HomeMy WebLinkAbout93-9-5009BOND ORDINANCE
CITY OF PADUCAH, KENTUCKY
SEWER SYSTEM REFUNDING REVENUE BONDS
SERIES 1993
DATED SEPTEMBER 1, 1993
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INDEX
SECTION 1. DEFINITIONS AND RECITALS 1
I. DEFINITIONS ................................... 1
H. RECITALS ..................................... 4
SECTION 2. APPROVAL OF CONTRACT OF THE FISCAL AGENT....... 6
SECTION 3. AUTHORIZATION OF BONDS; MATURITIES AND
� INTEREST RATES. 6
SECTION 4. PLACE OF PAYMENT; MANNER OF EXECUTION ........ 6
SECTION 5. PROVISIONS AS TO PRIOR REDEMPTION .............. 7
(a) Redemption Prior to Maturity ...................... 7
(b) Redemption of Less Than All of Single Bond ........... 7
(c) Notice of Redemption ........................... 7
SECTION
6.
MUTILATED, LOST, STOLEN OR DESTROYED BONDS .... 8
SECTION
7.
AUTHENTICATION OF BONDS ...................... 8
SECTION 8. BONDS PAYABLE OUT OF REVENUES ................ 8
SECTION 9. BOND FORM .................................... 8
SECTION 10. SALE OF BONDS . ................................ 9
SECTION 11. ACCEPTANCE OF BID FOR PURCHASE OF BONDS. ...... 9
SECTION 12. OPERATION OF SYSTEM AND ALLOCATION OF
REVENUES..................................... 9
SECTION 13. CREATION OF SPECIAL FUNDS . ..................... 9
SECTION 14. DISPOSITION OF PROCEEDS OF BONDS; USE OF
FUNDS IN ACCOUNTS CREATED IN PRIOR BOND
ORDINANCES; ARBITRAGE LIMITATIONS. ........... 10
A. DISPOSITION OF PROCEEDS OF BONDS. .............. 10
B. USE OF FUNDS IN ACCOUNTS CREATED IN PRIOR BOND
ORDINANCES. .................................. 10
C. ARBITRAGE LB41TATIONS. ......................... 11
SECTION 15. FLOW OF FUNDS . ............................... 12
A. Revenue Fund .................................... 12
B. Sinking Fund ..................................... 13
C. Depreciation Fund .................................. 14
D. Operation and Maintenance Fund ....................... 14
E. Surplus Funds .................................... 15
F. Investment of Funds ................................ 15
SECTION 16. DETERMINATION BY CITY THAT PROPORTIONS
OF DEPOSITS ARE CORRECT ...................... 15
SECTION 17. CITY OFFICIALS TO BE BONDED .................... 15
SECTION 18. ADOPTION OF BUDGET OF CURRENT EXPENSES. ...... 15
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SECTION 19. RATES AND CHARGES FOR SERVICES OF THE
SYSTEM. ..................................... 16
SECTION 20. INFERIOR BONDS; PARITY BONDS; AND SURPLUS
FACILITIES. .................................. 17
SECTION 21. ALL BONDS OF THIS ISSUE ARE EQUAL .............. 20
SECTION 22. DEFEASANCE ................................... 20
`\ SECTION 23. INSURANCE. .................. 21
SECTION 24. RECORDS, AUDITS AND REPORTS; MONTHLY
REPORTS . .................................... 21
SECTION 25. GENERAL COVENANTS . .......................... 21
SECTION 26. CONTRACTUAL NATURE OF ORDINANCE ............. 22
SECTION 27. EVENTS OF DEFAULT; REMEDIES ................... 22
SECTION 28. COVENANT TO REQUIRE USE OF SEWER SYSTEM. ..... 23
SECTION 29. ESCROW FUND TO DEFEASE BONDS OF 1985. ......... 23
SECTION 30. PROVISIONS IN CONFLICT REPEALED . .............. 24
SECTION 31. COVENANT OF CITY TO TAKE ALL ACTION
NECESSARY TO ASSURE COMPLIANCE WITH
THE CODE . ................................... 24
SECTION 32. APPOINTMENT AND DUTIES OF BOND REGISTRAR,
TRANSFER AGENT, PAYEE BANK AND DEPOSITORY
BANK........................................ 26
SECTION 33. SIGNATURES OF OFFICERS . ....................... 27
SECTION 34. SEVERABILITY CLAUSE . ......................... 27
SECTION 35. EFFECTIVE DATE OF ORDINANCE; PUBLICATION OF
SUMMARY.................................... 27
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ORDINANCE NO. 93-9-5009
ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, RELATING TO
$1,735,000 (PLUS OR MINUS UP TO $175,000) PRINCIPAL AMOUNT OF
CITY OF PADUCAH, KENTUCKY SEWER SYSTEM REFUNDING
REVENUE BONDS, SERIES 1993, DATED SEPTEMBER 1, 1993, FOR THE
PURPOSE OF FINANCING THE COST OF THE REFUNDING AND
REDEMPTION PRIOR TO MATURITY OF CERTAIN OUTSTANDING
SEWER SYSTEM BONDS; SETTING FORTH THE TERMS AND
CONDITIONS ON WHICH SAID BONDS MAY BE ISSUED AND
OUTSTANDING; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF
AND INTEREST ON SAID BONDS; PROVIDING FOR THE RIGHTS OF THE
OWNERS OF SAID BONDS AND THE ENFORCEMENT THEREOF;
PROVIDING FOR AN ADVERTISED PUBLIC COMPETITIVE SALE OF
SAID BONDS.
WHEREAS, the City of Paducah, a second class city of McCracken County, Kentucky,
owns and operates the existing municipal sewer system (the "System") serving the City, and in
that connection the City presently has outstanding $525,000 of Bonds designated as City of
Paducah Sewer System Revenue Bonds, dated April 1, 1974 (the 'Bonds of 1974"), scheduled
to mature serially on January 1 in each of the respective years 1994 through 1998, and
$1,060,000 of City of Paducah, Kentucky Sewer System Revenue Bonds, Series of 1985, dated
November 1, 1985 (the 'Bonds of 1985"), scheduled to mature serially on January 1 in each of
the years 1994 through 2005; and
WHEREAS, it is deemed advisable and in the best interest of the City that the City
Commission authorize the issuance and sale of $1,735,000 (plus or minus up to $175,000) of City
of Paducah, Kentucky Sewer System Refunding Revenue Bonds, Series 1993, dated September
1, 1993 (the 'Bonds"), for the purpose of financing the cost (not otherwise provided) of the
refunding and/or redemption prior to maturity of the outstanding Bonds of 1974 and Bonds of
1985, thereby defeasing the pledge of the revenues of the System securing payment of the Bonds
of 1974 and the Bonds of 1985 and the obligations of the City under the provisions of the
Ordinances of the City authorizing the Bonds of 1974 and the Bonds of 1985; and
WHEREAS, under the provisions of the Sections 58.010 through 58.140, inclusive, and
Section 82.082 of the Kentucky Revised Statutes, the City is authorized to issue the Bonds to
provide such funds for the purposes aforesaid.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY OF PADUCAH, KENTUCKY:
SECTION 1. DEFINITIONS AND RECITALS.
I. DEFINITIONS.
As used in this Ordinance, unless the context indicates or requires otherwise:
"ACT" refers to the provisions of Sections 58.010 through 58.140, inclusive, and Section
82.082 of the Kentucky Revised Statutes.
"ANNUAL BUDGET OF CURRENT EXPENSES" refers to the detailed statement of
income and expenditures for each fiscal year of the City, which shall include a Budget of Current
Expenses for the operation of the System.
"BOND COUNSEL" refers to the firm of Rubin Hays & Foley, Municipal Bond
Attorneys, First Trust Centre, 200 South Fifth Street, Louisville, Kentucky 40202, which firm has
prepared the legal proceedings for the issuance of the Bonds, has furnished all of the customary
services of Bond Counsel in this financing and will continue to furnish such services until the
Bonds are delivered and paid for, including the rendering of the final approving Legal Opinion
with regard to the legality of the Bonds and the tax exemption of the interest thereon.
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"BOND ORDINANCE" refers to this Ordinance authorizing the Bonds.
"BOND REGISTER" refers to the records maintained by the Payee Bank as Registrar of
the ownership and transfer of ownership of the Bonds.
"BOND REGISTRAR," 'REGISTRAR," "TRANSFER AGENT" or "PAYEE BANK"
refers to The Paducah Bank & Trust Co., Paducah, Kentucky, which 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.
"BONDS" or 'BOND" refers to the $1,735,000 (plus or minus up to $175,000) principal
amount of City of Paducah, Kentucky Sewer System Refunding Revenue Bonds, Series 1993,
dated September 1, 1993, authorized herein, and any of said Bonds.
"BONDS OF 1974" refers to the City of Paducah Sewer System Revenue Bonds, dated
April 1, 1974, presently outstanding in the principal amount of $525,000.
"BONDS OF 1985" refers to the City of Paducah, Kentucky Sewer System Revenue
Bonds, Series of 1985, dated November 1, 1985, presently outstanding in the principal amount
of $1,060,000.
"CERTIFIED PUBLIC ACCOUNTANTS" 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 System and/or of the City.
Initially, and until otherwise directed by the Governing Body of the City, such term shall be
deemed to refer to Allen, Rundle and Golightly, Certified Public Accountants, of Paducah,
Kentucky.
"CITY" refers to the City of Paducah, in McCracken County, Kentucky.
"CITY CHIEF OFFICER" refers to the Mayor of the City of Paducah, Kentucky.
"CITY CLERK" refers to the City Clerk of the City of Paducah, Kentucky.
"CITY COMMISSION" refers to the City Commission of the City of Paducah, in
McCracken County, Kentucky, or such other body as shall be the governing body of said City
under the laws of Kentucky at any given time.
"CODE" or "INTERNAL REVENUE CODE" refers to the United States Internal Revenue
Code of 1986, as amended, and the Treasury Regulations relating thereto.
"DEPOSITORY BANK" refers to the bank in which all of the Sinking Fund and Sinking
Fund Reserve created in Section 10 hereof are to be deposited and maintained, which bank
initially shall be The Paducah Bank & Trust Co., Paducah, Kentucky.
"ESCROW FUND" refers to the fund created pursuant to Section 29 hereof for the
purpose of defeasing the Bonds of 1985.
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"FDIC" refers to the Federal Deposit Insurance Corporation or any successor in interest.
"FISCAL AGENT" refers to J.J.B. Hilliard, W.L. Lyons, Inc., 501 South Fourth Avenue,
Louisville, Kentucky.
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"GOVERNING BODY" refers to the City Commission of the City of Paducah, Kentucky,
or such other body as shall be the governing body of the City under the laws of Kentucky at any
given time.
"GOVERNMENTAL OBLIGATIONS" refers to any debt securities that are direct
obligations of the United States of America and any debt securities, payment of the principal of
and the interest on which are unconditionally guaranteed by the United States of America.
"GROSS REVENUES" shall include disconnection fees and all other items of income
which have been established as "reasonably anticipated annual income of the System" (with the
exception of the investment income and connection fees) based upon a certification of
Independent Consulting Engineers and/or Certified Public Accountants, as defined herein.
"INDEPENDENT CONSULTING ENGINEERS" refers to an independent consulting
engineer or firm of engineers of national reputation or of recognized reputation in Kentucky in
the field of sewer system engineering.
"INTEREST PAYMENT DATE" shall mean January 1 and July 1 of each year,
commencing January 1, 1994.
"INVESTMENTS" refers to investments of funds on deposit in the various funds created
herein and includes (a) Governmental Obligations; (b) savings accounts, time deposits or
certificates of deposit in any bank or trust company (including the Depository Bank) organized
under the laws of the United States of America or any state thereof; provided however, that the
total of such deposits or certificates held in any one bank or trust company shall be secured by
a pledge of Governmental Obligations to the extent that such total exceeds the amount insured
by the FDIC, and such securities pledged shall have a market value (exclusive of accrued
interest) not less than the principal amount of such accounts, deposits or certificates to the extent
that such total exceeds the amount insured by the FDIC and shall be delivered to the Depository
Bank or pledged with a Federal Reserve Bank; (c) money market funds consisting principally of
the securities described in (a) above, the total of which shall not exceed 25% of all Investments
valued at par; (d) obligations of the Federal National Mortgage Association and Federal Home
Loan Banks; (e) repurchase agreements between the City and any bank or trust company
organized under the laws of the United States of America or any state thereof rated "A" or above
by Moody's Investors Service and Standard & Poor's Corporation, or a government bond dealer
recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement shall
be for a term not to exceed thirty (30) days and is secured by a pledge of any one or more
Governmental Obligations and such securities pledged shall have a market value (exclusive of
accrued interest) marked to market weekly of not less than 103% of the face amount of such
repurchase agreement, and shall be delivered to the Depository Bank or pledged with a Federal
Reserve Bank sufficient to perfect a security interest in such pledged securities, accompanied by
a legal opinion opining that repurchase agreements of the kind contemplated meet State of
Kentucky and federal guidelines, if any; (f) Bankers acceptances for a term of one year or less
issued by or drawn on any bank rated "Prime -1" or "A3" or better by Moody's Investors Service
and "A-1" or "A" by Standard & Poor's Corporation; and (g) commercial paper or finance
company paper of an issuer which is rated not less than "A-1" or "P-1" or their equivalents by
Standard & Poor's Corporation and Moody's Investors Service, or their successors.
"1974 ORDINANCE" refers to the Ordinance enacted by the Governing Body of the City
on April 16, 1974, authorizing the Bonds of 1974.
i "1985 ORDINANCE" refers to the Ordinance enacted by the Governing Body of the City
LI' on October 22, 1985, authorizing the Bonds of 1985.
"ORIGINAL PURCHASER" refers to the purchaser or purchasers of the Bonds at the
public sale thereof, including all members of the purchasing syndicate or group.
"OUTSTANDING" refers to all Outstanding Bonds which have been authenticated and
delivered, except:
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(a) Outstanding Bonds cancelled after purchase in the open market or because
of payment at or redemption prior to maturity;
(b) Outstanding Bonds paid or deemed to be paid pursuant hereto;
(c) Outstanding Bonds in lieu of which others have been authenticated pursuant
hereto.
"OUTSTANDING BONDS" refers to the Bonds and any Parity Bonds issued and
Outstanding.
"OWNER" or "BONDOWNER" refers to the registered owner or owners of the Bonds
and any Parity Bonds at the time issued and Outstanding.
"PARITY BONDS" refers to 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 as to security and
source of payment with the Bonds, and shall not be deemed to include, nor to prohibit the
issuance of, bonds ranking inferior in security to the Outstanding Bonds.
"PRIOR BONDS" collectively refers to the Bonds of 1974 and the Bonds of 1985.
"PRIOR BOND ORDINANCES" collectively refers to the 1974 Ordinance and the 1985
Ordinance.
"PRIOR SIN ICING FUND" refers to the "City of Paducah Sewer System Bond and
Interest Redemption Fund," created in the Prior Bond Ordinances for the benefit of the Prior
Bonds.
"RECORD DATE" refers to the 15th day of the month preceding each Interest Payment
Date.
"REQUIRED SINKING FUND RESERVE" refers to an amount equal to not less than
the maximum amount of principal and interest requirements falling due in any twelve month
period on all of the Outstanding Bonds, or such lesser amount as may be permitted from time
to time by applicable provisions of the Code (currently an amount equal to 10% of the principal
amount issued of all of the Outstanding Bonds), which is required to be accumulated as a reserve
in the Sinking Fund.
"REVENUE FUND" refers to the City of Paducah Sewer System Revenue Fund, created
in Section 13 hereof.
"SINKING FUND" refers to the City of Paducah Sewer System Revenue Bond Debt
Service Fund created in Section 13 hereof.
"SIN ICING FUND RESERVE INSURANCE POLICY" refers to an insurance policy
and/or surety bond issued by a reputable company rated in the highest category by Moody's
Investors Service and Standard & Poor's Corporation, satisfactory to the Payee Bank,
guaranteeing the payment of the Required Sinking Fund Reserve as described in said insurance
policy and/or surety bond.
"SYSTEM" refers to the sewer system of the City.
H. RECITALS
The factual background incident to the enactment of this Ordinance consists of the
following Recitals (the "Recitals"):
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A. The City owns the existing System serving the City and its environs in
McCracken County, Kentucky.
B. In connection with its ownership of the System, the City presently has Outstanding
and unpaid a total of $525,000 of Bonds of 1974, and $1,060,000 of Bonds of 1985. The Bonds
of 1985 are subject to redemption prior to maturity on July 1, 1996, at a redemption price of
103% of the principal amount called for redemption plus accrued interest to date of redemption.
The Bonds of 1974 are subject to redemption prior to maturity on January 1, 1994 at a
redemption price of 101 % of the principal amount called for redemption plus accrued interest to
the date of redemption. The Bonds of 1974 and the Bonds of 1985 are payable from and secured
f by a first pledge of the revenues derived from the operation of the System.
C. All of the presently outstanding Prior Bonds are current as to payment of both
principal and interest, and for the security of same, the Prior Sinking Fund is being maintained
in the amount and manner prescribed in the Prior Bond Ordinances.
D. A considerable savings in interest costs can be accomplished if the Prior Bonds
are refunded and called for redemption prior to maturity through the escrow of funds sufficient,
when invested, as set out below in Recitals F and G and in Section 29 hereof, to provide funds
in ample time to meet the following requirements:
(1) To pay all principal and interest of the Outstanding Bonds of 1985 falling due on
and prior to the date the Bonds of 1985 are called for redemption, as same
mature;
(2) To redeem on July 1, 1996, the Bonds of 1985 scheduled to mature on and
subsequent to the January 1 immediately following such date at a redemption
price of 103% of the principal amount redeemed; and
(3) To redeem the Outstanding Bonds of 1974 on January 1, 1994, at a redemption
price of 101% of the principal amount due thereon plus accrued interest to the
date of redemption.
E. It is deemed in the best interest of the City to effect the defeasement of the
revenue pledge securing the Prior Bonds by refunding the Prior Bonds through the deposit and
investment in escrow of sufficient funds to assure payment of the principal of and interest on the
Prior Bonds as they mature until and including said respective maturity and redemption date
(including the applicable redemption premium), thereby releasing the obligations of the City
under the Prior Bond Ordinances.
F. The City will deposit with the Payee Bank for the,Bonds of 1974 on or before
the date of delivery of the Bonds, cash in an amount which, together with the cash and
investments held in the Prior Sinking Fund by said Payee Bank, when invested in Governmental
Obligations, will be sufficient to pay the redemption price of 101% of the principal amount of
the Bonds of 1974 maturing on and after January 1, 1995, plus accrued interest to the date of
redemption on January 1, 1994, thereby defeasing the pledge of the revenues of the System
securing said Bonds of 1974.
G. The City will deposit in escrow with the Payee Bank for the Bonds of 1985 a
sufficient portion of the net proceeds of the Bonds to be invested in Governmental Obligations
at an interest rate or rates sufficient to provide funds to pay the principal and interest on the
Bonds of 1985, through July 1, 1996, and to redeem, on July 1, 1996, all of the remaining
y Outstanding Bonds of 1985 at a redemption price of 103% of the principal amount redeemed,
thereby defeasing the pledge of the revenues of the System securing said Bonds of 1985.
H. The funding through escrow for the retirement of the remaining Bonds of 1985,
as they mature and/or are redeemed, may be accomplished at this time by the issuance (at a
minimum sale price of 98% of par value) of the Bonds, thus resulting in a substantial savings
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in the amounts required to provide for the annual debt service requirements of the System. Such
refunding is authorized by the provisions of the Act.
I. Pursuant to the provisions of the Act, it is necessary that the City enact this
Ordinance providing for the issuance of the Bonds.
SECTION 2. APPROVAL OF CONTRACT OF THE FISCAL AGENT.
The Governing Body of the City does hereby ratify and approve all steps heretofore taken
by the City to retain the services of the Fiscal Agent for the issuance of the Bonds and the fiscal
agency agreement tendered to the City by the Fiscal Agent is hereby approved. The City Chief
Officer and the City Clerk are authorized and empowered to execute such fiscal agency
agreement on behalf of the City.
SECTION 3. AUTHORIZATION OF BONDS; MATURITIES AND INTEREST RATES.
For the purpose of providing funds not otherwise provided for the refunding and redemp-
tion prior to maturity of the Prior Bonds, there are hereby authorized to be issued and sold One
Million Seven Hundred Thirty -Five Thousand Dollars ($1,735,000) (plus or minus up to
$175,000) principal amount of City of Paducah, Kentucky Sewer System Refunding Revenue
Bonds, Series 1993, dated September 1, 1993, in denominations of $5,000 or any whole multiple
thereof. The Bonds shall mature serially on January 1 of the respective years 1994 through 2005,
in such principal amounts, and shall bear interest payable semiannually on January 1 and July 1
of each year, commencing January 1, 1994, at an interest rate or rates to be fixed by Order of
the Governing Body of the City as a result of the advertised sale of the Bonds.
SECTION 4. PLACE OF PAYMENT; MANNER OF EXECUTION.
The principal of, premium, if any, and interest on the Bonds shall be payable in lawful
money of the United States of America. Principal of the Bonds is payable upon surrender thereof
C -i at the main office of the Payee Bank. Interest on the Bonds shall be paid by check by the Payee
Bank to each Bondowner registered as Owner as of the Record Date and mailed no later than the
due date thereof to each Owner at the address appearing on the Bond Register.
The Bonds shall be executed on behalf of the City with the duly authorized reproduced
facsimile signature or manual signature of the City Chief Officer, and the City's corporate seal
or a facsimile thereof shall be impressed or imprinted thereon, and attested by the reproduced
facsimile signature or manual signature of 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 imprinted on any Bond.
The Bonds shall be designated "City of Paducah, Kentucky Sewer System Refunding
Revenue Bonds, Series 1993, dated September 1, 1993," and shall be issuable as fully registered
Bonds in the denomination of $5,000 or any integral multiple thereof. The fully registered Bonds
shall be lettered "R" and shall be numbered consecutively from 1 upward.
Pending the preparation of the definitive Bonds, the City may execute and, upon the
City's request, the Registrar shall authenticate and deliver, one or more temporary Bonds which
are printed, lithographed, typewritten, mimeographed or otherwise reproduced, in any
denomination, substantially of the tenor of the definitive Bonds in lieu of which they are
delivered, in fully registered form without coupons, and with such appropriate insertions,
omissions, substitutions and other appropriate and necessary variations as the officers of the City
executing such temporary Bonds may determine, as evidenced by their signing such temporary
Bonds.
Until exchanged for Bonds in definitive form, such temporary Bonds shall be entitled to
the benefit and security of this Ordinance. The City shall, without unreasonable delay, prepare,
execute and deliver printed Bonds with facsimile signatures and seal, and, upon the presentation
and surrender of the temporary Bond to the Registrar, such printed Bonds shall be delivered to
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the Purchasers and/or their designees in exchange therefor. Such exchange shall be made without
the making of any charge therefor to any Owner of the Bonds.
All Bonds shall be exchangeable and transferable upon the presentation and surrender
thereof at the office of the 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 or transfer. The Registrar shall
be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the
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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 is delivered.
In the event of non-payment of interest on one or more maturities of Outstanding Bonds
on a scheduled Interest Payment Date, a new record date for such interest payment for such
maturity or maturities ("Special Record Date") will be established by the 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 ("Special
Payment Date"), which shall be fifteen (15) days after the Special Record Date), shall be sent at
least five (5) business days prior to the Special Record Date by United States Mail, first class
postage prepaid, to the address as shown on the Bond Register of each Owner of a Bond of such
maturity or maturities appearing on the books of the Registrar at the close of business on the last
business day next preceding the date of mailing such notice.
SECTION 5. PROVISIONS AS TO PRIOR REDEMPTION.
(a) Redemption Prior to Maturity. The Bonds maturing on and after January 1,
2004, are subject to redemption prior to maturity, at the option of the City, on any Interest
Payment Date on and after January 1, 2003, in inverse order of maturities and by lot within a
single maturity, at a redemption price expressed as a percentage of the principal amount of the
Bonds called for redemption, as set forth in the following schedule, plus accrued interest to the
date of redemption:
Redemption Dates
(Inclusive)
January 1, 2003 through July 1, 2003
January 1, 2004, and thereafter
Redemption Price
Percentage of Principal Amount
102%
101%
(b) 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 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.
(c) Notice of Redemption. The Registrar shall give notice of any redemption
by sending at least one such notice by regular, first class mail not less than 30 and not more than
60 days prior to the date fixed for redemption to the registered Owner of each 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 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, and the place at which the Bonds are to be surrendered for payment, and, if
less than all of the Bonds are to be redeemed, an identification of the Bonds or portions thereof
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to be redeemed. Any notice 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 Payee Bank 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 main corporate trust office of the Payee Bank
on or after the date fixed for redemption, the Payee Bank 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
W as to which notice as aforesaid shall have been given, and for the retirement of which, upon the
terms aforesaid, funds are duly provided, will 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 Registrar and upon the 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.
SECTION 6. MUTILATED, LOST, STOLEN OR DESTROYED BONDS.
If any Bond shall be mutilated, lost, stolen or destroyed, the Registrar may 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 Registrar, and in the case of any lost, stolen or
destroyed Bond, there shall be first furnished to the Registrar satisfactory evidence of the
ownership of such Bond and of such loss, theft or destruction, together with indemnity
satisfactory to the Registrar. If any such Bond shall have matured, the Payee Bank may pay the
same instead of issuing a new Bond. The City and/or the Registrar may charge the Owner of
such Bond its (their) reasonable fees and expenses in this connection.
SECTION 7. AUTHENTICATION OF BONDS.
The Bonds, after being printed, 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 Registrar by the execution of the
Authentication Certificate of Registrar appearing on such Bond. Such Certificate appearing on
any Bond shall be deemed to have been duly executed by the Registrar if manually signed by
an authorized officer of the Registrar. It shall not be required that the same officer of the
Registrar sign such Certificate on all of the Bonds.
The City shall deliver or cause to be delivered to the Registrar a sufficient quantity of
Bonds to enable the Registrar to hold a quantity of Bonds, after the initial delivery of the
authorized issue of the Bonds for future authentication and exchange for such Bonds as may be
exchanged and transferred from time to time.
SECTION 8. BONDS PAYABLE OUT OF REVENUES.
All of the Bonds and any additional Parity Bonds, and the interest thereon shall be
payable out of the Sinking Fund, and shall be a valid claim of the holders thereof against said
Sinking Fund and against a sufficient portion of the Gross Revenues of the System pledged to
the Sinking Fund.
SECTION 9. BOND FORM.
The Bonds shall be in substantially the form set forth in Exhibit A attached hereto and
incorporated herein.
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SECTION 10. SALE OF BONDS.
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The Bonds shall be sold at public sale immediately after public advertisement as required
by Chapter 424 of the Kentucky Revised Statutes, and the City Chief Officer and the City Clerk
are authorized and directed to make such advertisement of a Notice of Bond Sale in such form
as may be prepared by Bond Counsel and as recommended by the Fiscal Agent.
Forms of "Notice of Bond Sale," "Official Terms and Conditions of Sale of Bonds" and
"Bid Form" in substantially the forms attached hereto, 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 Bonds. Copies of said documents shall be furnished to a list of prospective
bidders and to any interested parties who may request the same.
If for any reason it is determined that no bid should be accepted when the Bonds are first
offered for public sale, then, upon recommendation of the Fiscal Agent, the City Chief Officer
is authorized to readvertise such Bonds for public sale and to approve a revised Notice of Bond
Sale, Bid Form and Official Terms and Conditions of Sale of Bonds, and to distribute same to
prospective bidders, without the necessity of the Governing Body taking any further action or
granting any further authority for such proceedings.
SECTION 11. ACCEPTANCE OF BID FOR PURCHASE OF BONDS.
Upon the date and at the hour set forth for the opening and consideration of purchase
bids, as provided in the instruments hereinabove approved, the sealed bids theretofore received
by the 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
Governing Body shall, on the same day that such bids are received or as soon thereafter as
reasonably possible, reject all bids or 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," as is deemed in the best interest of the City.
If the Governing Body shall accept a purchase bid for the Bonds, the Governing Body
shall determine and adjust the exact principal amount and principal maturities of the Bonds plus
or minus up to $175,000 to effect the purpose of the issuance of the Bonds, and shall adopt an
Order to that effect, and supply proper evidence of such acceptance to the bidder submitting the
accepted bid, and thereupon arrangements shall be made for the Bonds to be printed and
delivered in accordance therewith and with the Official Terms and Conditions of Sale of Bonds.
SECTION 12. OPERATION OF SYSTEM AND ALLOCATION OF
REVENUES.
From and after the date of delivery of the Bonds, the System shall be operated on a fiscal
year basis from July 1 of each year to June 30 of each respective ensuing year, or on such other
fiscal year basis as shall be adopted for the operation of the System; and the gross income and
revenues of the System shall be set aside monthly and allocated as provided in this Ordinance.
SECTION 13. CREATION OF SPECIAL FUNDS.
There is hereby established, the following funds or accounts:
(1) City of Paducah Sewer System Revenue Fund (the 'Revenue Fund") to be
established at any FDIC Insured bank or trust company incorporated under the laws of the United
States of America or any state thereof, selected by the City;
(2) City of Paducah Sewer System Revenue Bond Debt Service Fund (the "Sinking
Fund") to be established and maintained at the Depository Bank;
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(3) City of Paducah Sewer System Depreciation Fund (the 'Depreciation Fund") to
be established and maintained at any FDIC insured bank or trust company incorporated under the
laws of the United States of America or any state thereof, selected by the City; and
(4) City of Paducah Sewer System Operation and Maintenance Fund (the "Operation
and Maintenance Fund") to be established and maintained at any FDIC insured bank or trust
company incorporated under the laws of the United States of America or any state thereof,
selected by the City.
Moneys deposited into any such funds shall be maintained, invested and applied in the
manner prescribed in this Ordinance.
SECTION 14. DISPOSITION OF PROCEEDS OF BONDS; USE OF
FUNDS IN ACCOUNTS CREATED IN PRIOR BOND
ORDINANCES; ARBITRAGE LHVHTATIONS.
Upon the sale and delivery of the Bonds and upon receipt by the City of the purchase
price thereof, it is hereby ordered that:
A. DISPOSITION OF PROCEEDS OF BONDS.
(1) Payment of Fees and Expenses. There shall first be deducted and paid from the
proceeds of the sale of the Bonds the fee of the Fiscal Agent according to the terms of the
contract of said Fiscal Agent, as heretofore approved, and any other expenses of the issuance of
the Bonds.
(2) Deposit of Collected Accrued Interest in Sinking Fund. An amount equal to the
accrued interest collected from the Original Purchaser of the Bonds for the period from the date
of the Bonds (September 1, 1993) to the date of delivery, shall be deposited into the Sinking
Fund.
(3) Deposit to Escrow Fund. An amount which when invested in Government
Obligations, will be sufficient to pay the principal and interest on all of the Bonds of 1985
coming due on and prior to July 1, 1996, and to redeem, on July 1, 1996, all of the then
remaining Outstanding Bonds of 1985 at a redemption price equal to 103% of the principal
amount redeemed plus accrued interest to date of redemption shall be deposited to the Escrow
Fund.
(4) Deposit to Prior Sinking Fund. An amount equal to the redemption price for the
Bonds of 1974 maturing on and after January 1, 1995 to effect the redemption of the Bonds of
1974 on January 1, 1994 shall be deposited in the Prior Sinking Fund.
(5) Deposit to Sinking Fund. The remaining balance, if any, shall be deposited in the
Sinking Fund.
B. USE OF FUNDS IN ACCOUNTS CREATED IN PRIOR BOND ORDINANCES.
(1) The funds and investments in the Prior Sinking Fund and the Sinking Fund
Reserve shall be held therein and/or transferred to the Escrow Fund, as determined by Bond
Counsel and invested in Governmental Obligations sufficient to effect the purposes set forth in
RECITAL F and G hereof.
Revenue Fund created pursuant to the 1974
(2) The funds and investments m the eve ue un
Ordinance shall be transferred to the Revenue Fund created in Section 13 hereof for the uses and
purposes herein provided.
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(3) Funds in the Depreciation Fund created pursuant to the 1974 Ordinance shall be
transferred to the Depreciation Fund created pursuant to Section 13 hereof for the uses and
purposes herein provided.
(4) The funds and investments in the Operation and Maintenance Fund created
pursuant to the 1974 Ordinance shall be transferred to the Operation and Maintenance Fund
created pursuant to Section 13 hereof for the uses and purposes herein provided.
C. ARBITRAGE LIMITATIONS.
(1) Neither the proceeds of the Bonds, nor "Non -Exempt Revenues of the System,"
as defined herein, will be invested in investments which will produce a net adjusted yield in
excess of the net interest cost (effective yield) of the Bonds, if such investment would cause such
Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code;
provided, however, that such proceeds and/or revenues may be invested to whatever extent and
whenever the Code and/or applicable regulations permit same to be invested without causing the
Bonds to be treated as "arbitrage bonds."
(2) "Non -Exempt Revenues" within the meaning of the foregoing shall be deemed to
refer to revenues of the System deposited in any of the funds earmarked for or reasonably
expected to be used for the payment of debt service on the Bonds, in excess of "Exempt
Revenues," which Exempt Revenues are:
(a) amounts deposited in the Sinking Fund for the purpose of paying debt service on
Outstanding Bonds within thirteen (13) months from the date of deposit;
(b) amounts deposited in the Sinking Fund Reserve, to the extent that such deposits
do not cause the total amount deposited therein to exceed the lesser of the
maximum annual debt service for principal and interest on the Outstanding
Bonds, or 125% of the average annual debt service on the Bonds, or 10% of the
total issued principal amount of Bonds;
(c) amounts deposited in the Operation and Maintenance Fund reasonably expected
to be used for the costs of the operation and maintenance of the System and not
reasonably expected to be used to pay debt service on the Bonds;
(d) amounts deposited in the Depreciation Fund or any similar reserve for
replacements, reasonably expected to be used for extensions, additions,
improvements or replacements to the System, and not reasonably expected to be
used to pay debt service (even if pledged to be used to pay debt service in the
event of the unexpected inadequacy of other funds pledged for that purpose) on
the Bonds.
(3) If, and to the extent that any Non -Exempt Revenues are on deposit and are
available for investment by reason of the foregoing, such funds shall be subject to the investment
limitations set out in Section 14.C.(1) above; provided that any funds transferred to the Revenue
Fund shall not be subject to such limitations.
On the basis of information furnished to the City, on known facts, circumstances and
reasonable expectations on the date of enactment of this Ordinance, the City certifies as follows:
(a) That it is not expected or contemplated that the proceeds of the Bonds will be
used or invested in any manner which will cause any of the Bonds to be treated
as "arbitrage bonds" within the meaning of Section 148 of the Code.
(b) That it is not expected or contemplated that the City will make any use of the
proceeds of the Bonds, which, if such use had been reasonably anticipated on the
date of issuance of the Bonds, would have caused the Bonds to be arbitrage
bonds.
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(c) That it is expected and contemplated that the City will comply with (i) all of the
requirements of Section 148 of the Code; and (ii) all of the requirements of the
Treasury Regulations relating thereto, to whatever extent is necessary to assure
that the Bonds will not be treated as arbitrage bonds.
(d) That it is anticipated that amounts on deposit in the Sinking Fund (exclusive of
the Sinking Fund Reserve) will be used within 13 months from the date of
deposit for the payment of debt service on the Outstanding Bonds.
(e) That amounts accumulated in the Sinking Fund Reserve will not exceed the lesser
of the maximum annual debt service for principal and interest on the Bonds, or
125% of the average annual debt service on the Bonds or 10% of the total issued
principal amount of Bonds.
(f) That it is not reasonably anticipated that amounts accumulated in the Depreciation
Fund or the Operation and Maintenance Fund will be used for payment of debt
service on any bonds payable from the revenues of the System, even though such
Funds will be so available if necessary to prevent a default in the payment of
principal and interest on such Bonds.
Prior to or at the time of delivery of the Bonds, the City Chief Officer and/or the City
Treasurer are authorized to execute the appropriate certification with reference to the matters
referred to above, setting out all known and contemplated facts concerning such anticipated
investment of the proceeds of the Bonds, including the execution of necessary and/or desirable
certifications of the type contemplated by the Code and applicable regulations, as amended, in
order to assure that interest on the Bonds will be exempt from all federal income taxes and that
the Bonds will not constitute or be treated as arbitrage bonds.
SECTION 15. FLOW OF FUNDS.
A. Revenue Fund. The gross income and revenues of the System shall be set aside
1� as received into the Revenue Fund maintained at the Depository Bank and shall then be
expended, used and apportioned as hereinafter set forth in this Section.
There shall be transferred on or before the first day of each month, from the Revenue
Fund, the amounts hereinafter specified:
(1) To the Sinking Fund, an amount equal to one-sixth (1/6) of the interest becoming
due on the Outstanding Bonds, or such larger or smaller amount as necessary to
pay such interest, on the next succeeding Interest Payment Date; provided
however, that as to the interest due on the Bonds for the period from
September 1, 1993, to January 1, 1994, such amount is subject to a credit for the
amount of accrued interest collected on the Bonds and deposited in the Sinking
Fund, and is subject to a credit for the amount, if any, on deposit in the Sinking
Fund transferred thereto on the date of issue of the Bonds for payment of interest
on the Bonds; plus
(2) To the Sinking Fund, an amount equal to one -twelfth (1/12) of the principal
amount of all Outstanding Bonds maturing on the next succeeding January 1, or
such larger or smaller amount as necessary to pay such principal amount; plus
(3) To the Sinking Fund Reserve, if, whenever, and so long as an amount equal to
the Required Sinking Fund Reserve shall not have been accumulated and/or is not
being maintained therein, including any amounts payable under the Sinking Fund
Reserve Insurance Policy, an amount equal to one -sixtieth (1/60) of the Required
Sinking Fund Reserve, until such amount shall have been accumulated, after
which additional deposits may be discontinued, subject to resumption, if,
whenever, and so long as the Required Sinking Fund Reserve shall be reduced
below such stipulated amount.
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(4) To the Depreciation Fund, if, whenever, and so long as an amount equal to
$250,000 is not then being held therein, an amount equal to $4,000, until the
amount of $250,000 has been accumulated and is being maintained therein.
(5) To the Operation and Maintenance Fund, an amount which, together with the
funds already on deposit therein, will be equal to all costs of operating,
maintaining and insuring the System for two full months, as determined from the
Annual Budget of Current Expenses.
B. Sinking Fund. The Sinking Fund shall be maintained at the Depository Bank and
shall be used for the purpose of accumulating the amounts necessary to pay the debt service of
principal and interest on the Outstanding Bonds when due. The Sinking Fund is hereby pledged
for the payment of the interest on and the principal of the Outstanding Bonds and is subject to
a first and paramount lien and charge in favor of the Owners of the Outstanding Bonds without
preference or priority as to one Outstanding Bond over another Outstanding Bond.
No further payments need be made into the Sinking Fund whenever and so long as such
amount of the Outstanding Bonds shall have been retired that the amounts then held in the
Sinking Fund and in the Sinking Fund Reserve are equal to the entire amount of the interest and
principal that will be payable to and at the time of the retirement or maturity of all of the then
Outstanding Bonds.
Such payments into the Sinking Fund shall be made on or before the first day of each
month, except that when the first day of any month shall be on a Sunday or legal holiday, then
such payments shall be made no later than the next succeeding business day.
In the event that the income and revenues during any month are inadequate to make the
required payments into the Sinking Fund, the deficiency shall be made up and paid as aforesaid
from the first available income and revenues thereafter received, and same shall be in addition
i
to payments otherwise provided to be made in such succeeding month or'months.
All funds on deposit in the Sinking 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
subsection F of this Section.
There shall be maintained in the Sinking Fund an amount equal to the Required Sinking
Fund Reserve. Amounts on deposit in the Sinking Fund Reserve, including amounts available
under the Sinking Fund Reserve Insurance Policy, shall be withdrawn and used by the Payee
Bank if and to the extent necessary, to prevent a default in the payment of principal and interest
on the Outstanding Bonds as and when due if the amounts otherwise on deposit in the Sinking
Fund and the Depreciation Fund, applied in that order, are not sufficient to make such payments.
The Payee Bank agrees to cause notice of such deficiency to be given to the appropriate parties
issuing the Sinking Fund Reserve Insurance Policy.
If, whenever, and so long as the Sinking Fund Reserve contains more than one surety
bond or insurance policy, any charge, draw, withdrawal, or other reduction in or from such
Reserve must be made pro rata against such surety bond and/or insurance policy or policies after
the depletion of any cash or assets other than surety bonds or policies.
As and when additional Parity Bonds are issued, provision shall be made for increasing
the Required Sinking Fund Reserve in the Sinking Fund by an amount equal to the Required
Sinking Fund Reserve by taking into account the maximum amount of principal and interest
requirements of the Parity Bonds falling due in any twelve-month period thereafter, by (a) the
immediate deposit of cash (and/or Investments) of such additional amount required to provide
such increased Required Sinking Fund Reserve, or (b) obtaining a Sinking Fund Reserve
Insurance Policy to effect such funding, and such Required Sinking Fund Reserve shall be
similarly maintained and restored when necessary, in the manner specified above.
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No amounts shall be credited to the Sinking Fund Reserve which would cause the total
amount credited to the Sinking Fund Reserve to exceed the Required Sinking Fund Reserve; and
any investment income from the Sinking Fund Reserve which would cause the total amount
credited in such Reserve to exceed such amount, shall be credited to and considered a part of the
Revenue Fund.
C. Depreciation Fund. The City shall accumulate in the Depreciation Fund an
amount of at least $250,000.
Amounts in the Depreciation Fund may be withdrawn and used upon appropriate
certification by whatever official is duly authorized by the Governing Body to make such
certification, for the purpose of paying the cost of making unusual or extraordinary maintenance,
repairs, renewals and/or replacements to the System not included in the Annual Budget of Current
Expenses, which would be necessary to keep the System in good operating condition, or for the
purpose of paying the cost of constructing extensions, additions and/or improvements to the
System which will either enhance the revenue-producing capacity of the System or provide a
higher degree of service; provided, however, that if the combined available balances in the
Sinking Fund, including the Sinking Fund Reserve on any January 1 or July 1 shall be
insufficient to pay the next maturing installment of interest and/or principal of the Outstanding
Bonds, the City shall withdraw and transfer from the Depreciation Fund to the Sinking Fund
whatever amount may be required to eliminate the deficiency in the Sinking Fund and to avoid
a default.
Provided further than any such withdrawals shall be promptly restored to the Depreciation
Fund through the deposit from the Revenue Fund in each month into the Depreciation Fund, the
sum of $4,000, until the total sum of $250,000 has been restored and is being maintained.
In the event that the income and revenues during any month are inadequate to make the
required payments into the Depreciation Fund, the deficiency shall be made up and paid as
aforesaid from the first available income and revenues thereafter received, and same shall be in
addition to payments otherwise provided to be made in such succeeding month or months.
1
\� As is certified in Section 15.B. above, it is not reasonably anticipated that any amounts
in the Depreciation Fund will be used to pay debt service on any Outstanding Bonds.
There shall be deposited in said Depreciation Fund the proceeds of any property damage
insurance not immediately used to replace damaged or destroyed property and connection fees
charged to customers for connecting to the System until used to defray the cost of such
connections.
As and when additional Parity Bonds are issued, the City shall determine at the time of
issuance thereof, with the advice of the Independent Consulting Engineers and/or Certified Public
Accountants then employed by the City, (a) whether additional amounts shall be accumulated in
the Depreciation Fund, (b) the exact revision, if any, in the required deposits in the Depreciation
Fund, and (c) the revised total amount necessary to be accumulated in the Depreciation Fund;
whereupon covenants to that effect shall be incorporated in the proceedings authorizing the
issuance of such Parity Bonds.
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
subsection F of this Section 15.
D. Operation and Maintenance Fund. There shall be transferred from the Revenue
Fund and deposited into the Operation and Maintenance Fund, from month to month, or as
needed, such amounts as are required to pay, as they accrue, the proper and necessary costs of
operating, maintaining and insuring the System, as set out in the "Current Expenses" contained
in the Annual Budget of Current Expenses and to accumulate and maintain in the Operation and
Maintenance Fund at all times an amount sufficient to pay all costs of operating, maintaining and
insuring the System for two (2) full months for as long as any of the Bonds are Outstanding.
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Subject to the foregoing requirements, all costs of operating, maintaining and insuring the System
shall be paid from the Operation and Maintenance Fund.
In the event that the income and revenues during any month are inadequate to make the
required payments into the Operation and Maintenance Fund, the deficiency shall be made up and
paid as aforesaid from the first available income and revenues thereafter received, and same shall
be in addition to payments otherwise provided to be made in such succeeding month or months.
All funds in the Operation and Maintenance Fund shall be kept separate and apart from
all other municipal funds and shall be deposited, secured and/or invested in the manner provided
in subsection F of this Section 15.
E. Surplus Funds. If, after making the payments required by the foregoing, there
shall remain a balance in the Revenue Fund in excess of six (6) months interest on Outstanding
Bonds, such excess balance may be used for any lawful purpose of the City, including the
payment of principal and interest on indebtedness inferior and subordinate to the Outstanding
Bonds incurred subject to the provisions of Section 20(1) hereof.
F. Investment of Funds. The City shall cause to have invested such portion of the
Revenue Fund, the Sinking Fund, the Sinking Fund Reserve, the Depreciation Fund and the
Operation and Maintenance Fund in Investments as defined in Section 1 hereof which
Investments shall be designated by the City, registered in the name of the City for the account
of the fund for which invested; and any of such funds on demand deposits in excess of the
amount insured by the FDIC shall, until expended, be secured by a pledge of an equivalent
amount in current market value (exclusive of accrued interest) of Governmental Obligations,
having a maturity date or being subject to redemption at the option of the holder not more than
five (5) years from the date of investment therein; and all such income from such Investments
shall be treated as revenues of the System and deposited into the Revenue Fund.
As is certified in Section W.B. above, no investment shall be made of either the proceeds
of the Outstanding Bonds or the revenues of the System which will cause the Outstanding Bonds
to be treated as arbitrage bonds within the meaning of Section 148 of the Code.
SECTION 16. DETERMINATION BY CITY THAT PROPORTIONS
OF DEPOSITS ARE CORRECT.
The Governing Body of the City hereby finds and determines that, exclusive of the
payments required to be made into the Sinking Fund and the Sinking Fund Reserve, the amounts
required to be deposited into the Depreciation Fund are proper and sufficient for the purposes of
such Depreciation Fund, and the amounts which are provided to be paid into the Operation and
Maintenance Fund are proper and sufficient for the operation, maintenance and insurance of the
System.
SECTION 17. 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 their custody at any time. The City will segregate
and earmark such funds, consistent with this Ordinance, in such manner as to enable the City to
obtain the benefit of the lowest possible premium rates on such surety bond or bonds. Each such
bond shall have a surety given by a surety corporation qualified or authorized to do business in
Kentucky, and the premium of such surety bond shall constitute a proper expense of operating
and maintaining the System, and may be paid from the moneys available in the Operation and
Maintenance Fund.
SECTION 18. ADOPTION OF BUDGET OF CURRENT EXPENSES.
The City covenants and agrees that prior to the delivery of the Bonds, the City will cause
to have adopted a budget of current expenses for the operation of the System for the remainder
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of the then current fiscal year, and thereafter, on or before the first day of each fiscal year prior
to the year of final maturity of the Outstanding Bonds, and will furnish a copy of such Budget
or amendments thereto, upon request, to any Bondowner. Current expenses shall include all
reasonable and necessary costs of operating, repairing, maintaining and insuring the System, but
shall exclude payments into the Sinking Fund and into the Sinking Fund Reserve. The City
further covenants that the current expenses incurred in any year shall not exceed the necessary
and reasonable amounts required therefor, and that the City will not expend any amount or incur
any obligations for operation, maintenance and repair in excess of the amounts provided for
Current Expenses in the current Annual Budget of Current Expenses, except on proper
justification and resolution by the Governing Body that such expenditures are necessary to
M„ operate and maintain the System. The City further covenants that at the same time and in like
manner, the City will prepare an estimate of Gross Revenues to be derived from the operation
of the System for such 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.
SECTION 19. RATES AND CHARGES FOR SERVICES OF THE
SYSTEM.
While the Outstanding Bonds, or any of them, 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, the proper and
necessary allowances for depreciation thereof, and the amounts necessary for the retirement of
all Outstanding Bonds and the accruing interest on all such Outstanding Bonds, and there shall
be charged such rates and amounts as shall be adequate to meet all requirements of the provisions
of this Ordinance. Prior to the issuance of the Bonds a schedule of rates and charges for the
services rendered by the System to all users adequate to meet all requirements of this Ordinance
has been established and adopted and is now in full force and effect.
The 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, and/or Certified Public Accountant as defined herein, to the effect that the annual net
revenues (defined as Gross Revenues less 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 125% of the
maximum debt service requirements falling due in any year thereafter for the principal of and
interest on all of the then Outstanding Bonds, calculated in the manner specified in Section
20(2)(b) hereof.
The City also covenants to cause a report to be filed with the Governing Body within four
(4) months after the end of each fiscal year by Certified Public Accountants and/or Independent
Consulting Engineers, setting forth the percentage of the annual net revenues of the System for
such year divided by the maximum debt service requirements falling due in any year thereafter
for principal of and interest on all of the then Outstanding Bonds, calculated in accordance with
generally accepted accounting principles; 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 115% of
the maximum debt service requirements falling due in any year thereafter for the principal of and
interest on all of the then Outstanding Bonds, the City shall increase the rates by an amount or
amounts sufficient, over the period of one year, in the opinion of such Engineers and/or
Accountants, to establish the existence of or immediate projection of, such minimum 115%
coverage.
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to reflect (ii) any increase in such net revenues projected by reason of the
revenues anticipated to be derived from the extensions, additions and/or
improvements to the System being financed (in whole or in part) by such
additional Parity Bonds; provided 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 a 100% performance bond) prior to the issuance of such additional Parity
Bonds. All of such adjustments shall be based upon the written certification of
an Independent Consulting Engineer, as defined herein.
(c) The interest payment dates for all such additional Parity Bonds shall be
semiannually on January 1 and July 1 of each year, and the principal maturities
thereof shall be on January 1 of the year in which any such principal is scheduled
to become due.
(3) Parity Bonds to Refund or Refinance Outstanding Bonds. 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, 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 Certified Public Accountants and/or Independent Consulting Engineers,
based upon necessary investigation, that:
(a) after the issuance of such Parity Bonds, the annual net revenues, as adjusted and
defined above, of the then existing System for the fiscal year preceding the date
of issuance of such Parity Bonds, after taking into account the revised debt
service requirements resulting from the issuance of such Parity Bonds and from
the elimination of the bonds being refunded or refinanced thereby, are equal to
not less than 125% of the maximum debt service requirements 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
(b) in the alternative, that the debt service requirements for the Outstanding Bonds
and the proposed Parity Bonds, in any year of maturities thereof after the
redemption of the Outstanding Bonds scheduled to be refunded through the
issuance of such proposed Parity Bonds, shall not exceed the scheduled debt
service requirements applicable to the Outstanding Bonds then Outstanding for
any corresponding year prior to the issuance of such proposed Parity Bonds and
the redemption of any of the Outstanding Bonds to be refunded.
(4) Parity Bonds at time of Consolidation of Waterworks and Sewer Systems. The
City further reserves the following rights:
(a) to combine and consolidate its existing waterworks 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 waterworks system
(the "Prior Water 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:
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(i) after the issuance of such parity bonds, the annual net revenues, as
adjusted and defined above, of the then existing waterworks 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 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 Water 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 Water Bonds, for any corresponding year prior to the issuance of such
proposed parity refunding bonds.
(b) After the creation of such Consolidated System, the City further reserves the
right, to add new water and/or sewer facilities, and/or related auxiliary facilities,
and/or to finance future extensions, additions and/or improvements to the
Consolidated System by the issuance of 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.
(c) Also, after the creation of the Consolidated System, the City further reserves the
right, to combine Parity Bonds, issued to refund outstanding Prior Water 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 Outstanding 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 Outstanding Bonds and such
additional Parity Bonds.
(5) Priority of Lien; Permissible Disposition of Surplus or Obsolete Facilities;
Conditions. The City covenants and agrees that so long as any of the Outstanding Bonds are
Outstanding, 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
Outstanding Bonds. Notwithstanding the foregoing, the City may at any time permanently
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abandon the use of, or sell at fair market value, any part of the facilities of the System, provided
that:
(a) It is in compliance with all covenants and undertakings in connection with all of
the Outstanding Bonds then Outstanding and payable from the revenues of the
System and the Sinking Fund Reserve for such Outstanding Bonds is being
maintained therein at the stipulated level;
(b) It will, in the event of any such sale, apply the proceeds to either (i) redemption
of Outstanding Bonds in accordance with the provisions governing redemption of
the Outstanding Bonds in advance of maturity, or purchase of Outstanding 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;
(c) It 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;
(d) 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 the earnings requirements hereinbefore provided in the provisions and
conditions governing the issuance of additional Parity Bonds;
(e) Such sale or disposition will not have the effect of causing the Outstanding Bonds
to become arbitrage bonds as defined in paragraph 14C hereof.
SECTION 21. ALL BONDS OF THIS ISSUE ARE EQUAL.
The Bonds authorized and permitted to be issued hereunder, and from time to time
Outstanding, shall not be entitled to priority one over the other in the application of the income
and revenues 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 authorized or permitted to be issued
under the provisions of this Ordinance, regardless of the fact that they may be actually issued and
delivered at different times, subject to the provisions of Section 20 (Inferior Bonds, Parity Bonds
and Surplus Facilities).
SECTION 22. DEFEASANCE.
The City reserves the right, at any time, to cause the pledge of the revenues securing the
Outstanding Bonds to be defeased and released by paying an amount into an escrow fund with
any FDIC insured bank sufficient, when invested (or sufficient without such investment, as the
case may be) in Governmental Obligations to assure the availability in such escrow fund of an
adequate amount (a) to call for redemption and to redeem and retire all or any part of such
Outstanding Bonds, both as to principal and as to interest, on the next or 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, the determination of whether to defease under (a) or (b) or both to be made by the
Governing Body of the City. Such Investments 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 cause the required notice of the redemption of such
Outstanding Bonds and the applicable redemption date to be given pursuant to Section 5(c)
hereof. Upon the proper amount of Governmental Obligations being placed in escrow as herein
provided, such revenue pledge shall be automatically fully defeased and released without any
further action being necessary as to such Outstanding Bonds. The City reserves the same right
to defease and release the pledge of revenues securing any Parity Bonds.
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SECTION 23. INSURANCE.
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(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.
The foregoing fire and extended coverage insurance shall be maintained so long as any
of the Outstanding 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 insurance value of the damaged facility.
In the event of any damage to or destruction of any part of the System, the insurance
proceeds shall be deposited to the credit of the Depreciation Fund and applied for the repair or
reconstruction of the damaged or destroyed portion thereof.
(b) Liability Insurance on Facilities. The City shall, if such insurance is not already
in force, procure and maintain, so long as any of the Outstanding Bonds are Outstanding, public
liability insurance relating to the operation of the facilities of the System, with limits of not less
than $500,000 per person and per accident, to protect the City from claims for bodily injury
and/or death; and not less than $500,000 from claims for damage to property of others which
may arise from the City's operations of the System and any 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 operations of the System, 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 limits of not less than $500,000 per person and per accident, to protect the City
from claims of bodily injury and/or death, and not less than $500,000 against claims for damage
to property of others which may arise from the operation of such vehicles by the City.
SECTION 24. RECORDS, AUDITS AND REPORTS; MONTHLY
REPORTS.
Insofar as consistent with the laws of Kentucky, the City agrees that so long as any of
the Outstanding Bonds remain Outstanding, it will keep proper books of records and account
showing complete and correct entry of all transactions relating to the System in accordance with
generally accepted accounting principles (for facilities of like type and size), in which complete
and correct entries shall be made of all pertinent transactions. All such records and books of
account shall at all times during normal business hours be subject to inspection by the holders
and Owners of 10% or more of the principal amount of the Outstanding 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 sixty (60) days thereafter, the City will cause an audit of
the financial affairs of the System to be prepared by Certified Public Accountants, covering the
operation of the System for the preceding fiscal year.
A copy of said audit report shall be sent to the Original Purchaser upon request, and a
copy shall be kept on file in the office of the City Clerk, where it 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 such Owner upon request.
SECTION 25. GENERAL COVENANTS.
The City covenants that so long as any of the Outstanding Bonds are Outstanding, as
follows:
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A. It will at all times own and operate the System as a public project on a revenue-
producing basis, and will permit no services to be rendered free of charge or without full
compensation.
B. It will at all times maintain the System in good condition through application of
revenues 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 compering sewer system, public or private, to sell or provide
sewer 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 cause
rates and charges for sewer service furnished by the System to be billed simultaneously with rates
and charges for water service to the same customers, and will provide that water service will be
discontinued to any premises where there is a failure to pay any part of the aggregate charges
so billed, including such penalties and fees for disconnection and/or reconnection as may be
prescribed from time to time, to the greatest extent permitted by law.
SECTION 26. CONTRACTUAL NATURE OF ORDINANCE.
The provisions of this Ordinance shall constitute a contract between the City and the
Owners of the Bonds and any Parity Bonds; and after the issuance of any of such bonds, no
change, variation or alteration of any kind in the provisions of this Ordinance shall be made in
any manner except as herein provided until such time as all of said bonds and the interest thereon
have been paid or provided for in full, by defeasance (as per Section 22 or as otherwise provided
herein; provided (a) that the Governing Body of the City may, without the consent of the
Bondowners, enact an Ordinance or adopt a Municipal Order (i) to evidence the succession of
another Bank or Trust Company as Payee Bank, Depository and Registrar, (ii) for the purpose
of curing any ambiguity, or of curing, correcting or supplementing any defective or inconsistent
provisions contained herein or in any ordinance or other proceedings pertaining hereto, and (iii)
for any other purpose, which shall not impair the security of the Owners of the Bonds; and (b)
provided further, that the Owners of eighty percent (80%) in principal amount of the Bonds at
any time Outstanding shall have the right to consent to, and approve the adoption of ordinances,
resolutions, orders or other proceedings, modifying or amending any of the terms or provisions
contained in this Ordinance, subject to the condition that (1) this Ordinance shall not be so
modified in any manner that would reduce the amount of the principal, redemption price, if any,
or interest due on the Outstanding Bonds or change the dates for payment thereof, or that would
permit any other obligations of the System to acquire an interest in the revenues of the System
equal or prior to the pledge of those revenues to payment of the Outstanding Bonds, or that may
adversely affect the rights of any certain Owners without similarly affecting the rights of all
Owners of the Bonds and any Parity Bonds then Outstanding, or (2) to reduce the percentage of
the number of owners whose consent is required to effect a further modification.
SECTION 27. EVENTS OF DEFAULT; REMEDIES.
The following items shall constitute an "event of default" on the part of the City:
(a) The failure to pay the principal of any of the Outstanding Bonds when due and
payable.
(b) The failure to pay any installment of interest on the Outstanding Bonds when the
same shall become due and payable.
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(c) The default by the City in the due or punctual performance of any other of the
covenants, conditions, agreements and provisions contained in the Bonds or in this Ordinance.
(d) The failure to promptly repair, replace or reconstruct needed or essential facilities
of the System that have been damaged and/or destroyed.
(e) The entering of an order or decree with the consent or acquiescence of the City
appointing a receiver of all or any part of the System or any revenues thereof; or if such order
or decree having been entered without the acquiescence or consent of the City, its failure in not
having the order vacated, discharged or stayed on appeal within sixty (60) days after entry.
Any Owner of the Bonds may, either at law or in equity, by suit, action, mandamus or
other proceedings, enforce and compel performance by the City and its officers and agents of all
duties imposed or required by law or by this Ordinance in connection with the operation of the
System, including the making and collection of sufficient rates, the segregation of the income and
revenues of the System and the application thereof in accordance with the provisions of this
Ordinance.
Upon the occurrence of an "event of default" as defined above, then upon the filing of
suit by any Owner of the Bonds any court having jurisdiction of the action may appoint a
Receiver pursuant to KRS 58.060 to administer the System on behalf of the City, with power to
charge and collect rates and charges for the services and facilities provided by the System
sufficient to provide for the payment of any Outstanding Bonds and other obligations of the
System, and the interest thereon, together with the expenses of operation and maintenance, and
to apply the income and revenues in accordance with the provisions of this Ordinance, and of the
applicable statutes of Kentucky, and to take such other legal action as may be appropriate for the
protection of any such Owner.
The City hereby agrees to transfer to any bona fide Receiver or other subsequent operator
of the System, pursuant to any valid court order in a proceeding brought to enforce collection
or payment of the City's obligations, all contracts and other rights of the City pertaining to the
System, conditionally, for such time only as such Receiver or operator shall operate by authority
of the Court. In the event of default, the Owner of any of the Bonds may require the governing
body of the City by injunction to raise the rates a reasonable amount.
SECTION 28. COVENANT TO REQUIRE USE OF SEWER SYSTEM.
The City agrees that during the time any of the Outstanding Bonds are Outstanding, it
will take all such steps as may be necessary to cause the owners of all properties abutting upon
any sewer lines of the City to connect thereto and to keep connected thereto all sanitary sewage
drain pipes on such properties. The foregoing covenant shall be in favor of and enforceable by
the holders and Owners of the Outstanding Bonds in accordance with the provisions herein
contained. If the City fails to take such steps, it may be required to do so by such Owners.
SECTION 29. ESCROW FUND TO DEFEASE BONDS OF 1985.
Simultaneously with the delivery of the Bonds, the City shall cause to have such amount
from the proceeds of the sale of the Bonds to be deposited to an escrow account established with
The Paducah Bank & Trust Co., Paducah, Kentucky (the "Escrow Fund") which will be
sufficient, when invested in Governmental Obligations, to pay the principal and interest on all
of the Bonds of 1985 coming due on January 1, 1994, through July 1, 1996, and to redeem all
of the remaining Outstanding Bonds of 1985 on July 1, 1996, at a redemption price of 103% of
the principal amount redeemed. Notice of such redemption shall be given not less than thirty
(30) nor more the sixty (60) days prior to July 1, 1996, all in accordance with the provisions of
Section 4 of the 1985 Ordinance.
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SECTION 30. 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
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 31. COVENANT OF CITY TO TAKE ALL ACTION
NECESSARY TO ASSURE COMPLIANCE WITH
THE CODE.
In order to assure Original Purchaser of the Bonds that interest thereon will continue to
be exempt from all federal and Kentucky income taxation (subject to certain exceptions set out
below), the City covenants to and with the Owners of the Bonds that (1) the City will take all
actions necessary to comply with the provisions of the Code, (2) the City will take no actions
which will violate any of the provisions of the Code, or would cause the Bonds to become
"private activity bonds" within the meaning of the Code, (3) none of the proceeds of the Bonds
will be used for any purpose which would cause the interest on the Bonds to become subject to
federal income taxation, and the City will comply with any and all requirements as to rebate (and
reports with reference thereto) to the United States of America of certain investment earnings on
the proceeds of the Bonds.
The City certifies that these Bonds are not "private activity bonds" within the meaning
of the Code, and the City has been advised by Bond Counsel, and therefore believes, that interest
on the Bonds is not included as an item of tax preference in calculating the alternative minimum
tax for individuals.
The City, and all subordinate entities thereof, does not reasonably anticipate issuing
T T� qualified tax-exempt obligations (other than private activity bonds) during the calendar year in
which the Bonds are being issued in excess of $10,000,000, and, therefore, the City does hereby
designate the Bonds as qualified tax-exempt obligations pursuant to the provisions of Section
265(b)(3) of the Code.
The City, and all subordinate entities thereof, does not reasonably expect to issue bonds
or other obligations considered under the Code to be "tax-exempt obligations" (other than private
activity bonds) in the aggregate principal amount in excess of $5,000,000 during the calendar
year ending December 31, 1993, and for that reason the City has been advised by Bond Counsel
that pursuant to Section 148(f)(4)(C) of the Code, neither the Sinking Fund, nor any other fund
or account established or continued in existence under the provisions of this Bond Ordinance is
subject to the "rebate requirements" on excess earnings in favor of the United States of America
imposed by the Code. The City covenants and agrees that in the event it is subsequently deter-
mined by the City, upon advice of nationally recognized bond counsel, that the Sinking Fund,
or any other fund or account established under this Bond Ordinance, are subject to said rebate
requirements and do, in fact, generate earnings from "non -purpose investments" in excess of the
amount which said investments would have earned at a rate equal to the "yield" on the Bonds,
plus any income attributable to such excess, it shall rebate to the United States of America any
such excess generated from such investments and remit such excess to the United States of
America on or before five (5) years from the date of issuance of the Bonds, and once every five
years thereafter until the final retirement of the Bonds; the last installment, to the extent required,
to be made no later than sixty (60) days following the date on which funds sufficient for the
complete retirement of the Bonds are deposited with the Paying Agent or any escrow agent.
The City is further advised that the exemption from income taxation by the United States
of America of interest on the Bonds is subject to the following exceptions:
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263
1. For purposes of the alternative minimum tax imposed on corporations (as defined
for federal income tax purposes), interest on the Bonds is taken into account in determining
adjusted current earnings for taxable years beginning after December 31, 1989.
2. Section 265 of the Code denies a deduction for interest on indebtedness incurred
or continued to purchase or carry the Bonds, except that in the case of a financial institution,
within the meaning of Section 265(b)(5) of the Code, a deduction is allowed for 80% of that
portion of such financial institutions' interest expense allocable to interest on the Bonds.
3. With respect to insurance companies subject to the tax imposed by Section 831
of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum
of certain items, including interest on the Bonds.
4. For taxable years beginning before January 1, 1996, interest on the Bonds earned
by some corporations could be subject to the environmental tax imposed by Section 59A of the
Code.
5. Interest on the Bonds earned by certain foreign corporations doing business in the
United States of America could be subject to a branch profits tax imposed by Section 884 of the
Code.
6. Passive investment income, including interest on the Bonds, may be subject to
federal income taxation under Section 1375 of the Code for Subchapter S corporations that have
Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross
receipts of such Subchapter S corporation is passive investment income.
7. Section 86 of the Code requires recipients of certain Social Security and certain
Railroad Retirement benefits to take into account, in determining the taxability of such benefits,
receipts or accruals of interest on the Bonds.
The City reserves the right to amend the Ordinance authorizing the Bonds without
obtaining the consent of the Owners of the Bonds (i) to whatever extent shall, in the opinion of
Bond Counsel, be deemed necessary to assure that interest on the Bonds shall be exempt from
federal income taxation, and (ii) to whatever extent shall be permissible (without jeopardizing
such tax exemption or the security of the Bondowners) to eliminate or reduce any restrictions
concerning the Project, the investment of the proceeds of these Bonds, or the application of such
proceeds or of the revenues of the Project. The Original Purchaser of these Bonds is deemed to
have relied fully upon these covenants and undertakings on the part of the City as part of the
consideration for the purchase of the Bonds. To the extent that the City obtains an opinion of
nationally recognized bond counsel to the effect that non-compliance with any of the covenants
contained in this Bond Ordinance or referred to in this Bond Ordinance would not subject interest
on the Bonds to federal income taxes or Kentucky income taxes, the City shall not be required
to comply with such covenants or requirements.
This Ordinance is enacted in contemplation that Bond Counsel will render an opinion as
to exemption of principal of the Bonds from Kentucky ad valorem taxation and as to exemption
of interest on the Bonds from federal and Kentucky income taxation, based on the assumption
by Bond Counsel that the City complies with covenants made by the City with respect to
compliance with the provisions of the Code, and based on the assumption of compliance by the
City with requirements as to any required rebate (and reports with reference thereto) to the
United States of America of certain investment earnings on the proceeds of the Bonds. The City
has been advised that based on the foregoing assumptions of compliance, Bond Counsel is of the
opinion that the Bonds are not "arbitrage bonds" within the meaning of Section 148 of the Code.
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SECTION 32. APPOINTMENT AND DUTIES OF BOND REGISTRAR,
TRANSFER AGENT, PAYEE BANK AND DEPOSITORY
BANK.
The Paducah Bank & Trust Co., Paducah, Kentucky, is hereby designated as the Bond
Registrar, Transfer Agent, Payee Bank and Depository Bank with respect to the Bonds.
(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 and temporary Bond or Bonds, if any, authorized
herein;
(2) To register all of the Bonds 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;
(4) To cancel and destroy (or remit to the City for 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 and Depository Bank.
(1) To maintain the Debt Service Fund including the Sinking Fund Reserve
held therein and to invest the funds contained therein in accordance with the provisions
of Section 9 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 Regis-
trar as to the ownership of each Bond as of the Record Date, and the Payee Bank's check
shall be drawn and mailed accordingly;
(3) To notify the Owner of each registered 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;
(4) To supply the City with a written accounting evidencing the payment of
interest on and principal of the Bonds within thirty (30) days following each respective
due date; and
(5) To serve as depository of amounts required to be deposited with the
Depository Bank, as provided herein.
The Registrar/Payee 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. The Registrar/Payee Bank
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 any oversight or error in judgment.
The Registrar/Payee Bank may at any time resign from its duties set forth in this
Ordinance by filing its resignation with the City Clerk and notifying the Original Purchaser or
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Purchasers of the Bonds. Thereupon, the City shall designate a successor Registrar/Payee Bank
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 the resignation of the
Registrar/Payee Bank, provision shall be made for the orderly transition of the books, records and
accounts relating to the Bonds to the successor Registrar/Payee Bank in order that there will be
no delinquencies in the payment of interest or principal due on the Bonds.
The Bank, shall indicate its acceptance of its duties as Registrar, Transfer Agent, Payee
Bank and Depository Bank by signing the acceptance of said Bank at the conclusion of this
Ordinance.
SECTION 33. SIGNATURES OF OFFICERS.
If any of the officers whose signatures or facsimile signatures appear on any of 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 such officers had remained in office until delivery, as provided
by KRS 58.040 and KRS 61.390.
SECTION 34. 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 35. EFFECTIVE DATE OF ORDINANCE; PUBLICATION OF
SUMMARY.
This Ordinance shall be introduced at a meeting of the City Commission and shall remain
on file for public inspection in the office of the City Clerk until the next following regular,
adjourned regular or called, special session of the City Commission, in the completed form in
which it shall be put on its final enactment. This Ordinance shall be in full force and effect upon
its enactment and publication thereof by title and summary, and a Notice of Enactment and
Summary of the provisions of this Ordinance, in the form submitted to this City Commission,
and approved hereby, shall be published as required by law.
Introduced and given first reading by the City Commission on August 31, 1993.
Given second reading and enacted by the City Commission on September 14, 1993.
Attest:
C� 4— �I
City Clerk
(Seal of City)
1
CITY OF PADUCAH, KENTUCKY
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Mayor
26S
CERTIFICATE OF CITY CLERK
I, Lenita Smith, certify that I am the duly qualified and acting City Clerk of the City of
Paducah, Kentucky, that the foregoing Ordinance is a true and correct copy of an Ordinance
authorizing the issuance of $1,735,000 (plus or minus up to $175,000) of City of Paducah,
Kentucky Sewer System Refunding Revenue Bonds, Series 1993, dated September 1, 1993, which
Ordinance was duly enacted by the City Commission of said City, signed by the Mayor of said
City, and attested under Seal by me as City Clerk at a properly convened meeting of the City
Commission held on September 14, 1993, as shown by the official records of the City in my
-'L custody and under my control, that said Ordinance has been ordered to be published by title and
summary as required by law, and that said Ordinance has been recorded in the official City
Ordinance Book of the City.
IN TESTIMONY WHEREOF, witness my signature as City Clerk and the official seal
of said City this September 14, 1993.
City Clerk
(Seal of City)
ACCEPTANCE BY THE PADUCAH BANK & TRUST CO., PADUCAH, KENTUCKY,
AS DEPOSITORY BANK, BOND REGISTRAR, TRANSFER AGENT AND PAYEE BANK
The undersigned hereby agrees to the provisions of the foregoing Ordinance to the extent
there are contained therein provisions as to the rights and duties of it as Depository Bank, Bond
Registrar, Transfer Agent and Payee Bank.
Dated: September _, 1993.
(Seal of Bank)
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The Paducah Bank & Trust Co.
Paducah, Kentucky
0
Signature
Title
Wo
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EXHIBIT A
UNITED STATES OF AMERICA
COMMONWEALTH OF KENTUCKY
COUNTY OF MCCRACKEN
CITY OF PADUCAH
SEWER SYSTEM REFUNDING REVENUE BOND
SERIES 1993
T NO. R-_ $
DATE OF ORIGINAL ISSUE: September 1, 1993 CUSIP:
INTEREST RATE: MATURITY DATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
KNOW ALL MEN BY THESE PRESENTS:
That the City of Paducah (the "City"), in the County of McCracken, in the Commonwealth
of Kentucky, for value received, hereby promises to pay to the Registered Owner named above,
or registered assigns or legal representatives, as herein provided, solely from the special fund
hereinafter identified, upon presentation and surrender of this Bond, the Principal Amount
specified above, on the Maturity Date specified above, and to pay interest on said sum at the per
annum Interest Rate specified above, from the interest payment date to which interest has been
paid next preceding the date on which this Bond is authenticated, unless this Bond is
authenticated on an interest payment date to which interest has been paid, in which event this
Bond shall bear interest from such date, or if this Bond is authenticated prior to the first interest
payment date, this Bond shall bear interest from the Date of Original Issue set out above,
commencing on January 1, 1994, and semiannually thereafter on July 1 and January 1 of each
year until payment of the Principal Amount, except as the provisions hereinafter set forth with
regard to redemption prior to maturity may be and become applicable hereto. The principal
amount of this Bond (or redemption price, if redeemed prior to maturity) is payable upon
surrender of this Bond, at maturity or at earlier redemption prior to maturity, in lawful money
of the United States of America at the main office of The Paducah Bank & Trust Co., Paducah,
Kentucky (the 'Payee Bank," "Transfer Agent" and 'Bond Registrar"). Interest due on this Bond
shall be paid by check or draft mailed by regular United States mail, postmarked no later than
the due date thereof, by the Payee Bank to the Registered Owner and at the address shown as
of the 15th day of the month preceding such interest payment date on the Bond Register kept by
the Payee Bank, which is also the Bond Registrar.
This Bond is part of an authorized issue of
($ ) principal amount of bonds (said bonds being hereinafter
sometimes collectively referred to as "the Bonds," or "these Bonds") authorized to be issued by
said City pursuant to an Ordinance (the 'Bond Ordinance") of the City Commission of the City,
under the authority of and in full compliance with the Constitution and Statutes of Kentucky,
including Sections 58.010 through 58.140, inclusive, and Section 82.082 of the Kentucky Revised
Statutes for the purpose of financing the refunding and redemption prior to maturity of certain
outstanding sewer system revenue bonds of the City.
It is provided in and by the Bond Ordinance that additional bonds ranking on a parity with
these Bonds, may be issued and outstanding upon the conditions and restrictions provided in the
Bond Ordinance; and these Bonds, together with such additional bonds ranking on a parity
therewith as may be hereafter issued and outstanding from time to time under the parity condi-
tions and restrictions of the Bond Ordinance, are and will continue to be payable from and
secured by a first pledge of a fixed portion of the gross income and revenues to be derived from
the operation of the sewer system of the City, (the "System"), which fixed portion of said gross
income and revenues shall be sufficient to pay the principal of and interest on all of such
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outstanding bonds as and when the same become due and payable, and which shall be set aside
as a special fund for that purpose and identified as the "City of Paducah, Kentucky Sewer System
Revenue Bond Debt Service Fund" (the "Sinking Fund").
The City covenants that so long as any of these Bonds and/or any additional parity bonds
are outstanding, the System will be continuously owned and operated as a revenue-producing
public project within the meaning of Sections 58.010 through 58.140, inclusive, of the Kentucky
Revised Statutes, and that the City will fix, charge and adjust from time to time as needed, such
rates for the services and facilities of the System so that the income and revenues therefrom will
be sufficient to pay all of these Bonds and any additional parity bonds, and the interest thereon,
y as the same become due, to pay the cost of operation and maintenance of the System and to
provide for an allowance for the depreciation thereof.
These Bonds do not constitute an indebtedness of the City of Paducah, Kentucky within
the meaning of any constitutional or statutory limitations, but are payable as to both principal and
interest solely out of the revenues of the System, as aforesaid, which revenues shall be deposited
in the Sinking Fund.
These Bonds are issuable as fully registered bonds in the denomination of $5,000 and any
authorized multiple thereof within a single maturity.
This Bond is transferable by the Registered Owner hereof in person or by his attorney
duly authorized in writing at the main office of the Bond Registrar, but only in the manner and
subject to the limitations provided in the Bond Ordinance, and upon surrender and cancellation
of this Bond, duly endorsed for transfer or accompanied by an assignment duly executed by the
Registered Owner or his authorized representative. Upon such transfer being made, a new fully
registered Bond or Bonds of the same series and the same maturity of authorized denomination,
for the same aggregate principal amount, will be issued to the transferee in exchange for this
Bond.
'1
The City and the Bond Registrar may deem and treat the Registered Owner hereof as the
absolute owner hereof for the purpose of receiving payment of principal hereof, premium, if any,
and interest due hereon and for all other purposes, and neither the City nor the Bond Registrar
shall be affected by any notice to the contrary.
The Bonds maturing on and after January 1, 2004, are subject to redemption prior to
maturity, at the option of the City, on any Interest Payment Date on and after January 1, 2003,
in inverse order of maturities and by lot within a single maturity, at a redemption price expressed
as a percentage of the principal amount of the Bonds called for redemption, as set forth in the
following schedule, plus accrued interest to the date of redemption:
Redemption Dates Redemption Price
(Inclusive) Percentage of Principal Amount
January 1, 2003 through July 1, 2003 102%
January 1, 2004 and thereafter 101%
The Registrar shall give notice of any redemption by sending such notice by regular, first
class mail not less than 30 and not more than 60 days prior to the date fixed for redemption to
the Registered Owner of each of the Bonds 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. Any notice mailed as
provided herein shall conclusively be presumed to have been duly given, whether or not the
bondowner receives such notice.
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, will cease to bear interest on the redemption date.
This Bond is exempt from taxation (except Inheritance Taxes) in the Commonwealth of
Kentucky.
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It is hereby certified, recited and declared that all acts, conditions and things required to
exist, happen and be performed precedent to and in the issuance of these Bonds, do exist, have
existed, have happened and have been performed in due time, form and manner as required by
law; that the amount of these Bonds, together with all other obligations of the City, does not
exceed any limit prescribed by the Constitution or Statutes of the Commonwealth of Kentucky,
and that a sufficient portion of the gross income and revenues of the System has been pledged
to and will be set aside into a special fund by the City for the prompt payment of the principal
of and interest on the Bonds and any additional bonds ranking on a parity therewith.
IN WITNESS WHEREOF, the City of Paducah, Kentucky, has caused this Bond to be
�W 'I executed on its behalf with the duly authorized reproduced facsimile signature of its Mayor, and
the reproduced facsimile of its corporate seal to be imprinted hereon, attested by the reproduced
facsimile signature of its City Clerk, as of the first day of September, 1993; provided, however,
that this Bond shall not be valid or become obligatory for any purpose, or be entitled to any
security or benefit under the Bond Ordinance pursuant to which it was authorized until the
Authentication Certificate of Registrar printed hereon shall have been executed by the manual
signature of a duly authorized representative of the Registrar.
CITY OF PADUCAH, KENTUCKY
By (Facsimile Signature)
Mayor
Attest:
(Facsimile Signature)
City Clerk
(Facsimile Seal)
THE AUTHENTICATION DATE OF THIS BOND IS:
(FORM OF AUTHENTICATION CERTIFICATE OF REGISTRAR)
AUTHENTICATION CERTIFICATE OF REGISTRAR
This is to certify that this Bond is one of the Series of Bonds referred to in the within
Bond and in the Bond Ordinance authorizing same.
THE PADUCAH BANK & TRUST CO.,
Paducah, Kentucky,
Bond Registrar
Authorized Officer
(All customary abbreviations for joint tenancy, etc.)
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(FORM OF ASSIGNMENT)
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
the within Bond
and hereby irrevocably constitutes and appoints
attorney to transfer this Bond on the books kept for registration and transfer thereof, with full
power of substitution in the premises.
Dated:
Registered Owner (Signature must correspond with name of
Registered Owner)
Social Security or other taxpayer identification number of
assignee:
Signature Guaranteed:
Notice: Signature(s) must be guaranteed by a
member firm of the New York Stock Exchange,
Inc., or a commercial bank or trust company