity Bonds and
from the elimination of the bonds being refunded or
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149
refinanced thereby, are equal to not less than 130% of
the Maximum Annual Debt Service then scheduled to fall
due in any fiscal year thereafter for principal of and
interest on all of the then Outstanding Bonds payable
from the revenues of the System, calculated in the
manner specified above; or
(2) in the alternative, that the debt service
requirements for the Bonds, any then previously issued
Parity Bonds and the proposed parity refunding bonds,
in any year of maturities thereof after the redemption
of the Bonds scheduled to be refunded through the
issuance of such proposed parity refunding bonds, shall
not exceed the debt service requirements applicable to
the then Outstanding Bonds and any then previously
issued Parity Bonds for such year prior to the issuance
of such proposed Parity Bonds and the redemption,
retirement or defeasement of the Bonds to be refunded,
and without extending the maturities of such parity
refunding bonds beyond the maturities of the bonds
being refunded.
The City further reserves the right, following receipt
of the written recommendations of the Commission, 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 or system (the
"Consolidated System"), after which, the Bonds and.any additional
Parity Bonds would be secured by and payable from the revenues of
the Consolidated System. In order to accomplish such combining
and consolidating, the City 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 Consolidated
System, for the purpose of refunding or refinancing certain
outstanding bonds constituting a charge against the existing
sewer system (the "Prior Sewer Bonds"), provided that prior to
the issuance of such parity bonds for that purpose, there shall
have been procured and filed with the City Clerk a statement by a
Certified Public Accountant 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 Maximum Annual Debt Service
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 Maximum Annual Debt Service thereafter on all of
the then outstanding bonds payable from the combined
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150
revenues of the Consolidated System, calculated in the
manner specified above; or
(ii) in the alternative, that the Maximum Annual Debt
Service for the Bonds, any then previously issued
Parity Bonds and the proposed parity refunding bonds,
in any year of maturities thereof after the redemption
of the Prior Sewer Bonds to be refunded through the
issuance of such proposed parity refunding bonds, shall
not exceed the scheduled Maximum Annual Debt Service
applicable to the then Outstanding 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 Ordinance, shall be understood
to mean bonds payable from the income and revenues of the
Consolidated System on a parity with the 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 Sinking Fund for the Bonds.
(b) After the creation of such Consolidated System, the
City further reserves the right, following receipt of written
recommendations of the Commission, to add new water and/or sewer
facilities, and/ related auxiliary facilities, and/or to
finance future extensions, additions and/or improvements to the
Consolidated System by the issuance of Bonds or more additional
series of bonds to be secured by a parity lien on and ratably
payable from the revenues of the Consolidated System, provided
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 Bonds; and
(ii) there shall have been procured and filed with
the City 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) are equal to at least 1.30 times the
Maximum Annual Debt Service on the 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
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151
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.
(c) Also, after the creation of the Consolidated
System, the City further reserves the right, following receipt of
written recommendations of the Commission, to combine Parity
Bonds, issued to refund outstanding Prior 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, and/or to accomplish the purposes set out
above, through the issuance of a single series of parity
refunding and improvement bonds.
The additional parity bonds, the issuance of which is
restricted and conditioned by this Section, shall be understood
to mean bonds payable from, the income and revenues of the System
on a parity with the 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
Sinking Fund for the Bonds. Interest payments for all such
additional Parity Bonds shall be semiannually 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.
Section 26. General Covenants of the City with Regard
to the Operation bf the System. So long as any of the Bonds and
any Parity Bonds are outstanding, the City covenants with respect
to the System as follows:
(a) Service to the City.
value of any service rendered by the
purpose shall be charged against the
any legal sources or funds available
L from the revenues of the System) as
proceeds thereof shall be deposited
as all other revenues of the System.
The reasonable cost and
System, to the City for any
City and paid thereby (from
other than funds derived
the service accrues and the
in the General Fund the same
(b) Disposal of Property. The City will not sell or
otherwise dispose of any of the facilities of the System, or any
part thereof, and, except 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
Bonds. Notwithstanding the foregoing, the City may at any time
permanently abandon the use of, or sell at the fair market value,
any part of the facilities of the System, provided that:
(1) It is in compliance with all covenants and
undertakings in connection with all of the Bonds then
outstanding and payable from the revenues of the System
and the Debt Service Reserve Account for such Bonds is
being maintained therein at the stipulated level;
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152
(2) 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 at not 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;
(3) Certifies, in good faith, 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;
(4) It certifies, in good faith, that the estimated net
revenues of the remaining facilities of the System for
the then next succeeding fiscal year, plus the
estimated net revenues of the facility or facilities,
if.any, to be added to the System, comply with-,-t-he
earnings requirements hereinbefore provided in'he
provisions and conditions governing the issuance of
additional Parity Bonds;
(5) Such sale or disposition will not have the effect
of causing the Bonds or any Parity Bonds to become
"arbitrage bonds" or of otherwise causing the interest
on such Bonds or any Parity Bonds to become taxable;
and
(6) The proceeds of any such sale or disposition shall
be paid into the Depreciation Fund and shall not be
permitted to reduce the amount otherwise required to be
paid into said Depreciation Fund.
(c) General Operation. The City shall operate and
mai4tain,-,the-,,9ysytem in good condition, shall faithfully and,
punctually perform all duties with reference to the Sy;'`M,
required by the Constitution and Statutes of the Commonwealth of
Kentucky, shall charge and collect lawfully established rates and
charges for services rendered by the System, and will properly -
adopt and enforce increased rates for the services of the System
whenever such increase shall be necessary to comply with any
covenant of this Ordinance, or to make any payment required by
this Ordinance, including amounts payable to the City of any
Reserve Account Insurance Policy.
(d) Records and Audits. Insofar as consistent with
the laws of Kentucky, the City agrees that so long as any of the
Bonds remain outstanding, it will keep or cause the Commission to
keep proper books of records and accounts showing complete and
correct entry of all transactions relating to the System in
accordance with generally accepted accounting principles (for
fac.ilitie _.. o.f.- 1, .ke. type and size) , in which complete han , correct_
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153
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 owners of 10% or
more of the principal amount of the Bonds then outstanding, or by
their duly authorized representatives.
The City further covenants that as soon as may be
feasible after the close of each fiscal year, and in any event
not later than ninety (90) days thereafter, the City 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, and that within four months
after the close of each fiscal year the City will furnish to any
owner of the Outstanding Bonds who shall request same in writing,
a copy of such annual audit report.
A copy of said audit report shall be kept on file in
the office of the City Clerk and at the office of the Commission,
where such report will be subject to inspection at any reasonable
time by or on behalf of any owner of Outstanding Bonds. A
condensation of the important facts shown by such report will be
mailed to any Bondowner upon request.
The City covenants and agrees that if and whenever it
is in default as to any of the provisions herein, it will furnish
monthly operating reports to the Fiscal Agent, identified in
Section 1 hereof, if requested by the Fiscal Agent, in such form
as shall be satisfactory to such Fiscal Agent, and to furnish
such operating reports to any Bondowner requesting same.
Section 27. Insurance. (a) Fire and Extended
Coverage. If and to the extent that the System includes
structures above ground level, the City shall, upon receipt of
the proceeds of the sale of the 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, of
a kind and in such amounts as would ordinarily be carried by
private companies or public bodies engaged in operating a similar
utility.
The foregoing fire and extended coverage insurance
shall be maintained so long as any of the 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 City 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 Bonds, the City shall, if such
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154
.. . P - _. ..
insurance is not already in force, procure and maintain, so long
as any of the Bonds are outstanding, public liability insurance
relating to the operation of the facilities of the System, with a
$1,000,000 combined single limit for bodily injury and property
damage to others which may arise from the City's operations of
the System and any other facilities constituting a portion of the
System.
(c) Vehicle Liability Insurance. If and to the extent
that the City owns or operates vehicles in the operation of the
System, upon receipt of the proceeds of the Bonds, the City
shall, if such insurance is not already in force, procure and
maintain, so long as any of the Bonds are outstanding, vehicular
public liability insurance with a $1,000,000 combined single
limit for bodily injury and property damage to others which may
arise from -the operation of such vehicles by the-glt:y.
Section 28. Additional Covenants Respecting the
System. The City covenants that so long as any of the Bonds
and/or any Parity Bonds, are outstanding, as follows:
(a) It will at all times own and operate the System, to
the fullest extent permitted by law 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 accumulated and set
aside for operation and maintenance as herein provided, and will
make renewals and replacements, as the same may be required,
through application of revenues accumulated and set aside into
the Depreciation Fund.
(c) It will not permit any competing water works
system, public or private, to sell or serve water services to
customers within the corporate limits of the City and its outside
service area, to the extent that the City 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) Pursuant to KRS 96.934 and other applicable legal
provisions, the City will provide that water services will be
discontinued to any premises where there is a failure to pay any
part of the water charges, so billed, including such penalties
and fees for disconnection and/or reconnection as may be
prescribed from time to -time, to the greatest ekterit permitted by
law.
(f) The City agrees that during the time that any of
the Bonds and/or any Parity Bonds are outstanding, it will take
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155
all steps as may be necessary to cause the owners of all
properties abutting upon any water lines of the City, to connect
thereto and to keep connected thereto all such lines on such
properties, and the City will prohibit all such properties from
obtaining water utilities services from any source other than the
System. This covenant shall be in favor of and enforceable by
the owners of the Bonds and all Parity Bonds in accordance with
the provisions herein contained. If the City fails to take such
steps, such obligation of the City may be enforced by any one or
more of the Bondowners.
Section 29. Commissioners of the Water Works; Existence
and Continuance Contractual with Bondholders. Pursuant to an
Ordinance heretofore enacted, the supervision, management and
conduct of the System is vested in a municipal commission,
designated as the "Commissioners of Water Works", which Ordinance
shall constitute a contract between the City and the holders of
the Bonds, and any additional Parity Bonds issued pursuant to the
Current Bond Ordinance; and said Ordinance may not be amended or
repealed so long as any of the Bonds, and/or 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 30. Signatures of Officers. If any of the
officers whose signatures or facsimile signatures appear on the
Bonds cease to be such officers before delivery of the Bonds,
such signatures shall nevertheless be valid for all purposes the
same as if said officers had remained in office until delivery,
as provided in KRS 58.040 and KRS 61.390.
Section 31. Appointment and Duties of Bond Registrar,
Transfer Agent and Payee Bank; Duties of Escrow Bank. The
Paducah Bank and Trust Company, Paducah, Kentucky, is hereby
designated as the Bond Registrar, Transfer Agent and Payee Bank
herein.
(a) Duties as Bond Registrar and Transfer Agent. Its
duties as Bond Registrar and Transfer Agent shall be as follows:
(1) To authenticate the Bonds authorized herein;
(2) To register all of the Bonds including those
issued in exchange for any Bond in the names of the
respective owners thereof;
(3) Upon being supplied with a properly authenticated
assignment satisfactory to the Bond Registrar (in the
sole discretion of such Bond Registrar), to transfer
the ownership of Bonds from one registered Bondowner to
another within three (3) business days of the receipt
of such proper assignment by the Bond Registrar; and
(4) To cancel and destro� (or remit to the City for
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156
-A , i si :,_I'r - �' =__ — — _-- -r t=—:.__ , -- } .i-
destruction, if so requested by the City) all
exchanged, matured, retired and redeemed Bonds, and to
maintain adequate records relevant thereto.
(b) Duties as Payee Bank. Its duties as Payee Bank
shall be as follows:
(1) To make payment of principal of and interest on the
Bonds from funds provided to the Payee Bank in
accordance with the provisions of Section 4 hereof;
(2) To remit, but only to the extent that all required
funds are made available to the Payee Bank by the City,
semiannual interest payments directly to the registered
owner of each Bond by regular United States mail. Said
interest payments shall be deposited in the United
States mail no later than each interest due date.
Matured or redeemed Bonds shall be payable upon:.
presentation to the Payee Bank. For interest payment
purposes, the Payee Bank shall be entitled to rely on
its records as Bond Registrar as to the ownership of
each Bond as of the 15th day of the month preceding an
interest due date, and the Payee Bank's check shall be
drawn and mailed accordingly;
(3) To send appropriate written notice to the owner of
each Bond to be redeemed and to redeem Bonds prior to
their stated maturity upon their presentation in
accordance with the provisions of Section 5 of this
Ordinance upon receiving sufficient funds;'and
(4) To supply the City with a written accounting
evidencing the payment of interest on and principal of
the Bonds within 30 days following each respective due
date.
(c) Duties of Escrow Bank. The duties of the Escrow
Bank will be to perform all duties of the Escrow Bank specified
herein and in the separate Escrow Agreement between the City and
the Escrow Bank with respect to the Refunded Bonds.
(d) General Provisions as to Registrar, Transfer Agent
and Payee Bank. The Registrar, Transfer Agent and Payee Bank
(collectively the "Bank") shall be entitled to the advice of
Counsel and shall be protected for any acts taken by it in good
faith in reliance upon such advice. It shall not be liable for
any actions taken in good faith and believed by it to be within
its discretion or the power conferred upon it by this Ordinance
or the responsibility for the consequences of an oversight or
error in judgment.
The Bank may at any time resign from any or all of its
capacities and duties set forth in this Ordinance as to any or
all of the foregoing by filing its resignation with the City
157
Clerk and notifying the original purchaser or purchasers of the
Bonds. Thereupon, the City shall designate a successor Bank as
to such capacities and duties, which shall be an incorporated
bank or trust company authorized to transact business in the
United States of America. Notwithstanding the foregoing, in the
event of such resignation provision shall be made for the orderly
transition of the books, records and accounts relating to the
Bonds as to such resigned capacity or capacities to the successor
Bank in order that there will be no delinquencies in the payment
of interest or principal due on the Bonds.
The Registrar shall indicate its acceptance of its
duties as Registrar, Transfer Agent and Payee Bank, by signing
its Acceptance at the conclusion of this Ordinance.
(e) Replacement by City of Registrar, Transfer Agent
and Payee Bank. The City shall have the right at any time to
replace the Registrar, Transfer Agent and Payee Bank, by
observing the following procedure:
(1) It must first enact an Ordinance to that effect.
(2) It must provide 90 days notice to such party in
that capacity by certified or registered mail.
(3) It must designate a replacement institution, which
must be an institution insured by the FDIC having
assets of not less than $1,000,000.
(4) It must obtain a written acceptance from such
successor, to assume the applicable duties, at
least 60 days in advance of the date of such
association.
(5) It must notify Bondowners by sending written
notice by regular U.S. mail of the intended change
at least 75 days in advance of the intended
change.
(6) All of the foregoing must occur more than 60 days
prior to an Interest Payment Date.
(7) It must arrange with the existing institution to
transfer all funds, records and/or other necessary
documents over to the successor, not less than 30
days prior to the succession date.
Section 32. Further Provisions with Respect to MBIA
Insurance; Approval of Execution of Financial Guaranty Agreement.
(a) It is acknowledged that in the issuance of the Current Bonds,
no deposit of money is being made to fund the Debt Service
Reserve Account, and that the City has received a commitment from
the MBIA for an insurance policy unconditionally guaranteeing the
timely payment to the Payee Bank of an amount equal to the
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158
__-
Maximum Annual Debt Service with respect.to the Bonds. The
Reserve Account Insurance Policy is non -cancellable, and the
premium therefore will be fully paid at the time of delivery of
the Current Bonds. Such Reserve Account Insurance Policy
provides that upon notice to MBIA that the City has failed to
make any required deposit to the Sinking Fund, MBIA will promptly
deposit with the Payee Bank sufficient funds to cover the deficit
in the respective account of such Sinking Fund, up to the maximum
amount of the Reserve Account Insurance Policy. The City is
required to reinstate the Reserve Account Insurance Policy to its
original face amount by promptly reimbursing MBIA for any
payments made by MBIA under the Reserve Account Insurance Policy,
but only after all required deposits to the Sinking Fund shall
have been made. The form of Financial Guaranty Agreement
tendered to the City by MBIA, with respect to the insurance of
the payment of the Bonds, is hereby approved; and the Mayor is
hereby authorized to execute same on behalf of the City.
(b) No moneys may be withdrawn from the Debt Service
Reserve Account, excluding income and earnings received from the
investment and reinvestment of moneys on deposit therein, unless
the amount on deposit therein is in excess of the Maximum Annual
Debt Service, and such excess amount, if withdrawn, shall be
reduced at the option of the City in either of the following
manners:
(1) If there is on deposit in the Debt Service Reserve
Account a Reserve Account Insurance Policy issued by
MBIA,'the principal amount thereof may be reduced by
the amount of such excess, or
(2) If such excess is evidenced by moneys and
investments, an amount equal to such excess shall be
withdrawn from the Debt Service Reserve Account and
deposited in the Depreciation Fund, or
y'
(3) Any combination of (1) and (2) above.
Notwithstanding the foregoing, all income and earnings
received from the investment and reinvestment of moneys on
deposit in the Debt Service Reserve Account will be deposited
into the Interest Account.
(c) The City agrees with MBIA that the following
provisions shall govern the relationship of the City with MBIA
with regard to the issuance of the Reserve Account Insurance
Policy and the Bond Insurance Policy:
(1) MBIA shall, to the extent that it makes payment of
principal of or interest on the Bonds, become
subrogated to the rights of the recipients of such
payments in accordance with the terms of the Bond
Insurance Policy, and to evidence such subrogation
(i) in the case of subrogation as to claims for past
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159
due interests the Registrar shall note the rights of
MBIA, as subrogee on the registration books of the City
maintained by the Registrar upon receipt from MBIA of
proof of the payment of interest thereon to the
registered owners of the Bonds, and (ii) in the case of
subrogation as to claims for past due principal, the
Registrar shall note the rights of MBIA, as subrogee on
the registration books of the City maintained by the
Registrar, upon surrender by MBIA of the Bond Insurance
T Policy of the Bonds, together with proof of the payment
of principal thereof, to the registered owners of the
Bonds.
(2) As long as the City shall have a Reserve Account
Insurance Policy on deposit in the Debt Service Reserve
Account, the City covenants that it will comply with
the following provisions:
(i) if five days prior to an interest or principal
payment date, the City shall determine that a
deficiency exists in the amount of interest and/or
principal due on such date and available for
transfer to the Payee Bank, the City or the Payee
Bank shall immediately notify MBIA of the amount
of such deficiency and the date on which such
payment is due.
(ii) the City shall reimburse MBIA within twelve months
of any withdrawal from such Reserve Account
Insurance Policy, together with interest thereon
to the date of reimbursement, at the rate set
forth in such Reserve Account Insurance Policy,
but in no case greater than the maximum rate of
interest permitted by law.
(iii) the City shall reimburse MBIA for all reasonable
expenses incurred by MBIA in connection with the
Reserve Account Insurance Policy, together with
interest thereon to the date of reimbursement at
the rate set forth in the Reserve Account
Insurance Policy, but in no case greater than the
maximum rate of interest permitted by law, all in
the manner provided in the Reserve Account
Insurance Policy.
(iv) the Payee Bank shall annually submit to the City
and MBIA, records of withdrawals on such Reserve
Account Insurance Policy received by the Pace Bank
and remaining unpaid, the respective dates of such
withdrawals, the interest accrued on such
withdrawals, and the aggregate amount of interest
due by the City to MBIA.
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160
(v) the City hereby acknowledges that MBIA shall be
deemed a third party beneficiary of this Current
Bond Ordinance for the purposes of enforcing the
terms, conditions and obligations of this
Ordinance which benefit MBIA.
Section 33. Supplemental Ordinances not Requiring
Consent of Bondowners or MBIA. The City may, without the consent
of, or notice to, any of the owners of the Bonds, or to MBIA,
enact one or more Supplemental Ordinances as shall not be
inconsistent with the terms and provisions hereof for any one or
more of the following purposes:
(a) to cure any ambiguity or formal defect or omission
in this Ordinance;
(b) to grant to or confer upon the Registrar for the
benefit of the Bondowners any.additional rights,
remedies, powers or authorities that should
lawfully be granted to or conferred upon the
Bondowners or the Registrar or either of them;
(c) to subject to the lien and pledge of this
Ordinance additional revenues, properties or
collateral which may legally be subjected;
(d) to add to the conditions, limitations and
restrictions on the issuance of the Bonds or any
Parity Bonds, other conditions, limitations and
restrictions thereafter to be observed;
(e) to add to the covenants and agreements of the City
in this Ordinance, other covenants and agreements
thereafter to be incurred by the City or to
surrender any right or power.herein reserved to orT
conferred upon the City; or'
(f) to effect the issuance of additional Parity Bonds
pursuant to Section 25 hereof.
Section 34. Supplemental Ordinances Requiring Consent
of Bondowners and MBIA. Exclusive of Supplemental Ordinances
covered by Section 33 hereof and subject to the terms and
conditions contained in this Section and not otherwise, the
owners of not less than two-thirds in aggregate principal amount
of the Bonds and any Parity Bonds then outstanding, together with
MBIA (so long as it is the insurer of any insurance policy
referred to herein, relative to the Debt Service Reserve Account
or to the Bonds) shall have the right, from time to time,
anything contained in this Ordinance to the contrary
notwithstanding, to consent to and approve the enactment by the
City of such other Supplemental Ordinance as shall be deemed
necessary and desirable by the City for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular,
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161
any terms or provisions contained in this Ordinance or in any
Supplemental Ordinance; provided, however, that nothing in this
Section shall permit, or be construed without consent of the
owner of any Bonds then outstanding as permitting (a) an
extension of the maturity date on which the principal of,
premium, if any, or interest on such Bond is or is to become, due
and payable, (b) a reduction in the principal amount of such
Bond, the rate of interest thereon, or any redemption premium,
(c) a privilege or priority of any other Bond or Bonds over such
Bond, (d) reduction in the principal amount of the Bonds required
for consent to such Supplemental Ordinance, or (e) the creation
of a lien upon or pledge of revenues, receipts, or other income
from, or in connection with the System ranking prior to or
(except in connection with the issuance of Parity Bonds pursuant
to Section 25 of this Ordinance) on a parity with the lien or
pledge by this Ordinance.
No Supplemental Ordinance shall be enacted for any of
the purposes of this Section without notice being furnished by
the Registrar to each Bondowner in the same manner as the
furnishing of a Notice of Redemption of Bonds, and no such
Ordinance shall be effective until at least 60 days subsequent to
the furnishing of such notice.
Section 35. Provisions in Conflict Repealed. All
ordinances, resolutions and orders, or parts thereof, in conflict
herewith are, to the extent of such conflict, hereby repealed,
and it is hereby specifically ordered and provided that except
for the permissible issuance of Parity Bonds pursuant to Section
25 hereof, 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.
Section 36. 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 37. Effective Date of Ordinance. This
Ordinance shall be in full force and effect immediately following
publication of Title and Summary of such Ordinance.
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162
Introduced and Given First Reading, April 9, 1991.
Given Second Reading and Final Enactment, April 17,
1991.
Attest:
Lenita Smith
City Clerk
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CITY OF PADUCAH, KENTUCKY
GERRY B. MONTGOMERY
Mayor
3
0
CERTIFICATE OF CITY CLERK
I, LENITA SMITH, the City Clerk of the City of Paducah,
Kentucky, certify that the foregoing is a true copy of an
Ordinance authorizing the issuance of City of Paducah, Kentucky
Water Works Revenue Refunding Bonds, Series 1991, dated April 1,
1991, that said Ordinance was introduced and given first reading
by the Board of Commissioners of said City of the 9th day of
April, 1991, and that it was placed and remained on file in my
office for public inspection in that identical completed form
until April 17, 1991, on which date it was given its second
reading and was enacted by said Board, that said meetings were
duly held in accordance with all applicable requirements of
Kentucky law, including KRS 61.810, 61.815, 61.820, and 61.825,
that a quorum was present at each of said meetings, that said
Ordinance has been ordered to be published by title and summary
contained in a Notice of Enactment and Summary of Ordinance, in
the form attached hereto, and that said Ordinance has not been
modified, amended, revoked, or repealed, and that same is now in
full force and effect.
IN TESTIMONY WHEREOF, witness my signature as City
Clerk and the official Seal of said City this April 17, 1991.
(Seal of City)
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Lenita Smith
City Cler
163