Section 105-216; Ord. 18078; Authorizing the issuance of Sewerage System Revenue Bonds (State Revolving Fund Program) Series 2004 for the purpose of extending and improving the City's sewerage system



Ordinance No.    018078                     Council Bill No.    B 126-04 (A)


    AN ORDINANCE

authorizing the issuance of Sewerage System Revenue Bonds (State Revolving Fund Program) Series 2004 of the City of Columbia, Missouri, for the purpose of extending and improving the City's sewerage system; prescribing the form and details of the bonds and the agreements made by the City to facilitate and protect their payment; and authorizing a no–interest loan from the Water and Wastewater Revolving Fund of the State of Missouri and prescribing other related matters; and fixing the time when this ordinance shall become effective.
    WHEREAS, the City of Columbia, Missouri (the “City”) is a municipal corporation and constitutional charter city operating under a home rule form of government, organized and existing under the constitution and laws of the State of Missouri; and

    WHEREAS, the City now owns and operates a revenue producing sewerage system serving the City, its inhabitants and others within its service area, including connected and related appurtenances and facilities and extensions, improvements, additions and enlargements made or acquired by the City after the date of this Ordinance (the “System”); and

    WHEREAS, the City desires to make extensions and improvements to the System to be financed in whole or in part by the issuance, pursuant to this Ordinance, of its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 2004 (the “Bonds”) in the Original Principal Amount as set forth in Exhibit A; and

    WHEREAS, to provide the most cost effective financing of the extensions and improvements to the System the City desires to participate in the Missouri Leveraged State Water Pollution Control Revolving Fund Program (the “SRF Program”) of the Missouri Department of Natural Resources (“DNR”) and the State Environmental Improvement and Energy Resources Authority (the “Authority”); and

    WHEREAS, under the provisions of Chapter 250 of the Revised Statutes of Missouri (the “Act”) the City is authorized to issue and sell revenue bonds for the purpose of paying all or part of the cost of extending and improving the System, with the cost of operation and maintenance of the System and the principal of and interest on revenue bonds payable solely from the Net Revenues (as defined below); and

    WHEREAS, pursuant to the Act, a special bond election was duly held in the City on November 4, 1997, on the following question:




    QUESTION

    Shall the City of City, Missouri, issue its Sewer System Revenue Bonds in the amount of $18,901,000 for the purpose of constructing, improving and extending the City-owned sanitary sewer utility including constructing and improving an additional wetland area?

and it was found and determined that more than a simple majority of the qualified electors of the City voting on the question had voted in favor of the question, the vote having been 5,076 votes for the question and 1,401 votes against the question; and

    WHEREAS, the City Council (the “Governing Body”) of the City has caused plans and specifications for extensions and improvements to the System and a cost estimate to be made by the Consulting Engineer (as defined below); and

    WHEREAS, the plans and specifications and the cost estimate are accepted and approved and are on file in the office of the City Clerk, the amount of the estimated cost being not less than the Original Principal Amount; and

    WHEREAS, $16,130,000 principal amount of bonds so authorized have heretofore been issued (as further described below) and the City finds and determines that it is necessary and advisable and in the best interest of the City and its inhabitants to issue the Bonds in the Original Principal Amount; and
    
    WHEREAS, by Ordinance No. 13351, passed on June 8, 1992, (the “Series 1992B Ordinance”), the City has issued its Sewerage System Revenue Bonds ( State Revolving Fund Program)Series 1992B (the “Series 1992B Bonds”), dated June 1, 1992, in the original principal amount of $870,000 of which $520,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 16011 passed on May 20, 1999 (the "Series 1999A Ordinance"), the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1999 (the "Series 1999A Bonds"), dated June 1, 1999, in the original principal amount of $3,730,000, of which $3,075,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 016262 passed on November 18, 1999 (the "Series 1999B Ordinance"), the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1999B (the "Series 1999B Bonds"), dated December 1, 1999, in the original principal amount of $1,420,000, of which $1,240,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 016647 passed on November 2, 2000 (the Series 2000 Ordinance"), the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program) Series 2000 (the "Series 2000 Bonds"), dated November 1, 2000, in the original principal amount of $2,445,000, of which $2,235,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 017089 passed on November 5, 2001 (the "Series 2001 Ordinance"), the City has issued its Special Obligation Capital Improvement Bonds, Series 2001A (the "Series 2001A Bonds"), dated November 1, 2001, in the original principal amount of $2,685,000, of which $2,480,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 017274 passed on April 24, 2002 (the "Series 2002A Ordinance"), the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program, Series 2002 (the "Series 2002A Bonds"), dated May 8, 2002, in the original principal amount of $2,230,000, of which $2,130,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 017431 passed on September 5, 2002 (the "Series 2002B Ordinance"), the City has issued its Sewerage System Revenue Refunding Bonds, Series 2002 (the "Series 2002B Bonds"), dated September 15, 2002, in the original principal amount of $7,940,000, of which $7,755,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, by Ordinance No. 017634 passed on April 2, 2003 (the "Series 2003 Ordinance," the Series 1992B Ordinance, the Series 1999A Ordinance, the Series 1999B Ordinance, the Series 2000 Ordinance, the Series 2001 Ordinance, the Series 2002A Ordinance and the Series 2002B Ordinance, collectively referred to herein as the "Outstanding Parity Bond Ordinance"), the City has issued its Sewerage System Revenue Bonds (State Revolving Fund Program), Series 2003 (the "Series 2003 Bonds," the Series 1992B Bonds, the Series 1999A Bonds, the Series 1999B Bonds, the Series 2000 Bonds, the Series 2001A Bonds, the Series 2002A Bonds and the Series 2002B Bonds, collectively referred to herein as the "Outstanding Parity Bonds"), dated April 1, 2003, in the original principal amount of $3,620,000, of which $3,620,000 remains outstanding as of the date of passage of this Ordinance; and

    WHEREAS, the Series 1999A Bonds, the Series 1999B Bonds, the Series 2000 Bonds, the Series 2001A Bonds, the Series 2002A Bonds and the Series 2003 Bonds were issued under the authority of the City's November 4, 1997 sewer system revenue bond election; and

    WHEREAS, the City, upon the issuance of the Bonds, will not have outstanding any other bonds or other obligations payable from the Net Revenues other than the Outstanding Parity Bonds and the Bonds; and

    WHEREAS, under the provisions of the Outstanding Parity Bond Ordinance, the City may issue additional bonds payable out of the Net Revenues that are on a parity with the Outstanding Parity Bonds, if certain conditions are met; and

    WHEREAS, it is hereby found and determined that it is necessary and advisable and in the best interest of the City and its inhabitants that revenue bonds be issued and secured in the form and manner provided in this Ordinance and be sold to the Authority under the SRF Program, subject to the terms of the Outstanding Parity Bond Ordinance.

    NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBIA, MISSOURI, AS FOLLOWS:

ARTICLE I

DEFINITIONS

    Section 101.  Definitions of Words and Terms.  Capitalized words and terms not otherwise defined in this Ordinance have the meanings set forth in the Purchase Agreement (defined below).  In addition to the foregoing and words and terms defined in the Recitals and elsewhere in this Ordinance, capitalized words and terms have the following meanings in this Ordinance:

    "Administrative Fee" means the fee payable to DNR equal to 0.714% of the outstanding principal amount of the Revolving Fund Loan on each Administrative Fee Calculation Date in Exhibit A.

    "Authority Bonds" means the Water Pollution Control and Drinking Water Revenue Bonds (State Revolving Funds Programs) Series 2004 of the Authority.

    "Authority Program Bonds" means the Authority Bonds and any other bonds of the Authority issued under the SRF Program, all or a portion of the proceeds of which are loaned to the City pursuant to the SRF Program.

    "Authorized Representative" means the representative of the City designated by the City in accordance with the Regulations.

    "Bondowner" means the Authority or its assigns.

    "Bond Register" means the books for the registration, transfer and exchange of Bonds kept at the office of the Paying Agent.

    "Consultant" means the Consulting Engineer, an independent certified public accountant or a firm of independent certified public accountants.

    "Consulting Engineer" means each independent engineer or engineering firm with experience in designing and constructing wastewater treatment, sanitary sewerage or water pollution control facilities or, if applicable, water production and transmission facilities, and retained by the City.

    "Current Expenses" means all reasonable and necessary expenses of ownership, operation, maintenance and repair of the System and keeping the System in good repair and working order, determined in accordance with generally accepted accounting principles, including current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, costs of materials and supplies, Paying Agent fees and expenses, annual audits, periodic Consultant's reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, short–term obligations incurred and payable within a particular Fiscal Year, obligations incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the ownership and operation of the System, but excluding interest paid on System Revenue Bonds, depreciation and amortization charges (including payments into the Depreciation and Replacement Account), and all general administrative expenses of the City not related to the operation of the System.

    "Defeasance Securities" means:

        (a)    Federal Securities;

        (b)    obligations of the Resolution Funding Corporation or any successor, but only if the use of the obligations to pay and discharge Bonds pursuant to Article XI will cause the discharged Bonds to be rated in the highest long–term rating category by the Rating Agency; or

        (c)    obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any state that:

        (i)    are not callable at the option of the obligor prior to maturity or for which irrevocable instructions have been given by the obligor to call on the date specified in the instructions, and

        (ii)    are fully secured as to principal, redemption premium and interest by a fund, consisting of cash or Federal Securities, that:

        (A)    may be applied only to the payment of principal, redemption premium and interest on the obligations, and

        (B)    is sufficient, as verified by a nationally recognized independent certified public accountant, to pay the principal, redemption premium and interest on the obligations.

    "Depreciation and Replacement Account" means the fund or account created or ratified and confirmed by Section 401.

    "Federal Securities" means any direct obligation of, or obligation the timely payment of the principal of and interest on which is unconditionally guaranteed by, the United States of America and backed by its full faith and credit.

    "Interest Payment Date" means each January 1 and July 1, commencing January 1, 2005.

    "Net Revenues" means Revenues less Current Expenses.

    "Operation and Maintenance Account" means the fund or account created or ratified and confirmed by Section 401.

    "Ordinance" means this Ordinance as from time to time amended in accordance with its terms.

    "Outstanding" means, as of the date of determination, all Bonds issued and delivered under this Ordinance, except:

        (1)    Bonds cancelled by the Paying Agent or delivered to the Paying Agent for cancellation;

        (2)    Bonds for the payment of the principal or redemption price of and interest on which money or Defeasance Securities are held under Section 1101;

        (3)    Bonds in exchange for which, or in lieu of which, other Bonds have been registered and delivered pursuant to this Ordinance; and

        (4)    Bonds allegedly mutilated, destroyed, lost, or stolen and paid under Section 208.

    "Owner" means the Bondowner.

    "Parity Bonds" means any parity bonds issued under Section 902 payable from the Net Revenues on a parity basis with the Bonds.

    "Parity Ordinances" means the Outstanding Parity Bond Ordinance and the Ordinances under which any Parity Bonds are issued.

    "Purchase Agreement" means the Purchase Agreement dated as of May 1, 2004, by and among the City, the Authority and DNR.

    "Record Date" means the 15th day (whether or not a Business Day) of the calendar month next preceding the applicable Interest Payment Date.

    "Revenue Fund" means the fund or account created or ratified and confirmed by Section 401.

    “Revenues” means all income and revenues derived by the City from the System, determined in accordance with generally accepted accounting principles, including investment and rental income, net proceeds from business interruption insurance, and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Revenue Bonds, but excluding any profits or losses on developer-financed System assets contributed to the City, the early extinguishment of debt or the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business.

    "Revolving Fund Agreement" means the Revolving Fund Agreement dated as of May 1, 2004, by and among the City, the Authority and DNR.

    "Revolving Fund Loan" means the no–interest loan to the City by DNR from The Water and Wastewater Fund Loan under the Revolving Fund Agreement.

    “SRF Program” means, collectively, the SRF Drinking Water Program and the Missouri Leveraged State Water Pollution Control Revolving Fund Program.
    
    "SRF Program Bonds" means the Bonds and any other System Revenue Bonds issued in connection with the City's participation in the SRF Program.

    "SRF Subsidy" means the amount of investment earnings which will accrue on the Reserve Account during each Fiscal Year (taking into account scheduled transfers from the Reserve Account which will occur upon the payment of principal on the Authority Program Bonds and assuming that the construction for the applicable project has been completed), if the Reserve Security is equal to the Reserve Percentage of the principal amount of the SRF Program Bonds outstanding, the Reserve Account is invested in an investment agreement at a fixed interest rate during the calculation period and earnings are reduced by the Administrative Fee payable to DNR.  Administrative Fee, Reserve Account, Reserve Percentage and Reserve Security as used in this definition have the respective meanings set forth in the bond indentures for the applicable Authority Program Bonds.

    "State" means the State of Missouri.

    "Surplus Account" means the fund or account created or ratified and confirmed by Section 401.

    "System Revenue Bonds" means collectively the Bonds, the Parity Bonds and all other revenue bonds which are payable from the Net Revenues.

    "Terms Certificate" means the Terms Certificate of the City, dated the date of passage of this Ordinance, related to a purchase contract for the Authority Bonds.

    "Trustee" means the trustee acting at any time as Trustee under the Indenture.

    "User Charge Ordinance" means Ordinance No. 017837 of the City of Columbia passed on September 15, 2003, as amended, supplemented or replaced and approved by DNR.

    Section 102.  Additional Provisions.  Additional provisions are set forth in Exhibit A.


ARTICLE II

AUTHORIZATION OF BONDS

    Section 201.  Authorization of Bonds.  The Bonds are authorized and directed to be issued in the Original Principal Amount for the purposes of this Ordinance.

    Section 202.  Security for Bonds
    
    (a)    The Bonds are special, limited obligations of the City payable solely from, and secured by a pledge of, the Net Revenues.  The taxing power of the City is not pledged to the payment of the Bonds.  The Bonds do not constitute a general obligation of the City or an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction.

    (b)    The Bonds are issued on a parity with the Outstanding Parity Bonds.

    Section 203.  Description of Bonds.  The Bonds consist of fully registered bonds without coupons, numbered from R–1 consecutively upward, in the denomination of $1,000 or any integral multiple of $1,000.  The Bonds will be issued in substantially the form of Exhibit B and will be registered, transferred and exchanged as provided in Section 206.  The Bonds are dated the Dated Date as set forth on the Bonds.  The Bonds become due on the dates and in the principal amounts (subject to optional and mandatory redemption prior to maturity as provided in Article III) and bear interest at the annual rates set forth in Exhibit A.  Interest is computed on the basis of a 360–day year of twelve 30–day months from the Dated Date or from the most recent Interest Payment Date to which interest has been paid or provided for and is payable on each Interest Payment Date.

    Section 204.  Designation of Paying Agent.  The Trustee is designated as the City's paying agent for the payment of the Bonds and bond registrar for the registration, transfer and exchange of Bonds (the "Paying Agent").  The Paying Agent will not be paid any additional fees for its services under this Ordinance.

    Section 205.  Method and Place of Payment of Bonds.

    (a)    Payment of the Bonds will be made with any coin or currency that is legal tender for the payment of debts due the United States of America on the payment date.

    (b)    Each payment of principal of and redemption premium, if any, on each Bond will be made at maturity or upon earlier redemption to the Owner shown in the Bond Register, upon presentation and surrender of the Bond at the principal office of the Paying Agent.  The interest on the Bonds will be paid on each Interest Payment Date to the person in whose name this Bond is registered on the registration books maintained by the Paying Agent at the close of business on the Record Date.  The principal of and redemption premium, if any, and interest on the Bonds is payable by electronic transfer in immediately available federal funds to a bank in the continental United States of America pursuant to instructions from any Owner received by the Paying Agent prior to the Record Date.

    (c)    The Paying Agent will keep a record of payment of principal of, redemption premium, if any, and interest on all Bonds and, at least annually at the request of the City, will forward a copy or summary of the record of payments to the City.

    Section 206.  Registration, Transfer and Exchange of Bonds.

    (a)    The City will cause the Paying Agent to keep the Bond Register.  Each Bond when issued will be registered in the name of the Owner on the Bond Register.  Bonds will be transferred and exchanged only upon the Bond Register.

    (b)    Upon surrender of any Bond at the principal office of the Paying Agent, the Paying Agent will transfer or exchange the Bond for a new Bond or Bonds in any authorized denomination of the same maturity and in the same aggregate principal amount as the Bond which was presented for transfer or exchange.  All Bonds presented for transfer or exchange must be accompanied by a written instrument of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Owner or by the Owner’s authorized agent.  All Bonds presented for transfer or exchange must be surrendered to the Paying Agent for cancellation.

    (c)    For every exchange or transfer of Bonds the City or the Paying Agent may levy a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid for the exchange or transfer.  The charge must be paid by the person requesting the exchange or transfer.  Payment of the charge is a condition precedent to the exchange or transfer.

    (d)    The City and the Paying Agent will treat the person in whose name any Bond is registered as the absolute owner of the Bond, whether or not payment of the Bond is overdue, for the purpose of receiving payment of the principal of, redemption premium, if any, and interest on the Bond and for all other purposes.  All payments made to any Owner or upon the Owner’s order will be valid and effectual to satisfy and discharge the City's liability for payment of the Bond to the extent of the sum or sums paid.  Neither the City nor the Paying Agent will be affected by any notice to the contrary.

    (e)    At reasonable times and under reasonable rules established by the Paying Agent, the Owners of 25% or more in principal amount of the Outstanding Bonds, or their representative designated in a manner satisfactory to the Paying Agent, may inspect and copy the Bond Register.

    Section 207.  Execution, Authentication and Delivery of Bonds.

    (a)    Each Bond must be signed by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the City Clerk, and have the official seal of the City affixed or imprinted.  If any officer whose manual or facsimile signature appears on any Bond ceases to be an officer before the delivery of any Bond signed by the officer, the manual or facsimile signature on the Bond will be valid and sufficient for all purposes of this Ordinance.

    (b)    The Mayor and the City Clerk are directed to prepare and execute the Bonds as specified in this Article, and when executed, to deliver the Bonds to the Paying Agent for authentication.  Upon authentication, the Paying Agent will deliver the Bonds to the Bondowner, upon payment of the purchase price for the Bonds.

    (c)    Each Bond will be authenticated by any authorized officer or employee of the Paying Agent.  No Bond is entitled to any security or benefit under this Ordinance or be valid or obligatory for any purpose until authenticated by the Paying Agent.

    Section 208.  Mutilated, Destroyed, Lost and Stolen Bonds.

    (a)    If (i) any mutilated Bond is surrendered to the Paying Agent, or the City and the Paying Agent receive evidence to their satisfaction of the mutilation, destruction, loss or theft of any Bond, and (ii) there is delivered to the City and the Paying Agent security or indemnity as required by them, in the absence of notice to the City or the Paying Agent that the Bond has been acquired by a bona fide purchaser, the City will execute and the Paying Agent will register and deliver, in exchange for or in lieu of any mutilated, destroyed, lost or stolen Bond, a new Bond of the same maturity and of like tenor and principal amount.  If the Bond has become or is about to become due, the City may pay the Bond instead of issuing a new Bond.

    (b)    Upon the issuance of any new Bond under this Section, the City may require the payment by the Owner of a sum sufficient to cover any tax or other governmental charge imposed and any other expenses (including the fees and expenses of the Paying Agent) connected with the issuance of the Bond.

    (c)    Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Bond will constitute a replacement of the prior obligation of the City, whether or not the mutilated, destroyed, lost or stolen Bond is enforceable by anyone at any time, and will be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds.

    Section 209.  Cancellation and Destruction of Bonds Upon Payment.  All Bonds which have been paid or redeemed or which have otherwise been surrendered to the Paying Agent, either at or before maturity, will be cancelled immediately upon the payment or redemption and the Paying Agent’s receipt of the Bonds.  Cancelled Bonds will be periodically destroyed by the Paying Agent.  The Paying Agent will execute a certificate in duplicate describing the destroyed Bonds and file an executed counterpart of the certificate with the City.

    Section 210.  Sale of the Bonds; Authorization and Execution of Documents.

    (a)    The Bonds will be sold to the Bondowner at the purchase price set forth in Exhibit A, plus accrued interest, if any, under the terms of the Terms Certificate and the Purchase Agreement.

    (b)    The City is authorized to enter into the Purchase Agreement and the Revolving Fund Agreement, in substantially the forms presented to the Governing Body.  The Mayor is authorized to execute the Purchase Agreement, the Revolving Fund Agreement and the Terms Certificate for and on behalf of and as the act and deed of the City, with changes approved by the Mayor, which approval will be conclusively evidenced by the Mayor’s signature.  The Mayor is further authorized and directed to execute other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance.  The City Clerk is authorized and directed to attest the execution of the Purchase Agreement and the Revolving Fund Agreement and any other documents, certificates and instruments that are necessary or desirable to carry out the intent of this Ordinance and the Terms Certificate.

    Section 211.  Administrative Fee and Other Fees; Revolving Fund Loan.

    (a)    Subject to Section 202, the City will pay to the Trustee for deposit in the Administrative Expense Fund, within 30 days after receipt of a statement from the Trustee (i) the Administrative Fee, (ii) the City's Allocable Portion of the Master Trustee’s Disclosure Fee, and (iii) the City's Allocable Portion of the Trustee’s Fee.

    (b)    The City is authorized to receive the Revolving Fund Loan under the terms of the Revolving Fund Agreement.  By this Ordinance, the City assigns the proceeds of the Revolving Fund Loan, as and when received, to the Authority.


ARTICLE III

REDEMPTION OF BONDS

    Section 301.  Mandatory Sinking Fund Redemption.  The Term Bonds defined in Exhibit A will be redeemed in part on the dates and in the principal amounts in Exhibit A, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the redemption date.

    Section 302.  Optional Redemption.  At the option of the City, certain Bonds may be called for redemption and payment prior to maturity in whole or in part on the dates and at the redemption prices set forth in Exhibit A.  Bonds will be optionally redeemed in part in integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner) from the maturities selected by the City with the prior written consent of the Bondowner.  Upon redemption, the sinking fund redemption amounts for each Term Bond in Exhibit A will be proportionately reduced (unless otherwise directed by the City with the prior written consent of the Bondowner), subject to rounding to integral multiples of $5,000 (unless otherwise approved in writing by the Bondowner).  The City will give written notice to the Trustee designating the amount of each maturity redeemed and the reduction in each sinking fund redemption amount, subject to verification by the Trustee.  In exercising its option to redeem the Bonds, the City will deposit with the Paying Agent, prior to the redemption date, an additional premium equal to 30–days’ interest on the Bonds to be redeemed.

    Section 303.  Selection of Bonds to Be Redeemed.  If all Outstanding Bonds are held by the Bondowner, the redemption of the Bonds in part will be reflected in the records maintained by the Paying Agent.  If the Bonds are held by any Owner other than the Bondowner, the City, with the prior written consent of the Paying Agent and the Owners, will establish procedures for the selection of Bonds upon partial redemption.

    Section 304.  Notice and Effect of Call for Redemption.

    (a)    If all Outstanding Bonds are held by the Bondowner, no notice of the mandatory sinking fund redemption of Bonds is required to be given.  If the Bonds are held by any Owner other than the Bondowner or if Bonds are being optionally redeemed, notice of redemption will be given in the manner described below.  Unless waived by any Owner of Bonds to be redeemed, the Paying Agent, on behalf of the City, will give notice by mailing a redemption notice by registered or certified mail, at least 45 days prior to the date fixed for redemption, to the Owner of Bonds to be redeemed at the address shown on the Bond Register.

    (b)    All redemption notices will be dated and include the following information:

        (1)    the redemption date,

        (2)    the redemption price, consisting of the principal amount, redemption premium, if any, and interest to the redemption date,

        (3)    if less than all Outstanding Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed,

        (4)    a statement that on the redemption date the redemption price will become due and payable upon each Bond or portion of a Bond called for redemption, and that interest ceases to accrue on the redeemed amount from and after the redemption date, and

        (5)    the address of the principal office of the Paying Agent where the Bonds must be surrendered for payment of the redemption price.

    (c)    If notice of redemption has been given or waived, the Bonds or portions to be redeemed will become due and payable on the redemption date at the redemption price specified in the notice.  From and after the redemption date (unless the City defaults in the payment of the redemption price), the called Bonds will cease to bear interest.  Upon the surrender of Bonds for payment of the redemption price in accordance with the notice, the Paying Agent will pay the redemption price to the applicable Owners.  Upon the Paying Agent’s receipt of any Bond being partially redeemed, the Paying Agent will prepare a new Bond or Bonds of the same maturity in the amount of the unpaid principal.


ARTICLE IV

RATIFICATION AND ESTABLISHMENT OF FUNDS AND ACCOUNTS

    Section 401.  Ratification and Establishment of Funds and Accounts.  

    (a)    The following funds and accounts are hereby established, acknowledged, ratified or confirmed in the treasury of the City and by the Outstanding Parity Bond Ordinance known respectively as the:

    (1)    Sewer Revenue Account (the “Revenue Fund”);

    (2)    Sewer Operation and Maintenance Account (the “Operation and Maintenance Account”);


    (3)    Sewer Contingency Account (the “Depreciation and Replacement Account”); and


    (4)    Sewer Surplus Account (the “Surplus Account”);


are ratified and confirmed.


    (b)    The separate accounts acknowledged under Section 503 of the Series 1992B Ordinance known respectively as the:


    (1)    Interest Account, Principal Account and Debt Service Account for the Series 1992B Bonds (collectively the “Series 1992B Debt Service Account”); and


    (2)    Reserve Account for the Series 1992B Bonds (the “1992B Debt Service Reserve Account”);


are ratified and confirmed.


    (c)    The separate accounts acknowledged under Section 403 of the Series 1999A Ordinance known respectively as the:


    (1)    Interest Account, Principal Account and Debt Service Account for the Series 1999A Bonds (collectively the “Series 1999A Debt Service Account”); and


    (2)    Reserve Account for the Series 1999A Bonds (the “1999A Debt Service Reserve Account”);


are ratified and confirmed.


    (d)    The separate accounts acknowledged under Section 403 of the Series 1999B Ordinance known respectively as the:


    (1)    Debt Service Account, Principal Account and Interest Account (the “Series 1999B Debt Service Account”); and
 
    (2)    Reserve Account (the “Series 1999B Debt Service Reserve Account”);

are ratified and confirmed.

    (e)    The separate accounts acknowledged under Section 403 of the Series 2000 Ordinance known respectively as the:


    (1)    Debt Service Account, Principal Account and Interest Account (the “Series 2000 Debt Service Account”); and
 
    (2)    Reserve Account (the “Series 2000 Debt Service Reserve Account”);

are ratified and confirmed.

    (f)    The separate accounts established under Section 401 of the Series 2001 Ordinance known respectively as the:


    (1)    Debt Service Account for Special Obligation Capital Improvement Bonds, Series 2001A (the “Series 2001A Debt Service Account”); and
 
    (2)    Debt Service Reserve Account for Special Obligation Capital Improvement Bonds, Series 2001A (the “Series 2001A Debt Service Reserve Account”);

are ratified and confirmed.

    (g)    The separate accounts acknowledged under Section 403 of the Series 2002A Ordinance known respectively as the:


    (1)    Debt Service Account, Principal Account and Interest Account (the “Series 2002A Debt Service Account”); and
 
    (2)    Reserve Account (the “Series 2002A Debt Service Reserve Account”);

are ratified and confirmed.

    (h)    The separate accounts acknowledged under Section 402 of the Series 2002B Ordinance known respectively as the:

    (1)    Debt Service Account, Principal Account and Interest Account (the “Series 2002B Debt Service Account”); and
 
    (2)    Reserve Account (the “Series 2002B Debt Service Reserve Account”);

are ratified and confirmed.

    (i)    The separate accounts created under Section 403 of the Series 2003 Ordinance known respectively as the:


(1)    Debt Service Account for Sewerage System Revenue Bonds, Series 2003 (the “Series 2003 Debt Service Account,” the Series 2003 Debt Service Account, the Series 2002B Debt Service Account, the Series 2002A Debt Service Account, the Series 2001A Debt Service Account, the Series 2000 Debt Service Account, the Series 1999B Debt Service Account, the Series 1999A Debt Service Account and the Series 1992B Debt Service Account are collectively the “Outstanding Parity Bond Debt Service Account”); and

(2)    Debt Service Reserve Account for Sewerage System Revenue Bonds, Series 2003 (the “Series 2003 Debt Service Reserve Account,” the Series 2003 Debt Service Reserve Account, the Series 2002B Debt Service Reserve Account, the Series 2002A Debt Service Reserve Account, the Series 2001A Debt Service Reserve Account, the Series 2000 Debt Service Reserve Account, the Series 1999B Debt Service Reserve Account, the Series 1999A Debt Service Reserve Account and the Series 1992B Debt Service Reserve Account are collectively the “Outstanding Parity Bond Debt Service Reserve Account”);

are ratified and confirmed.


Section 402.  Administration of Funds and Accounts.  The funds and accounts described in subdivision (a) of Section 401 will be maintained and administered by, or on behalf of, the City under this Ordinance and the Outstanding Parity Bond Ordinance while any of the Bonds and the Outstanding Parity Bonds are outstanding.  The funds or accounts described in subdivisions (b) through (i) of Section 401 will be maintained and administered while the applicable Outstanding Parity Bonds or the Bonds, as appropriate, are outstanding.
    
    Section 403.  Acknowledgment of Accounts.

    (a)    The City acknowledges the creation of the following accounts for the City held by the Trustee under the Indenture:

        (1)    Construction Account;

        (2)    Reserve Account;

    (3)    Leveraged Portion Debt Service Account;

        (4)    Principal Account; and

(5)    Interest Account.

    (b)    The City further acknowledges that certain amounts will be transferred to the Costs of Issuance Fund and the Administrative Expense Fund under the Indenture in satisfaction of certain City obligations under this Ordinance, the Purchase Agreement and the Revolving Fund Agreement.


ARTICLE V

APPLICATION OF BOND PROCEEDS

    Section 501.  Disposition of Bond Proceeds.  The proceeds received from the sale of the Bonds, including any premium and accrued interest, will be deposited simultaneously with the delivery of the Bonds, as follows:

        (1)    into the Costs of Issuance Fund an amount equal to the Costs of Issuance in Exhibit A;

    (2)    into the Interest Account the accrued interest, if any, on the Bonds; and

    (3)    into the Construction Account the remaining proceeds of the Bonds.

    Section 502.  Assignment and Application of Moneys in the Construction Account.

    (a)    By this Ordinance, the City assigns the proceeds of the Bonds held in the Construction Account to the Bondowner to secure the City's obligations under this Ordinance. Moneys in the Construction Account will be disbursed to the City for the sole purpose of paying the cost of extending and improving the System in accordance with the plans and specifications prepared by the Consulting Engineer, previously approved by the Governing Body and DNR and on file in the office of the City Clerk, including any alterations in or amendments to the plans and specifications approved by the Governing Body and DNR with the advice of the Consulting Engineer.

    (b)    Requisitions will be submitted for withdrawals from the Construction Account in accordance with Article III of the Purchase Agreement.


ARTICLE VI

APPLICATION OF REVENUES

    Section 601.  Revenue Fund.  The City covenants and agrees that from and after the delivery of the Bonds, all Revenues derived and collected by the City will be deposited into the Revenue Fund when received.  The Revenues will be segregated from all other moneys, revenues, funds and accounts of the City.  The Revenue Fund will be administered and applied solely for the purposes and in the manner provided in this Ordinance and any Parity Ordinance.
    
    Section 602.  Application of Moneys in Funds and Accounts.

    (a)    The City will apply moneys in the Revenue Fund on the dates, in the amounts and in the order as follows:

        (1)    on the first day of each month to the Operation and Maintenance Account an amount sufficient to pay the estimated cost of operating and maintaining the System during the month;

        (2)    on the 25th day of each month, on a parity basis (i) to the Outstanding Parity Bond Debt Service Account the amount required under the Outstanding Parity Bond Ordinance and (ii) the following amounts to the Trustee for credit to the Interest Account and the Principal Account:

    (A)    on June 25, 2004, to and including December 25, 2004, to the Interest Account 1/7 of the amount of interest on the Bonds due on January 1, 2005 less accrued interest, if any, deposited to the Interest Account; and on January 25, 2005 and thereafter 1/6 of the amount of interest due on the Bonds on the next Interest Payment Date, with these monthly payments to be reduced as follows:

                    (I)    the balance in the Leveraged Portion Debt Service Account on an Interest Payment Date after the payment of the principal of and interest due on the Authority Bonds on the Interest Payment Date will be credited against the next succeeding monthly payment or payments; and

                    (II)    the projected investment earnings on the Construction Account and the Reserve Account for the current Interest Period and actual investment earnings for the prior Interest Period reduced by estimated earnings for the preceding Interest Period that were previously credited, as set forth in the Trustee’s semiannual notice to the City, will be credited in equal installments against the monthly payments due prior to the next Interest Payment Date; and

            (B)    on January 25, 2005 and each monthly payment date thereafter, to the Principal Account 1/12 of the principal due on the Bonds on the next succeeding principal payment date, whether at maturity or upon mandatory sinking fund redemption.  If the Initiation of Operation specified in the certificate delivered by the City under Section 3.5 of the Purchase Agreement is earlier than the expected Initiation of Operation on the City’s signature page to the Purchase Agreement, (i) the first monthly installment of principal will be paid no later than the monthly payment date which is not more than 12 months after the Initiation of Operation, and (ii) on the monthly payment date which is not more than 20 years after the Initiation of Operation, all remaining unpaid principal installments will be paid;

(3)    on the dates required by Section 211(a), to the Trustee, for deposit to the Administrative Expense Fund, the amount required to pay the Administrative Fee, the City's Allocable Portion of the Trustee’s Fee and the City's Allocable Portion of the Master Trustee’s Disclosure Fee;

(4)    on the first day of each month, to the Outstanding Parity Bond Debt Service Reserve Account as required by the Outstanding Parity Bond Ordinance and in the event the Trustee has withdrawn moneys from the Reserve Account (other than investment earnings or the amount transferred from the Reserve Account upon the payment of principal on the Bonds), to the Reserve Account all available moneys until the Reserve Account has been replenished;

(5)    on the first day of each month, to the Depreciation and Replacement Account, the amount required by the User Charge Ordinance; and

(6)    on the first day of each month the remaining balance to the Surplus Account.
    
    (b)    If the amount in the Revenue Fund is not sufficient to make the payments at the time required to be made by the City to the Interest Account, the Principal Account and the Outstanding Parity Bond Debt Service Account, the City will apply the remaining balance in the Revenue Fund on a proportionate basis (based upon the outstanding principal amounts of the Bonds and the Outstanding Parity Bonds) to the Principal Account, the Interest Account and the Outstanding Parity Bond Debt Service Account.

    (c)    If the amount in the Revenue Fund is not sufficient to make the payments at the time required to be made by the City to the Reserve Account and to the Outstanding Parity Bond Debt Service Reserve Account, the City will divide the balance in the Revenue Fund between the Reserve Account and the Outstanding Parity Bond Debt Service Reserve Account on a proportionate basis (based upon the outstanding principal amounts of the Bonds and the Outstanding Parity Bonds).

    (d)    Except as provided in Section 603, moneys in the Depreciation and Replacement Account will be used by the City for the purpose of making replacements and repairs to the System in order to keep the System in good repair and working order and to assure the continued effective and efficient operation of the System.  This provision will not be construed to modify any more restrictive provision of the Outstanding Parity Bond Ordinance for the use of moneys in the Depreciation and Replacement Account.

    (e)    Moneys in the Surplus Account are to be expended for the following purposes as determined by the Governing Body:

(1)    paying the cost of the operation, maintenance and repair of the System to the extent necessary after the application of the moneys held in the Operation and Maintenance Account and in the Depreciation and Replacement Account;

(2)    paying the cost of extending, enlarging or improving the System;

(3)    preventing default in, anticipating payments into or increasing the amounts in the accounts confirmed or established in Section 401, the Principal Account, the Interest Account, the Reserve Account or the Depreciation and Replacement Account, or establishing or increasing the amount of any debt service account or debt service reserve account created by the City for the payment of any System Revenue Bonds subsequently issued; or

(4)    redeeming and paying prior to maturity, or, at the option of the City, purchasing in the open market at the best price obtainable not exceeding the call price (if any bonds are callable), the Bonds, the Outstanding Parity Bonds or any other System Revenue Bonds of the City hereafter issued under the conditions hereinafter specified and standing on a parity with the Bonds, including principal, redemption premium, if any, and interest.

    (f)    All amounts paid and credited to the Operation and Maintenance Account will be expended solely for the purpose of paying the Current Expenses of the System.

    (g)    No moneys derived by the City from the System will be diverted to the general governmental or municipal functions of the City.

    (h)    If the deposits to the Operation and Maintenance Account (the "OM Deposits") required under this Section are greater than the OM Deposits required in the User Charge Ordinance, the OM Deposits under the User Charge Ordinance will be deemed a credit toward OM Deposits required under this Section.  If the OM Deposits required under this Section are less than those required in the User Charge Ordinance, OM Deposits under this Section will be deemed a credit to OM Deposits required under the User Charge Ordinance.

    Section 603.  Deficiency of Payments into Funds and Accounts.

    (a)    If the Revenues are insufficient to make any payment on any date specified in this Article, the City will make good the amount of the deficiency by making additional payments out of the first available Revenues for application in the order specified in Section 602.

    (b)    If the moneys in the Outstanding Parity Bond Debt Service Account, the Outstanding Parity Bond Debt Service Reserve Account, the Principal Account, the Interest Account or the Reserve Account are not sufficient to pay the principal of and interest on the Outstanding Parity Bonds and the Bonds as and when the same become due, the City will apply moneys in the Surplus Account and the Depreciation and Replacement Account on a proportionate basis (based upon the outstanding principal amounts of the Bonds, and the Outstanding Parity Bonds) to the Principal Account, the Interest Account and the Outstanding Parity Bond Debt Service Account to prevent any default in the payment of the principal of and interest on the Bonds and the Outstanding Parity Bonds.

    Section 604.  Transfer of Funds to Paying Agent.  The City Clerk is authorized and directed to make the payments to the Principal Account and the Interest Account as provided in Section 602, and, to the extent necessary to prevent a default in the payment of the Bonds, from the Reserve Account, the Surplus Account and the Depreciation and Replacement Account as provided in Sections 602 and 603, sums sufficient to pay the Bonds when due, and to forward amounts to the Paying Agent in a manner which ensures the Paying Agent will have sufficient available funds on or before the second Business Day immediately preceding the dates when payments on the Bonds are due.  Upon the payment of all principal and interest on the Bonds, the Paying Agent will return any excess funds to the City.  Except as otherwise provided in the Indenture, all moneys deposited by the City with the Paying Agent are subject to the provisions of this Ordinance.


ARTICLE VII

DEPOSIT AND INVESTMENT OF MONEYS

    Section 701.  Investment of Moneys.

    (a)    Moneys in the Interest Account, the Principal Account, the Construction Account, the Leveraged Portion Debt Service Account and the Reserve Account are assigned by the City to the Authority to secure the City's obligations under this Ordinance and the City acknowledges that moneys in the Interest Account, the Principal Account, the Construction Account, the Leveraged Portion Debt Service Account and the Reserve Account will be invested by the Authority, subject to the Arbitrage Instructions, in Investment Securities in accordance with Section 4.10 of the Indenture.  Moneys in each of the other funds and accounts created or ratified and confirmed by this Ordinance may be invested by the City in obligations as may be permitted by law, but no investment will be made for a period extending longer than the date when the moneys invested may be needed.  All earnings on any investments held in any fund or account will accrue to the applicable fund or account.  In determining the amount held in any fund or account under this Ordinance, obligations will be valued at the lower of cost or market value.  If the amount in any fund or account held within the Treasury of the City is greater than the required amount, the City may transfer the excess to the Revenue Fund.

    (b)    If the Outstanding Parity Bonds are outstanding, any investments of moneys in any funds and accounts referenced in Section 401 made pursuant to this Section are subject to the applicable restrictions in the Outstanding Parity Bond Ordinance.


ARTICLE VIII

PARTICULAR COVENANTS OF THE CITY

    Section 801.  Efficient and Economical Operation.  The City will continuously own and will operate the System in an efficient and economical manner and will keep and maintain the System in good repair and working order.

    Section 802.  Rate Covenant.  The City will fix, establish, maintain and collect rates and charges for the use and services furnished by or through the System to produce income and revenues sufficient to (a) pay the costs of the operation and maintenance of the System; (b) pay the principal of and interest on the Bonds as and when due; (c) enable the City to have in each Fiscal Year Net Revenues of not less than 110% of the amount required to be paid by the City in the Fiscal Year on account of both principal of and interest on all System Revenue Bonds at the time outstanding, provided that interest on any SRF Program Bonds will be reduced by the SRF Subsidy, if any; and (d) provide reasonable and adequate reserves for the payment of the Bonds and the interest thereon and for the protection and benefit of the System as provided in this Ordinance.  The City will require the prompt payment of accounts for service rendered by or through the System and will promptly take whatever action is legally permissible to enforce and collect delinquent charges.

    Section 803.  Reasonable Charges for all Services.  None of the facilities or services provided by the System will be furnished to any user (excepting the City itself) without a reasonable charge being made therefor.  If the income and revenues derived by the City from the System are insufficient to pay the reasonable expenses of operation and maintenance of the System and the principal of and interest on the Bonds when due, the City will pay into the Revenue Fund a fair and reasonable payment in accordance with effective applicable rates and charges for all services or other facilities furnished to the City or any of its departments by the System.

    Section 804.  Annual Budget.  Prior to the commencement of each Fiscal Year, the City will cause a budget setting forth the estimated receipts and expenditures of the System for the next succeeding Fiscal Year to be prepared and filed with the City Clerk.  The City Clerk, within 30 days after the end of the current Fiscal Year, will mail a copy of the budget to the Bondowner. The City Clerk will provide a copy of the budget to the Trustee upon request.  The annual budget will be prepared in accordance with the laws of the State.

    Section 805.  Annual Audit.

    (a)    Promptly after the end of each Fiscal Year, the City will cause an audit of the System for the preceding Fiscal Year to be made by a certified public accountant or firm of certified public accountants employed for that purpose and paid from the Revenues.  The annual audit will cover in reasonable detail the operation of the System during the Fiscal Year.

    (b)    Within 180 days after the end of the City's Fiscal Year, a copy of the annual audit will be filed in the office of the City Clerk, and a duplicate copy of the audit will be mailed to the Bondowner and the Trustee.  The annual audit will be open to examination and inspection during normal business hours by any taxpayer, any user of the services of the System, any Owner of the Bonds, or anyone acting for or on behalf of the taxpayer, user or Owner.

    (c)    As soon as possible after the completion of the annual audit, the Governing Body will review the annual audit, and if the annual audit reveals any breach of this Ordinance, the City agrees to promptly cure the breach.

    Section 806.  Performance of Duties.  The City will faithfully and punctually perform all duties and obligations with respect to the operation of the System now or hereafter imposed upon the City by the Constitution and laws of the State and the provisions of this Ordinance.

    Section 807.  Tax Covenants.

    (a)    The City will comply with all applicable provisions of the Code, including Sections 103 and 141 through 150, necessary to maintain the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes.  The City will not use or permit the use of any proceeds of the Bonds or any other funds of the City, nor take or permit any other action, or fail to take any action, which would adversely affect the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes.  The City will adopt ordinances or resolutions and take other actions necessary to comply with the Code and with other applicable future law, in order to ensure that the interest on the Authority Bonds will remain excluded from federal gross income.

    (b)    The City (1) will use the proceeds of the Bonds as soon as practicable for the purposes for which the Bonds are issued, and (2) will not invest or directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the City in any manner, or take or omit to take any action, that would cause the Authority Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Code.

    (c)    The City will not use any portion of the proceeds of the Bonds, including any investment income earned on the proceeds, directly or indirectly, (1) in a manner that would cause any Bond to be a “private activity bond” within the meaning of Section 141(a) of the Code, or (2) to make or finance a loan to any person.

    (d)    The City will pay to the Trustee, for deposit to the Interest Account and subsequent transfer as provided in the Indenture, an amount equal to arbitrage rebate and the costs incurred in connection with determining arbitrage rebate, at the times required by the Arbitrage Instructions.  The provisions of this paragraph will survive the payment in full or defeasance of the Bonds.


ARTICLE IX

ADDITIONAL BONDS

    Section 901.  Prior Lien Bonds.  The City will not issue any debt obligations payable out of the Net Revenues which are superior in lien, security or otherwise to the Bonds.

    Section 902.  Parity Lien Bonds or Obligations.

    (a)    The City will not issue any additional bonds or other long–term obligations payable out of the Net Revenues of the System which stand on a parity or equality with the Bonds unless the following conditions are met:

(1)    the City is not in default in the payment of principal or interest on the Bonds or any Parity Bonds or in making any deposit into the funds and accounts under this Ordinance or any Parity Ordinance; and

(2)    the City provides to the Bondowner and the Trustee a certificate showing either of the following:

            (A)    the average annual Net Revenues as set forth in the last available audit for the two Fiscal Years immediately preceding the issuance of additional bonds, shall have been at least 110% of the average annual debt service on the System Revenue Bonds, including the additional bonds proposed to be issued, to be paid out of the Net Revenues in all succeeding Fiscal Years.  Interest to be paid on any SRF Program Bonds may be reduced by the SRF Subsidy, if any.  If the City has made any increase in rates for the use and services of the System and the increase has not been in effect during all of the two Fiscal Years for which annual audits are available, the City may add the additional Net Revenues which would have resulted if the rate increase had been in effect for the entire period to the audited Net Revenues; or

            (B)    the estimated average annual Net Revenues for the two Fiscal Years immediately following the Fiscal Year in which the improvements to the System being financed by the additional bonds are to be in commercial operation, as certified by the Consultant, is at least 110% of the average annual debt service on the System Revenue Bonds, including the additional bonds proposed to be issued, to be paid out of the Net Revenues in succeeding Fiscal Years following the commencement of commercial operation  of the improvements.  Interest to be paid on any SRF Program Bonds may be reduced by the SRF Subsidy, if any.  In determining the amount of estimated Net Revenues for the purpose of this subsection, the Consultant may adjust the estimated net income and revenues by adding the estimated increase in Net Revenues resulting from any increase in rates for the use and services of the System approved by the City.

    (b)    If the conditions set forth in this Section are satisfied, the City (i) may issue additional revenue bonds or other obligations of the City on a parity with the Bonds and that enjoy complete equality of the lien on the Net Revenues with the Bonds, (ii) may make equal provision for paying the additional revenue bonds or other obligations from the Revenue Fund, and (iii) may secure the additional revenue bonds or other obligations by funding reasonable System debt service accounts and debt service reserve accounts from the Net Revenues.

    Section 903.  Junior Lien Bonds.  Nothing in this Article prohibits or restricts the right of the City to issue additional revenue obligations, including revenue bonds, for the purpose of extending, improving, enlarging, repairing or altering the System, or refunding obligations issued for such purpose, that are subordinate to the Bonds if at the time of the issuance of the additional revenue obligations the City is not in default in the performance of any covenant or agreement in this Ordinance.  If the City is in default in paying either interest on or principal of the Bonds, or if the Reserve Account is not fully funded, the City shall not make any payments on the subordinate revenue obligations until the default is cured.  Subject to the limitations in this Section, the City may make provision for paying the principal of and interest on the subordinate revenue bonds or obligations from moneys in the Revenue Fund.

    Section 904.  Refunding Bonds.   The City may, without complying with the provisions of Section 902, refund any of the Bonds in a manner which provides debt service savings to the City, and the refunding bonds so issued will be on a parity with any of the Bonds that are not refunded.  If the Bonds are refunded in part and the refunding bonds bear a higher average rate of interest or become due on a date earlier than that of the Bonds which are refunded, the City must obtain the prior written consent of the Bondowner and DNR to the issuance of the refunding bonds.


ARTICLE X

DEFAULT AND REMEDIES

    Section 1001.  Event of Default.  If (i) the City defaults in the payment of the principal of or interest on any of the Bonds, or (ii) the City or its Governing Body or any of its officers, agents or employees fails or refuses to comply with any provision of this Ordinance, the Constitution or statutes of the State, the Purchase Agreement or the Revolving Fund Agreement and default continues for a period of 60 days after written notice specifying the non–payment default has been given to the City by the Trustee, the Authority, DNR or the Owner of any Bond then Outstanding, at any time thereafter and while the default continues, the City shall pay to DNR the penalties assessed by DNR in accordance with the Regulations.  The penalties will be assessed as a reduction in the credit provided in Section 602(a)(2)(A).

    Section 1002.  Remedies.

    (a)    The provisions of this Ordinance constitute a contract between the City and the Owners of the Bonds.  The Owner or Owners of not less than 10% in principal amount of the Bonds at the time Outstanding have the right for the equal benefit and protection of all Owners of Bonds similarly situated:

(1)    by any proceeding at law or in equity to enforce the rights of the Owner or Owners against the City and its officers, agents and employees, and to compel the performance by the City of its duties and obligations under this Ordinance, the Constitution and the laws of the State;

(2)    by any proceeding at law or in equity to require the City, its officers, agents and employees to account as if they were the trustees of an express trust; and

(3)    by any proceeding at law or in equity to enjoin any act or thing which is unlawful or in violation of the rights of the Owners of the Bonds.

    (b)    Any amounts paid on the Bonds to the Owners will be applied first to interest and second to principal, to the extent due and payable.

    Section 1003.  Limitation on Rights of Bondowners.  No Owner has any right in any manner whatever by the Owner’s action to affect, disturb or prejudice the security granted and provided for in, or enforce any right under, this Ordinance, except in the manner provided in this Ordinance.  All proceedings at law or in equity will be for the equal benefit of all Owners.

    Section 1004.  Remedies Cumulative.  No remedy conferred upon the Owners is intended to be exclusive of any other remedy.  Each remedy is in addition to every other remedy and may be exercised without exhausting any other remedy conferred under this Ordinance.  No waiver by any Owner of any default or breach of duty or contract of the City under this Ordinance will affect any subsequent default or breach of duty or contract by the City or impair any rights or remedies thereon.  No delay or omission of any Owner to exercise any right or power accruing upon any default will impair any right or power or will be construed to be a waiver of any default.  Every substantive right and every remedy conferred upon the Owners of the Bonds by this Ordinance may be enforced and exercised from time to time and as often as may be expedient.  If any Owner discontinues any proceeding or the decision in the proceeding is against the Owner, the City and the Owners of the Bonds will be restored to their former positions and rights under this Ordinance.

    Section 1005.  No Obligation to Levy Taxes.  Nothing in this Ordinance imposes any duty or obligation on the City to levy any taxes either to meet any obligation incurred under this Ordinance or to pay the principal of or interest on the Bonds.


ARTICLE XI

DEFEASANCE

    Section 1101.  Defeasance.  When all of the Bonds have been paid and discharged, the provisions of this Ordinance (other than Section 807) will terminate.  Bonds will be treated as paid and discharged within the meaning of this Ordinance if the City has deposited with the Paying Agent, or other bank or trust company located in the State, having full trust powers and meeting the requirements of a successor Trustee under the Indenture, (i) moneys and non–callable Defeasance Securities which, together with interest to be earned, as evidenced by the written report of an independent certified public accountant, will be sufficient for the payment of the principal and redemption premium, if any, of and interest to accrue on the Bonds to the date of maturity or redemption, plus an additional premium on Bonds being optionally redeemed equal to interest that would otherwise accrue on the Bonds for an additional 30–day period, and (ii) an opinion of Bond Counsel, addressed to the Authority and the Trustee, that providing for the payment of the Bonds by depositing moneys or Defeasance Securities with the Paying Agent in accordance with this Section will not cause the interest on the Authority Bonds to be included in gross income for federal income tax purposes.  If any Bonds will be redeemed prior to maturity, the City must have given irrevocable instructions to the Paying Agent to redeem the Bonds.  Any moneys and obligations which at any time are deposited with the Paying Agent or other bank by or on behalf of the City, for the purpose of paying and discharging any of the Bonds, are assigned, transferred and set over in trust for the applicable Owners, and the moneys and obligations are irrevocably appropriated to the payment and discharge of the applicable Bonds.


ARTICLE XII

AMENDMENTS

    Section 1201.  Amendments.

    (a)    Any provision of the Bonds or of this Ordinance may be amended by an ordinance with the written consent of the Authority and the Trustee.  Consent must be evidenced by an instrument executed by the Authority and the Trustee, acknowledged or proved in the manner of a deed to be recorded, and filed with the City Clerk.  In addition, the prior written consent of the Bondowner and DNR is required for any amendment which would:

        (1)    extend the maturity of any payment of principal or interest on any Bond;

        (2)    reduce the amount of principal or interest payable on any Bond; or

        (3)    permit the priority of any Bond over any other Bond.

    (b)    No amendment will be effective until (i) the City has delivered to the Bondowner, the Trustee and DNR an opinion of Bond Counsel stating that the amendment is permitted by this Ordinance and the Act, complies with their respective terms, is valid and binding upon the City in accordance with its terms and does not adversely affect the exclusion of interest on the Authority Bonds from gross income for federal income tax purposes, and (ii) the City Clerk has on file a copy of the amendment and all required consents.


ARTICLE XIII

MISCELLANEOUS PROVISIONS

    Section 1301.  Further Authority.  The officers of the City, including the Mayor and the City Clerk, are authorized and directed to execute all documents and take the actions as are necessary or advisable in order to carry out and perform the purposes of this Ordinance and to make ministerial changes in the documents approved by this Ordinance which they may approve. The execution of any document or taking of any related action constitutes conclusive evidence of the necessity or advisability of the action or change.

    Section 1302.  Severability.  If any section or other part of this Ordinance is for any reason held invalid, the invalidity will not affect the validity of the other provisions of this Ordinance.

    Section 1303.  Governing Law.  This Ordinance is governed by and will be construed in accordance with the laws of the State.

    Section 1304.    Effective Date.  This Ordinance is in full force and effect from and after its passage by the City Council and approval by the Mayor.




    PASSED this 12th day of May, 2004.