HomeMy WebLinkAbout1991-11-01 • ORDINANCE NO.
AN ORDINANCE AUTHORIZING THE CONSTRUCTION OF
EXTENSIONS, BETTERMENTS AND IMPROVEMENTS TO
THE WATER AND SEWER SYSTEM OF THE CITY OF
BATESVILLE, ARKANSAS; AUTHORIZING THE ISSUANCE
OF REFUNDING AND IMPROVEMENT WATER AND SEWER
SYSTEM REVENUE BONDS; PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON
THE BONDS; PRESCRIBING OTHER MATTERS RELATING
THERETO; AND DECLARING AN EMERGENCY.
WHEREAS, the City of Batesville, Arkansas (the "City") ,
a city of the first class, owns and operates, by and through the
Batesville Utilities Commission (the "Commission") a Waterworks and
Sewer System ("System") ; and
WHEREAS, the City Council has determined that expansions
and improvements to the System are necessary in order to make the
services thereof adequate for the needs of the City; and
WHEREAS, the City has employed McGoodwin, Williams &
Yates as consulting engineer; and
WHEREAS, the consulting engineer has prepared preliminary
plans and specifications for the proposed expansions and
improvements to the System, all as described in detail in the plans
and specifications (the "Improvements") , and a copy of the plans
and specifications is on file in the office of the Commission where
it may be inspected by any interested person; and
WHEREAS, the City has outstanding issues of Water and
Sewer Refunding Revenue Bonds, dated August 1, 1976 (the 111976
Bonds") and Water and Sewer Revenue Bonds, dated May 1, 1978 (the
"1978 Bonds") ; and
WHEREAS, the City can realize substantial debt service
savings by discharging and refinancing the debt evidenced by the
1976 Bonds and the 1978 Bonds; and
WHEREAS, the total estimated cost of the Improvements,
the refinancing provision of required reserves and necessary
expenses incidental thereto and to the issuance of bonds is
approximately $8 , 895, 000; and
WHEREAS, it is expected that federal grant funds in the
amount of approximately $1, 600, 000 will be available to pay a
portion of the cost of the Improvements; and
WHEREAS, the City has funds available for the discharge
of the 1976 Bonds and for payment of a portion of other costs
involved; and
WHEREAS, the City has made arrangements for the sale of
its $6, 075, 000 in principal amount of Refunding and Improvement
Water and Sewer Revenue Bonds, Series 1991 (the "Series 1991
I
• Bonds") for the purpose of financing the refunding of the 1976
Bonds and the 1978 Bonds and the cost of the Improvements; and
NOW THEREFORE, BE IT ORDAINED by the City Council of the
City of Batesville, Arkansas:
Section 1. The Improvements shall be accomplished.
Section 2 . The City Council hereby finds and declares
that the period of usefulness of the Improvements will be more than
forty (40) years, which is longer than the term of the Series 1991
Bonds.
Section 3 . The sale of the Bonds to T.J. Raney & Sons
(the "Underwriter") pursuant to the terms and conditions set out in
the Bond Purchase Agreement relating thereto, which has been
submitted to and is before this meeting, at a price of 98 . 63% of
the principal amount plus accrued interest for Series 1991 Bonds
bearing interest, maturing and otherwise subject to the terms and
provisions hereafter in this Ordinance set forth in detail be, and
the same are hereby, approved and confirmed. The Bond Purchase
Agreement is approved and the Mayor is authorized to execute and
deliver it on behalf of the City.
Section 4 . Under the authority of the Constitution and
laws of the State of Arkansas, including particularly Arkansas Code
of 1987 Annotated, Title 14 , Chapter 234, Subchapter 2 , Title 14,
Chapter 235, Subchapter 2 and Title 14, Chapter 231, Subchapter 1
and decisions of the Supreme court of Arkansas, including City of
Harrison v. Braswell , 209 Ark. 1094 , 194 S.W. 2d 12 (1946) , City of
Batesville, Arkansas Refunding and Improvement Water and Sewer
Revenue Bonds, Series 1991, are hereby authorized and ordered
issued in the principal amount of $6, 075, 000 for the purpose of
accomplishing the Improvements, refunding the 1976 Bonds and the
1978 Bonds, and paying necessary expenses incidental thereto
and to the issuance of the Series 1991 Bonds. The Series 1991
Bonds are being issued as Series 1991 A Bonds, in the principal
amount of $4 , 950, 000, to finance the cost of the Improvements, and
as Series 1991 B Bonds, in the principal amount of $1, 125, 000, to
finance the refunding of the 1978 Bonds. The Bonds shall be
initially dated December 1, 1991, with interest payable
semiannually on February 1 and August 1 of each year, commencing
August 1, 1992 , shall be numbered consecutively from 1 upward, in
order of issuance, and shall be in the denomination of $5, 000 or an
integral multiple thereof. The Series 1991 Bonds shall mature (on
February 1) and bear interest as follows:
«�Y m�i.aaz
-2-
• SERIES 1991 A
INTEREST
YEAR PRINCIPAL RATE (%)
1993 $140, 000. 00 4 . 80
1994 145, 000. 00 5. 00
1995 150, 000. 00 5. 15
1996 160, 000. 00 5. 25
1997 170, 000. 00 5. 40
1998 180, 000. 00 5. 50
1999 190, 000. 00 5. 65
2000 200, 000. 00 5. 75
2001 210, 000. 00 5. 85
2002 225, 000. 00 6. 00
2003 235, 000. 00 6. 15
2004 250, 000. 00 6. 25
2005 265, 000. 00 6. 35
2006 285, 000. 00 6 . 45
2007 305, 000. 00 6. 50
2012 1, 840, 000. 00 6. 65
SERIES 1991 B
INTEREST
. YEAR PRINCIPAL RATE M
1993 $135, 000 4 . 80
1994 145, 000 5. 00
1995 150, 000 5 . 15
1996 160, 000 5. 25
1997 170, 000 5. 40
1998 175, 000 5. 50
1999 190, 000 5. 65
Principal (at stated maturity and mandatory redemption
prior to maturity) and interest on the Series 1991 Bonds shall be
due as follows:
•
tcmr%WA1.m2 —3—
• SERIES 1991 A BONDS
DATE PRINCIPAL INTEREST TOTAL
8/ 1/92 203 , 111. 67 203 , 111. 67
2/ 1/93 140, 000. 00 152, 333 . 75 292 , 333 . 75
8/ 1/93 148, 973 . 75 148 , 973 . 75
2/ 1/94 145, 000. 00 148, 973 .75 293 , 973 . 75
8/ 1/94 145, 348 . 75 145, 348 . 75
2/ 1/95 150, 000. 00 145, 348 . 75 295, 348 . 75
8/ 1/95 141, 486. 25 141, 486 . 25
2/ 1/96 160, 000. 00 141, 486. 25 301, 486. 25
8/ 1/96 137 , 286. 25 137, 286. 25
2/ 1/97 170, 000. 00 137, 286. 25 307 , 286 . 25
8/ 1/97 132 , 696 . 25 132 , 696 . 25
2/ 1/98 180, 000. 00 132 , 696.25 312 , 696. 25
8/ 1/98 127, 746. 25 127 , 746. 25
2/ 1/99 190, 000. 00 127, 746. 25 317, 746. 25
8/ 1/99 122 , 378 . 75 122 , 378 . 75
2/ 1/ 0 200, 000. 00 122, 378 . 75 322 , 378.75
8/ 1/ 0 116, 628 . 75 116, 628. 75
2/ 1/ 1 210, 000. 00 116, 628 .75 326, 628 . 75
8/ 1/ 1 110, 486. 25 110, 486. 25
2/ 1/ 2 225, 000. 00 110, 486. 25 335, 486 . 25
8/ 1/ 2 103 , 736 . 25 103 , 736. 25
2/ 1/ 3 235, 000. 00 103 , 736. 25 338, 736. 25
8/ 1/ 3 96, 510. 00 96, 510. 00
2/ 1/ 4 2501000. 00 96, 510. 00 346, 510. 00
8/ 1/ 4 88, 697 . 50 88 , 697 . 50
2/ 1/ 5 265, 000. 00 88, 697 . 50 353 , 697 . 50
8/ 1/ 5 80, 283 . 75 80, 283 . 75
2/ 1/ 6 285, 000. 00 80, 283 . 75 365, 283 . 75
8/ 1/ 6 71, 092 . 50 71, 092 . 50
2/ 1/ 7 3051000. 00 71, 092 . 50 376, 092 . 50
8/ 1/ 7 61, 180. 00 61, 180. 00
2/ 1/ 8 325, 000. 00 61, 180. 00 386, 180. 00
8/ 1/ 8 50, 373 . 75 50, 373 . 75
2/ 1/ 9 345, 000. 00 50, 373 . 75 395, 373 . 75
8/ 1/ 9 38, 902 . 50 38 , 902 . 50
2/ 1/10 365, 000. 00 38, 902 . 50 403 , 902 . 50
8/ 1/10 26, 766. 25 26, 766. 25
2/ 1/11 390, 000. 00 26, 766. 25 4161766. 25
8/ 1/11 13 , 798 . 75 13 , 798 . 75
2/ 1/12 415, 000. 00 13 , 798 . 75 428, 798 . 75
-4-
• SERIES 1991 B BONDS
DATE PRINCIPAL INTEREST TOTAL
8/ 1/92 39, 596. 67 39 , 596 . 67
2/ 1/93 135, 000. 00 29, 697. 50 164 , 697 . 50
8/ 1/93 26, 457 . 50 26, 457 . 50
2/ 1/94 145, 000. 00 26, 457. 50 171, 457 . 50
8/ 1/94 22 , 832 . 50 22 , 832 . 50
2/ 1/95 150, 000. 00 22 ,832 . 50 172 , 832 . 50
8/ 1/95 18 , 970. 00 18 , 970. 00
2/ 1/96 160, 000. 00 18, 970. 00 178, 970 . 00
8/ 1/96 14, 770. 00 14 , 770. 00
2/ 1/97 170, 000. 00 14 , 770. 00 184 , 770. 00
8/ 1/97 10, 180. 00 10, 180. 00
2/ 1/98 175, 000. 00 10, 180. 00 185, 180. 00
8/ 1/98 5, 367 . 50 51367. 50
2/ 1/99 190, 000. 00 5, 367 . 50 195, 367 . 50
The Series 1991 Bonds shall be registered as to principal
and interest. Principal is payable at the principal office of
First National Bank of Lawrence County, , (the "Trustee"
and "Paying Agent") in the City of Walnut Ridge, Arkansas. Payment
of interest shall be by check or draft mailed to the registered
owner at the address shown on the registration book of the City
• maintained by the Trustee. Bonds issued prior to the first
interest payment date shall bear interest from December 1, 1991.
The interest commencement date for Series 1991 Bonds issued
thereafter shall be the last interest payment date on which
interest has been paid. The Series 1991 Bonds shall be subject to
redemption prior to maturity as hereinafter set forth.
Section 5. The Series 1991 Bonds shall be executed on
behalf of the City by the Mayor and City Clerk and shall have
impressed thereon the seal of the City. The Series 1991 Bonds may
be signed by the facsimile signature of the Mayor and the facsimile
signature of the City Clerk. The Series 1991 are secured on a
parity of lien, pledge and security with Additional Bonds, issued
under this Ordinance, and the term "Bonds" refers to and includes
the Series 1991 Bonds and any Additional Bonds outstanding
hereunder. The Bonds, together with interest thereon, shall be
payable solely out of the Water and Sewer Revenue Bond Fund,
hereafter described, and shall be a valid claim of the holders
thereof only against such fund and the amount of revenues pledged
thereto or deposited therein, which revenues are hereby pledged and
mortgaged for the equal and ratable payment of the Bonds and shall
be used for no other purpose than to pay the principal, premium, if
any, interest and Trustee's and Paying Agent's fees on and in
connection with the Bonds. The Bonds shall not constitute an
indebtedness of the City within any constitutional or statutory
limitation.
tcU.y\bccLod2 -5-
• Section 6. The Series 1991 Bonds shall be in
substantially the following form and the Mayor and City Clerk are
hereby expressly authorized and directed to make all recitals
contained therein:
•
«k.y%mt.t.oaz —6—
Naw
• (Form of Bond)
REGISTERED REGISTERED
No.
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF INDEPENDENCE
CITY OF BATESVILLE, ARKANSAS
REFUNDING AND IMPROVEMENT WATER AND SEWER REVENUE BOND
SERIES 1991 (A) (B)
Interest Rate: Maturity Date:
Interest Commencement Date:
Registered Owner:
Principal Amount: Dollars ($ )
CUSIP No.
KNOW ALL MEN BY THESE PRESENTS:
That the City of Batesville, County of Independence,
State of Arkansas (the "City") , for value received, hereby promises
to pay, but solely from the source as hereinafter provided and not
otherwise, to the Registered Owner shown above, upon the
presentation and surrender hereof at the principal corporate office
of First National Bank of Lawrence County in the City of Walnut
Ridge, , or its successor or successors, as Trustee and as
Paying Agent (herein referred to as the "Trustee") , on the Maturity
Date shown above, the Principal Amount shown above, in such coin or
currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts
and to pay by check or draft interest thereon, but solely from the
source as hereinafter provided and not otherwise, in like coin or
currency from the Interest Commencement Date shown above at the
Interest Rate per annum shown above, payable semiannually on the
1st days of February and August of each year, until payment of such
principal sum or, if this Series 1991 Bond or a portion thereof
shall be duly called for redemption, until the date fixed for
redemption, and to pay interest on overdue principal and interest
(to the extent legally enforceable) at the rate borne by this
Series 1991 Bond. Payment of each installment of interest shall be
made to the person in whose name this Series 1991 Bond is
registered on the registration books of the City maintained by the
Trustee at the close of business on the fifteenth day of the month
(whether or not a business day) next preceding each interest
payment date (the "Record Date") , irrespective of any transfer or
exchange of this Series 1991 Bond subsequent to such Record Date
and prior to such interest payment date.
This Series 1991 Bond is one of an issue of City of
Batesville, Arkansas Refunding and Improvement Water and Sewer
Revenue Bonds, Series 1991, aggregating Six Million Seventy-Five
Thousand Dollars ($6, 075, 000) , in principal amount (the "Series
1991 Bonds") , and is issued for the purpose of refinancing
«�Y\mt.i.mz -7-
outstanding indebtedness and financing additions and improvements
to the City's municipal Water and Sewer System (the "System") . The
Series 1991 Bonds are being issued as Series 1991 A Bonds, in the
principal amount of $4, 950, 000, to finance the cost of the
Improvements, and as Series 1991 B Bonds, in the principal amount
of $1, 125, 000, to finance the refunding of bonds of the City
previously issued.
THE SERIES 1991 BONDS ARE ISSUED PURSUANT TO AND IN FULL
COMPLIANCE WITH THE CONSTITUTION AND LAWS OF THE STATE OF ARKANSAS,
INCLUDING PARTICULARLY TITLE 14, CHAPTER 234 , SUBCHAPTER 2 , TITLE
14 , CHAPTER 235, SUBCHAPTER 2 AND TITLE 14 , CHAPTER 231, SUBCHAPTER
1 OF THE ARKANSAS CODE OF 1987 ANNOTATED AND DECISION OF THE
SUPREME COURT OF ARKANSAS, INCLUDING CITY OF HARRISON V. BRASWELL,
209 ARK. 1094, 194 S.W. 2d 12 (1946) , AND PURSUANT TO ORDINANCE NO.
' DULY ADOPTED AND APPROVED ON , 1991 (THE
"AUTHORIZING ORDINANCE") , AND DO NOT CONSTITUTE AN INDEBTEDNESS OF
THE CITY WITHIN ANY CONSTITUTIONAL OR STATUTORY LIMITATION. The
Series 1991 Bonds are secured on a parity of lien, pledge and
security with Additional Bonds, if any, issued under the
Authorizing Ordinance, and the term "Bonds" herein includes the
Series 1991 Bonds and any Additional Bonds outstanding. The Bonds
are not general obligations of the City but are special obligations
secured by a pledge of revenues derived from the operation of the
System. An amount of revenues of the System sufficient to pay the
principal of and interest on the Bonds has been duly pledged for
the payment of principal of, premium, if any, on and interest on
�.. the Bonds. Reference is hereby made to the Authorizing Ordinance
for a detailed statement of the terms and conditions upon which the
Bonds are issued, of the nature and extent of the security for the
Bonds, and the rights and obligations of the City, the Trustee and
the bondholders.
(REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF THIS
BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT AS IF
SET FORTH IN THIS PLACE. )
THE CITY HAS DESIGNATED THIS SERIES 1991 BOND AS A
"QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
«\1ay\mt.1.W2 —8—
=g= s
IN WITNESS WHEREOF, the City of Batesville, Arkansas has
caused this Series 1991 Bond to be executed by its Mayor and City
Clerk, their facsimile signatures thereunto duly authorized and its
corporate seal to be impressed, lithographed or imprinted on this
Series 1991 Bond.
CITY OF BATESVILLE, ARKANSAS
ATTEST:
By (facsimile signature)
(facsimile signature) Mayor
City Clerk
(SEAL)
•
•
WUMewftlAXM —9—
• (Reverse Side of Bond)
CITY OF BATESVILLE, ARKANSAS
REFUNDING AND IMPROVEMENT WATER AND SEWER REVENUE BOND,
SERIES 1991
The Series 1991 Bonds or portions thereof may be redeemed
at the option of the City, in whole or in part, in integral
multiples of $5, 000, from funds from any source, in inverse order
of maturity (and by lot within a maturity in such manner as the
Trustee shall determine) on any interest payment date on and after
February 1, 1998, at a redemption price equal to the principal
amount being redeemed plus accrued interest to the redemption date.
The Series 1991 Bonds or portions thereof are subject to
mandatory redemption, in whole or in part in integral multiples of
$5, 000, in inverse order of maturities (and by lot within a
maturity in such manner as the Trustee shall determine) , from
unused proceeds of the Series 1991 Bonds, on the first interest
payment date after the determination is made that the proceeds will
not be used, at a redemption price equal to 100% of the principal
amount redeemed plus accrued interest to date of redemption.
"Unused proceeds" are any proceeds of the sale of the Series 1991
Bonds which the City determines are not required to pay costs of
refinancing the existing debt or costs of the proposed additions
and Improvements to the System.
The Series Bonds or portions thereof maturing February 1,
2012 , are also subject to mandatory redemption in integral
multiples of $5, 000, by lot (in such manner as the Trustee shall
determine) , at a redemption price equal to 100% of the principal
amount redeemed plus accrued interest to the date of redemption, on
February 1 the following years and in the following principal
amounts:
Year Principal Amount
2008 $325, 000
2009 345, 000
2010 365, 000
2011 390, 000
2012 (Maturity) 415, 000
Notice of redemption identifying the Series 1991 Bonds or
portions thereof (which shall be $5, 000 or a multiple thereof) to
be redeemed shall be given by the Trustee, not less than thirty
(30) nor more than sixty (60) days prior to the date fixed for
redemption, by mailing a copy of the redemption notice by first
class mail, postage prepaid, to all registered owners of Series
1991 Bonds to be redeemed. Failure to mail an appropriate notice
or any such notice to one or more registered owners of Series 1991
Bonds to be redeemed shall not affect the validity of the
proceedings for redemption of other Series 1991 Bonds as to which
notice of redemption is duly given in proper and timely fashion.
tc\kRY\bav-i.oaz —10—
• All such Series 1991 Bonds or portions thereof thus called for
redemption and for the retirement of which funds are duly provided
in accordance with the Authorizing Ordinance prior to the date
fixed for redemption will cease to bear interest on such redemption
date.
This Series 1991 Bond is transferable by the registered
owner hereof in person or by his attorney-in-fact duly authorized
in writing at the principal corporate trust office of the Trustee,
but only in the manner, subject to the limitations and upon payment
of the charges provided in the Authorizing Ordinance, and upon
surrender and cancellation of this Series 1991 Bond. Upon such
transfer a new fully registered Series 1991 Bond or Bonds of the
same series and maturity, of authorized denomination or
denominations, for the same aggregate principal amount, will be
issued to the transferee in exchange therefor. This Series 1991
Bond is issued with the intent that the laws of the State of
Arkansas shall govern its construction.
The City and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof for the
purpose of receiving payment of or on account of principal hereof
and premium, if any, hereon and interest due hereon and for all
other purposes, and neither the City nor the Trustee nor any paying
agent shall be affected by any notice to the contrary.
The Series 1991 Bonds are issuable only as fully
registered bonds in the denomination of $5, 000, and any integral
multiple thereof. Subject to the limitations and upon payment of
the charges provided in the Authorizing Ordinance, Series 1991
Bonds may be exchanged for a like aggregate principal amount of
Series 1991 Bonds of the same maturity of other authorized
denominations.
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 the Series 1991 Bonds
do exist, have happened and have been performed in due time, form
and manner as required by law; that the indebtedness represented by
the Series 1991 Bonds, together with all obligations of the City,
does not exceed any constitutional or statutory limitation; and
that the above referred to revenues pledged to the payment of the
principal of and premium, if any, and interest on the Series 1991
Bonds as the same become due and payable will be sufficient in
amount for that purpose.
This Series 1991 Bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Authorizing Ordinance until the Certificate of
Authentication hereon shall have been signed by the Trustee.
«\kayMmmt.oaz —11-
• (Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Series 1991 Bond is one of the Bonds designated
Refunding and Improvement Water and Sewer Revenue Bonds, Series
1991, in and issued under the provisions of the within mentioned
Authorizing Ordinance.
FIRST NATIONAL BANK
OF LAWRENCE COUNTY
Walnut Ridge, Arkansas
TRUSTEE
By
Authorized Signature
DATE OF AUTHENTICATION:
«Umy\mtc1xd2 —12—
• (Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED,
("Transferor") , hereby sells, assigns and transfers unto
the within bond and all rights
thereunder, and hereby irrevocably constitutes and appoints
as attorney to transfer the within bond on the
books kept for registration thereof with full power of substitution
in the premises.
DATE:
Transferor
GUARANTEED BY:
NOTICE: Signature(s) must be guaranteed by a member firm
of the National Association of Securities Dealers or a commercial
bank or a trust company.
«\k.Y\mt.i.aaz —13—
I
Section 7 . The rates charged for services of the
(0 System heretofore fixed by Ordinance No. of the City,
adopted , 1991 and the conditions, rights and
obligations pertaining thereto, as set out in that ordinance,
are hereby ratified, confirmed and continued.
The City covenants that the rates shall always be
maintained (including any increases if and when necessary, from
time to time) at levels which will produce Net Revenues at least
equal to 120% the amount necessary to pay when due principal and
interest on all Bonds to which any System Revenues are pledged and
to deposit the amounts required to be paid into the Debt Service
Reserve and the Depreciation Fund during the current and next
ensuing fiscal years. (Such rates may be reduced by the City,
provided that the covenant set forth in the preceding sentence is
always observed. )
As used in this Ordinance:
(a) "System Revenues" means Operating Revenues plus
Sales Tax Revenues, if any.
(b) "Operating Revenues" means gross revenues derived
from operation of the System (including earnings and profits on
investments) .
(c) "Sales Tax Revenues" means, for any fiscal year,
revenues derived from any sales and use tax levied by the City for
the purpose of providing funds for the System or expenses thereof
for the then current fiscal year. It is intended that all Sales
Tax Revenues shall be deposited into the Bond Fund, as set forth in
Section 11, below. For all calculations under the provisions of
this Ordinance, including Section 7 , and Section 14 , such revenues
shall be taken into account as "Sales Tax Revenues" only to the
extent that such revenues have been appropriated by the City for
deposit into the Bond Fund, as received, and to the extent of (and
in the amounts not to exceed) the average monthly amount projected
to be collected during such fiscal year in the opinion of an
independent certified public accountant not in the regular employ
of the City (and acceptable to the Trustee) filed with the Trustee,
as a result of such appropriation. In making the projection
provided for hereby, the independent certified public accountant
may rely upon a forecast or projection prepared by a consultant
which (1) has previously performed at least one such forecast or
projection and (2) is acceptable to such independent certified
public accountant.
(d) "Net Revenues" means System Revenues less the
amounts required to pay the costs of operation, maintenance and
repair of the System, including all expense items properly
attributable to the operation and maintenance of the System in
accordance with generally accepted accounting principles applicable
to municipal water and sewer systems (excluding depreciation,
interest and amortization expenses) .
w\kay\b&ie1.od2 -14-
f
The City covenants that, (a) in the event that System Revenues,
including Sales Tax Revenues, received and deposited should fail to
equal at least one-half of System Revenues necessary to comply with
the annual requirements set forth above for any period of six
months, the City shall adopt an ordinance or ordinances within
thirty days enacting rates for System services which shall cause
sufficient System Revenues to be produced and (b) Operating
Revenues exclusive of Sales Tax Revenues shall always equal at
least the amounts required to pay costs of operation, maintenance
and repair of the System.
Nothing herein shall be construed as a pledge of Sales Tax Revenues
or as an obligation of the City to appropriate Sales Tax Revenues
to any purpose hereunder.
Section 8 . The Manager of the System shall be custodian
of the System Revenues and shall give bond for the faithful
discharge of his duties as such custodian. The System shall be
continuously operated as a revenue-producing undertaking. All
System Revenues, as received by the Manager, shall be deposited by
him or her in such depository or depositories for the City as may
be lawfully designated from time to time by the Commission;
subject, however, to the giving of security as now or hereafter may
be required by law, and provided that such depository or
depositories shall hold membership in the Federal Deposit Insurance
Corporation ("FDIC") or any successor entity. All deposits shall
be in the name of the City and shall be so designated as to
�. indicate the particular fund to which the System Revenues belong.
Any deposit in excess of the amount insured by the FDIC shall be
secured by direct or fully guaranteed obligations of the United
States of America unless invested as herein authorized.
Section 9 . All Operating Revenues shall be deposited
into a special fund hereby created and designated "Water and Sewer
Revenue Fund, " in a bank selected by the Commission that is a
member of the FDIC. Revenues in the Water and Sewer Revenue Fund
are hereby pledged and shall be applied to the payment of the
reasonable and necessary expenses of operation and maintenance of
the System, to the payment of the principal of and interest on the
Series 1991 Bonds, to the maintenance of Debt Service Reserves at
required levels, to the providing of the Depreciation Fund, and
otherwise as described herein.
Section 10. There shall be paid, beginning after the
first full month following issuance of the Bonds, from the Water
and Sewer Revenue Fund into a fund hereby created and designated
Water and Sewer Operation and Maintenance Fund (the "Operation and
Maintenance Fund") , in a bank selected by the Commission that is a
member of the FDIC, on the first business day of each month, an
amount sufficient to pay the reasonable and necessary monthly
expenses of operation, repair and maintenance of the System for
such month and from which disbursements shall be made only for
those purposes. Fixed annual charges such as insurance premiums
and the cost of major repair and maintenance expenses may be
tc\ny\b.tci.aaz —15—
computed and set upon an annual basis, and one-twelfth (1/12) of
the amount thereof may be paid into the Operation and Maintenance
Fund each month.
If in any month for any reason there shall be a failure
to transfer and pay the required amount into the Operation and
Maintenance Fund, the amount of the deficiency shall be added to
the amount otherwise required to be transferred and paid into the
fund the next succeeding month. If in any fiscal year a surplus
shall be accumulated in the Operation and Maintenance Fund over and
above the amount which shall be necessary to defray the reasonable
and necessary costs of operation and maintenance of the System
during the remainder of the then current fiscal year and the next
ensuing fiscal year, such surplus may be transferred into the Bond
Fund or into the Depreciation Fund, to the extent of any deficit
therein, and, in the absence of any such deficit, to the Revenue
Fund.
Section 11. (a) (i) After making the required payment
into the Operation and Maintenance Fund there shall be transferred
and paid from the Water and Sewer Revenue Fund into a special trust
fund, hereby created and designated "Water and Sewer Revenue Bond
Fund" (the "Bond Fund") , in the Trustee, the sums sufficient, with
Sales Tax Revenues, to comply with the requirements set forth in
subsection (b) below.
(ii) There shall be paid into the Bond Fund, as received,
all Sales Tax Revenues.
(b) There shall be paid into the Bond Fund until all
outstanding Bonds, with interest thereon, have been paid in full or
provision made for such payment, on the first business day of each
month, a sum at least equal to 1/6 of the next installment of
interest and a sum equal to 1/12 of the installment of principal
due during the then next twelve months (either at maturity or in
accordance with any mandatory redemption provisions) of the Bonds
(provided that the monthly amount with respect to interest payable
prior to the first interest payment date shall be an amount equal
to such payment divided by the number of full months between the
date of issuance and such interest payment date) plus an amount
sufficient to provide for Trustee's and Paying Agent's fees on all
outstanding Bonds. If Additional Bonds are issued pursuant to the
provisions hereof, payments into the Bond Fund shall be increased
to provide for monthly amortization of such Additional Bonds.
(c) There is hereby established and shall be maintained
within the Bond Fund a "Debt Service Reserve, " initially funded
with Bond proceeds and existing funds in an amount equal to the
Required Level (defined below) . If Additional Bonds are issued on
a parity with the Series 1991 Bonds, the Debt Service Reserve must
be increased upon the issuance of such Additional Bonds, so that
• the amount thereof is equal to the Required Level. The Debt
Service Reserve shall be established and maintained at an amount
equal to the least of (1) 10% of the proceeds of all Bonds
wU.y%.�Loa2 -16-
R
(including such amount with respect to any Additional Bond) issued
or (2) the maximum annual debt service on all Bonds outstanding or
(3) 1. 25 times the average annual debt service and all Bonds
(including any additional bonds) outstanding (the "Required
Level") . If the Debt Service Reserve is ever reduced below the
Required Level, the monthly payments into the Bond Fund shall be
increased by depositing therein all available System Revenues after
required deposits into the Bond Fund, until the Debt Service
Reserve is restored to the Required Level.
The Debt Service Reserve shall be maintained as two
subaccounts. Any Sales Tax Revenues transferred thereto from the
Bond Fund, and all earnings thereon, shall be deposited into the
"Sales Tax Revenue Subaccount. " All Operating Revenues deposited
therein, and all earnings thereon, shall be deposited in the
"Operating Revenues Subaccount. " In the event that the Debt
Service Reserve shall exceed the Required Level, (a) funds held in
the Sales Tax Revenues Subaccount may be withdrawn and applied to
the redemption or defeasance of Bonds prior to maturity and (b)
funds held in the Operating Revenues Subaccount may be withdrawn
and (i) applied to the redemption or defeasance of Bonds prior to
maturity or (ii) deposited in the Revenue Fund.
(d) If the System Revenues are insufficient to make the
required payment on the first business day of any month into the
Bond Fund, the amount of any such deficiency in the payment made
shall be added to the amount otherwise required to be paid into the
Bond Fund on the first business day of the next month.
If for any reason there shall be a deficiency in the
payments made into the Bond Fund so that there are unavailable
sufficient moneys therein to pay the principal of, interest on, and
Trustee's and Paying Agent's fees in connection with the Bonds as
the same become due, any sums then held in the Debt Service Reserve
shall be used to the extent necessary to pay such principal,
interest, and Trustee's and Paying Agent's fees. The Debt Service
Reserve shall be used solely as herein provided, but the moneys
therein may be invested as set forth below.
(e) If a surplus shall exist in the Bond Fund (exclusive
of the Debt Service Reserve) over and above current monthly
requirements thereof, such surplus shall be deposited into the Debt
Service Reserve, as set forth in (c) , above. Moneys in the Bond
Fund shall be used solely for the payment of principal, premium, if
any, and interest on the Bonds and Trustee's and Paying Agent's
fees.
(f) The Trustee shall withdraw from the Bond Fund on or
before the due date of any Bond or interest payable therefrom, at
maturity or redemption prior to maturity, and deposit with the
Paying Agent, an amount equal to the amount of such Bond or
interest payment for the sole purpose of paying the same, together
Iwith the Paying Agent's fee.
tcgmY%mLc1.od2 -17-
(g) To the extent that the level of the Debt Service
Reserve exceeds the Required Level, determined as set forth in
Section 22 hereof, such excess shall be invested, if invested, at
a yield not in excess of the yield on the Bonds (of the series to
which applicable) . For this purpose, "yield" shall be determined
as set forth in Section 148 of the Internal Revenue Code of 1986,
as amended, and regulations issued or otherwise effective
thereunder.
Section 12 . After making the required payments into the
Operation and Maintenance Fund the Bond Fund, and beginning after
the first full month following issuance of the Bonds, there shall
be paid from the Water and Sewer Revenue Fund into a fund hereby
created and designated Waterworks Depreciation Fund (the
"Depreciation Fund") , in a bank, selected by the Commission, that
is a member of the FDIC, on the first business day of each month
while any of the Series 1991 Bonds are outstanding, a sum equal to
one-twelfth (1/12) of the amount necessary, as estimated by the
Manager of the System to pay for new construction and acquisition,
for major replacements, and for extraordinary repairs to the System
during the next ensuing fiscal year. The City shall cause the
Manager to file annually with the Trustee, at least fifteen days
before the last day of each fiscal year, a statement, which shall
set forth the factors and assumptions on which such determination
is based, specifying the estimated amount necessary to be expended
in the next ensuing fiscal year to pay for new construction and
acquisition, major replacements, and for extraordinary repairs to
the System. The moneys in the Depreciation Fund shall be used
solely for such purposes and for the purpose of paying costs of
damage caused by unforeseen catastrophes, except that moneys in the
Depreciation Fund shall be used to the extent necessary at any time
to prevent default in the payment of principal, interest, and
Trustee's and Paying Agent's fees on the Series 1991 Bonds. (It is
not expected that moneys remaining in the Depreciation Fund would
be sufficient to prevent such a default. )
If in any fiscal year a surplus shall be accumulated in
the Depreciation Fund over and above the amount which shall be
necessary to cover probable replacement costs during the current
fiscal year and the next ensuing fiscal year, such surplus may be
transferred to the Bond Fund, to the extent of any deficit therein,
and, in the absence of any such deficit, to the Revenue Fund.
Section 13 . Any surplus in the Water and Sewer Revenue
Fund, after making all disbursements required by the provisions of
this Ordinance and making full provision for the funds herein
provided, may be used, at the option of the City, for the
redemption of the Bonds, prior to maturity in accordance with their
respective redemption provisions; for constructing extensions,
betterments and improvements to the System; or for any other lawful
municipal purpose.
Section 14 . So long as any Series 1991 Bonds are
outstanding under the provisions of this Ordinance, the City shall
«\JmykmLci.oU -18—
E
not issue or attempt to issue any bonds claimed to be entitled to
a priority of lien on System Revenues over the lien securing the
Series 1991 Bonds.
The City reserves the right to issue Additional Bonds to
finance or refinance the cost of constructing any future
extensions, betterments or improvements to the System, but the City
shall not authorize or issue any such Additional Bonds ranking on
a parity with the Series 1991 unless and until there shall have
been procured and filed with the Trustee a statement by an
independent certified public accountant not in the regular employ
of the City reciting the opinion, based upon necessary
investigation, that Net Revenues for the fiscal year immediately
preceding the fiscal year in which it is proposed to issue such
Additional Bonds shall equal not less than 120% of the maximum
annual principal and interest requirements on all the then
outstanding Bonds payable from System Revenues and the Additional
Bonds then proposed to be issued. For the purposes of the
computation required by this paragraph, additional amounts may be
added to the Net Revenues of the completed fiscal year immediately
preceding the issuance of Additional Bonds, as follows: If, prior
to the issuance of the Additional Bonds and subsequent to the first
day of such preceding fiscal year, the City shall have increased
its rates or charges imposed for services of the System there may
be added to the Net Revenues of such fiscal year the additional Net
Revenues which would have been received from the operation of the
System during such fiscal year had such increase been in effect
throughout such fiscal year, as reflected by a certificate of a
duly qualified consulting engineer not in the regular employ of the
City and approved by the Trustee.
Section 15. The Series 1991 Bonds shall be subject to
redemption prior to maturity in accordance with the terms set out
in the bond form, hereinabove.
Section 16. The City will keep proper books of accounts
and records (separate from all other records and accounts) in which
complete and correct entries shall be made of all transactions
relating to the operation of the System, and such books shall be
available for inspection by the holder of any of the Bonds at
reasonable times and under reasonable circumstances. The City
agrees to have these records audited by an independent certified
public accountant at least once each year. A copy of the audit
shall be delivered to the Trustee not later than 180 days after the
end of each fiscal year and shall be made available to any
bondholder making request therefor. In the event that the City
fails or refuses to make the audit, the Trustee, or any holder of
a Bond, may have the audit made, and the cost thereof shall be
charged against the Operation and Maintenance Fund.
Section 17 . The City covenants that it will maintain the
System in good condition and operate the same in an efficient
manner and at reasonable cost. While any of the Bonds are
outstanding, the City agrees that, to the extent that comparable
tc\mY\bawi.oaz -19-
protection is not otherwise provided to the satisfaction of the
Trustee, it will insure and at all times keep insured, in the
amount of the full insurable value thereof, in a responsible
insurance company or companies authorized and qualified under the
laws of the State of Arkansas to assume the risk thereof,
properties of the System, to the extent that such properties would
be covered by insurance by private companies engaged in similar
types of businesses (but in any event in such amounts as will avoid
co-insurance responsibilities) , against loss or damage thereto from
fire and other perils included in extended coverage insurance in
effect in Arkansas. The insurance policies are to be taken with
companies approved by the Trustee, are to carry a clause making
them payable to the Trustee as its interest may appear, and are
either to be placed in the custody of the Trustee or satisfactory
evidence of said insurance shall be filed with the Trustee. In the
event of loss, the proceeds of such insurance shall be applied
solely toward the reconstruction, replacement or repair of the
System, and in such event the City will, with reasonable
promptness, cause to be commenced and completed the reconstruction,
replacement and repair work. If such proceeds are more than
sufficient for such purposes, the balance remaining shall be
deposited to the credit of the Water and Sewer Revenue Fund, and if
such proceeds shall be insufficient for such purposes the
deficiency shall be supplied first from moneys in the Depreciation
Fund and second from moneys in the Operation and Maintenance Fund
and third from surplus moneys in the Water and Sewer Revenue Fund.
Nothing shall be construed as requiring the City to expend any
IL moneys for operation and maintenance of the System or for premiums
on its insurance which are derived from sources other than the
operation of the System, but nothing shall be construed as
preventing the City from doing so.
Section 18 . Bonds for the payment or redemption of
which moneys or Government Securities, as defined in Section 22
hereof, which are not subject to call prior to maturity (except at
the option of the holder thereof) shall have been deposited with
the Paying Agent (whether upon or prior to the maturity or the
redemption date of such bonds) shall be deemed to be paid and
discharged; provided, however, that if such Bonds are to be
redeemed prior to the maturity thereof, notice of such redemption
shall have been duly given or provided for. In determining the
sufficiency of the deposit there shall be considered the principal
amount of such Government Securities, the dates of maturity thereof
and interest to be earned thereon until the maturity of such
Government Securities.
Section 19 . The City covenants that so long as any Bonds
are outstanding, that it will not mortgage, pledge or otherwise
encumber the System, or any part thereof or any revenues derived
from the operation thereof, except as herein specifically provided,
and will not sell, lease or otherwise dispose of any substantial
IL portion of the same. Nothing herein shall be construed to prohibit
the City from disposing of worn out or obsolete System properties
or from disposing of properties not being used and not useful in
k\my\b.t.t.on —20—
the operation of the System, provided that all revenues derived
from the disposition of such properties shall be deposited in the
Water and Sewer Revenue Fund.
Section 20. (a) There shall be a statutory mortgage
lien upon the System, which shall exist in favor of the holders and
registered owners of the Bonds until payment in full of the
interest on and principal of the Bonds; and the System shall remain
subject to such statutory mortgage lien until payment in full of
the principal of and interest on the Bonds. Such statutory
mortgage lien shall be interpreted according to the decision in
City of Harrison v. Braswell, above.
(b) If there be any default in the payment of the
principal of or interest on any of the Bonds, or if the City
defaults in any Bond Fund requirements or in the performance of any
of the other covenants contained and set forth in this Ordinance,
the Trustee may, and upon the written request of the holders and
registered owners of not less than ten percent (10%) in principal
amount of the Bonds then outstanding shall, by proper suit compel
the performance of the duties of the officials of the City under
the laws of Arkansas. And in the case of a default in the payment
of the principal of and interest on any of the Bonds, the Trustee
may, and upon the written request of holders or registered owners
of not less than ten percent (10%) in principal amount of the Bonds
then outstanding shall, apply in a proper action to a court of
competent jurisdiction for the appointment of a receiver to
administer the System on behalf of the City and the holders and
registered owners with power to charge and collect (or by mandatory
injunction or otherwise to cause to be charged and collected) rates
sufficient to provide for the payment of the expenses of operation,
maintenance and repair and to pay any Bonds and interest
outstanding and to apply the revenue in conformity with the laws of
Arkansas and with this Ordinance. When all defaults in principal
and interest payments have been cured, the custody and operation of
the System shall revert to the City.
(c) No holder or registered owner of any of the out-
standing Bonds shall have any right to institute any suit, action,
mandamus or other proceeding in equity or at law for the protection
or enforcement of any right under this Ordinance or under the laws
of Arkansas unless such holder or registered owner previously
shall have given to the Trustee written notice of the default on
account of which such suit, action or proceeding is to be taken,
and unless the holders and registered owners of not less than ten
percent (10%) in principal amount of the Bonds then outstanding
shall have made written request of the Trustee after the right to
exercise such powers or right of action, as the case may be, shall
have accrued, and shall have afforded the Trustee a reasonable
opportunity either to proceed to exercise the powers herein granted
or granted by the laws of Arkansas, or to institute such action,
suit or proceeding in its name, and unless, also, there shall have
been offered to the Trustee reasonable security and indemnity
against the costs, expenses and liabilities to be incurred therein
w1,1my\bQtct.oa2 —21-
r
or thereby and the Trustee shall have refused or neglected to
comply with such request within a reasonable time, and such
notification, request and offer of indemnity are hereby declared in
every such case, at the option of the Trustee, to be conditions
precedent to the execution of the powers and trusts of this
Ordinance or to any other remedy hereunder. It is understood and
intended that no one or more holders or registered owners of the
Bonds hereby secured shall have any right in any manner whatever by
his or their action to affect, disturb or prejudice the security of
this Ordinance, or to enforce any right hereunder except in the
manner herein provided, that all proceedings at law or in equity
shall be instituted, had and maintained in the manner herein
provided and for the benefit of all holders and registered owners
of all outstanding Bonds and that any individual rights of action
or other right given to one or more of such holders and registered
owners by law are restricted by this Ordinance to the rights and
remedies herein provided.
(d) All rights of action under this Ordinance or under
any of the Bonds secured hereby, enforceable by the Trustee, may be
enforced by it without the possession of any of the Bonds
appertaining thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the
benefit of all the holders and registered owners of such Bonds,
subject to the provisions of this Ordinance.
• (e) No remedy herein conferred upon or reserved to the
Trustee or to the holders of the Bonds is intended to be exclusive
of any other remedy or remedies herein provided, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or given by law.
(f) No delay or omission of the Trustee or of any
holders of the Bonds to exercise any right or power accrued upon
any default shall impair any such right or power or shall be
construed to be a waiver of any such default or an acquiescence
therein; and every power and remedy given by this Ordinance to the
Trustee and to the holders of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed
expedient.
(g) The Trustee may, and upon the written request of the
holders of not less than fifty percent (50%) in principal amount of
the Bonds then outstanding shall, waive any default which shall
have been remedied before the entry of final judgment or decree in
any suit, action or proceeding instituted under the provisions of
this Ordinance or before the completion of the enforcement of any
other remedy, but no such waiver shall extend to or affect any
other existing or any subsequent default or defaults or impair any
rights or remedies consequent thereon.
(h) The cost of any proceedings brought to enforce the
Bonds or any provision of this Ordinance, including reasonable
L.v.Y\k.�t.oaz -22-
attorney's fees, shall, be a debt of the City and shall be paid by
the City as incurred and billed by the Trustee.
(i) The City covenants that the holders and registered
owners of the Bonds shall have the protection of the provisions of
Arkansas Code of 1987 §14-235-223 , and the City will diligently
proceed to enforce the lien of unpaid sewer charges against the
premises served by the sewer facilities and to collect the amount
due, together with the penalty and expenses authorized by that or
any successor or like law. And, if the City shall fail to proceed
within thirty (30) days after written request shall have been filed
by the Trustee, the Trustee may and upon the written request of
the holders ad registered owners of not less than ten percent (10%)
in principal amount of the Bonds then outstanding shall, proceed to
enforce the lien in accordance with and pursuant to the
authorization of that or any successor or like law.
Section 21. This Ordinance shall constitute a binding
contract between the City and the holders of the outstanding Bonds,
and the City will at all times strictly adhere to the terms and
provisions hereof and will fully discharge all of its obligations
hereunder. Subject to the terms and provisions set forth below
and not otherwise, the holders of not less than seventy-five
percent (75%) in aggregate principal amount of the Bonds then
outstanding shall have the right, from time to time, to consent to
and approve the adoption by the City of such ordinance
• supplemental to this Ordinance as shall be necessary or desirable
for the purpose of modifying, altering, amending, adding to or
rescinding in any particular, any of the terms or provisions of
this Ordinance or in any supplemental ordinance, except that there
shall not be permitted (a) an extension of the maturity of the
principal of or the interest on any Bond, or (b) a reduction in the
principal amount of any Bond or the rate of interest thereon, or
(c) the creation of a lien upon or a pledge of revenues other than
as expressly authorized by this Ordinance as now adopted, or (d)
the creation of a privilege of priority of any Bond or Bonds over
any other Bond or Bonds, or (e) a reduction in the aggregate
principal amount of the Bonds required for consent to such
supplemental ordinance.
Section 22 . (a) Moneys held for the credit of the Debt
Service Reserve in the Bond Fund shall be invested and reinvested
in (i) direct or fully guaranteed obligations of the United States
of America (including any such securities issued or held in book-
entry form on the books of the Department of the Treasury of the
United States of America) ("Government Securities") or (ii) in time
deposits or certificates of deposit of banks, including the
Trustee, which are insured by the Federal Deposit Insurance
Corporation (the "FDIC") , or, if in excess of insurance coverage,
collateralized by Government Securities, or (iii) obligations
issued by the Government National Mortgage Association or (iv)
money market funds comprised exclusively of investments described
in (i) or (iii) above (collectively, "Permitted Investments' ) all
of which shall mature, or which shall be subject to redemption by
tcUmy\batol.oU -23-
• the holder thereof, at the option of such holder, not later than
five (5) years after the date of investment or the final maturity
date of the outstanding bonds, whichever is earlier. The Trustee
shall so invest and reinvest pursuant to the direction of the City
and in the Trustee's discretion in the absence of any direct
instruction from the City.
(b) Moneys held for the credit of the Bond Fund (other
than the Debt Service Reserve) shall be invested and reinvested in
Permitted Investments, which shall mature, or which shall be
subject to redemption by the holder thereof, at the option of such
holder, not later than the date or dates when the moneys will be
required for payment of the principal of and interest on the Bonds
when due. The Trustee shall invest and reinvest pursuant to the
direction of the City and in the Trustee's discretion in the
absence of any direct instructions from the City.
(c) Moneys held for the credit of the Construction Fund
and all other Funds established hereunder may be invested and
reinvested pursuant to the direction of the City in Permitted
Investments which shall mature, or which shall be subject to
redemption by the holder thereof, at the option of such holder, not
later than the date or dates when such money will be required for
the purposes intended.
(d) Obligations so purchased as an investment of moneys
• in any fund shall be deemed at all times to be a part of such fund
and the interest accruing thereon and any profit realized from such
investments shall be credited to such fund, and any loss resulting
from such investment shall be charged to such fund.
(e) Investments of moneys in all funds shall be valued
in terms of current market value at least annually. To the extent
that the value of the Debt Service Reserve exceeds the Required
Level, funds shall be transferred as set forth in Section 11
hereof; to the extent the value of the Debt Service Reserve is less
than the Required Level, such deficiency shall be cured within 180
days.
Section 23 . When the Series 1991 Bonds have been
executed and the seal of the City impressed as herein provided,
they shall be delivered to the Trustee, and the Trustee shall
authenticate them and deliver them to the Underwriter upon payment
in cash of the purchase price of $5, 991, 772 . 50 plus accrued
interest from December 1, 1991, to the date of delivery ("total
sale proceeds") plus funds provided by the Commission. The Trustee
shall disburse such funds as set forth in detail in a letter of
delivery instructions and delivered to the Trustee as follows:
(1) The Trustee shall deposit the amount of the accrued
interest in the Bond Fund.
to\kay%mmi.oaz —24—
(2) The Trustee shall deposit the amount necessary to
refund 1976 Bonds and the 1978 Bonds into a special trust account
for the retirement of the 1976 Bonds and the 1978 Bonds.
(3) The Trustee shall deposit the sum of $607 , 500 into
the Debt Service Reserve.
(4) The Trustee shall pay such costs of issuance of the
Series 1991 Bonds as shall be specified in the letter of delivery
instructions.
(5) The Trustee shall remit the balance to the City for
deposit in a special account in the name of the City designated
"Waterworks Revenue Construction Fund" ("Construction Fund") in
a bank or banks selected by the City. The moneys in the
Construction Fund in excess of the amount insured by the FDIC shall
be continuously secured by Government Securities (though any moneys
invested as hereafter authorized need not be so secured) . The
moneys in the Construction Fund shall be disbursed solely in
payment of the costs of accomplishing the Improvements, paying
necessary expenses incidental thereto and paying expenses of
issuing the Series 1991 Bonds not paid by the purchasers.
Disbursements shall be on the basis of checks or requisitions which
shall contain at least the following information: the person to
whom payment is being made; the amount of the payment; and the
purpose by general classification of the payment. Each check or
requisition must be signed by the Manager of the System and one
other person designated by the Commission and in the case of all
items of expense over which the consulting engineer shall exercise
supervision (which shall include all expenses except engineering
fees, legal fees, and expenses pertaining to the issuance of the
Series 1991 Bonds) each check or requisition shall be accompanied
by a certificate signed by the consulting engineer certifying
approval thereof. In the case of requisitions, the depository
shall issue its check upon the Construction Fund payable to the
person, firm or corporation designated in the requisition. The
depository of the Construction Fund shall be required to keep
accurate records as to all payments made on the basis of
requisitions, and the Commission of the City shall be required to
keep accurate records of all payments made on the basis of checks.
When the Improvements have been completed and all
required expenses paid and expenditures made from the Construction
Fund for and in connection with the accomplishment of the
improvements and the financing thereof, this fact shall be
evidenced by a certificate signed by the Manager of the System and
by the consulting engineer, which certificate shall state, among
other things, the date of the completion and that all obligations
payable from the Construction Fund have been discharged. A copy of
the certificate shall be filed with the depository of the
Construction Fund, and a copy with the Trustee, and upon receipt
thereof the depository of the Construction Fund shall transfer any
remaining balance to the Bond Fund. Moneys so transferred shall be
f
tcvaY\mtc,.mz -25-
R
• used to redeem bonds in accordance with the mandatory redemption
provisions applicable to unused proceeds of the Bonds.
Section 24 . In the event the office of Mayor, City
Clerk, City Treasurer, Commission, Manager of the System or City
Council shall be abolished, or any two or more of such offices
shall be merged or consolidated, or in the event the duties of a
particular office shall be transferred to another office or
officer, or in the event of a vacancy in any such office by reason
of death, resignation, removal from office or otherwise, or in the
event any such officer shall become incapable of performing the
duties of his office by reason of sickness, absence from the City
or otherwise, all powers conferred and all obligations and duties
imposed upon such office or officer shall be performed by the
office or officer succeeding to the principal functions thereof, or
by the office or officer upon whom such powers, obligations and
duties shall be imposed by law.
Section 25. It is understood and agreed that the
Commission, acting for and on behalf of the City, has custody of
and control over the System, operates, maintains and repairs the
System and collects and handles System revenues. Therefore, it is
understood and agreed that even though there are some express
references to the Commission, all references herein to the City
shall, when appropriate in view of the authority and responsibility
of the Commission, be construed to mean and include the Commission.
• To this end, the Commission shall be obligated to perform all
covenants and obligations with reference to the System and System
revenues, set forth herein, the performance of which are within its
authority and jurisdiction. It is understood and intended that the
bondholders have relied on, and are beneficiaries of, such
commitments of the Commission.
Section 26. The Mayor is hereby directed to publish for
one insertion in a newspaper which is published in the City and of
general circulation therein, this Ordinance, to which shall be
attached a Notice signed by him in substantially the following
form:
tc\my\eotci.mz —26—
Section 27. The Trustee shall only be responsible for
the exercise of good faith and reasonable prudence in the execution
of its trust. The recitals in this Ordinance and in the face of
the Bonds are the recitals of the City and not of the Trustee. The
Trustee shall not be required to take any action as Trustee unless
it shall have been requested to do so in writing by the holders of
not less than ten percent (10%) in principal amount of the Bonds
then outstanding and shall have been offered reasonable security
and indemnity against the costs, expenses and liabilities to be
incurred therein or thereby. The Trustee may resign at any time by
ten (10) days notice in writing to the City Clerk and the majority
in principal amount of the holders of the Bonds then outstanding at
any time, with or without cause, may remove the Trustee. In the
event of a vacancy in the office of Trustee, either by resignation
or by removal, the majority in principal amount of the holders of
the Bonds then outstanding may appoint a new Trustee, such
appointment to be evidenced by a written instrument or instruments
filed with the City Clerk. If the majority in principal amount of
the holders of the Bonds then outstanding shall fail to fill a
vacancy within thirty (30) days after the same shall occur, then
the City shall forthwith designate ' a new Trustee by a written
instrument filed in the office of the City Clerk. The original
Trustee and any successor Trustee shall execute a written
acceptance of the trust imposed upon it or them by this Ordinance,
but only upon the terms and conditions set forth in this Ordinance
and subject to the provisions of this Ordinance, to all of which
the respective holders of the Bonds agree. Such written acceptance
shall be filed with the City Clerk and a copy thereof shall be
placed in the bond transcript. Any successor Trustee shall have
all the powers herein granted to the original Trustee. In the
event of a change in the office of Trustee, the former Trustee
which has resigned or been removed shall cease to be Paying Agent
and the successor Trustee shall automatically become the Paying
Agent.
Section 28. Anything herein to the contrary notwith-
standing, all rights of any holder of any Bond to or with respect
to any moneys or investments held in any fund hereunder shall
terminate at the expiration of two years plus six months from the
date of maturity of such Bond, whether by scheduled maturity or by
call for redemption prior to maturity in accordance with the terms
hereof.
Section 29 . (a) The City covenants that it shall not
take any action or suffer or permit any action to be taken or
condition to exist which causes or may cause the interest payable
on the Bonds to be subject to federal income taxation. Without
limiting the generality of the foregoing, the City represents and
covenants that the proceeds of the Bonds and System revenues will
not be used directly or indirectly in such manner as to cause the
Bonds to be treated as "arbitrage bonds" within the meaning of
Section 148 of the Internal Revenue Code of 1986, as amended (the
"Code") . The City covenants to pay to the United States Treasury
«\my\t.tc1.aa2 -28-
any arbitrage rebate due under Section 148 of the Code at the times
required by Section 148 of the Code, if any be required.
(b) The City shall assure that (1) not in excess of ten
percent (10%) of the Net Proceeds of the Bonds is used for Private
Business Use if, in addition, the payment of more than ten percent
(10%) of the principal or ten percent (10%) of the interest due on
the Bonds during the term thereof is, under the terms of the Bonds
or any underlying arrangement, directly or indirectly secured by
any interest in property used or to be used for a Private Business
Use or in payments in respect of property used or to be used for a
Private Business Use or is to be derived from payments, whether or
not to the City, in respect of property or borrowed moneys used or
to be used for a Private Business Use; and (ii) that, in the event
that both (A) in excess of five percent (5%) of the Net Proceeds of
the Bonds are used for a Private Business Use, and (B) an amount in
excess of five percent (5%) of the principal or five percent (5%)
of the interest due on the Bonds during the term thereof is, under
the terms of the Bonds or any underlying arrangement, directly or
indirectly, secured by any interest in property used or to be used
for a Private Business Use or in payments in respect of property
used or to be used for a Private Business Use or is to be derived
from payments, whether or not to the City, in respect of property
or borrowed money used or to be used for a Private Business Use,
the excess over such five percent (5%) of Net Proceeds of the Bonds
used for a Private Business Use shall be used for a Private
Business Use related to the governmental use of the System.
The City shall assure that not in excess of five percent
(5%) of the Net Proceeds of the Bonds is used, directly or
indirectly, to make or finance a loan to persons other than state
or local governmental units.
As used in this subsection (b) , the following terms shall
have the following meanings:
"Net Proceeds" means the face amount of the Bonds, plus
accrued interest and premium, if any, less original issue discount,
if any, less any amount deposited into the Debt Service Reserve
which is derived from the sale proceeds of the Bonds.
"Private Business Use" means use directly or indirectly
in a trade or business carried on by a natural person or in any
activity carried on by a person other than a natural person,
excluding, however, use by a state or local governmental unit and
use as a member of the general public.
(c) The Series 1991 Bonds are hereby designated as
"qualified tax-exempt obligations" within the meaning of Section
265 of the Code. The City represents and covenants that the
aggregate principal amount of its qualified tax-exempt obligations
(excluding "private activity bonds" within the meaning of Section
141 of the Code which are not "qualified 501 (c) (3) bonds" within
the meaning of Section 145 of the Code) , including those of its
«Imy\b.w,.mz -29-
subordinate entities, to be issued in calendar year 1991 does not
and will not exceed $10, 000, 000.
The City further represents that (i) it does not
reasonably expect that the aggregate principal amount of its
tax-exempt obligations (including the Series 1991 Bonds of Series
A but not including the Series 1991 Bonds of Series B Bonds but not
including "private activity bonds" within the meaning of Section
141 of the Code) , including those of its subordinate entities,
issued in calendar year 1990 will exceed $5, 000, 000 and (ii) the
aggregate principal amount of the tax-exempt obligations issued by
the City (including subordinate entities) during the year 1976 and
the year 1978 (not including "industrial development bonds" within
the meaning of Section 103 (b) (2) of the Internal Revenue Code of
1954 , as amended, but without regard to Section 103 (b) (3) (B) or
"private loan bonds" within the meaning of Section 103 (o) (2) (A) but
without regard to any exception other than Section 103 (o) (2) (C) )
did not exceed $5, 000, 000.
(d) The City covenants that it will take no action which
would cause the Series 1991 Bonds to be "federally guaranteed"
within the meaning of Section 149 (b) of the Code; specifically, (A)
the payment of any portion of principal or interest with respect to
the Bonds will not be guaranteed (directly or indirectly) by the
United States or any agency or instrumentality thereof and (B) not
more than 5% of the proceeds of the Series 1991 Bonds (exclusive of
• proceeds invested for an initial temporary period until needed for
the purpose for which the Series 1991 Bonds were issued and
proceeds deposited into the Bond Fund) will be invested (directly
or indirectly) in federally insured deposits or accounts. Nothing
in this Section shall prohibit investments in Series 1991 Bonds
issued by the United States Treasury.
(e) The City covenants that it will submit to the
Secretary of the Treasury of the United States, not later than the
15th day of the second calendar month after the close of the
calendar quarter in which the Series 1991 Bonds are issued, the
statement required by Section 149 (e) of the Code.
Section 30. Nothing in this Ordinance expressed or
implied is intended or shall be construed to confer upon, or to
give to, any person or entity, other than the City, the Trustee,
and the registered owners of the Bonds, any right, remedy or claim
under or by reason of this Ordinance or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises and
agreements in this Ordinance contained by and on behalf of the City
shall be for the sole and exclusive benefit of the City, the
Trustee, and the registered owners of the Bonds.
Section 31. The provisions of this Ordinance are hereby
declared to be separable and if any provision shall for any reason
be held illegal or invalid, such holding shall not affect the
validity of the remainder of the Ordinance.
«vmY\batci.mz -30-
• Section 32 . This Ordinance shall not create any right of
any kind and no right of any kind shall arise hereunder pursuant to
it until the Series 1991 Bonds shall be issued and delivered.
Section 33 . All ordinances and resolutions or parts
thereof, in conflict herewith are hereby repealed to the extent of
such conflict.
Section 34 . It is hereby ascertained and declared that
the Improvements must be accomplished as soon as possible in order
to make the System adequate for the needs of the City and its
inhabitants, without which the life, health, safety and welfare
thereof are jeopardized, and that the issuance of the Series 1991
Bonds and the taking of the other action authorized by this
Ordinance is necessary for the accomplishment thereof. It is,
therefore, declared that an emergency exists and this Ordinance
being necessary for the immediate preservation of the public peace,
health and safety shall take effect and be in force from and after
its passage.
PASSED: ( y��, ��� /, �� 1991.
APPROVED:
ATTEST:
City Clerk
(SEAL)
•
mmyb.wei.oax -31-
FL
CERTIFICATE
The undersigned, City Clerk of the City of Batesville,
Arkansas, hereby certifies th t the foregoing pages are a true and
correct copy of Ordinance No. /-//- / , adopted at a Q t,6A session
of the Council of the City of Batesville, Arkansalg, held at the
regular meeting place of the Council in the City at �_ �.m. ,
on the - — day of 46tH-r'&'< , 1990, and that saidn Ordinance is of
record in Ordinance Record Book No. , Page o(o�� , now in my
possession.
GIVEN under my hand and seal this day of
-ja-*ya-�A- , 1991.
City Clerk
(SEAL)
tc\Jay\bntci.oC -32-