Req.#13526
O"INANCE NO.
281-46
1 AN ORDINANCE of the City of Tacoma, Washington, providing for the issuance
2 and sale of the City's Electric System Revenue and Refunding Bonds,
Series 2013, in the aggregate principal amount of not to exceed
3 $375,000,000 to provide funds to finance capital improvements and to allow
for the option of refunding or defeasing a portion of the City's outstanding
4 Electric System bonds; fixing or setting parameters with respect to certain
5 terms and covenants of the bonds, and appointing the City's designated
representative to approve the final terms of the sale of the bonds.
6
WHEREAS the City, by Ordinance No. 23514, passed on November 20,
7
8 1985 (as amended, supplemented and restated, the "Master Ordinance"),
9 authorized Electric System Revenue Bonds ("Parity Bonds") of the City to be issued
10 in series having a parity of lien and charge upon the Net Revenues (as that term is
1 1 hereinafter defined) if certain conditions are met and complied with, made
12
covenants in connection with the issuance of such Parity Bonds and authorized the
1 3
14 sale and issuance of a first series of such Parity Bonds to refund all of the City's
15 then-outstanding light and power revenue bonds, and
16 WHEREAS the City has issued and has currently outstanding the following
17 series of Parity Bonds (the "Outstanding Parity Bonds"):
18
Authorizing Bonds Principal Amount
19 Name of Bonds Ordinance Dated Issued
20 2004 Bonds 27230 June 8, 2004 82,655,000
21 2005 Bonds 27403 October 4, 2005 249,905,000
22 2007 Bonds 27587 March 13, 2007 81,130,000
2010 Bonds 27889 July 27, 201 0 187,255,000
23
24 and
WHEREAS the ordinances authorizing the issuance of the 2004 Bonds,
25
26 2005 Bonds, and 2007 Bonds (collectively, the "Refunding Candidates") provide
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that any such bonds may be defeased when the City sets aside in the Bond Fund or
another special account refunding bond proceeds or other money or Governmental
2
Obligations in amounts which, together with known earned income from the
3
4 investment thereof, are sufficient to redeem, retire, or pay any Refunding
5 Candidates in accordance with their terms and to pay when due the interest and
6 redemption premium, if any, thereon, and
7 WHEREAS the City Council and the Public Utility Board have determined
8
that some or all of the Refunding Candidates may be refunded or defeased through
9
10 the issuance of revenue refunding bonds and the use of Electric System Revenue,
1 1 and
12 WHEREAS it appears to be in the best interests of the City to issue Electric
13 System Revenue and Refunding Bonds (hereinafter defined as the "2013 Bonds")
14
in one or more series to finance capital improvements to the Electric System,
1 5
16 including the costs of issuance of such 2013 Bonds, and to provide for the option of
17 refunding or defeasing the Refunding Candidates, and
18 WHEREAS the City desires to provide for the issuance and sale of the 2013
19 Bonds as a series of Parity Bonds; Now, Therefore,
20
BE IT ORDAINED BY THE CITY OF TACOMA:
21
ARTICLE 1
22
23 AMENDED AND RESTATED MASTER ORDINANCE
24 Section 1.1. Amended and Restated Master Ordinance. For purposes of
25 this Ordinance, certain provisions of the Master Ordinance, as previously amended,
26
are incorporated and restated herein. The intent is not to amend any provision
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applicable to the Outstanding Parity Bonds, but to include those provisions in this
Ordinance. Upon the maturity or defeasance of all of the 2004 Bonds, 2005 Bonds,
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and 2007 Bonds, the Master Ordinance shall be of no effect and all provisions for
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4 the issuance of Future Parity Bonds shall be as contained in this Ordinance and
5 Ordinance No. 27889 authorizing the issuance of the 2010 Bonds.
6 ARTICLE 11
7 DEFINITIONS AND AUTHORITY
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Section 2.1. Supplemental Ordinance. This Ordinance is supplemental to
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10 and is adopted in accordance with Section 5.1 and Article X of the Master
1 1 Ordinance.
12 Section 2.2. Definitions. As used in this Ordinance, the following words
13 shall have the following meanings:
14
"Accreted Value" means, with respect to any Capital Appreciation Bonds,
15
16 (A) as of any Valuation Date, the amount set forth for such date in any Parity Bond
1 7 Ordinance authorizing such Capital Appreciation Bonds; and (B) as of any date
18 other than a Valuation Date, the sum of (1) the Accreted Value on the preceding
19 Valuation Date and (2) the product of (a) a fraction, the numerator of which is the
20
number of days having elapsed from the preceding Valuation Date and the
21
22 denominator of which is the number of days from such preceding Valuation Date to
23 the next succeeding Valuation Date, calculated based on the assumption that
24 Accreted Value accrues during any semiannual period in equal daily amounts on
25 the basis of a year of twelve 30-day months, times (b) the difference between the
26
Accreted Values for such Valuation Dates.
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"Acquired Obligations" means those United States Treasury Certificates of
Indebtedness, Notes, and Bonds--State and Local Government Series and other
2
direct, noncallable obligations of the United States of America purchased to
3
4 accomplish the refunding of the Refunded Bonds as authorized by this Ordinance.
5 "Annual Debt Service" for any Fiscal Year means the amount equal to:
6 (A) the interest accruing during such Fiscal Year on all outstanding
7 Parity Bonds, excluding interest to be paid from the proceeds of sale of Parity
8
Bonds and less any federal credit for a portion of interest on Parity Bonds if
9
10 permitted to be deducted as provided in Section 11.2; and
11 (B) the principal of all outstanding Serial Bonds due in such Fiscal
1 2 Year; and
13 (C) the Sinking Fund Requirement, if any, for such Fiscal Year.
14
For purposes of this definition, the principal and interest portions of the
1 5
16 Accreted Value of Capital Appreciation Bonds and the Appreciated Value of
1 7 Deferred Income Bonds becoming due at maturity or by virtue of a Sinking Fund
1 8 Requirement shall be included in the calculations of accrued and unpaid and
19 accruing interest or principal in such manner and during such period of time as is
20
specified in any Parity Bond Ordinance authorizing such Capital Appreciation
21
Bonds or Deferred Income Bonds.
22
23 For the purpose of calculating the principal and interest on Option Bonds in
24 any Fiscal Year, such Option Bonds shall be assumed to mature on the stated
25 maturity date or mandatory redemption date thereof.
26
27
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"Appreciated Value" means, with respect to any Deferred Income Bonds,
(A)(1) as of any Valuation Date, the amount set forth for such date in any Parity
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Bond Ordinance authorizing such Deferred Income Bonds and (2) as of any date
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4 other than a Valuation Date, the sum of (a) the Appreciated Value on the preceding
5 Valuation Date and (b) the product of (i) a fraction, the numerator of which is the
6 number of days having elapsed from the preceding Valuation Date and the
7 denominator of which is the number of days from such preceding Valuation Date to
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the next succeeding Valuation Date calculated based on the assumption that
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10 Appreciated Value accrues during any semiannual period in equal daily amounts on
1 1 the basis of a year of twelve 30-day months, times (ii) the difference between the
1 2 Appreciated Values for such Valuation Dates, and (B) as of any date of computation
1 3 on and after the Interest Commencement Date, the Appreciated Value on the
14
Interest Commencement Date.
1 5
16 "Bond Counsel" means an attorney at law or a firm of attorneys, selected by
1 7 the City, of nationally recognized standing in matters pertaining to the tax-exempt
18 nature of interest on bonds issued by states and their political subdivisions, duly
19 admitted to the practice of law before the highest court of any state of the United
20
States of America.
21
22 "Bond Fund" means the Electric System Revenue Bond Fund created by
23 Ordinance No. 23514.
24 "Bondowners'Trustee" means a trustee appointed by bondowners pursuant
25 to Article XV of this Ordinance.
26
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"Bond Register" means the books or records maintained by the Bond
Registrar for the purpose of identifying ownership of the Bonds.
2
"Bond Registrar" means the Fiscal Agent, or any successor bond registrar
3
4 selected by the City.
5 "Capital Appreciation Bonds" means any Parity Bonds as to which interest is
6 payable only at the maturity or prior redemption of such Parity Bonds. For the
7 purposes of (i) receiving payment of the redemption price, if any, of a Capital
8
Appreciation Bond that is redeemed prior to maturity, or (ii) computing the principal
9
10 amount of Parity Bonds held by the holder of a Capital Appreciation Bond in giving
1 1to the City or the Paying Agent any notice, consent, request, or demand pursuant to
12 the related Parity Bond Ordinance for any purpose whatsoever, the principal
1 3amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value.
14
"Certified Public Accountant" means an independent certified public
1 5
16 accountant (or firm of certified public accountants) selected by the City and having
17 a favorable national reputation.
18 "City" means the City of Tacoma, Washington, a home-rule charter municipal
19 corporation duly organized and existing under and by virtue of the Constitution and
20
laws of the State of Washington.
21
22 "City Payment" means any payment (designated as such by a Parity Bond
23 Ordinance) required to be made by or on behalf of the City under a Derivative
24 Product and which is determined according to a formula set forth in the Derivative
25 Product.
26
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"Code" means the Internal Revenue Code of 1986, as amended, together
with corresponding and applicable final, temporary, or proposed regulations and
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revenue rulings issued or amended with respect thereto by the United States
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4 Treasury Department or the Internal Revenue Service, to the extent applicable to
5 the 2013 Bonds.
6 "Commission" means the Securities and Exchange Commission.
7 "Construction Fund" means the "City of Tacoma Electric System
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Construction Fund" created by Ordinance No. 23663.
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10 "Contract Resource Obligation" means an obligation of the Electric System to
1 1 pay the following costs, whether or not Power and Services are available to the
12 Electric System in return for such payment:
1 3 (A) costs associated with generation, transmission or distribution
14
facilities (including any common undivided interest therein) hereafter acquired,
15
16 purchased or constructed by the City and declared by the Council to be a separate
1 7 utility system, which such costs shall include, but are not limited to, costs of normal
18 operation and maintenance, renewals and replacements, additions and betterments
19 and debt service on the bonds or other obligations of such separate electric utility
20
system, or
21
22 (13) costs associated with the purchase of Power and Services
23 under a contract.
24 "Council" means the City Council of the City as the same shall be duly and
25 regularly constituted from time to time.
26
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"Deferred Income Bonds" means any Parity Bonds issued under any Parity
Bond Ordinance as to which accruing interest is not paid prior to the Interest
2 Commencement Date specified in such ordinance and the Appreciated Value for
3
4 such Parity Bonds is compounded semiannually on the Valuation Date for such
5 Deferred Income Bonds.
6 "Derivative Payment Date" means any date specified in the Derivative
7 Product on which a City Payment is due and payable under the Derivative Product.
8
"Derivative Product" means a written contract or agreement between the City
9
10 and a third party (the "Reciprocal Payor") that has or whose obligations are
1 1 unconditionally guaranteed by a party that has (as of the date of the Derivative
12 Product) at least an investment grade rating from a rating agency (who, if the City's
1 3 Parity Bonds are rated by Moody's Investors Service, must have a rating of at
14
least "A"), which provides that the City's obligations thereunder will be conditioned
15
16 on the performance by the Reciprocal Payor of its obligations under the agreement,
17 and
18 (A) under which the City is obligated to pay, on one or more
19 scheduled and specified Derivative Payment Dates, the City Payments in exchange
20
for the Reciprocal Payor's obligation to pay or cause to be paid to the City, on
21
22 scheduled and specified Derivative Payment Dates, the Reciprocal Payments;
23 (B) for which the City's obligations to make City Payments may be
24 secured by a pledge of and lien on the Revenues on an equal and ratable basis
25 with the Parity Bonds;
26
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(C) under which Reciprocal Payments are to be made directly into
the Bond Fund;
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(D) for which the City Payments are either specified to be one or
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4 more fixed amounts or are determined as provided by the Derivative Product;
5 (E) for which the Reciprocal Payments are either specified to be
6 one or more fixed amounts or are determined as set forth in the Derivative Product;
7 and
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(F) which provides, on either a current or forward basis, for an
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10 exchange of payments determined in accordance with a formula specified therein.
1 1 "Designated Representative" means the officer of the City appointed in
12 Section 4.3 of this Ordinance to serve as the City's designated representative in
13 accordance with RCW 39.46.040(2).
14
"DTC" means The Depository Trust Company.
15
16 "Electric System" means the electric utility properties, rights and assets, real
17 and personal, tangible and intangible, now owned and operated by the City and
18 used or useful in the generation, transmission, distribution and sale of electric
19 energy and the business incidental thereto, and all properties, rights and assets,
20
real and personal, tangible and intangible, hereafter constructed or acquired by the
21
22 City as additions, betterments, improvements or extensions to said electric utility
23 properties, rights and assets, but shall not include any generation, transmission,
24 and distribution facilities that may hereafter be purchased, constructed, or otherwise
25 acquired by the City and declared by the Council to be a separate utility system not
26
financed from the Revenues (except as a Contract Resource Obligation (i) included
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in Operating Expenses of the Electric System upon compliance with Section 10.2
hereof or (ii) on a basis junior and inferior to the lien on Revenues pledged to
2
secure the Bonds), the revenue of which separate utility system may be pledged to
3
4 the payment of revenue obligations issued to purchase, construct, condemn, or
5 otherwise acquire or expand such separate utility system. The Council may, by
6 ordinance, elect to combine with and include as a part of the Electric System any
7 other separate utility system of the City, provided that full provision for the payment
8
of any outstanding indebtedness of such separate system shall first be made in the
9
10 manner substantially similar to that set forth in Section 1 0. 1 hereof.
1 1 "Engineer" means an independent licensed professional engineer (or firm of
1 2 licensed professional engineers) selected by the City and having a favorable
1 3 national reputation for skill and experience with electric systems of comparable size
14
and character to the Electric System in such of the following as are relevant to the
15
16 purposes for which they are retained: (a) engineering and operations and (b) the
17 design of rates.
18 "Event of Default" means those events described as Events of Default in
19 Section 15.1 hereof.
20
"Final Terms" means the terms and conditions for the sale of a series of
21
22 2013 Bonds including, but not limited to, the amount, date or dates, denominations,
23 interest rate or rates (or mechanism for determining interest rate or rates), payment
24 dates, final maturity, redemption rights, price, and other terms or covenants,
25 including minimum savings for refunding bonds (if the refunding bonds are issued
26
for savings purposes).
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"Finance Director" means the Director of the Department of Finance of the
City, or any other officer who succeeds to substantially all of the responsibilities of
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that office specified in this Ordinance.
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4 "Fiscal Agent" means the fiscal agent of the State, as the same may be
5 designated by the State from time to time.
6 "Fiscal Year" means the Fiscal Year used by the City at any time. At the time
7 of the passage of this Ordinance, the Fiscal Year is the 12-month period beginning
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January 1 of each year.
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10 "Future Parity Bonds" means any electric revenue bonds of the City issued
11 after the date of issuance of the 2013 Bonds that will have a lien upon the Net
12 Revenues of the Electric System for the payment of the principal thereof and
1 3 interest thereon equal to the lien upon the Net Revenues of the Electric System for
14
the payment of the principal of and interest on the Outstanding Parity Bonds and
15
the 2013 Bonds.
16
17 "Government Obligations" means those government obligations defined by
18 RCW 39.53.010(9) as it now reads or hereafter may be amended or replaced.
19 "Insurer" means an issuer of Qualified Insurance.
20
"Interest Commencement Date" means, with respect to any particular
21
22 Deferred Income Bonds, the date specified in any Parity Bond Ordinance
23 authorizing such Bonds (which date must be prior to the maturity date for such
24 Bonds) after which interest accruing on such Bonds shall be payable semiannually,
25 with the first such payment date being the applicable interest payment date
26
immediately succeeding such Interest Commencement Date.
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"Issue Date" means, with respect to any Series of 2013 Bonds, the date of
initial issuance and delivery of such Series to the purchaser in exchange for the
2
purchase price of such Series.
3
4 "Letter of Representations" means the Blanket Letter of Representations
5 from the City to DTC in the form on file with the Finance Director.
6 "Master Ordinance" means Ordinance No. 23514, including any amendments
7 or supplements adopted pursuant thereto.
8
"Maximum Interest Rate" means, with respect to any particular Variable
9
10 Interest Rate Bond, a numerical rate of interest, which shall be set forth in any
1 1 Parity Bond Ordinance authorizing such Bond, that shall be the maximum rate of
12 interest such Bond may at any time bear.
13 "Minimum Interest Rate" means, with respect to any particular Variable
14
Interest Rate Bond, a numerical rate of interest which may include a zero interest
15
16 rate and may (but need not) be set forth in any Parity Bond Ordinance authorizing
17 such Bond, that shall be the minimum rate of interest such Bond may at any time
18 bear.
19 Woody's" means Moody's Investors Service, Inc., or its comparable
20
recognized business successor.
21
22 WSRB" means the Municipal Securities Rulemaking Board or any successor
23 to its functions.
24 "Net Revenues" means, for any period, the excess of Revenues over
25 Operating Expenses for such period, excluding from the computation of Revenues
26
(A) any profit or loss derived from the sale or other disposition, not in the ordinary
35
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course of business, of investments or fixed or capital assets of the Electric System,
or resulting from the early extinguishment of debt; (B) insurance and condemnation
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proceeds; (C) income from investment of money on hand in any construction fund
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4 and other investment income restricted to a particular purpose inconsistent with its
5 use for the payment of debt service; and (D) any other extraordinary, non-recurring
6 income or contribution.
7 "Operating Expenses" means all the City's expenses for operation and
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maintenance of the Electric System, including all operation and maintenance
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10 expenses included in the Uniform System of Accounts and shall include, without
1 1 limiting the generality of the foregoing, (A) all costs of purchased Power and
1 2 Services required under contracts existing as of the date of passage of this
1 3 Ordinance to be taken by the City for the account of the Electric System, and
14
otherwise all costs of purchased Power and Services to the extent, but only to the
1 5
16 extent, that the City is not obligated to make payment therefor unless the City is
1 7 receiving Power and Services in return for such payment; and (B) costs of Contract
18 Resource Obligations upon satisfaction of the requirements established by Article X
19 hereof. Operating Expenses shall include payments to the City for services
20
rendered to the electric utility by other departments or offices of the City but shall
21
22 not include any extraordinary, non-recurring expenses, any costs or expenses for
23 new construction, interest, amortization, any allowance for depreciation or any
24 taxes payable to the City (or payments in lieu of taxes) upon the properties or
25 earnings of the Electric System or the earnings of any separate electric utility
26
system derived from payments by the Electric System.
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"Option Bonds" means Parity Bonds that the owner or holder thereof may at
its option demand payment of the principal and accrued interest thereof or the
2
purchase of such Parity Bonds by or on behalf of the City in advance of the
3
4 otherwise scheduled dates for the payment of principal and interest thereon.
5 "Outstanding Parity Bonds" means the outstanding 2004 Bonds, 2005 Bonds,
6 2007 Bonds, and 2010 Bonds.
7 "Parity Bonds" means the Outstanding Parity Bonds, the 2013 Bonds, and
8
any Future Parity Bonds. "Parity Bonds" may include bonds, notes, warrants,
9
10 certificates of indebtedness or any other evidence of indebtedness issued pursuant
1 1 to the Parity Conditions.
12 "Parity Bond Ordinance" means any ordinance authorizing the issuance of
13 Parity Bonds.
14
"Parity Conditions" means the conditions for issuing Future Parity Bonds set
1 5
forth in Section 9.2 hereof.
16
17 "Paying Agent" means the Fiscal Agent or any bank or banks designated as
18 Paying Agent by the City in accordance with applicable laws of the State of
19 Washington now or hereinafter in effect.
20
"Permitted Investments" means investments that are now or may hereafter
21
22 be permitted to the City by the laws of the State of Washington.
23 "Power and Services" means energy, capacity, reserves, and services,
24 excluding the purchase of ownership of generating capability.
25 "Pricing Certificate" means the certificate of the Designated Representative
26
with the final terms of the 2013 Bonds.
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"Qualified Insurance" means any non-cancelable municipal bond insurance
policy or surety bond issued by any insurance company licensed to conduct an
2
insurance business in any state of the United States (or by a service corporation
3
4 acting on behalf of one or more such insurance companies) and if such Qualified
5 Insurance is being used to fund the Reserve Account, which insurance company or
6 companies, as of the time of issuance of such policy or surety bond, are currently
7 rated in one of the two highest rating categories by both Moody's Investors Service,
8
Inc. and Standard & Poor's Corporation or their comparably recognized business
9
successors.
10
1 1 "Qualified Letter of Credit" means any irrevocable letter of credit issued by a
12 financial institution for the account of the City on behalf of the owners of the Parity
13 Bonds, which institution maintains an office, agency, or branch in the United States
14
and, as of the time of issuance of such letter of credit and if such Qualified
1 5
16 Insurance is being used to fund the Reserve Account, is currently rated in one of
17 the two highest rating categories by either Moody's Investors Service, Inc. or
18 Standard & Poor's Corporation or their comparably recognized business
19 successors.
20
"Rate Stabilization Fund" means the Cumulative Reserve Fund for
21
22 Supplemental Purchases of Electric Energy created by Ordinance No. 21862, as it
23 may be amended, of the City, and renamed the Rate Stabilization Fund.
24 "Rating Agencies" means Moody's, S&P or another nationally recognized
25 rating agency rating municipal bonds.
26
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"Reciprocal Payment" means any payment (designated as such by a Parity
Bond Ordinance) to be made to, or for the benefit of, the City under a Derivative
2
Product by the Reciprocal Payor.
3
4 "Reciprocal Payor" means a party to a Derivative Product that is obligated to
5 make one or more Reciprocal Payments thereunder.
6 "Refunded Bonds" means all or a portion of the Refunding Candidates as
7 designated by the Designated Representative.
8
"Refunding Candidates" means the 2004 Refunding Candidates,
9
10 2005 Refunding Candidates, and 2007 Refunding Candidates.
1 1 "Refunding Plan" means:
12 (A) providing to the Refunding Trustee proceeds of the
13 2013 Bonds in an amount sufficient, with other money of the City, if necessary, to
14
acquire the Acquired Obligations that will be deposited, with cash, if necessary, with
1 5
16 the Refunding Trustee;
1 7 (B) the payment of the principal of and interest on the Refunded
18 Bonds when due, up to and including their respective call dates, or such other date
19 as shall be determined by the Designated Representative, and the call, payment,
20
and redemption on such date of all of the then-outstanding Refunded Bonds at a
21
price of par; and
22
23 (C) may include the payment of the costs of issuing the
24 2013 Bonds and the costs of carrying out the foregoing elements of the Refunding
25 Plan.
26
3j
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"Refunding Trust Agreement" means a Refunding Trust Agreement between
the City and the Refunding Trustee.
2
"Refunding Trustee" means the trustee or escrow agent or any successor
3
4 trustee or escrow agent serving as refunding trustee to carry out the Refunding
5 Plan.
6 "Registered Owner" means the person in whose name a 2013 Bond is
7 registered on the Bond Register. For so long as the City utilizes the book-entry
8
system for the 2013 Bonds, DTC shall be deemed to be the Registered Owner.
9
10 "Reserve Account Requirement" means, with respect to the 2013 Bonds and
1 1 the Outstanding Parity Bonds, an amount equal to the lesser of maximum Annual
12 Debt Service in any Fiscal Year following the date of computation or 125 percent of
1 3 average Annual Debt Service and with respect to a series of Future Parity Bonds,
14
an amount set forth in the Parity Bond Ordinance authorizing such bonds. A Parity
1 5
1 6 Bond Ordinance authorizing Future Parity Bonds may establish a separate Reserve
17 Account for such Future Parity Bonds or provide that such Future Parity Bonds be
18 secured by a common Reserve Account. In calculating the Reserve Account
19 Requirement, in the case of Variable Rate Interest Bonds the interest rate
20
calculated thereon shall be calculated on the assumption that such Bonds will bear
21
22 interest during such period at the Maximum Interest Rate for such bonds; provided
23 that, if on such date of calculation the interest rate on such bonds shall then be
24 fixed for a specified period, the interest rate used for such specified period for the
25 purposes of the foregoing calculation shall be such actual interest rate.
26
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"Revenue Fund" means the City of Tacoma Electric System Revenue Fund
continued and redesignated by Section 7.1.A of Ordinance No. 23514.
2
"Revenues" means all income (including investment income), receipts, and
3
4 revenues received by the City through the ownership and operation of the Electric
5 System, including any income derived by the City through the ownership and
6 operation of any facilities that may hereafter be purchased, constructed, or
7 otherwise acquired and operated by the City as a separate utility system, which
8
income is available after meeting all requirements of the obligations of such
9
10 separate system and is paid into the Revenue Fund. "Revenues" shall not include
1 1 investment income restricted to a particular purpose inconsistent with its use for the
12 payment of debt service, including investment income derived pursuant to a plan of
13 debt refunding.
14
"Rule 15c2-12" means the Commission's Rule 15c2-12 under the Securities
1 5
16 Exchange Act of 1934, as amended, and as the same may be amended from time
1 7 to time.
18 "W" means Standard & Poor's Ratings Services, or its comparable
19 recognized business successor.
20
"Securities Depository" means DTC, any successor thereto, any substitute
21
22 securities depository selected by the City, or the nominee of any of the foregoing.
23 Any Securities Depository must be qualified under applicable laws and regulations
24 to provide the services proposed to be provided by it.
25 "Serial Bonds" means Bonds other than Term Bonds.
26
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"Series of 2013 Bonds" or "Series" means a series of 2013 Bonds issued
pursuant to this Ordinance.
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"Sinking Fund Requirement" means, for any Fiscal Year, the amount
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4 required on account of Term Bonds to be deposited into the Bond Retirement
5 Account in such Fiscal Year as established by the ordinance or resolution of the
6 City authorizing the issuance of such Term Bonds.
7 "State" means the State of Washington.
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"Supplemental Ordinance" means any ordinance amending, modifying, or
|10 13|
10 supplementing the provisions of this Ordinance or any Parity Bond Ordinance.
1 1 "Term Bonds" means Parity Bonds of any principal maturity which are
12 subject to mandatory redemption or for which mandatory sinking fund payments are
13 required.
14
"2004 Bonds" means the Electric System Revenue Bonds, 2004 Series A,
15
16 issued pursuant to Ordinance No. 27230 in the original principal amount of
17 $82,655,000.
18 "2004 Refunding Candidates" mean the outstanding 2004 Bonds.
19 "2005 Bonds" means the 2005A Bonds and the 2005B Bonds.
20
"2005A Bonds" means the Electric System Revenue Bonds, 2005 Series A,
21
22 issued pursuant to Ordinance No. 27403 in the original principal amount of
23 $93,480,000.
24 "2005B Bonds" means the Electric System Revenue Refunding Bonds,
25 2005 Series B, issued pursuant to Ordinance No. 27403 in the original principal
26
amount of $156,425,000.
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"2005 Refunding Candidates" means the outstanding 2005A Bonds maturing
in the years 2016 through 2021, inclusive, and the 2005B Bonds maturing in the
2
years 2016 through 2021, inclusive.
3
4 "2007 Bonds" means the Electric System Revenue Refunding Bonds,
5 Series 2007, issued pursuant to Ordinance No. 27587 in the original principal
6 amount of $81,130,000.
7 "2007 Refunding Candidates" means the outstanding 2007 Bonds.
8
"201 0 Bonds" means the Electric System Revenue Bonds, Series 201 OA,
9
10 Electric System Revenue Bonds, Series 2010B (Taxable Build America Bonds -
1 1 Direct Payment) and Electric System Revenue Bonds, Series 2010C (Taxable
12 Clean Renewable Energy Bonds - Direct Payment), issued pursuant to Ordinance
13 No. 27889 in the original principal amount of $187,255,000.
14
"2013 Bonds" means the Electric System Revenue and Refunding Bonds,
1 5
16 Series 2013, issued pursuant to this Ordinance, which bonds may be issued in one
17 or more Series as determined by the Designated Representative.
18 "Uniform System of Accounts" means the Federal Energy Regulatory
19 Commission (or its successor in function) Uniform System of Accounts prescribed
20
for Class A and Class B Public Utilities and Licenses, as the same may be
21
22 modified, amended, or supplemented from time to time.
23 "Valuation Date" means (i) with respect to any Capital Appreciation Bonds
24 the date or dates set forth in any Parity Bond Ordinance authorizing such bonds on
25 which specific Accreted Values are assigned to the Capital Appreciation Bonds, and
26
(ii) with respect to any Deferred Income Bonds the date or dates prior to the Interest
43 -20-
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Commencement Date set forth in any Parity Bond Ordinance authorizing such
bonds on which specific Appreciated Values are assigned to the Deferred Income
|1013|
Bonds.
|1013|
"Variable Interest Rate" means a variable interest rate or rates to be borne
|1013|
5 by a series of Parity Bonds or any one or more maturities within a series of Parity
6 Bonds. The method of computing such variable interest rate shall be specified in
7 the Parity Bond Ordinance authorizing such series of Parity Bonds and shall be
|1013|
based on (i) a percentage or percentages or other function of an objectively
|10 13|
10 determinable interest rate or rates (e.g., a prime lending rate) or a function of such
11 objectively determinable interest rate or rates which may be in effect from time to
12 time or at a particular time or times; provided that, such variable interest rate shall
1 3 be subject to a Maximum Interest Rate and may be subject to a Minimum Interest
14
Rate, and that there may be an initial rate specified in each case as provided in
1 5
16 such Parity Bond Ordinance; or (ii) a stated interest rate that may be changed from
17 time to time as provided in the Parity Bond Ordinance authorizing such bonds,
18 provided that, such interest rate shall be subject to a Maximum Interest Rate. Such
19 Parity Bond Ordinance shall also specify either (i) the particular period or periods of
20
time or manner of determining such period or periods of time for which each value
21
22 of such variable interest rate shall remain in effect or (ii) the time or times upon
23 which any change in such variable interest rate shall become effective.
24 "Variable Interest Rate Bonds" for any period of time, means Parity Bonds
25 which during such period bear a Variable Interest Rate, provided that bonds the
26
0rd13526.doc-WF/bn -21- 44
interest rate on which shall have been fixed for the remainder of the term thereof
shall no longer be Variable Interest Rate Bonds.
|1013|
Section 2.3. Authority for this Ordinance. This Ordinance is adopted
|1013|
4 pursuant to the provisions of the laws of the State of Washington, the Tacoma City
5 Charter and the Master Ordinance.
6 ARTICLE III
7 FINDINGS
|1013|
Section 3.1. Findings of Parity. As required pursuant to the Parity
|10 13|
10 Conditions, the Council hereby finds as follows:
1 1 (A) The 2013 Bonds will be issued for lawful purposes of the City
12 related to the Electric System, specifically, for providing the funds necessary to
13 finance capital improvements to the Electric System and allow for the refunding or
14
the defeasance of the Refunding Candidates.
1 5
16 (B) At the time of issuance of the 2013 Bonds there will be no
17 deficiency in the Bond Fund and no Event of Default shall have occurred.
18 (C) At the time of issuance of the 2013 Bonds there will be on file
19 with the City Clerk the certificate required by Section 5.2(B) of the Master
20
Ordinance.
21
22 The applicable requirements contained in Section 5.2 of the Master
23 Ordinance having been complied with in the issuance of the 2013 Bonds, the 2013
24 Bonds will have a lien upon the Net Revenues of the Electric System for the
25 payment of principal thereof and interest thereon equal to the lien upon the Net
26
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Revenues of the Electric System for the payment of the principal of and interest on
the Outstanding Parity Bonds.
2
Section 3.2. Due Regard. The Council and Board hereby find that due
3
4 regard has been given to the cost of the maintenance and operation of the Electric
5 System and that they have not obligated the City to set aside into the Bond Fund for
6 the account of the 2013 Bonds a greater amount of the revenues and proceeds of
7 the Electric System than in their judgment will be available over and above such
8
cost of maintenance and operation.
9
1 0 Section 3.3. Authorization of Plan and System. The 2013 Bonds, and
1 1 interest earnings on such 2013 Bonds, will finance or reimburse a portion of the
1 2 Electric System's capital budget for 2013/2014. Included in the capital budget are
13 regular system additions and improvements to the distribution, transmission,
14
telecommunication, conservation and generation facilities, equipment and
1 5
16 supporting systems. These improvements and betterments to the System are
1 7 collectively defined as the "Plan." The City may modify details of the Plan as
18 necessary or advisable. Should any part or provision of the Plan be held to be
1 9 invalid, such holding shall not affect the validity of any other part of the Plan.
20
Section 3.4. Findings. The Council and Board hereby find it to be necessary
21
22 and in the best interests of the City to sell and issue the 2013 Bonds to provide part
23 of the funds necessary to finance the Plan and allow for the refunding and
24 defeasance of the Refunding Candidates.
25
26
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ARTICLE IV
AUTHORIZATION OF 2013 BONDS
2
Section 4.1. Principal Amount, Designation and Series. One or more series
3
4 of Parity Bonds is hereby authorized to be issued in the aggregate principal amount
5 of not to exceed $375,000,000. The 2013 Bonds shall be designated as, and shall
6 be distinguished from Parity Bonds of all other series by the title, "City of Tacoma,
7 Washington, Electric System Revenue and Refunding Bonds, Series 2013" (the
8
,& 2013 Bonds"). The 2013 Bonds may be issued in one or more Series and may be
9
10 issued as tax-exempt or taxable bonds.
1 1 Section 4.2. Purpose. The purpose of the 2013 Bonds is to provide the
12 funds necessary to finance the Plan described in Section 3.3, to fund the Reserve
13 Account, to allow for the refunding of the Refunding Candidates, and to pay the
14
costs of issuance of the 2013 Bonds.
1 5
16 Section 4.3. Description of the Bonds; Appointment of Designated
17 Representative. The Director of Utilities and, in his absence, the Superintendent of
18 Power or another designee of the Director of Utilities, is appointed as the City's
19 Designated Representative and is authorized and directed to conduct the sale of
20
such 2013 Bonds in the manner and upon the terms deemed most advantageous to
21
22 the City, and to approve the Final Terms of the 2013 Bonds, with such additional
23 terms and covenants as he or she deems advisable, as set forth in the Pricing
24 Certificate to be signed by the Designated Representative, within the following
25 parameters:
26
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(A) Principal Amount. The 2013 Bonds may be issued in one or
more Series and shall not exceed the aggregate principal amount of $375,000,000.
2
(B) Date or Dates. Each Series of 2013 Bonds shall be dated as of
3
4 its date of delivery to the purchaser, which date may not be later than June 30,
5 2014.
6 (C) Denominations, Series Designation, etc. The 2013 Bonds
7 must be issued in Authorized Denominations, shall be numbered separately in the
8
manner and shall bear any name and additional designation as deemed necessary
9
10 or appropriate by the Designated Representative.
1 1 (D) Interest Rate(s). The 2013 Bonds shall bear interest at fixed
12 rates per annum (computed on the basis of a 360-day year of twelve 30-day
13 months) from their date or from the most recent interest payment date for which
14
interest has been paid or duly provided for, whichever is later. One or more rates of
1 5
16 interest may be fixed for the 2013 Bonds, provided that no coupon rate of interest
17 for any 2013 Bond may exceed 5.25 percent, and the "all-in" true interest cost to the
18 City for a Series of 2013 Bonds may not exceed 5.50 percent.
19 (E) Payment Dates. Interest must be payable at fixed rates
20
semiannually on such dates as are acceptable to the Designated Representative,
21
22 commencing no later than one year following the Issue Date. Principal payments
23 shall commence on a payment date acceptable to the Designated Representative
24 and must be payable at maturity or in mandatory redemption installments on such
25 dates as are acceptable to the Designated Representative.
26
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(F) Final Maturity. The 2013 Bonds shall mature no later than
July 1, 2043.
2
(G) Redemption Rights. In his or her discretion, the Designated
3
4 Representative may approve provisions for the optional and mandatory redemption
5 of 2013 Bonds, as follows:
6 i. Optional Redemption. Any 2013 Bond or Series of 2013
7 Bonds may be designated as being (i) subject to redemption at the option of the
8
City prior to its maturity date on the dates and at the prices determined by the
9
10 Designated Representative or (ii) not subject to redemption prior to its maturity
1 1 date. If a 2013 Bond is designated as subject to optional redemption prior to its
12 maturity, it must be subject to such redemption on one or more dates occurring not
13 more than 101/2 years after the Issue Date. Any taxable series of 2013 Bonds may
14
be subject to optional redemption at any time with a "make whole" redemption
15
16 payment.
17 ii. Mandatory Redemption. Any 2013 Bond may be
18 designated as a Term Bond, subject to mandatory redemption prior to its maturity
19 on the dates and in the amounts determined by the Designated Representative.
20
(H) Price. The purchase price for any Series of 2013 Bonds may
21
22 not be less than 98 percent or more than 120 percent of the stated principal amount
23 of that Series, and the underwriters' discount may not exceed $5 per $1,000
24 principal amount of 2013 Bonds.
25
26
49
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(1) Other Terms and Conditions.
i. The 2013 Bonds may be sold by either negotiated sale
2
or by competitive bid, in accordance with Section 6.1 of this Ordinance.
3
4 ii. The Designated Representative may determine whether
5 it is in the City's best interest to provide for bond insurance or other credit
6 enhancement; and may accept such additional terms, conditions and covenants as
7 he or she may determine are in the best interests of the City, consistent with this
8
Ordinance.
9
10 Section 4.4. Registration, Exchange and Payments.
1 1 (A) Registrar/Bond Register. The City hereby adopts the system of
12 registration approved by the Washington State Finance Committee, which utilizes
13 the Fiscal Agent, as registrar, authenticating agent, paying agent, and transfer
14
agent for the 2013 Bonds (collectively, the "Bond Registrar"). The Bond Registrar
15
16 shall keep, or cause to be kept, at its principal corporate trust office, sufficient
1 7 records for the registration and transfer of the 2013 Bonds (the "Bond Register"),
1 8 which shall be open to inspection by the City. The Bond Registrar is authorized, on
19 behalf of the City, to authenticate and deliver 2013 Bonds transferred or exchanged
20
in accordance with the provisions of such 2013 Bonds and this Ordinance and to
21
22 carry out all of the Bond Registrar's powers and duties under this Ordinance. The
23 Bond Registrar shall be responsible for its representations contained in the Bond
24 Registrar's Certificate of Authentication on the 2013 Bonds.
25 (B) Registered Ownership. The City and the Bond Registrar may
26
deem and treat the registered owner of each 2013 Bond as the absolute owner for
0rd13526.doc-WF/bn -27- 50
all purposes, and neither the City nor the Bond Registrar shall be affected by any
notice to the contrary. Payment of any such 2013 Bond shall be made only as
2
described in Section 4.4, but such registration may be transferred as herein
3
4 provided. All such payments made as described in Section 4.4 shall be valid and
5 shall satisfy the liability of the City upon such 2013 Bond to the extent of the amount
6 so paid.
7 (C) Transfer or Exchange of Registered Ownership; Change in
8
Denominations. The registered ownership of any 2013 Bond may be transferred or
9
10 exchanged, but no transfer of any 2013 Bond shall be valid unless it is surrendered
11 to the Bond Registrar with the assignment form appearing on the 2013 Bond duly
12 executed by the registered owner or such registered owner's duly authorized agent
13 in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond
14
Registrar shall cancel the surrendered 2013 Bond and shall authenticate and
1 5
16 deliver, without charge to the registered owner or transferee, a new 2013 Bond (or
1 7 2013 Bonds at the option of the new registered owner) of the same series, date,
18 maturity, and interest rate and for the same aggregate principal amount in any
19 authorized denomination, naming as registered owner the person or persons listed
20
as the assignee on the assignment form appearing on the surrendered 2013 Bond,
21
22 in exchange for such surrendered and canceled 2013 Bond. Any 2013 Bond may
23 be surrendered to the Bond Registrar and exchanged, without charge, for an equal
24 aggregate principal amount of 2013 Bonds of the same series, date, maturity, and
25 interest rate in any authorized denomination. The Bond Registrar shall not be
26
obligated to transfer or exchange any 2013 Bond during a period beginning at the
5i -28-
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opening of business on the 15th day of the month next preceding any interest
payment date and ending at the close of business on such interest payment date,
2
or, in the case of any proposed redemption of the 2013 Bonds, after the mailing of
3
4 notice of the call of such 2013 Bonds for redemption.
5 (D) Bond Registrar's Ownership of 2013 Bonds. The Bond
6 Registrar may become the registered owner of any 2013 Bond with the same rights
7 it would have if it were not the Bond Registrar, and to the extent permitted by law,
8
may act as depository for and permit any of its officers or directors to act as
9
10 member of, or in any other capacity with respect to, any committee formed to
1 1 protect the rights of the registered owners of the 2013 Bonds.
12 (E) Registration Covenant. The City covenants that, until all 2013
1 3 Bonds have been surrendered and canceled, it will maintain a system for recording
14
the ownership of each 2013 Bond that complies with the provisions of Section 149
15
of the Code.
16
1 7 (F) Place and Medium of Payment. Both principal of and interest
18 on the Bonds shall be payable in lawful money of the United States of America.
19 Interest on the Bonds shall be paid by checks or drafts mailed by the Bond
20
Registrar on the interest payment date to the registered owners at the addresses
21
22 appearing on the Bond Register on the 15th day of the month preceding the interest
23 payment date or, at the request of an owner of $1,000,000 or more in aggregate
24 principal amount of Bonds, by wire transfer to an account in the United States
25 designated in writing by such owner prior to the record date. Principal of the Bonds
26
shall be payable upon presentation and surrender of the Bonds by the registered
-29- 5 2
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owners at the principal office of the Bond Registrar at the option of the owners. The
Bonds shall be payable solely out of the Bond Fund and shall not be general
2
obligations of the City. Notwithstanding the foregoing, as long as the Bonds are
3
4 registered in the name of DTC or its nominee, payment of principal of and interest
5 on the Bonds shall be made in the manner set forth in the Letter of
6 Representations.
7 Section 4.5. Redemption Terms.
8
(A) Optional Redemption. The 2013 Bonds shall be subject to
9
10 optional redemption on any date as provided by the Designated Representative,
1 1 and set forth in the Pricing Certificate, within the parameters set forth in Section 4.3.
12 Any 2013 Bond that is subject to optional redemption may be selected by the City,
13 in its sole discretion, for redemption, in whole or in part, at any time at which
14
redemption is permitted as determined by the Designated Representative.
1 5
16 (B) Mandatory Redemption. The 2013 Bonds designated as Term
1 7 Bonds by the Designated Representative, within the parameters set forth in
18 Section 4.3, if not previously redeemed under any optional redemption provisions,
19 defeased or purchased and surrendered for cancellation under the provisions set
20
forth below, shall be called for redemption at a price equal to the stated principal
21
22 amount to be redeemed, plus accrued interest, on the redemption dates and in the
23 redemption amounts as determined by the Designated Representative. If Term
24 Bonds are redeemed under the optional redemption provisions, defeased or
25 purchased by the City and cancelled, the principal amount of the Term Bonds so
26
redeemed, defeased, or purchased (irrespective of their actual redemption or
5 3@ 0rd13526.doc-WF/bn -30-
purchase prices) shall be credited against one or more scheduled mandatory
redemption amounts for those Term Bonds and as set forth in the Pricing Certificate
2
of the Designated Representative for any 2013 Bonds issued as taxable bonds.
3
4 The City shall determine the manner in which the credit is to be allocated and shall
5 notify the Bond Registrar in writing of its allocation prior to the earliest mandatory
6 redemption date for that maturity of Term Bonds for which notice of redemption has
7 not already been given.
8
(C) Selection of 2013 Bonds for Redemption; Partial Redemption.
9
10 All or a portion of the principal amount of any 2013 Bond that is subject to optional
11 or mandatory redemption may be redeemed in any Authorized Denomination. If
12 less than all of the outstanding principal amount of any 2013 Bond is redeemed,
13 upon surrender of that 2013 Bond to the Bond Registrar, there shall be issued to
14
the Registered Owner, without charge, a new 2013 Bond (or 2013 Bonds, at the
1 5
16 option of the Registered Owner) of the same series, maturity, and interest rate in
17 any Authorized Denomination in the aggregate principal amount remaining
18 unredeemed. The principal portion of any 2013 Bond registered in the name of the
19 Securities Depository which is to be partially redeemed shall be selected in
20
accordance with the Letter of Representations. If a 2013 Bond ceases to be held in
21
22 book-entry form, the portion to be partially redeemed shall be selected randomly in
23 such manner as the Bond Registrar shall determine.
24 (D) Notice of Redemption. While a 2013 Bond is registered in the
25 name of the Securities Depository, notice of redemption shall be given as required
26
in accordance with the Letter of Representations. If a 2013 Bond ceases to be held
-31- @i
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in book-entry form, unless waived by the Registered Owner of the 2013 Bond to be
redeemed, the City shall cause notice of an intended redemption of 2013 Bonds to
2
be given by the Bond Registrar not less than 20 nor more than 60 days prior to the
3
4 date fixed for redemption by first-class mail, postage prepaid, to the Registered
5 Owner of each 2013 Bond to be redeemed at the address appearing on the Bond
6 Register on the Record Date. The requirements of the preceding sentence shall be
7 satisfied when notice has been mailed as so provided, whether or not it is actually
8
received by an Owner of any 2013 Bond. In addition, the redemption notice shall
9
10 be mailed or sent electronically within the same period to the MSRB (if required
1 1 under the Undertaking), to each Rating Agency, and to such other persons and with
12 such additional information as the Finance Director shall determine, but these
13 additional mailings shall not be a condition precedent to the redemption of a 2013
14
Bond.
1 5
16 (E) Rescission of Optional Redemption Notice. In the case of an
17 optional redemption, the notice of redemption may state that the City retains the
18 right to rescind the redemption notice and the optional redemption of those
19 2013 Bonds by giving a notice of rescission to the affected Registered Owners at
20
any time on or prior to the scheduled optional redemption date. Any notice of
21
22 optional redemption that is so rescinded shall be of no effect, and a 2013 Bond for
23 which a notice of optional redemption has been rescinded shall remain outstanding.
24 (F) Effect of Redemption. Interest on 2013 Bonds called for
25 redemption shall cease to accrue on the date fixed for redemption, unless either the
26
notice of redemption is rescinded as set forth above, or money sufficient to effect
-32-
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such redemption is not on deposit in the Bond Fund (or in an escrow account
established to carry out a refunding or defeasance of the redeemed 2013 Bonds, if
2
any).
3
4 (G) Open Market Purchase. The City reserves the right to
5 purchase any or all of the 2013 Bonds in the open market at any time at any price
6 acceptable to the City plus accrued interest to the date of purchase.
7 ARTICLE V
8
FORM AND GENERAL TERMS
9
10 Section 5.1. Lost or Destroyed 2013 Bonds. If any 2013 Bonds are lost,
1 1 stolen or destroyed, the Bond Registrar may authenticate and deliver a new
12 2013 Bond or 2013 Bonds of like Series, amount, maturity and tenor to the
13 Registered Owner upon the owner paying the expenses and charges of the Bond
14
Registrar and the City in connection with preparation and authentication of the
15
16 replacement 2013 Bond or 2013 Bonds and upon his or her filing with the Bond
1 7 Registrar and the City evidence satisfactory to both that such 2013 Bond or
18 2013 Bonds were actually lost, stolen or destroyed and of his or her ownership, and
19 upon furnishing the City and the Bond Registrar with indemnity satisfactory to both.
20
Section 5.2. Form; Execution and Authentication of 2013 Bonds. The
21
22 2013 Bonds shall be prepared in a form consistent with the provisions of this
23 Ordinance and state law. The 2013 Bonds shall be executed on behalf of the City
24 with the manual or facsimile signature of the Mayor and aftested with the manual or
25 facsimile signature of the City Clerk and the seal of the City shall be imprinted or
26
impressed on each of the 2013 Bonds.
_33-
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Only 2013 Bonds bearing a Certificate of Authentication in the following form,
manually signed by the Bond Registrar, shall be valid or obligatory for any purpose
2
or entitled to the benefits of the Ordinance:
3
CERTIFICATE OF AUTHENTICATION
4
5 This is one of the Electric System Revenue and Refunding Bonds,
Series 2013, of the City of Tacoma, Washington, dated 2013, as
6 described in the Bond Ordinance.
7 WASHINGTON STATE FISCAL AGENT,
8 Bond Registrar
9 By [specimenl
Authorized Officer
10
11 The authorized signing of a Certificate of Authentication shall be conclusive
12 evidence that the 2013 Bond so authenticated has been duly executed,
1 3 authenticated, and delivered and is entitled to the benefits of this Ordinance.
14
In case any of the officers who shall have signed or attested any of the
1 5
16 2013 Bonds shall cease to be such officers before the 2013 Bonds so signed or
1 7 attested shall have been actually delivered, such 2013 Bonds shall be valid
18 nevertheless and may be issued by the City with the same effect as though the
19 persons who had signed or attested such 2013 Bonds had not ceased to be such
20
officers.
21
ARTICLE VI
22
23 SALE OF 2013 BONDS
24 Section 6.1. Manner of Sale of 2013 Bonds; Delivery of 2013 Bonds. The
25 Designated Representative is authorized to sell the 2013 Bonds by negotiated sale
26
or by competitive sale in accordance with a notice of sale consistent with this
-34-
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Ordinance, based on his or her assessment of market conditions, in consultation
with appropriate City officials and staff, Bond Counsel, and other advisors. If the
2
2013 Bonds are sold by negotiated sale, the Designated Representative is
3
4 authorized to execute a bond purchase contract with the underwriters, and all other
5 necessary agreements to effectuate the bond sale(s). In determining the Final
6 Terms and the method of sale of the 2013 Bonds, the Designated Representative
7 shall take into account those factors that, in his or her judgment, may be expected
8
to result in the lowest true interest cost on the 2013 Bonds to their maturity,
9
10 including, but not limited to, current interest rates for obligations comparable to the
1 1 2013 Bonds.
12 The proper City officials are authorized and directed to do everything
13 necessary for the prompt delivery of the 2013 Bonds to the purchaser and for the
14
proper application and use of the proceeds of the sale thereof.
1 5
16 Section 6.2. Preliminary Official Statement. The Superintendent of Power
1 7 shall review the form of the preliminary official statement prepared in connection
1 8 with the sale of the 2013 Bonds to the public. For the sole purpose of the
19 purchaser's compliance with paragraph (b)(1) of Rule 15c2-12, the Superintendent
20
of Power is authorized to "deem final" that preliminary official statement as of its
21
22 date, except for the omission of information permitted to be omitted by
23 Rule 15c2-12. The City approves the distribution to potential purchasers of the
24 2013 Bonds of a preliminary official statement that has been "deemed final" in
25 accordance with this paragraph.
26
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Section 6.3. Official Statement. The City approves the preparation of a final
official statement for each Series of 2013 Bonds to be sold to the public in the form
2
of the preliminary official statement, with such modifications and amendments as
3
4 the Superintendent of Power deems necessary or desirable, and further authorizes
5 the Superintendent of Power to execute and deliver such final official statement to
6 the purchaser. The City authorizes and approves the distribution by the purchaser
7 of that final official statement to purchasers and potential purchasers of the
8
2013 Bonds.
9
ARTICLE VII
10
11 REFUNDING OR DEFEASANCE
12 Section 7. 1. Refunding or Defeasance. In the event that the City, in order to
13 effect the payment, retirement, or redemption of any 2013 Bond, sets aside in the
14
Bond Fund or in another special account, held in trust by a trustee, cash or
15
16 noncallable government obligations, as such obligations are now or hereafter
1 7 defined in RCW 39.53, or any combination of cash and/or noncallable government
18 obligations, in amounts and maturities which, together with the known earned
19 income therefrom, are sufficient to redeem or pay and retire such 2013 Bond in
20
accordance with its terms and to pay when due the interest and redemption
21
22 premium, if any, thereon, and such cash and/or noncallable government obligations
23 are irrevocably set aside and pledged for such purpose, then no further payments
24 need be made into the Bond Fund for the payment of the principal of and interest
25 on such 2013 Bond. The Designated Representative is authorized to choose which
26
of the Refunded Candidates, if any, shall be refunded or defeased. The owner of a
-36-
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2013 Bond so provided for shall cease to be entitled to any lien, benefit, or security
of this Ordinance except the right to receive payment of principal, premium, if any,
2
and interest from such special account, and such 2013 Bond shall be deemed to be
3
4 not outstanding under this Ordinance.
5 The escrow agent shall give written notice of defeasance to the owners of all
6 2013 Bonds so provided for within 30 days of the closing date and to the MSRB in
7 accordance with Article Vill.
8
ARTICLE Vill
9
CONTINUING DISCLOSURE UNDERTAKING
10
11 Section 8.1. Undertaking to Provide Ongoing Disclosure.
12 (A) Contract/Undertaking. To meet the requirements of
1 3 paragraph (b)(5) of United States Securities and Exchange Commission ("SEC")
14
Rule 15c2-12 ("Rule 15c2-12"), as applicable to a participating underwriter for the
1 5
16 2013 Bonds, the City makes the following written undertaking (the "Undertaking")
1 7 for the benefit of holders of the 2013 Bonds:
18 i. Undertaking to Provide Annual Financial Information and
19 Notice of Listed Events. The City undertakes to provide or cause to be provided,
20
either directly or through a designated agent, to the MSRB, in an electronic format
21
22 as prescribed by the MSRB, accompanied by identifying information as prescribed
23 by the MSRB:
24 (a) Annual financial information and operating data of
25 the type included in the final official statement for the 2013 Bonds and described in
26
subsection B of this section ("annual financial information");
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(b) Timely notice (not in excess of 10 business days
after the occurrence of the event) of the occurrence of any of the following events
2 with respect to the 2013 Bonds: (1) principal and interest payment delinquencies;
3
4 (2) non-payment related defaults, if material; (3) unscheduled draws on debt service
5 reserves reflecting financial difficulties; (4) unscheduled draws on credit
6 enhancements reflecting financial difficulties; (5) substitution of credit or liquidity
7 providers, or their failure to perform; (6) adverse tax opinions, the issuance by the
8
Internal Revenue Service of proposed or final determinations of taxability, Notice of
9
10 Proposed Issue (IRS Form 5701 - TEB) or other material notices or determinations
1 1 with respect to the tax status of the 2013 Bonds; (7) modifications to rights of
12 holders of the 2013 Bonds, if material; (8) bond calls (other than scheduled
13 mandatory redemptions of Term Bonds), if material, and tender offers;
14
(9) defeasances; (10) release, substitution, or sale of property securing repayment
15
16 of the 2013 Bonds, if material; (1 1) rating changes, (1 2) bankruptcy, insolvency,
17 receivership, or similar event of the City, as such "Bankruptcy Events" are defined
18 in Rule 15c2-12; (13) the consummation of a merger, consolidation, or acquisition
19 involving the Electric System or the sale of all or substantially all of the assets of the
20
Electric System other than in the ordinary course of business, the entry into a
21
22 definitive agreement to undertake such an action or the termination of a definitive
23 agreement relating to any such actions, other than pursuant to its terms, if material;
24 and (14) appointment of a successor or additional trustee or the change of name of
25 a trustee, if material.
26
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(c) Timely notice of a failure by the City to provide
required annual financial information on or before the date specified in subsection B
2
of this section.
3
4 (B) Type of Annual Financial Information Undertaken to be
5 Provided. The annual financial information that the City undertakes to provide in
6 subsection (A) of this section:
7 i. Shall consist of (1) audited financial statements of the
8
Electric System prepared in accordance with generally accepted accounting
9
10 principles applicable to government entities, with regulations prescribed by the
1 1 Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute)
12 and substantially in accordance with the system prescribed by the Federal Energy
13 Regulatory Commission; provided, that if the Electric System's financial statements
14
are not yet available, the City shall provide unaudited financial statements in
1 5
16 substantially the same format, and audited statements when they become
1 7 available; (2) principal amount of outstanding Parity Bonds; (3) debt service
18 coverage for outstanding Parity Bonds; (4) energy resources from Electric System
19 owned resources and purchases from Electric System power purchase contracts;
20
and (5) average number of customers, energy sales and revenue from energy sales
21
22 of the major customer classes.
23 H. Shall be provided not later than the last day of the ninth
24 month after the end of each fiscal year of the City (currently, a fiscal year ending
25 December 31), as such fiscal year may be changed as required or permitted by
26
State law, commencing with the City's fiscal year ending December 31, 2013; and
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iii. May be provided in a single or multiple documents, and
may be incorporated by specific reference to documents available to the public on
2
the Internet website of the IVISRB or filed with the SEC.
3
4 (C) Amendment of Undertaking. The Undertaking is subject to
5 amendment after the primary offering of the 2013 Bonds without the consent of any
6 holder of any 2013 Bond, or of any broker, dealer, municipal securities dealer,
7 participating underwriter, Rating Agency or the IVISRB, under the circumstances
8
and in the manner permitted by Rule 15c2-12. The City will give notice to the
9
10 IVISRB of the substance (or provide a copy) of any amendment to the Undertaking
1 1and a brief statement of the reasons for the amendment. If the amendment
12 changes the type of annual financial information to be provided, the annual financial
13 information containing the amended financial information will include a narrative
14
explanation of the effect of that change on the type of information to be provided.
1 5
16 (D) Beneficiaries. The Undertaking evidenced by this section shall
1 7inure to the benefit of the City and the Beneficial Owner of a 2013 Bond, and shall
18 not inure to the benefit of or create any rights in any other person.
19 (E) Termination of Undertaking. The City's obligations under this
20
Undertaking shall terminate upon the legal defeasance of all of the 2013 Bonds. In
21
22 addition, the City's obligations under this Undertaking shall terminate if those
23 provisions of Rule 15c2-12 which require the City to comply with this Undertaking
24 become legally inapplicable in respect of the 2013 Bonds for any reason, as
25 confirmed by an opinion of Bond Counsel delivered to the City, and the City
26
provides timely notice of such termination to the MSRB.
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(F) Remedy for Failure to Comply with Undertaking. As soon as
practicable after the City learns of any failure to comply with this Undertaking, the
2 City will proceed with due diligence to cause such noncompliance to be corrected.
|1013|
4 No failure by the City or other obligated person to comply with the Undertaking shall
5 constitute a default in respect of the 2013 Bonds. The sole remedy of a Beneficial
6 Owner of a 2013 Bond shall be to take action to compel the City or other obligated
7 person to comply with the Undertaking, including seeking an order of specific
|1013|
performance from an appropriate court.
|10 13|
10 (G) Designation of Official Responsible to Administer Undertaking.
1 1The Finance Director or his or her designee is authorized to take such further
12 actions as may be necessary, appropriate, or convenient to carry out this
13 Undertaking in accordance with Rule 15c2-12, including, without limitation, the
14
following actions:
1 5
16 i. Preparing and filing the annual financial information
17 undertaken to be provided;
18 ii. Determining whether any event specified in
19 subsection (A) has occurred, assessing its materiality, where necessary, with
20
respect to the 2013 Bonds, and preparing and disseminating any required notice of
21
22 its occurrence;
23 iii. Determining whether any person other than the City is
24 an "obligated person" within the meaning of Rule 15c2-12 with respect to the
25 Bonds, and obtaining from such person an undertaking to provide any annual
26
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financial information and notice of listed events for that person in accordance with
Rule 15c2-12;
2
iv. Selecting, engaging and compensating designated
3
4 agents and consultants, including, but not limited to, financial advisors and legal
5 counsel, to assist and advise the City in carrying out the Undertaking; and
6 V. Effecting any necessary amendment of the Undertaking.
7 ARTICLE IX
8
ISSUANCE OF FUTURE PARITY BONDS
9
10 Section 9.1. Authorization of Series of Future Parity Bonds. Before any
11 series of Future Parity Bonds shall be issued under the provisions of this Article, the
12 City shall adopt an ordinance or ordinances authorizing the issuance of such bonds.
1 3 Section 9.2. Requirements for Issuance of Future Parity Bonds.
14
(A) Future Parity Bonds may be issued payable from the Bond
1 5
16 Fund on a parity with the Outstanding Parity Bonds, the 2013 Bonds and any
1 7 Future Parity Bonds theretofor issued and secured by an equal charge and lien on
18 Net Revenues, for any lawful purpose of the City related to the Electric System;
19 provided that, (i) except as to Future Parity Bonds issued pursuant to Section 9.2.C,
20
at the time of the issuance of such Future Parity Bonds, there is no deficiency in the
21
22 Bond Fund, and no Event of Default has occurred and is continuing, and (ii) the
23 requirements of the applicable provisions of this Section 9.2 are complied with.
24 (B) Future Parity Bonds may be issued for any lawful purpose of
25 the City related to the Electric System, including, but not limited to, acquiring,
26
constructing, and installing additions, betterments, and improvements to and
6f)
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extensions of, acquiring necessary equipment for, or making necessary renewals,
replacements, or repairs and capital improvements to the Electric System, if there
2
shall be on file with the City Clerk either
3
4 i. a certificate of an appropriate financial officer of the City
5 stating that Net Revenues in any 12 consecutive months out of the most recent
6 24 months preceding the authentication and delivery of the Future Parity Bonds
7 then proposed to be issued, as determined from the financial statements of the
8
Electric System prepared by the Department of Public Utilities, were not less than
9
10 125 percent of maximum Annual Debt Service in any future Fiscal Year on all
1 1 outstanding Parity Bonds and the bonds then proposed to be issued (provided that
12 (i) in the event that any adjustment in the rates, fees and charges collected by the
1 3 City for the services of the Electric System shall be effective at any time on or prior
14
to the date of authentication and delivery of the Future Parity Bonds then proposed
1 5
16 to be issued, such officer shall reflect in the certificate the Net Revenues he or she
1 7 estimates would have been collected in such 12-month period if such new rates,
18 fees, and charges had been in effect for the entire 12-month period and (ii) with
19 respect to any Variable Interest Rate Bonds outstanding on the date such certificate
20
is delivered, such officer shall estimate the debt service on such Bonds in
21
22 accordance with Section 9.2.E(2)(b) hereof), or
23 ii. a certificate of the Engineer stating that the average
24 annual Net Revenues for the Fiscal Years in the period specified in the next
25 sentence, as such Net Revenues are estimated by the Engineer in accordance with
26
Section 9.2.E hereof, shall be at least equal to 125 percent of maximum Annual
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Debt Service in any future Fiscal Year, as estimated by the Engineer in accordance
with Section 9.2.E hereof. The period for the determination of average annual Net
|1013|
Revenues shall be the period beginning with the first Fiscal Year following the
|1013|
4 earlier of (i) the date to which interest has been capitalized or (ii) the date of initial
5 operation of the facilities to be financed by such Future Parity Bonds and ending
6 with the fifth Fiscal Year after such date.
7 With the consent of the appropriate percentage of Parity Bond owners, the
|1013|
Council may at any time pass an ordinance amending or supplementing this
|10 13|
10 Ordinance for the purpose of providing that the certificate of the Engineer
1 1referenced in Section 9.2B(2) above and Sections 9.2D and 9.2E below can be
12 given by a Certified Public Accountant. The owners of the 2013 Bonds, by taking
13 and owning the same, shall be deemed to have consented to the passage by the
14
Council of any such Supplemental Ordinance.
1 5
16 (C) Future Parity Bonds may also be issued from time to time for
17 the purpose of providing funds, with any other available funds, for retiring at or prior
18 to their maturity or maturities any or all of the outstanding Parity Bonds of any
19 series or any reimbursement obligation made pursuant to Section 9.3, including the
20
payment of any redemption premium thereon, and, if deemed necessary by the
21
22 City, for paying the interest to accrue thereon to the date fixed for their retirement
23 and any expenses incident to the issuance of such Future Parity Bonds.
24 Future Parity Bonds issued under this subsection shall not be delivered
25 unless the proceeds (excluding any accrued interest but including any premium) of
26
such Future Parity Bonds, together with any other money that has been made
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available for such purposes, and the principal of and the interest on the investment
of such proceeds or any such money, shall be sufficient to pay the principal of and
|1013|
the redemption premium, if any, on the bonds to be refunded and the interest which
|1013|
4will become due and payable on or prior to the date of their payment or redemption,
5and the expenses incident to the issuance of such Future Parity Bonds.
6 If such Future Parity Bonds are to be issued under this subsection, there
7shall be filed with the City Clerk a certificate signed by an appropriate financial
|1013|
officer of the City, showing that the maximum Annual Debt Service in any Fiscal
|10 13|
10 Year thereafter shall not be increased by more than $5,000 by reason of the
I 1issuance of the Future Parity Bonds, or there shall be filed with the City Clerk either
12 of the certificates required by Section 9.2.13 hereof.
13 (D) In rendering any certificate under this Section, the Engineer
14
may rely upon, and such certificate shall have attached thereto, financial
15
16 statements of the Electric System, certified by an appropriate financial officer of the
17 City, showing income and expenses for the period upon which the same are based
18 and a balance sheet as of the end of such period, or similar certified statements by
19 a Certified Public Accountant.
20
(E) i. In estimating Net Revenues for each of the Fiscal Years
21
22 covered by any certificate required to be delivered by it pursuant to Section 9.2.13 or
23 10.2 hereof, the Engineer may base its estimate upon such factors as it shall
24 consider reasonable.
25 H. In estimating the Annual Debt Service for each of the
26
Fiscal Years covered by any certificate required to be delivered by it pursuant to
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Section 9.2.13 or Section 10.2 hereof, the Engineer shall include the Annual Debt
Service on all Parity Bonds estimated to be outstanding during each such Fiscal
2
Year. With respect to (a) any Parity Bonds which are not outstanding on the date
3
4 such certificate is delivered but which are projected to be issued during the period
5 covered by such certificate to complete construction of the facilities being financed
6 by the Future Parity Bonds then being issued, and (b) any Variable Interest Rate
7 Bonds outstanding on the date such certificate is delivered, the Engineer shall
8
estimate the debt service on such bonds upon such assumptions as the Engineer
9
10 shall consider reasonable and set forth in such certificate, including assumptions
I 1 with respect to the interest rate or rates to be borne by such bonds and the
12 amounts and due dates of the principal installments for such bonds; provided,
1 3 however, that the interest rate or rates assumed to be borne by any Variable
14
Interest Rate Bonds shall not be less than the interest rate borne by such Variable
1 5
16 Interest Rate Bonds at the time that the Engineer delivers such certificate.
1 7 (F) Nothing contained herein shall prevent the City from refunding
18 at one time all of the Parity Bonds then outstanding. Nothing contained herein shall
19 prevent the City from issuing obligations payable from a lien on the Net Revenues
20
that is junior and inferior to the Outstanding Parity Bonds, the 2013 Bonds or any
21
22 Future Parity Bonds.
23 Section 9.3. Reimbursement Obligations. In the event that the City elects to
24 meet the requirements of Section 11.2 hereof with respect to the Reserve Account
25 as to any issue of Parity Bonds through the use of a Qualified Letter of Credit,
26
Qualified Insurance, or other equivalent credit enhancement device, the City may
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contract with the entity providing such Qualified Letter of Credit, Qualified
Insurance, or other equivalent credit enhancement device that the City's
|1013|
reimbursement obligation, if any, to such entity ranks on a parity of lien with the
|1013|
4Parity Bonds.
5 In the event that the City elects additionally to secure any issue of Option
6Bonds through the use of a Qualified Letter of Credit, Qualified Insurance, or other
7equivalent credit enhancement device, the City may contract with the entity
|1013|
providing such Qualified Letter of Credit, Qualified Insurance, or other equivalent
|10 13|
10 credit enhancement device that the City's reimbursement obligation, if any, to such
1 1entity ranks on a parity of lien with the Parity Bonds; provided that the payments
12 due under such reimbursement agreement are such that if such reimbursement
13 obligation were a series of Future Parity Bonds, such bonds could be issued in
14
compliance with the provisions of Section 9.2 hereof.
1 5
16 Section 9.4. Derivative Product. A City Payment under a Derivative Product
1 7may be on a parity with the Parity Bonds if the Derivative Product satisfies the
18 requirements for additional Parity Bonds described in this Ordinance, taking into
19 consideration regularly scheduled City Payments and regularly scheduled
20
Reciprocal Payments under the Derivative Product. The following shall be
21
22 conditions precedent to the use of any Derivative Product on a parity with any Parity
23 Bonds under this Ordinance:
24 (A) The City shall obtain an opinion of Bond Counsel on the due
25 authorization and execution of such Derivative Product, the validity and
26
enforceability thereof and opinion that the action proposed to be taken is authorized
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or permitted by this Ordinance or the applicable provisions of any Parity Bond
Ordinance and will not adversely affect the excludability for federal income tax
2
purposes of the interest on any tax-exempt outstanding Parity Bonds.
3
4 (B) Prior to entering into a Derivative Product, the City shall adopt
5 a Supplemental Ordinance, which shall:
6 i. set forth the manner in which the City Payments and
7 Reciprocal Payments are to be calculated and a schedule of Derivative Payment
8
Dates;
9
10 ii. establish general provisions for the rights of providers of
1 1Derivative Products; and
12 iii. set forth such other matters as the City deems
13 necessary or desirable in connection with the management of Derivative Products
14
as are not clearly inconsistent with the provisions of this Ordinance.
15
16 If the City enters into a Derivative Product on a parity with the Parity Bonds,
17 City payments shall be made from the Interest Account in the Bond Fund and
18 Annual Debt Service shall include any regularly scheduled City Payments adjusted
19 by any regularly scheduled Reciprocal Payments during a Fiscal Year.
20
Unscheduled payments, such as termination payments, may not be entered into on
21
22 a parity with the Parity Bonds.
23 Nothing in this section shall preclude the City from entering into Derivative
24 Products with a claim on the Revenues junior to that of the Parity Bonds.
25 Furthermore, nothing in this section shall preclude the City from entering into
26
obligations on a parity with the Parity Bonds in connection with the use of derivative
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products or similar instruments if the City obtains an opinion of Bond Counsel that
the obligations or products the City is issuing or entering into are consistent with
|1013|
Section 9.2 of this Ordinance.
|1013|
ARTICLE X
|1013|
5 CONTRACT RESOURCE OBLIGATIONS
6 Section 1 0. 1. Creation of Separate Systems. The City is hereby authorized
7to create, acquire, construct, finance, own and operate one or more additional
|1013|
electric utility systems for the purpose of generating, transmitting or distributing
|10 13|
10 electric power and energy. The Council may declare any such system to be a
1 1separate utility system not financed from Revenues (except as a Contract Resource
12 Obligation (i) included in Operating Expenses of the Electric System upon
13 compliance with Section 10.2 hereof or (ii) on a basis junior and inferior to the lien
14
on Revenues pledged to secure Parity Bonds), the revenue of which separate utility
1 5
16 system may be pledged to the payment of revenue obligations issued to purchase,
1 7construct, condemn, or otherwise acquire or expand such separate utility system.
18 The costs associated with any such separate utility system may, upon declaration
19 of the Council, constitute a Contract Resource Obligation and, upon compliance
20
with Section 10.2 hereof, may be included in the Electric System's Operating
21
22 Expenses; provided, however, no Contract Resource Obligation constituting the
23 costs of a separate utility system for the retail distribution of electric power and
24 energy may be included in the Electric System's Operating Expenses.
25 Section 10.2. Contract Resource Obligations as Operating Expenses. A
26
Contract Resource Obligation may be included in the Electric System's Operating
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Expenses if the following requirements are met at the time the Contract Resource
Obligation is incurred:
|1013|
(A) No Event of Default has occurred and is continuing.
|1013|
4 (B) There shall be on file with the City Clerk a certificate of the
5 Engineer stating that the average annual Net Revenues for the Fiscal Years in the
6 period specified in the next sentence, as such Net Revenues are estimated by the
7 Engineer in accordance with Section 9.2.E. hereof, shall be at least equal to
|1013|
125 percent of maximum Annual Debt Service in any future Fiscal Year, as
|10 13|
10 estimated by the Engineer in accordance with Section 9.2.E. hereof. The period for
11 the determination of average annual Net Revenues shall be the period beginning
12 with the first Fiscal Year following the earlier of (i) the date to which interest is
13 capitalized or (ii) the date of initial operation of the facilities to be financed and
14
ending with the fifth full Fiscal Year after such date.
1 5
16 (C) There shall be on file with the City Clerk an opinion of the
17 Engineer to the effect stated in subparagraph (a) below if the Contract Resource
18 Obligation is to be utilized to supply power and energy or to the effect stated in
19 subparagraph (b) below if the Contract Resource Obligation is to be utilized to
20
supply transmission capability:
21
22 (i) (a) The additional source of power and energy from such
23 Contract Resource Obligation is sound from a power supply planning standpoint
24 and is technically and economically feasible in accordance with prudent utility
25 practice; and (b) the estimated cost of such Contract Resource Obligation is
26
reasonable.
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(a) The transmission capability to be acquired pursuant
to the Contract Resource Obligation will be necessary within a reasonable time
|1013|
after the estimated date of commercial operation of the transmission facilities; and
|1013|
4 (b) the estimated cost of such Contract Resource Obligation is reasonable.
5 With the consent of the appropriate percentage of Parity Bond owners, the
6 Council may at any time pass an ordinance amending or supplementing this
7 Ordinance for the purpose of providing that for purposes of this Section 10.2, the
|1013|
certificate of Engineer can be given by a Certified Public Accountant. The owners
|10 13|
10 of the 2013 Bonds, by taking and owning the same, shall be deemed to have
1 1consented to the passage by the Council of any such Supplemental Ordinance.
12 ARTICLE Xi
13 SPECIAL FUNDS AND ACCOUNTS
14
Section 1 1. 1. Revenue Fund.
1 5
16 (A) The Revenue Fund has heretofore been created and
1 7redesignated the "City of Tacoma Electric System Revenue Fund." The City
18 covenants and agrees that it will pay or cause to be paid all Revenues into the
19 Revenue Fund as promptly as practicable after receipt thereof.
20
The Revenues of the Revenue Fund shall be held by the City in trust for the
21
22 equal and ratable benefit of owners of the Parity Bonds and holders of
23 reimbursement obligations ranking on a parity of lien with the Parity Bonds subject
24 to application thereof in accordance with the provisions of this Ordinance. The City
25 will hold the Revenue Fund separate and distinct from all other funds of the City.
26
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There have heretofore been created in the Revenue Fund two accounts to
be known as (i) the General Account and (ii) the Operating Account, which
|1013|
accounts shall be held and used for the purposes hereinafter described.
|1013|
4 (B) The Revenues paid into the Revenue Fund shall first be
5 credited to the General Account and thereafter applied and used only for the
6 following purposes and in the following order of priority:
7 First, to make all payments required to be made into the Operating Account
|1013|
to pay Operating Expenses;
|10 13|
10 Second, to make all payments required to be made into the Interest Account
I 1in the Bond Fund for the payment of accrued interest on the next interest payment
1 2date;
13 Third, to make all payments required to be made into the Principal Account
14
in the Bond Fund for the payment of the principal amount of Serial Bonds next
15
16 coming due, and into the Bond Retirement Account in the Bond Fund for the
17 mandatory redemption of Term Bonds;
18 Fourth, to make all payments required to be made pursuant to a
19 reimbursement agreement in connection with a Qualified Letter of Credit, Qualified
20
Insurance, or other equivalent credit facility, unless such payments are contractually
21
22 obligated to be paid under Third above, provided that if there is not sufficient money
23 to make all payments under reimbursement agreements the payments will be made
24 on a pro rata basis;
25 Fifth, to make all payments required to be made into the Reserve Account in
26
the Bond Fund created to secure the payment of the Parity Bonds;
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Sixth, to make all payments required to be made into any special fund or
account created to pay or secure the payment of the principal of and interest on any
|1013|
revenue bonds, warrants, or other revenue obligations of the City having a lien
|1013|
4upon Net Revenues and money in the Revenue Fund and accounts therein junior
5and inferior to the lien thereon for the payment of the principal of and interest on the
6Parity Bonds;
7 Seventh, to pay any taxes (or payments in lieu of taxes) upon the properties
|1013|
or earnings of the Electric System payable to the City;
|10 13|
10 Eighth, to deposit into the Rate Stabilization Fund the amounts budgeted or
1 1appropriated to be deposited therein which shall be used as provided by Ordinance
12 No. 21862 of the City, as now or hereafter amended; and
13 Ninth, subject to the provisions of Section 13.1.A, after all of the above
14
payments and credits have been made, amounts remaining in the General Account
15
16 may be used for any other lawful purpose of the City related to the Electric System.
1 7 (C) Nothing contained in this Section 1 1. 1 shall be construed to
18 require the deposit into the Revenue Fund of any of the revenues, income, receipts
19 or other money of the City derived by the City through the ownership or operation of
20
any separate utility system hereafter created or established from funds other than
21
22 the proceeds of Parity Bonds.
23 Section 11.2. Bond Fund. The Bond Fund has been heretofore created as a
24 special fund of the City designated the "Electric System Revenue Bond Fund." The
25 Bond Fund shall be used solely for the purposes of paying the principal of,
26
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premium, if any, and interest on Parity Bonds, and retiring Parity Bonds prior to
maturity in the manner provided herein or in any Parity Bond Ordinance.
2
The Bond Fund shall contain four accounts: the Interest Account, the
3
4 Principal Account, the Bond Retirement Account, and the Reserve Account. At the
5 option of the City, separate accounts may be created in the Bond Fund for the
6 purpose of paying or securing the payment of principal, premium, if any, and
7 interest on any Parity Bonds. The City hereby obligates and binds itself irrevocably
8
to set aside and to pay into the Bond Fund out of the Net Revenues certain fixed
9
10 amounts, without regard to any fixed proportion of such Net Revenues, sufficient
1 1 (together with other available funds on hand and paid into the Bond Fund) to pay
1 2 the principal of, premium, if any, and interest on all Parity Bonds from time to time
1 3 outstanding as the same respectively become due and payable, either at the
1 4
maturity thereof or in accordance with the terms of any Sinking Fund Requirement
1 5
16 established for the retirement of Term Bonds. The fixed amounts to be paid into the
1 7 Bond Fund, to the extent that such payments are not made from bond proceeds or
1 8 from other money that may legally be available therefor, shall be as follows and in
1 9 the following order of priority:
20
(A) No later than the day on which an installment of interest falls
21
22 due on any Parity Bonds, the City shall pay into the Interest Account in the Bond
23 Fund (together with such other money as is on hand and available in such account)
24 an amount equal to the installment of interest then falling due on all outstanding
25 Parity Bonds.
26
|1013|
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(B) No later than the date upon which an installment of principal on
Parity Bonds that are Serial Bonds falls due, the City shall pay into the Principal
2
Account in the Bond Fund an amount (together with such other money as is on
3
4 hand and available in such account) equal to the installment of principal then falling
5 due on all outstanding Parity Bonds that are Serial Bonds.
6 (C) No later than the date upon which a sinking fund installment on
7 Term Bonds falls due, the City shall pay into the Bond Retirement Account in the
8
Bond Fund an amount (together with such other money as is on hand and available
9
10 in such account) equal to the Sinking Fund Requirement for such date.
1 1 The City shall apply all the money paid into the Bond Retirement Account to
12 the redemption of Term Bonds on the next ensuing Sinking Fund Requirement due
1 3 date (or may so apply such money prior to such Sinking Fund Requirement due
14
date) pursuant to the terms of the applicable Parity Bond Ordinance. The City may
1 5
16 also apply the money paid into the Bond Retirement Account for the purpose of
1 7 retiring Term Bonds by the purchase of such bonds at a purchase price (including
18 any brokerage charge) not in excess of the principal amount thereof, in which event
19 the principal amount of such bonds so purchased shall be credited against any
20
Sinking Fund Requirement chosen by the City. If as of any January 1 the principal
21
22 amount of Term Bonds retired by purchase or redemption exceeds the cumulative
23 amount required to have been redeemed by sinking fund installments on or before
24 such January 1, then such excess may be credited against the Sinking Fund
25 Requirement for Term Bonds for the following Fiscal Year. Any such purchase of
26
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Term Bonds by the City may be made with or without tenders of bonds in such
manner as the City shall, in its discretion, deem to be in its best interest.
2
(D) There is hereby established within the Reserve Account a
3
4 special subaccount entitled the "2013 Reserve Subaccount." Funds in such
5 Reserve Subaccount shall be treated in all respects as other funds in the
6 2013 Reserve Account. The City shall make transfers into the 2013 Reserve
7 Subaccount from money and investments in the Reserve Account, from proceeds of
8
the 2013 Bonds or a Reserve Surety, as determined by the Designated
9
10 Representative, in amounts sufficient to satisfy the Reserve Account Requirement
1 1 with respect to the 2013 Bonds.
12 In the event of the issuance of any Future Parity Bonds, the ordinance
13 authorizing the issuance of such Future Parity Bonds shall provide for further and
14
additional approximately equal monthly payments into the Bond Fund for credit to
15
16 the Reserve Account from the money in the Revenue Fund, in such amounts and at
17 such times so that by no later than five years from the date of issuance of such
18 Future Parity Bonds or by the final maturity established for such series of Future
19 Parity Bonds, whichever occurs first, there will be credited to the Reserve Account
20
an amount equal to the Reserve Account Requirement; provided, however, that the
21
22 proceedings authorizing the issuance of Future Parity Bonds may provide for
23 payments into the Bond Fund for credit to the Reserve Account from the proceeds
24 of such Future Parity Bonds or from any other money lawfully available therefor, in
25 which event, in providing for deposits and credits required by the foregoing
26
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provisions of this paragraph, allowance shall be made for any such amounts so
paid into such Account.
2
With the consent of the appropriate percentage of Parity Bond owners, the
3
4 Council may at any time pass an ordinance amending or supplementing this
5 Ordinance for the purpose of providing that in calculating the Reserve Account
6 Requirement, the City may deduct the direct payment the City is expected to
7 receive in respect of the 201 0 Bonds or other Future Parity Bonds for which the
8
federal government will provide the City with a direct payment of a portion of the
9
10 interest from the interest portion of Annual Debt Service. The owners of the
1 1 2013 Bonds, by taking and owning the same, shall be deemed to have consented
12 to the passage by the Council of any such Supplemental Ordinance.
1 3 So long as any Outstanding Parity Bonds are insured or reinsured by
14
National Public Finance Guarantee Corporation or Assured Guaranty Municipal
1 5
16 Corporation (if the following is required by Assured Guaranty Municipal
1 7 Corporation), if federal credit payments for any Outstanding Parity Bonds are
18 reduced or not received during any 12-month period ending December 31, the City
19 will calculate the Annual Debt Service for the subsequent 12 months ending
20
December 31 based on the actual reduction in the amount of the federal credit
21
22 payments, for the purpose of calculating the Reserve Account Requirement, until
23 the receipt of the federal credit payments is restored or resumes. In case of such
24 shortfall, the City will have 90 days to fully fund the Reserve Account Requirement
25 created as a result of such reduction or failure to receive the federal credit
26
payments.
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Subject to the preceding paragraphs of this subsection, the money and value
of Permitted Investments in the Reserve Account shall be determined as of the last
2
business day of each Fiscal Year and maintained at an amount at least equal to the
3
4 Reserve Account Requirement, except where it is necessary to make a transfer
5 therefrom to the Interest Account, Principal Account, or Bond Retirement Account
6 because of an insufficiency of money therein to make any required payment of
7 principal of or interest on any Parity Bonds when due.
8
If at any time the money and value of Permitted Investments in the Reserve
9
10 Account exceed the amount of money and value of Permitted Investments then
1 1 required to be maintained therein by 1 0 percent, such excess may be transferred to
12 the City for deposit in the General Account in the Revenue Fund. With the consent
13 of the appropriate percentage of Parity Bond owners, the Council may at any time
14
pass an ordinance amending or supplementing this Ordinance for the purpose of
1 5
16 providing that the above sentence be amended to read as follows: If at any time
1 7 the money and value of Permitted Investments in the Reserve Account shall exceed
18 the amount of money and value of Permitted Investments then required to be
1 9 maintained therein, such excess may be transferred to the City for deposit in the
20
General Account in the Revenue Fund. The owners of the 2013 Bonds and the
21
22 2010 Bonds, by taking and owning the same, shall be deemed to have consented
23 to the passage by the Council of any such Supplemental Ordinance.
24 For the purpose of determining the amount credited to the Reserve Account,
25 obligations in which money in the Reserve Account shall have been invested shall
26
be valued at the market value thereof. The term "market value" shall mean, in the
8 -58-
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case of securities that are not then currently redeemable at the option of the holder,
the current bid quotation for such securities, as reported in any nationally circulated
|1013|
financial journal, and the current redemption value in the case of securities that are
|1013|
4 then redeemable at the option of the holder. For obligations that mature within six
5 months, the market value shall be the par value thereof. The valuation of the
6 amount in the Reserve Account shall be made by the City as of the close of
7 business on each December 31 (or on the next preceding business day if
|1013|
December 31 does not fall on a business day) and may be made on each June 30
|10 13|
10 (or on the next preceding business day if June 30 does not fall on a business day).
1 1If the valuation of the amount in the Reserve Account is less than the Reserve
12 Account Requirement the City shall immediately transfer from the General Account
13 an amount necessary to make the valuation of the amount in the Reserve Account
14
equal to 1 00 percent of the Reserve Account Requirement. If the amounts
1 5
available in the General Account for such transfer are insufficient to make the
16
1 7valuation of the amount in the Reserve Account equal to 1 00 percent of the
1 8Reserve Account requirement, the City shall then transfer to the Reserve Account
1 9on or before the 25th day of each of the six succeeding calendar months no less
20
than one-sixth of the amount necessary to make the valuation of the amount in the
21
22 Reserve Account equal to 1 00 percent of the Reserve Account Requirement.
23 In making the payments and credits to the Principal Account, Interest
24 Account, Bond Retirement Account and Reserve Account required by this
25 Section 1 1.2, to the extent that such payments are made from bond proceeds, from
26
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money in any capitalized interest account, or from other money that may legally be
available, such payments are not required to be made from the Revenue Fund.
2
In making the payments and credits to the Reserve Account required by this
3
4 Section 1 1.2, to the extent that the City has obtained Qualified Insurance or a
5 Qualified Letter of Credit for specific amounts required pursuant to this section to be
6 paid out of the Reserve Account, such amounts so covered by Qualified Insurance
7 or a Qualified Letter of Credit shall be credited against the amounts required to be
8
maintained in the Reserve Account by Section 11.2 hereof to the extent that such
9
10 payments and credits to be made are insured by an insurance company, or
1 1 guaranteed by a letter of credit from a financial institution. Such Qualified Letter of
12 Credit or Qualified Insurance shall not be cancelable on less than five years' notice.
1 3 In the event of any cancellation, the Reserve Account shall be funded in
14
accordance with the first two paragraphs of this subsection D, as if the Parity Bonds
1 5
16 that remain outstanding had been issued on the date of such notice of cancellation.
17 (E) If there is a deficiency in the Interest Account, Principal
18 Account, or Bond Retirement Account in the Bond Fund, the City shall promptly
19 make up such deficiency from the Reserve Account by the withdrawal of cash
20
therefrom for that purpose and by the sale or redemption of obligations held in the
21
22 Reserve Account, if necessary, in such amounts as will provide cash in the Reserve
23 Account sufficient to make up any such deficiency, and if a deficiency still exists
24 immediately prior to an interest payment date and after the withdrawal of cash, the
25 City shall then draw from any Qualified Letter of Credit, Qualified Insurance, or
26
other equivalent credit facility in sufficient amount to make up the deficiency. Such
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draw shall be made at such times and under such conditions as the agreement for
such Qualified Letter of Credit or such Qualified Insurance shall provide. The City
2
covenants and agrees that any deficiency created in the Reserve Account by
3
4 reason of any withdrawal therefrom for payment into the Interest Account, Principal
5 Account or Bond Retirement Account shall be made up from money in the Revenue
6 Fund first available after providing for the required payments into such Interest,
7 Principal, and Bond Retirement Accounts and after providing for payments under a
8
reimbursement agreement entered into by the City under Section 9.3.
9
10 Money in the Bond Fund shall be transmitted to the Paying Agent in amounts
1 1 sufficient to meet the maturing installments of principal of, premium, if any, and
12 interest on the Parity Bonds when due. All money remaining in the Bond Fund after
13 provision for the payment in full of the principal of, premium, if any, and interest on
14
all outstanding Parity Bonds shall be returned to the Revenue Fund.
1 5
16 The Bond Fund shall be drawn upon solely for the purpose of paying the
1 7 principal of, premium, if any, and interest on Parity Bonds. Money set aside from
18 time to time with the Paying Agent for such payment shall be held in trust for the
19 owners of the Parity Bonds in respect of which the same shall have been so set
20
aside. Until so set aside, all money in the Bond Fund shall be held in trust for the
21
22 benefit of the owners of all Parity Bonds at the time outstanding equally and ratably.
23 Notwithstanding any provision of this Ordinance requiring the deposit of any
24 earnings or other money in the Bond Fund, any such earnings that are subject to
25 any rebate or other payment requirement pursuant to applicable provisions of the
26
Code may be withdrawn from the Bond Fund for deposit into a separate fund or
0rd13526.doc-WF/bn 8
account created for that purpose. Any amounts required at any time to be
withdrawn from the Reserve Account or other accounts in the Bond Fund in order to
2
preserve the tax-exempt or tax-advantaged status of Parity Bonds shall be
3
4 withdrawn and deposited in the General Account in the Revenue Fund.
5 Section 11.3. Investment of Funds. Money held for the credit of the
6 Revenue Fund, Construction Fund, Rate Stabilization Fund, and the Interest
7 Account, Principal Account, and Bond Retirement Account in the Bond Fund shall,
8
to the fullest extent practicable and reasonable, be invested and reinvested at the
9
10 direction of the City solely in, and obligations deposited in such accounts shall
1 1consist of, Permitted Investments which shall mature on or prior to the respective
12 dates when the money held for the credit of such Accounts will be required for the
13 purposes intended. Money in the Reserve Account in the Bond Fund not required
14
for immediate disbursement for the purposes for which such Account is created
1 5
16 shall, to the fullest extent practicable and reasonable, be invested and reinvested at
17 the direction of the City solely in, and obligations deposited in the Reserve Account
18 shall consist of, Permitted Investments maturing or subject to redemption at the
19 option of the owner thereof within 1 0 years from the date of such investment (but
20
maturing prior to the final maturity date of the Parity Bonds then outstanding).
21
22 Except to the extent there are deficiencies in any account in the Bond Fund,
23 all income received from the investment of money in any account in the Bond Fund,
24 shall be from time to time deposited in the Revenue Fund, or credited against the
25 monthly amount required to be deposited in such account.
26
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ARTICLE X11
REFUNDING OR DEFEASANCE OF THE REFUNDED BONDS
|1013|
Section 12.1. Refunding of the Refunded Bonds.
|1013|
4 (A) Appointment of Refunding Trustee. The Designated
5Representative or Finance Director is authorized to appoint a Refunding Trustee in
6connection with the 2013 Bonds.
7 (B) Use of 2013 Bond Proceeds; Acquisition of Acquired
|1013|
Obligations. The portion of the proceeds of the sale of the 2013 Bonds allocated to
|10 13|
10 refunding or defeasance and available Revenues of the Refunded Bonds and
11 available Revenues shall be deposited immediately upon the receipt thereof with
12 the Refunding Trustee and used to discharge the obligations of the City relating to
13 the Refunded Bonds under Ordinances Nos. 27320, 27403, and 27587 by providing
14
for the payment of the amounts required to be paid by the Refunding Plan. To the
15
16 extent practicable, such obligations shall be discharged fully by the Refunding
1 7Trustee's simultaneous purchase of Acquired Obligations, bearing such interest and
18 maturing as to principal and interest in such amounts and at such times so as to
19 provide, together with a beginning cash balance, if necessary, for the payment of
20
the amounts required to be paid by the Refunding Plan. The Acquired Obligations
21
22 will be listed and more particularly described in the Refunding Trust Agreement
23 between the City and the Refunding Trustee, but are subject to substitution as set
24 forth below. Any 2013 Bond proceeds or other money deposited with the
25 Refunding Trustee not needed to purchase the Acquired Obligations and provide a
26
beginning cash balance, if any, and pay the costs of issuance of the 2013 Bonds
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shall be returned to the City and deposited in the Construction Fund or in the Bond
Fund to pay interest on the 2013 Bonds on the first interest payment date.
2
(C) Substitution of Acquired Obligations. Prior to the purchase of
3
4 any Acquired Obligations by the Refunding Trustee, the City reserves the right to
5 substitute other direct, noncallable obligations of the United States of America
6 ("Substitute Obligations") for any of the Acquired Obligations and to use any
7 savings created thereby for any lawful City purpose if, (a) in the opinion of the City's
8
bond counsel, the interest on the 2013 Bonds and the Refunded Bonds will remain
9
10 excluded from gross income for federal income tax purposes under Sections 103,
1 1 148, and 149(d) of the Code, and (b) such substitution shall not impair the timely
12 payment of the amounts required to be paid by the Refunding Plan, as verified by a
13 nationally recognized independent certified public accounting firm.
14
(D) After the purchase of the Acquired Obligations by the
1 5
16 Refunding Trustee, the City reserves the right to substitute therefor cash or
17 Substitute Obligations subject to the conditions that such money or securities held
18 by the Refunding Trustee shall be sufficient to carry out the Refunding Plan, that
19 such substitution will not cause the 2013 Bonds or the Refunded Bonds to be
20
arbitrage bonds within the meaning of Section 148 of the Code and regulations
21
22 thereunder in effect on the date of such substitution and applicable to obligations
23 issued on the issue dates of the 2013 Bonds and the Refunded Bonds, as
24 applicable, and that the City obtain, at its expense: (1) a verification by a nationally
25 recognized independent certified public accounting firm acceptable to the
26
Refunding Trustee confirming that the payments of principal of and interest on the
Q V
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substitute securities, if paid when due, and any other money held by the Refunding
Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from
2
nationally recognized bond counsel to the City, to the effect that the disposition and
3
4 substitution or purchase of such securities, under the statutes, rules, and
5 regulations then in force and applicable to the 2013 Bonds, will not cause the
6 interest on the tax-exempt 2013 Bonds or the Refunded Bonds to be included in
7 gross income for federal income tax purposes and that such disposition and
8
substitution or purchase is in compliance with the statutes and regulations
9
10 applicable to the 2013 Bonds. Any surplus money resulting from the sale, transfer,
1 1 other disposition, or redemption of the Acquired Obligations and the substitutions
12 therefor shall be released from the trust estate and transferred to the City to be
1 3 used for any lawful City purpose.
14
(E) Administration of Refunding Plan. The Refunding Trustee is
1 5
16 authorized and directed to purchase the Acquired Obligations (or Substitute
1 7 Obligations) and to make the payments required to be made by the Refunding Plan
18 from the Acquired Obligations (or Substitute Obligations) and money deposited with
19 the Refunding Trustee pursuant to this Ordinance. All Acquired Obligations (or
20
Substitute Obligations) and the money deposited with the Refunding Trustee and
21
22 any income therefrom shall be held irrevocably, invested and applied in accordance
23 with the provisions of Ordinance Nos. 27230, 27403, and 27587, this Ordinance,
24 chapter 39.53 RCW and other applicable statutes of the State of Washington and
25 the Refunding Trust Agreement. All necessary and proper fees, compensation, and
26
expenses of the Refunding Trustee for the 2013 Bonds and all other costs
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incidental to the setting up of the escrow to accomplish the refunding of the
Refunded Bonds and costs related to the issuance and delivery of the 2013 Bonds,
2
including bond printing, verification fees, bond counsel's fees, and other related
3
4 expenses, shall be paid out of the proceeds of the 2013 Bonds.
5 (F) Authorization for Refunding Trust Agreement. To carry out the
6 Refunding Plan provided for by this Ordinance, the Designated Representative or
7 Finance Director is authorized and directed to execute and deliver to the Refunding
8
Trustee a Refunding Trust Agreement setting forth the duties, obligations, and
9
10 responsibilities of the Refunding Trustee in connection with the payment,
1 1 redemption, and retirement of the Refunded Bonds as provided herein and stating
12 that the provisions for payment of the fees, compensation, and expenses of such
13 Refunding Trustee set forth therein are satisfactory to it. Prior to executing the
14
Refunding Trust Agreement, the Designated Representative is authorized to make
1 5
16 such changes therein that do not change the substance and purpose thereof or that
1 7 assure that the escrow provided therein and the 2013 Bonds are in compliance with
18 the requirements of federal law governing the exclusion of interest on the tax-
19 exempt 2013 Bonds from gross income for federal income tax purposes.
20
Section 12.2. Call for Redemption of the Refunded Bonds. The City calls for
21
22 redemption on July 1, 2014, for the 2004 Refunded Bonds, on July 1, 2015, for the
23 2005 Refunded Bonds and on their maturity date of July 1, 2015, for the
24 2007 Bonds, or such other date as shall be determined by the Designated
25 Representative, all of the Refunded Bonds at par plus accrued interest. Such call
26
for redemption shall be irrevocable after the delivery of the 2013 Bonds to the
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purchaser thereof. The date on which the Refunded Bonds are herein called for
redemption is the first date on which those bonds may be called.
2
The proper City officials are authorized and directed to give or cause to be
3
4 given such notices as required, at the times and in the manner required, pursuant to
5 Ordinance Nos. 27320, 27403, and 27587, in order to effect the redemption prior to
6 their maturity or payment on their maturity of the Refunded Bonds.
7 Section 12.3. City Findings with Respect to Refunding. The Council
8
authorizes the Designated Representative to approve the issuance of the refunding
9
10 portion of the 2013 Bonds if it will achieve a debt service savings to the City or
1 1 result in a beneficial restructuring of Electric System debt and is in the best interest
12 of the City and its ratepayers. In making such finding, the Designated
1 3 Representative will give consideration to the fixed maturities of the 2013 Bonds and
14
the Refunded Bonds, the costs of issuance of the 2013 Bonds, and the known
1 5
16 earned income from the investment of the proceeds of the issuance and sale of the
1 7 2013 Bonds pending payment and redemption of the Refunded Bonds. The
18 Designated Representative may determine the amount of 2013 Bond proceeds and
19 Revenues to contribute to the refunding of the Refunded Bonds. The Designated
20
Representative may determine the amount of 2013 Bond proceeds and Revenues
21
22 to contribute to the refunding of the Refunded Bonds.
23 The Council further finds that the money to be deposited with the Refunding
24 Trustee for the Refunded Bonds in accordance with Section 12.1 of this Ordinance
25 will discharge and satisfy the obligations of the City under Ordinance Nos. 27320,
26
27403, and 28587 with respect to the Refunded Bonds, and the pledges, charges,
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trusts, covenants, and agreements of the City therein made or provided for as to the
Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be
2outstanding under such ordinance immediately upon the deposit of such money
|1013|
4with the Refunding Trustee.
5 ARTICLE XIII
6 COVENANTS TO SECURE PARITY BONDS
7 The City covenants and agrees with the purchasers and owners of the
|1013|
2013 Bonds from time to time so long as any such 2013 Bonds are outstanding, as
|10 13|
follows:
10
1 1 Section 13.1. Security for 2013 Bonds.
12 (A) All 2013 Bonds are special limited obligations of the City
1 3payable from and secured solely by Net Revenues, and by other money and assets
14
specifically pledged hereunder for the payment thereof. There are hereby pledged
1 5
16 as security for the payment of the principal of, premium, if any, and interest on all
17 2013 Bonds in accordance with the provisions of this Ordinance, subject only to the
18 provisions of this Ordinance restricting or permitting the application thereof for the
19 purposes and on the terms and conditions set forth in this Ordinance: (i) the
20
proceeds of the sale of the 2013 Bonds to the extent held in funds established by
21
22 this Ordinance, (ii) Net Revenues, and (iii) the money and investments, if any,
23 credited to the Revenue Fund and the Bond Fund, and the income therefrom. The
24 Revenues and other money and securities hereby pledged shall immediately be
25 subject to the lien of this pledge without any physical delivery thereof or further act,
26
and the lien of this pledge shall be valid and binding as against all parties having
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Claims of any kind in tort, contract, or otherwise against the City regardless of
whether such parties have notice thereof.
|1013|
All Parity Bonds now or hereafter outstanding shall be equally and ratably
|1013|
4payable and secured hereunder without priority by reason of date of adoption of the
5ordinance providing for their issuance or by reason of their series, number or date
6of sale, issuance, execution or delivery, or by the liens, pledges, charges, trusts,
7assignments, and covenants made herein, except as otherwise expressly provided
|1013|
or permitted in this Ordinance and except as to Parity Bonds covered by insurance
|10 13|
10 that may be obtained by the City to insure the repayment of one or more series or
1 1maturities within a series.
12 Except as provided by Section 9.3 hereof, the pledge of the Net Revenues
13 and of the amounts to be paid into and maintained in the funds and accounts
14
described above in this Section to pay and secure the payment of Parity Bonds is
1 5
16 hereby declared to be a prior lien and charge on the Net Revenues and the money
1 7and investments in such funds and accounts superior to all other liens and charges
18 of any kind or nature.
19 (B) No money may be removed from the Revenue Fund for
20
transfer to any fund of the City not described in this Ordinance while any deficiency
21
22 exists and is continuing in any payment required by this Ordinance into the Bond
23 Fund or any account therein.
24 (C) The 2013 Bonds shall not in any manner or to any extent
25 constitute general obligations of the City or of the State of Washington, or any
26
political subdivision of the State of Washington, or a charge upon any general fund
0rd13526.doc-WF/bn -69- 9 @@
or upon any money or other property of the City or of the State of Washington, or of
any political subdivision of the State of Washington, not specifically pledged thereto
2
by this Ordinance.
3
4 Section 13.2. Rate Covenant - General. The City shall establish, maintain
5 and collect rates and charges for services, facilities and commodities sold,
6 furnished or supplied through the facilities of the Electric System that shall be fair
7 and adequate to provide Revenues sufficient for the punctual payment of the
8
principal of, premium, if any, and interest on the Parity Bonds for which the payment
9
10 has not otherwise been provided, for all payments which the City is obligated to
1 1 make into the Bond Fund, and for the proper operation and maintenance of the
12 Electric System, including payment of all Contract Resource Obligations included in
1 3 the Electric System's Operating Expenses pursuant to Section 10.2 hereof, and all
14
necessary repairs, replacements, and renewals thereof, including the payment of all
1 5
16 taxes, assessments, or other governmental charges lawfully imposed on the
1 7 Electric System or the Revenues therefrom, or payments in lieu thereof, and the
18 payment of all other amounts that the City may now or hereafter become obligated
19 to pay from the Revenues by law or contract.
20
Section 13.3. Rate Covenant - Debt Service Coverage. The City shall also
21
22 establish, maintain and collect rates and charges which shall be adequate to
23 provide, in each Fiscal Year, Net Revenues in an amount equal to at least
24 1.25 times the actual Annual Debt Service for such year.
25 Solely for purposes of calculating the coverage requirement set forth above,
26
there shall be added to Revenues in any Fiscal Year any amount withdrawn from
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the Rate Stabilization Fund in such Fiscal Year and deposited in the Revenue
Fund, and there shall be subtracted from Revenues in any Fiscal Year any amount
|1013|
withdrawn from the General Account in the Revenue Fund and deposited in the
|1013|
Rate Stabilization Fund.
|1013|
5 The calculation of the coverage requirement set forth above, and in
6 Section 9.2 hereof, and the City's compliance therewith, may be made solely with
7 reference to this Ordinance without regard to future changes in generally accepted
|1013|
accounting principles. If the City has changed one or more of the accounting
|10 13|
10 principles used in the preparation of its financial statements, because of a change in
1 1generally accepted accounting principles or otherwise, then an event of default
12 relating to this coverage requirement shall not be considered an Event of Default if
13 the coverage requirement ratio would have been complied with had the City
14
continued to use those accounting principles employed at the date of the most
15
16 recent audited financial statements prior to the date of this Ordinance.
1 7 Section 13.4. Restrictions on Contracting of Obligations Secured by
18 Revenues.
1 9 (A) Except as provided in Section 10.2 hereof, the City will not
20
hereafter create any other special fund or funds for the payment of revenue bonds,
21
22 warrants, or other revenue obligations, or issue any bonds, warrants, or other
23 obligations or create any additional indebtedness that will rank prior to the charge
24 and lien on the Revenues or properties of the Electric System created herein to
25 secure the payment of the principal of and interest on the Parity Bonds.
26
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(B) The City will not hereafter create any other special fund or
funds for the payment of revenue bonds, warrants or other revenue obligations, or
2 issue any bonds, warrants or other obligations or create any additional
3
4 indebtedness that will rank on a parity with the charge and lien on the Revenues or
5 properties of the Electric System for the payments into the Bond Fund, except as
6 provided under Article IX hereof or with respect to a reimbursement obligation made
7 pursuant to Section 9.3 and ranking on a parity of lien with the Parity Bonds.
8
(C) The City may issue bonds, notes, warrants, or other obligations
9
10 payable from and secured by a lien on the Revenues of the Electric System that is
1 1 subordinate or inferior to the lien on such Revenues securing the Parity Bonds and
1 2 may create a special fund or funds for payment of such subordinate obligations.
1 3 Section 13.5. Covenant to Maintain System in Good Condition. The City
14
shall at all times maintain, preserve, and keep, or cause to be maintained,
1 5
1 6 preserved, and kept, the properties of the Electric System and all additions and
1 7 betterments thereto and extensions thereof and every part and parcel thereof, in
18 good repair, working order and condition, and will from time to time make, or cause
19 to be made, all necessary and proper repairs, renewals, replacements, extensions
20
and betterments thereto so that at all times the business carried on in connection
21
22 therewith shall be properly and advantageously conducted. The City will at all times
23 operate such properties and the business in connection therewith or cause such
24 properties and business to be operated in an efficient manner and at a reasonable
25 cost.
26
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Section 13.6. Covenants Concerning Disposal of Properties of Electric
System. The City shall not sell, mortgage, lease, or otherwise dispose of the
|1013|
properties of the Electric System except as provided by law and subject to such
|1013|
4 additional restrictions as are provided in this Section.
5 (A) The City will not sell or otherwise dispose of the Electric
6 System in its entirety unless simultaneously with such sale or other disposition,
7 provision is made for the payment, redemption, or other retirement of all Parity
|1013|
Bonds then outstanding.
|10 13|
10 (B) Except as provided in C below, the City will not sell or
1 1otherwise dispose of any part of the Electric System in excess of 5 percent of the
12 value of the net utility plant of the Electric System unless provision is made for the
1 3payment, redemption, or other retirement of a principal amount of Parity Bonds
14
equal to the greater of the following amounts:
1 5
16 i. An amount that will be in the same proportion to the net
1 7principal amount of Parity Bonds then outstanding (defined as the total principal
18 amount of such Parity Bonds outstanding less the amount of cash and investments
19 in the Principal Account and Bond Retirement Account in the Bond Fund) that the
20
revenues attributable to the part of the Electric System sold or disposed of for the
21
22 12 preceding months bears to the total revenues for such period; or
23 ii. An amount that will be in the same proportion to the net
24 principal amount of Parity Bonds then outstanding that the book value of the part of
25 the Electric System sold or disposed of bears to the book value of the entire Electric
26
System immediately prior to such sale or disposition.
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(C) The City may sell or otherwise dispose of any part of the
Electric System which shall have become unserviceable, inadequate, obsolete, or
2
unfit to be used in the operation of the Electric System, or no longer necessary,
3
4 material to or useful in such operation.
5 (D) The proceeds of sale of any part of the Electric System shall be
6 deposited in the Revenue Fund.
7 (E) No sale of any part of the Electric System, valued in excess of
8
1 0 percent of the book value of the physical assets of the Electric System, shall be
9
10 made if, in the opinion of an Engineer, based on financial statements of the Electric
1 1System for the most recent Fiscal Year available, such sale would prevent the City
12 from meeting the requirements of Section 13.2 and of the first paragraph of
13 Section 13.3. With the consent of the appropriate percentage of Parity Bond
14
owners, the Council may at any time pass an ordinance amending or supplementing
1 5
16 this Ordinance for the purpose of providing that for purposes of this Section 13.6.E,
17 the opinion of Engineer can be given by a Certified Public Accountant. The owners
18 of the 2013 Bonds, by taking and owning the same, shall be deemed to have
19 consented to the passage by the Council of any such Supplemental Ordinance.
20
Section 13.7. Insurance. The City shall either self-insure in such manner
21
22 and to such extent as the City shall determine to be necessary and appropriate or,
23 as needed, and to the extent insurance coverage is available at reasonable cost
24 with responsible insurers, keep, or cause to be kept, the Electric System and the
25 operation thereof insured, with policies payable to the City, against the risks of
26
direct physical loss, damage to or destruction of the Electric System, or any part
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thereof, and against accidents, casualties, or negligence, including liability
insurance and employer's liability, at least to the extent that similar insurance is
|1013|
usually carried by utilities operating like properties.
|1013|
4 In the event of any loss or damage, the City will promptly repair or replace
5 the damaged portion of the insured property and apply the proceeds of any
6 insurance policy for that purpose; or in the event the City should determine not to
7 repair or reconstruct such damaged portion of the properties of the Electric System,
|1013|
the proceeds of such insurance shall be paid into the Reserve Account to the extent
|10 13|
10 that such transfer shall be necessary to make up any deficiency in said Reserve
1 1Account and the balance, if any, shall at the option of the City, be used either for
12 repairs, renewals, replacements, or capital additions to the Electric System or for
13 the purchase, payment, or redemption of Parity Bonds.
14
Section 13.8. Condemnation. In the event of any loss or damage to the
1 5
16 properties of the Electric System by reason of condemnation, the City will (i) with
1 7respect to each such loss, promptly replace, repair, and reconstruct to the extent
18 necessary to the proper conduct of the operations of the Electric System the
19 condemned portion thereof and shall apply the proceeds of any condemnation
20
award for that purpose to the extent required therefor, and (ii) if the City shall not
21
22 use the entire proceeds of such condemnation award to repair, replace, or
23 reconstruct such lost or damaged property, such award not so used shall be paid
24 into the Revenue Fund.
25 Section 13.9. Books of Account. The City shall keep proper books of
26
account in accordance with the rules and regulations prescribed by the Division of
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Municipal Corporations of the State Auditor's office of the State of Washington, or
other State department or agency succeeding to such duties of the State Auditor's
2 office, and if no such rules or regulations are prescribed as aforesaid then in
|1013|
4 substantial accordance with the uniform system of accounts prescribed by the
5 Federal Energy Regulatory Commission or other federal agency having jurisdiction
6 over electric public utility companies owning and operating properties similar to the
7 Electric System, whether or not the City is at the time required by law to use such
|1013|
system of accounts. The City shall cause its books of account to be audited
|10 13|
10 annually by the State Auditor's office or other State department or agency as may
1 1be authorized and directed by law to make such audits, or if such an audit shall not
12 be made for 12 months after the close of any Fiscal Year of the City, by Certified
1 3Public Accountants. In keeping said books of account, the City shall accrue
14
depreciation monthly thereon on its depreciable properties in accordance with the
1 5
16 accounting practice prescribed by the public departments or agencies above
1 7mentioned. The City will furnish to any owner of 2013 Bonds, upon a written
18 request therefor, copies of the balance sheet and statement of income and retained
19 earnings showing in reasonable detail the financial condition of the Electric System
20
as of the close of each fiscal year, and the income and expenses of such year,
21
22 including the amounts paid into the Revenue Fund, the Bond Fund, and in any and
23 all special funds created or continued pursuant to the provisions of this Ordinance,
24 and the amounts expended for maintenance, renewals, replacements, and gross
25 capital additions to the Electric System.
26
91
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Section 13. 1 0. Covenant Not to Render Service Free of Charge. So long as
any 2013 Bonds are outstanding and unpaid, the City shall not furnish or supply or
2
permit the furnishing or supplying of any commodity, service, or facility furnished by
3
4 or in connection with the operation of the Electric System free of charge to any
5 person, firm, or corporation, public or private, and the City will maintain and enforce
6 reasonable procedures for the payment of any and all accounts owing to the City
7 and delinquent, by discontinuing service or by filing suits, actions, or proceedings,
8
or by both discontinuance of service and filing suit.
9
10 Section 13.1 1. Covenant to Make Only Sound Improvements. The City shall
1 1 not expend any money in the Revenue Fund or the proceeds of Parity Bonds or
12 other obligations for any renewals, replacements, extensions, betterments and
1 3 improvements to the Electric System that are not economically sound and that will
14
not properly and advantageously contribute to the conduct of the business of the
1 5
16 Electric System in an efficient and economical manner or that are not mandated by
1 7 law or regulation. The foregoing shall not preclude the City from paying any legal or
18 contractual obligations.
19 Section 13.12. Covenant to Pay Bond Principal and Interest Punctually. The
20
City shall duly and punctually pay or cause to be paid, but only from Revenues and
21
22 other money pledged therefor under this Ordinance, the principal of, premium, if
23 any, and interest on each and every 2013 Bond on the dates and at the places and
24 in the manner provided in such bonds, according to the true intent and meaning
25 thereof, and will faithfully do and perform and fully observe and keep any and all
26
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covenants, undertakings, stipulations and provisions contained in the 2013 Bonds
and in this Ordinance.
2
Section 13.13. Covenant to Pay Taxes, Assessments and Other Claims.
3
4 The City shall from time to time duly pay and discharge, or cause to be paid and
5 discharged, when the same shall become due, all taxes, assessments and other
6 governmental charges, or payments in lieu thereof, lawfully imposed upon the
7 Electric System or the Revenues, and all claims for labor and materials and
8
supplies that, if not paid, might become a lien or charge upon the Electric System,
9
10 or any part thereof, or upon the Revenues (prior to the lien thereon for the payment
1 1 of the Parity Bonds), or that might in any way impair the security of the Parity
12 Bonds, except taxes, assessments, charges, or claims that the City shall in good
1 3 faith contest by proper legal proceedings.
14
ARTICLE XIV
1 5
SUPPLEMENTAL AND AMENDATORY ORDINANCES
16
1 7 Section 14.1. Amendments Without Consent of Bondowners. The City may
18 adopt at any time and from time to time without the consent of the owners of any
19 Parity Bonds an ordinance or ordinances supplemental to or amendatory of this
20
Ordinance and any Supplemental Ordinance theretofore adopted for any one or
21
22 more of the following purposes:
23 (A) In accordance with Article IX hereof, to provide for the issuance
24 of Future Parity Bonds and to prescribe the terms and conditions pursuant to which
25 such bonds may be issued, paid or redeemed;
26
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(B) To add covenants and agreements of the City for the purpose
of further securing the payment of the Parity Bonds, provided such additional
2
covenants and agreements are not contrary to or inconsistent with the covenants
3
4 and agreements of the City contained in this Ordinance or any Supplemental
5 Ordinance;
6 (C) To prescribe further limitations and restrictions upon the City's
7 ability to issue bonds and incur indebtedness payable from the Revenues, provided
8
that such further limitations and restrictions are not contrary to or inconsistent with
9
those theretofore in effect;
10
1 1 (D) To surrender any right, power, or privilege reserved to or
12 conferred upon the City by the terms of this Ordinance;
13 (E) To confirm as further assurance any pledge under, and the
14
subjection to any lien, claim or pledge created or to be created by, the provisions of
15
16 this Ordinance of the Revenues or of any other money, securities, or funds;
17 (F) To cure any ambiguity or defect or inconsistent provision of this
18 Ordinance or any Supplemental Ordinance or to insert such provisions clarifying
19 matters or questions arising under this Ordinance or any Supplemental Ordinance
20
as are necessary or desirable in the event any such modifications are not contrary
21
22 to or inconsistent with this Ordinance or any Parity Bond Ordinance as theretofore
23 in effect;
24 (G) To add such provisions as the Council, with the advice of Bond
25 Counsel to the City, shall deem necessary in order to preserve the tax-exempt
26
status of the Parity Bonds.
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Section 14.2. Amendments With Consent of Bondowners. The provisions of
this Ordinance and of any Supplemental Ordinance may be modified at any time or
2
from time to time by a Supplemental Ordinance, with the consent of bondowners in
3
4 accordance with and subject to the provisions of Article XVI hereof.
5 After all of the 2004 Bonds, 2005 Bonds, and 2007 Bonds are redeemed,
6 refunded, or defeased, this Section 14.2 shall be amended in its entirety to read as
7 folloWS:
8
With the consent of the owners of not less than 51 percent in aggregate
9
principal amount of the Parity Bonds at the time outstanding, the Council may pass
1 0
1 1 an ordinance or ordinances supplemental hereto or to any Future Parity Bond
1 2 Ordinance for the purpose of adding any provisions to or changing in any manner or
1 3 eliminating any of the provisions of this Ordinance or of any Future Parity Bond
14
Ordinance, but no such Supplemental Resolution shall:
15
16 (A) Extend the fixed maturity of any Parity Bonds or the time of
17 payment of interest thereon from the established due date, or reduce the rate of
18 interest thereon or the amount of the principal thereof, or reduce any premium
1 9 payable on the redemption thereof, or accelerate any redemption provision, without
20
the written consent of the owner of each Parity Bond so affected;
21
22 (B) Reduce the aforesaid percentage of bondowners required to
23 approve any such Supplemental Ordinance, without the written consent of the
24 owners of all of the Parity Bonds then outstanding;
25 (C) Give to any Parity Bond any preference over any other Parity
26
Bond; or
0
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(D) Authorize the creation of any pledge prior to or, except as
provided in Article IX for the issuance of Future Parity Bonds, on a parity with the
2
pledge afforded by this Ordinance, without the consent of the owner of each such
3
4 Parity Bond affected thereby.
5 It shall not be necessary for bondowners to approve the particular form of
6 any proposed Supplemental Ordinance, but it shall be sufficient if such consent
7 shall approve the substance thereof.
8
Section 14.3. Filing of Supplemental Ordinances. No Supplemental
9
10 Ordinance shall become effective until filed with the City together with an opinion of
1 1 Bond Counsel that such Supplemental Ordinance has been validly enacted and that
12 it is effective in accordance with its terms.
13 ARTICLE XV
14
DEFAULTS AND REMEDIES
1 5
16 Section 15.1. Events of Default. The Council hereby finds and determines
1 7 that the continuous operation of the Electric System and the collection, deposit, and
18 disbursement of the Net Revenues in the manner provided in this Ordinance are
19 essential to the payment and security of the 2013 Bonds, and the failure or refusal
20
of the City to perform the covenants and obligations contained in this Ordinance will
21
22 endanger the necessary continuous operation of the Electric System and the
23 application of the Net Revenues to the purposes set forth in this Ordinance.
24 The City hereby covenants and agrees with the purchasers and owners from
25 time to time of the 2013 Bonds, in order to protect and safeguard the covenants and
26
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obligations undertaken by the City securing the 2013 Bonds, that the following shall
constitute "Events of Default":
2
(A) If default shall be made in the due and punctual payment of the
3
principal of and premium, if any, on any of the 2013 Bonds when the same shall
4
5 become due and payable, either at maturity or by proceedings for redemption or
6 otherwise;
7 (B) If default shall be made in the due and punctual payment of
8
any installment of interest on any 2013 Bond;
9
10 (C) If the City shall fail to purchase or redeem Term Bonds in an
1 1 aggregate principal amount at least equal to the Sinking Fund Requirement for the
12 applicable Fiscal Year; or
1 3 (D) If the City shall default in the observance and performance of
14
any other of the covenants, conditions, and agreements on the part of the City
1 5
16 contained in this Ordinance or any covenants, conditions, or agreements on the
1 7 part of the City contained in any ordinance of the City authorizing Future Parity
18 Bonds as provided in Article IX hereof and such default or defaults shall have
19 continued for a period of 90 days after the City shall have received from the
20
Bondowners' Trustee or from the owners of not less than 20 percent in principal
21
22 amount of the Parity Bonds outstanding a written notice specifying and demanding
23 the cure of such default; provided, if the default in the observance and performance
24 of any of the covenants, conditions and agreements is one which cannot be
25 completely remedied within 90 days after written notice, it shall not be an Event of
26
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Default as long as the City has taken active steps within the 90 days after written
notice to remedy the default and is diligently pursuing such remedy.
2
Section 15.2. Bondowners'Trustee. So long as such Event of Default shall
3
4 not have been remedied, a Bondowners'Trustee may be appointed by the holders
5 of 25 percent in principal amount of the Parity Bonds, by an instrument or
6 concurrent instruments in writing signed and acknowledged by such bondowners or
7 by their attorneys-in-fact duly authorized and delivered to such Trustee, notification
8
thereof being given to the City. Any Bondowners' Trustee appointed under the
9
10 provisions of this Section 15.2 shall be a bank or trust company organized under
1 1 the laws of the State of Washington or the State of New York or a national banking
12 association. The fees and expenses of the Bondowners' Trustee shall be borne by
13 the bondholders and not by the City. The bank or trust company acting as
14
Bondowners' Trustee may be removed at any time, and a successor Bondowners'
1 5
16 Trustee may be appointed by the holders of a majority in principal amount of the
17 outstanding Parity Bonds, by an instrument or concurrent instruments in writing
18 signed and acknowledged by such bondowners, or by their attorneys-in-fact duly
19 authorized.
20
The Bondowners'Trustee appointed in the manner herein provided, and
21
22 each successor thereto, is hereby declared to be a trustee for the holders of all the
23 Parity Bonds and is empowered to exercise all the rights and powers herein
24 conferred on the Bondowners' Trustee.
25 Section 15.3. Suits at Law or in Equity. The Bondowners' Trustee may, upon
26
the happening of an Event of Default, and during the continuance thereof, take such
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steps and institute such suits, actions, or other proceedings in its own name, or as
trustee, all as it may deem appropriate for the protection and enforcement of the
2
rights of bondowners to collect any amounts due and owing the City, or to obtain
3
4 other appropriate relief, and may enforce the specific performance of any covenant,
5 agreement, or condition contained in this Ordinance, or in any of the 2013 Bonds.
6 Any action, suit, or other proceeding instituted by the Bondowners' Trustee
7 hereunder shall be brought in its name as trustee for the bondowners and all such
8
rights of action upon or under any of the Parity Bonds or the provisions of this
9
10 Ordinance may be enforced by the Bondowners' Trustee without the possession of
1 1 any of said Parity Bonds, and without the production of the same at any trial or
12 proceedings relative thereto except where otherwise required by law, and the
13 respective holders of said Parity Bonds, by taking and holding the same, shall be
14
conclusively deemed irrevocably to appoint the Bondowners' Trustee the true and
1 5
16 lawful trustee of the respective owners of said Parity Bonds, with authority to
1 7 institute any such action, suit, or proceeding; to receive as trustee and deposit in
18 trust any sums becoming distributable on account of said Parity Bonds; to execute
19 any paper or documents for the receipt of such money, and to do all acts with
20
respect thereto that the bondowner himself might have done in person. Nothing
21
22 herein contained shall be deemed to authoriZe or empower the Bondowners'
23 Trustee to consent to accept or adopt, on behalf of any holder of said Parity Bonds,
24 any plan or reorganization or adjustment affecting the said Parity Bonds of the City
25 or any right of any holder thereof, or to authorize or empower the Bondowners'
26
Trustee to vote the claims of the holders thereof in any receivership, insolvency,
I 0 7 -84-
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liquidation, bankruptcy, reorganization, or other proceeding to which the City shall
be a party.
2
Section 15.4. Suits by Individual Bondowners. No owner of any one or more
3
4 of said Parity Bonds shall have any right to institute any action, suit, or proceeding
5 at law or in equity for the enforcement of same, unless an Event of Default shall
6 have happened and be continuing, and unless no Bondowners'Trustee has been
7 created as herein provided, but any remedy herein authorized to be exercised by
8
the Bondowners'Trustee may be exercised individually by any bondowner, in his
9
own name and on his own behalf or for the benefit of all bondowners, in the event
10
1 1 no Bondowners' Trustee has been appointed, or with the consent of the
12 Bondowners'Trustee if such Bondowners'Trustee has been appointed; provided,
1 3 however, that nothing in this Ordinance or in any Parity Bonds shall affect or impair
14
the obligation of the City, which is absolute and unconditional, to pay from Net
15
16 Revenues the principal of and interest on said Parity Bonds to the respective
1 7 holders thereof at the respective due dates therein specified, or affect or impair the
18 right of action, which is absolute and unconditional, of such holders to enforce such
19 payment.
20
Section 15.5. Remedies Granted in Ordinance Not Exclusive. The remedies
21
22 herein conferred upon or reserved to the holders of such Parity Bonds of the City
23 and to the Bondowners' Trustee are not intended to be exclusive of any other
24 remedy or remedies, and each and every such remedy shall be cumulative and
25 shall be in addition to every other remedy given hereunder or now or hereafter
26
existing at law or in equity or by statute. The privileges herein granted shall be
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exercised from time to time and continued so long as and as often as the occasion
therefor may arise and no waiver of any default hereunder, whether by the
2
Bondowners' Trustee or by the holders of Parity Bonds, shall extend to or shall
3
4 affect any subsequent default or shall impair any rights or remedies consequent
5 thereon. No delay or omission of the bondowners or of the Bondowners'Trustee to
6 exercise any right or power accruing upon any default shall impair any such right or
7 power or shall be construed to be a waiver of any such default or any acquiescence
8
therein.
9
ARTICLE XVI
10
11 AMENDMENTS AND BONDOWNERS MEETINGS
12 After all of the 2004 Bonds, 2005 Bonds, and 2007 Bonds Parity Bonds are
1 3 redeemed, refunded, or defeased, this Article XVI 'Amendments and Bondowners
14
Meetings" shall be deleted in its entirety.
1 5
1 6 Section 16.1. Call of Bondowners Meetings. The City or the owners of not
1 7 less than 20 percent in principal amount of the Parity Bonds then outstanding may
1 8 at any time call a meeting of the owners of the Parity Bonds. Every such meeting
1 9 shall be held at such place in the City of New York, State of New York, or in the City
20
of Tacoma, State of Washington, as may be specified in the notice calling such
21
22 meeting. Written notice of such meeting, stating the place and time of the meeting
23 and in general terms the business to be transacted, shall be mailed to the
24 bondowners by the City, the Bondowners Committee or the bondowners calling
25 such meeting not less than 30 nor more than 60 days before such meeting, and
26
shall be published at least once a week for four successive calendar weeks on any
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day of the week, the date of first publication to be not less than 30 nor more than
60 days preceding the meeting; provided, however, that the publication of such
2
notice shall in no case be a condition precedent to the validity of any action taken at
3
4 any such meeting. The expenses of publication and mailing of such notice shall be
5 paid or reimbursed by the City. Any meeting of bondowners shall, however, be
6 valid without notice if the owners of all Parity Bonds then outstanding are present in
7 person or by proxy or if notice is waived before or within 30 days after the meeting
8
by those not so present.
9
10 Section 16.2. Notice to Bondowners. Except as otherwise provided in this
1 1 Ordinance, any provision in this Ordinance for the mailing of a notice or other paper
12 to bondowners shall be fully complied with if it is mailed by first class mail, postage
1 3 prepaid, to each registered owner of any of the Parity Bonds then outstanding at his
14
address, if any, appearing upon the Bond Register; and any provision in this
1 5
16 Ordinance contained for publication of a notice or other matter shall require the
1 7 publication thereof in "The Bond Buyer" in The City of New York, State of New York
18 (or in lieu of publication in "The Bond Buyer," in a daily newspaper printed in the
19 English language and customarily published on each business day of general
20
circulation in the Borough of Manhattan, The City of New York, State of New York),
21
22 and also in a daily newspaper printed in the English language and customarily
23 published on each business day and of general circulation in the City of Seattle,
24 State of Washington.
25 Section 16.3. Proxies; Proof of Ownership of Bonds. Attendance and voting
26
by bondowners at such meetings may be in person or by proxy. Owners of Parity
I 1@1 "-@
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Bonds may, by an instrument in writing under their hands, appoint any person or
persons, with full power and substitution, as their proxy to vote at any meeting for
2
them. Officers or nominees of the City may be present or represented at such
3
4 meeting and take part therein but shall not be entitled to vote thereat, except as
5 such officers or nominees are bondowners or proxies for bondowners.
6 Any registered owner of Parity Bonds shall be entitled in person or by proxy
7 to attend and vote at such meeting as owner of the Parity Bonds registered in his
8
name without producing such Bonds, and such persons and their proxies shall, if
9
10 required, produce such proof of personal identity as shall be satisfactory to the
1 1 Secretary of the meeting. All proxies presented at such meeting shall be delivered
12 to the Inspectors of Votes and filed with the Secretary of the meeting.
1 3 The vote at any such meeting of the owner of any Parity Bond entitled to
14
vote thereat shall be binding upon such owner and upon every such subsequent
1 5
16 owner of such Bond (whether or not such subsequent owner has notice thereof).
17 Section 16.4. Execution of Instruments by Bondowners. Any request,
18 direction, consent, or other instrument in writing required or permitted by this
19 Ordinance to be signed or executed by bondowners may be in any number of
20
concurrent instruments of similar tenor, and may be signed or executed by such
21
22 bondowners in person or by agent appointed by an instrument in writing. Proof of
23 the execution of any such instrument shall be sufficient for any purpose of this
24 Ordinance if made in the following manner: The fact and date of the execution by
25 any person of any such instrument may be proved by either (a) an acknowledgment
26
executed by a notary public or other officer empowered to take acknowledgments of
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deeds to be recorded in the particular jurisdiction, or (b) an affidavit of a witness to
such execution sworn to before such a notary public or other officer. Where such
2
execution is by an officer of a corporation or association or a member of a
3
4 partnership on behalf of such corporation, association, or partnership, such
5 acknowledgment or affidavit shall also constitute sufficient proof of his authority.
6 The foregoing shall not be construed as limiting the City to such proof, it
7 being intended that the City may accept any other evidence of the matters herein
8
stated that it may deem sufficient. Any request or consent of the owner of any
9
10 Parity Bond shall bind every future owner of the same Bond in respect of anything
1 1 done by the City in pursuance of such request, direction or consent.
12 The right of a proxy for a bondowner to act may be proved (subject to the
13 City's right to require additional proof) by a written proxy executed by such
14
bondowner as aforesaid.
1 5
16 Section 16.5. Appointment of Officers at Bondowners Meetings. Persons
1 7 named by the City or elected by the owners of a majority in principal amount of the
1 8 Parity Bonds represented at the meeting in person or by proxy in the event the City
1 9 is not represented at such meeting, shall act as temporary Chairman and temporary
20
Secretary of any meeting of bondowners. A permanent Chairman and a permanent
21
22 Secretary of such meeting shall be elected by the owners of a majority in principal
23 amount of the Parity Bonds represented at such meeting in person or by proxy.
24 The permanent Chairman of the meeting shall appoint two Inspectors of Votes who
25 shall count all votes cast at such meeting, except votes on the election of Chairman
26
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and Secretary as aforesaid, and who shall make and file with the Secretary of the
meeting and with the City their verified report of all such votes cast at the meeting.
2
Section 16.6. Quorum at Bondowners Meetings. The owners of not less
3
4 than the principal amount of the Parity Bonds required for any action to be taken at
5 such meeting must be present at such meeting in person or by proxy in order to
6 constitute a quorum for the transaction of business, less than a quorum, however,
7 having power to adjourn from time to time without any other notice than the
8
announcement thereof at the meeting; provided, however, that if such meeting is
9
10 adjourned by less than a quorum for more than 1 0 days, notice thereof shall be
1 1 published by the City at least 5 days prior to the adjourned date of the meeting.
1 2 Section 16.7. Vote Required to Amend Ordinance. Any amendment to the
1 3 provisions of this Ordinance, in any particular except the percentage of bondowners
14
the approval of which is required to approve such amendment, may be made by a
1 5
16 Supplemental Ordinance of the City and a resolution duly adopted by the affirmative
1 7 vote at a meeting of bondowners duly convened and held, or with written consent
18 as hereinafter provided in Section 16.9 hereof, of the owners of not less than
19 51 percent in principal amount of the Parity Bonds outstanding when such meeting
20
is held or such consent is given; provided, however, that no such amendment shall
21
22 (a) extend the date of payment of the principal of any Parity Bond or of any
23 installment of interest thereon or reduce the principal or redemption price thereof or
24 the rate of interest thereon or advance the date upon which any Bond may first be
25 called for redemption prior to its fixed maturity date; (b) give to any Parity Bond or
26
Bonds any preference over any other Parity Bond or Bonds secured equally and
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ratably therewith; (c) reduce the aforesaid percentage of Parity Bonds, the owners
of which are required to consent to any such ordinance amending the provisions of
2
this Ordinance; or (d) authorize the creation of any pledge prior to or, except as
3
4 provided in Article IX hereof for the issuance of Future Parity Bonds, on a parity
5 with the pledge afforded by this Ordinance, without the consent of the owner of
6 each such Parity Bond affected thereby.
7 Section 16.8. Obtaining Approval of Amendments at Bondowners Meeting.
8
The City may at any time adopt an ordinance amending the provisions of this
9
10 Ordinance to the extent that such amendment is permitted by the provisions of
1 1 Section 16.7 hereof, to take effect when and as provided in this Section. At any
12 time thereafter, such Supplemental Ordinance may be submitted by the City for
1 3 approval to a meeting of the bondowners duly convened and held in accordance
14
with the provisions of this Ordinance. A record in duplicate of the proceedings of
1 5
16 each meeting of the bondowners shall be prepared by the permanent Secretary of
1 7 the meeting and shall have attached thereto the original reports of the Inspectors of
18 Votes and affidavits by a person or persons having knowledge of the facts, showing
19 a copy of the notice of the meeting, and setting forth the facts with respect to the
20
mailing and publication thereof under the provisions of this Ordinance. Such a
21
22 record shall be signed and verified by the affidavits of the permanent Chairman and
23 the permanent Secretary of the meeting, and one duplicate thereof shall be
24 delivered to the City. Any record so signed and verified shall be proof of the
25 matters therein stated. If the Supplemental Ordinance shall be approved by a
26
resolution duly adopted at such meeting of bondowners by the affirmative vote of
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the owners of the required percentages of Parity Bonds, a notice stating that a
resolution approving such Ordinance has been so adopted shall be mailed by the
2
City to each bondowner who has requested such notice (but failure so to mail
3
4 copies of such notice shall not affect the validity of such Ordinance) and shall be
5 published at least once in the manner provided in Section 16.2 hereof. Proof of
6 such mailing and publication by the affidavit or affidavits of a person or persons
7 having knowledge of the facts shall be filed with the City. Such ordinance of the
8
City making such amendment shall be deemed conclusively to be binding upon the
9
10 City, the Paying Agent and the Registrar, and the owners of all Parity Bonds at the
1 1 expiration of 30 days after the publication of the notice provided for in this Section,
12 except in the event of a final decree of court of competent jurisdiction setting aside
1 3 such ordinance or annulling the action taken thereby in a legal action or equitable
14
proceeding for such purpose commenced within such period; provided that the City,
1 5
16 the Paying Agent and the Registrar during such 30-day period and any such further
1 7 period during which such action or proceeding may be pending shall be entitled in
18 their absolute discretion to take such action, or to refrain from taking such action,
19 with respect to such Supplemental Ordinance as they may deem expedient.
20
Nothing in this Ordinance contained shall be deemed or construed to authorize or
21
22 permit, by reason of any call of a meeting of bondowners or of any right conferred
23 hereunder to make such a call, any hindrance or delay in the exercise of any rights
24 conferred upon or reserved to the Paying Agent, the Registrar, or the bondowners,
25 under any of the provisions of this Ordinance.
26
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Section 16.9. Alternate Method of Obtaining Approval of Amendments. The
City may at any time adopt an ordinance amending the provisions of this
2
Ordinance, or of any Parity Bonds, to the extent that such amendment is permitted
3
4 by the provisions of this Article, to take effect when and as provided in this Section.
5 Upon adoption of such ordinance, a request that bondowners consent thereto shall
6 be mailed by the City to the bondowners; and notice that the City is requesting
7 bondowners to consent to such amendment shall be published at least once in the
8
manner provided in Section 16.2 hereof. Such ordinance shall not be effective
9
10 unless and until there shall have been filed with the City the written consents of the
1 1 percentages of owners of outstanding Parity Bonds specified in Section 16.7 hereof
12 and a notice shall have been published as hereinafter in this Section provided.
1 3 Each such consent shall be effective only if accompanied by proof of ownership of
14
the Parity Bonds for which such consent is given, which proof shall be such as is
1 5
16 permitted by Section 16.3 hereof. A certificate or certificates of the Secretary of the
1 7 City that he has examined such proof and that such proof is sufficient shall be
18 conclusive that the consents have been given by the owners of the Parity Bonds
19 described in such certificate or certificates. Any such consent shall be binding upon
20
the owner of the Parity Bonds giving such consent and on every subsequent owner
21
22 of such Parity Bonds (whether or not such subsequent owner has notice thereof).
23 A notice stating that the ordinance has been consented to by the owners of the
24 required percentages of Parity Bonds and will be effective as provided in this
25 Section, may be given to the bondowners by mailing such notice to the
26
bondowners, and shall be given by publishing the same at least once in the manner
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0rdI3526.doc-WF/bn
provided in Section 16.2 hereof. A record, consisting of the papers required by this
Section to be filed with the City shall be proof of the matters therein stated, and the
2
Ordinance shall be deemed conclusively to be binding upon the City and the
3
4 owners of all Parity Bonds at the expiration of 30 days after the notice last provided
5 for in this Section, except in the event of a final decree of a court of competent
6 jurisdiction setting aside such consent or annulling the action taken thereby in a
7 legal action or equitable proceeding for such purpose commenced within such
8
period.
9
10 Section 16.1 0. Amendment of Ordinance In Any Respect by Approval of All
11 Bondowners. Notwithstanding anything contained in the foregoing provisions of this
12 Article, the rights and obligations of the City and of the owners of the Parity Bonds
1 3 and the terms and provisions of the Parity Bonds and of this Ordinance, may be
14
amended in any respect with the consent of the City, by the affirmative vote of the
1 5
16 owners of all said Parity Bonds then outstanding at a meeting of bondowners called
1 7 and held as hereinabove provided, or upon the adoption of an ordinance by the City
18 and the consent of the owners of all the Bonds then outstanding, such consent to
19 be given as provided in Section 16.9 except that no notice to bondowners either by
20
mailing or publication shall be required, and the amendment shall be effective
21
22 immediately upon such unanimous vote or written consent of all of the bondowners.
23 Section 16.1 1. Bonds Owned by City. Parity Bonds owned or held by or for
24 the account of the City shall not be deemed outstanding for the purpose of any vote
25 or consent or other action or any calculation of outstanding Parity Bonds in this
26
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Ordinance provided for, and shall not be entitled to vote or consent or take any
other action in this Ordinance provided for.
2
Section 16.12. Endorsement of Amendment on Bonds. Parity Bonds
3
4 delivered after the effective date of any action amending this Ordinance taken as
5 hereinabove provided may bear a notation by endorsement or otherwise as to such
6 action, and in that case, upon demand of the owner of any Parity Bond outstanding
7 at such effective date and presentation of his Bond for the purpose at the principal
8
office of the Paying Agents, suitable notation shall be made on such Bond by the
9
10 Paying Agent as to any such action. If the City shall so determine, new Bonds so
1 1 modified as in the opinion of the City and its counsel to conform to such action shall
12 be prepared, delivered, and upon demand of the owner of any Parity Bond then
13 outstanding shall be exchanged without cost to such bondowner for Parity Bonds
14
then outstanding hereunder, upon surrender of such Parity Bonds.
15
ARTICLE XVI I
16
1 7 MISCELLANEOUS
18 Section 17.1. Ordinance and Laws a Contract With Bondowners. This
19 Ordinance is adopted under the authority of and in full compliance with the
20
Constitution and laws of the State of Washington, as amended and supplemented.
21
22 In consideration of the purchase and acceptance of the 2013 Bonds by those who
23 shall hold the same from time to time, the provisions of this Ordinance and of said
24 laws shall constitute a contract with the owner or owners of each 2013 Bond, and
25 the obligations of the City and its Council under said acts and under this Ordinance
26
shall be enforceable by any court of competent jurisdiction. The covenants and
0rd13526.doc-WF/bn -95- 1 1@ I
agreements herein set forth to be performed on behalf of the City shall be for the
equal benefit, protection, and security of the owners of any and all Parity Bonds, all
2
of which, regardless of the time or times of their issue or maturity, shall be of equal
3
4 rank without preference, priority, or distinction of any Parity Bonds over any others
5 thereof except as expressly provided herein.
6 Section 17.2. Benefits of Ordinance Limited to City, Bondowners, and
7 Paying Agent. Nothing in this Ordinance, expressed or implied, is intended or shall
8
be construed to confer upon or give to any person or corporation other than the
9
10 City, the Paying Agent, the Registrar, and the owners from time to time of the
1 1 2013 Bonds any rights, remedies, or claims under or by reason of this Ordinance or
12 any covenant, condition, or stipulation thereof; and all the covenants, stipulations,
1 3 promises, and agreements in this Ordinance contained by or on behalf of the City
14
shall be for the sole and exclusive benefit of the City, the Bondowners' Trustee, the
1 5
16 Paying Agents, the Registrar, and the owners from time to time of the 2013 Bonds.
1 7 Section 17.3. Severability. If any one or more of the provisions of this
18 Ordinance is or are held by any court of competent jurisdiction to be contrary to law,
19 then such provision or provisions shall be null and void and shall be deemed
20
separable from the remaining provisions and shall in no way affect the validity of the
21
22 other provisions of this Ordinance or the 2013 Bonds.
23
24
25
26
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Section 17.4. Effective Date. This Ordinance shall take effect and be in
2 force 10 days after its passage, approval, and publication as required by law. Any
3 actions taken pursuant to this Ordinance before its effective date and after its
4 passage are hereby ratified, approved and confirmed.
5
6 Passed APR 3 0 2013
7
Mayor
8
9 Attest:
10
1 1
City Clerk
12
13 Approved as to form and legality:
14
FOSTER PEPPER PLLC
15 Bond Counsel to the City of Tacoma
16
By n"C@@ (]LO-kJ
17 . k i
18 Requested by Public Utility Board
Resolution No. U-10621
19
20
21
22
23
24
25
26
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CLERK'S CERTIFICATE
1, the undersigned, the duly chosen, qualified and acting City Clerk of the
|1013|
City of Tacoma, Washington, and keeper of the records of the City Council (the
|1013|
"Council"), DO HEREBY CERTIFY:
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5 1. That the attached Ordinance No-.7?-,,L-j_U (the "Ordinance") is a true and
6 correct copy of an Ordinance of the Council, as finally passed at a regular meeting
7 of the Council held on the day of 61cl, 2013, and duly recorded
|1013|
in my office.
|10 13|
10 2. That said meeting was duly convened and held in all respects in
1 1 accordance with law, and to the extent required by law, due and proper notice of
12 such meeting was given; that a legal quorum was present throughout the meeting
13 and a legally sufficient number of members of the Council voted in the proper
14
manner for the passage of said Ordinance; that all other requirements and
1 5
16 proceedings incident to the proper adoption of said Ordinance have been duly
1 7 fulfilled, carried out and otherwise observed, and that I am authorized to execute
18 this certificate.
19 IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
20 6@r
official seal of the City as of this day of N&A-, 2013.
21
22
23
City Clerk
24 City of Tacoma, Washington
25
26
i -98-
0rd13526.doc-WF/bn
CITY CLERK USE ONLY
REQUEST FOR Request
MORDINANCE E]RESO"&WVFQrd./Res. 28146
1. DATE: April 11, 2013 4it* Al Quit w@ - --oll
2. SPONSORED BY: COUNCIL MEMBER(S) N/K ol I I IoUnn q wMIZ
3a. REQUESTING 4a. CONTACT (for questions): PHONE:
DEPARTMENT/DIVISION/PROGRAM Bill Berry 253-502-8294
Tacoma Power
3b. "Do PASS" FROM GPFC
F-1 Yes
No 4b. Person Presenting: PHONE:
To Committee as information Only Ted Coates 253-502-8205
F-1 Did not go before a Committee
3c. DID THIS ITEM GO BEFORE THE 4c@ ATTORNEY: PHONE:
PUBLIC UTILITY BOARD? Nancy Neraas, Foster Pepper 206-447-6277
Yes, on 4/10/2013 (Bond Counsel)
Not required
Bill Fosbre, Chief Assistance 253-5 -8218
City Attorney
C to
5. REQUESTED COUNCIL DATE: April 131@,
n&T-er fFardylQA st to the City
I e
(If a specific council meeting date is required, explain why; Le application dead e contract
expiration date, required contract execution date, public notice or hearing required, etc.)
This date is requested in order to facilitate a bond sale in mid-May.
6. SUMMARY AGENDA TITLE: (A concise sentence, as it will appear on the Council agenda.)
Authorize Bond Ordinance for City of Tacoma Electric System Revenue and Refunding Bonds, Series
2013, in an amount not to exceed $375,000,000.
7. BACKGROUND INFORMATioN/GENERAL DiscussioN: (Why is this request necessary? Are there legal
requirements? What are the viable alternatives? Who has been involved in the process?)
The purpose of this request is to authorize the Bond Ordinance enabling Tacoma Power to execute the
sale of the City of Tacoma Electric System Revenue and Refunding Bonds, Series 2013, within a not to
exceed amount of $375,000,000. These funds are required to complete capital projects identified in the
Public Utility Board and City Council adopted 2013-2014 budget, and enable the refunding of a portion of
the outstanding 2004, 2005A, 2004B, or 2007 City of Tacoma Electric System Revenue and Refunding
Bonds to take advantage of low long-term interest rates.
cotclerk kforms @ RequestResolutionOrdinance.doc Office of the Ciky Clerk (411612013)
CITY CLERK USE ONLY
REQUEST (CONT) Request 60
Ord/Res
8. LIST ALL MATERIAL AVAILABLE AS BACKUP INFORMATION FOR THE REQUEST AND INDICATE WHERE FILED:
Source Documents/Backup Material Location of Document
Letter to Board and Council from Bill Gaines Attached
dated April 11, 2013
Bond Ordinance for City of Tacoma Electric City Clerk's Office
System Revenue and Refunding Bonds,
Series 2013
9. WHICH OF THE CITY'S STRATEGIC GOALS DOES THIS ITEM SUPPORT? (CHECK THE GOAL THAT BEST APPLIES)
A. A SAFE, CLEAN AND ATTRACTIVE COMMUNITY .
B. A DIVERSE, PRODUCTIVE AND SUSTAINABLE ECONOMY
C. A HIGH-PERFORMING, OPEN AND ENGAGED GOVERNMENT
10. IFTHISCONTRACTISFORANAMOUNTOF$200,OOOORLFSS,FXPLAINWHYITNEEDSLEGISLATIVEAPPROVAL:
Debt issuance must be approved by the Public Utility Board and City Council.
11. FINANCIAL IMPACT: El ExPENDITURE REVENUE
A. F-1 No IMPACT (NO FISCAL NOTE)
B YES, OVER $ 1 00,000, Fiscal Note Attached
C. El YES, UNDER $1 00,000, (NO FISCAL NOTE)
Provide funding source information below:
FUNDING SOURCE: (Enter amount of funding from each source)
Fund Number & Name: State $ city $ Other $ Total Amount
Tacoma Power 2013 Not to Exceed Not to Exceed $375
Bond Construction $375 million million
Fund
If an expenditure, is it budgeted? F1 Yes R No Where? Cost Center:
Aect
12
cotclerk@fonns\RequestResolutionOrdinance.doc Office of the City Clerk (011071201 1)
CITY CLERK USE ONLY
Request
Ord/Res .2 8 1 446,
FISCAL NOTE
Each piece of legislation that has a financial impact or creates positions authority requires a fiscal note. After preparation
by departmental staff, the Management and Budget Office will review the fiscal note and make any necessary revisions
before transmittal to the City Attorney's Office for legislation preparation.
DEPARTMENT: CONTACT PERSON/PHONE: BUDGET CONSULTANT/PHONE:
Tacoma Power Biil Berry, 253-502-8294
Is it currently budgeted? 9 Yes F-1 No
Is this a grant? F] Yes M No If Yes, F1 Operating Capital
EXPENDITURES:
FUND NAME & NUMBER COST CENTER WBS ACCOUNT 2013-2014 EXPENDITURES
Tacoma Power 2013 To be Determined To be Not to exceed $375
Bond Construction Fund Determined million
TOTAL
*General Fund: Include Department
Purpose:
REVENUES:
FUND NAME & NUMBER COST CENTER WBS ACCOUNT 2013-2014 REVENUES
Tacoma Power 2013 To be Determined To be Not to exceed $375
Bond Construction Fund Determined million
TOTAL
Notes: These funds will provide for capital projects identified by Tacoma Power's adopted 2013-2014 budget.
POSITION IMPACT:
POSITION TITLE PERMANENT/PROJECT/ POSITION END DATE 2013-2014 FTE FUTURE FTE
TEMPORARY POSITION
Total positions created or abrogated through this legislation, including FTE impact. FTE impactfor temporary employees is
estimated.
4
cotclerk\forms\RequestResolutionOrdinance.doe Office of the City Clerk (011071201 1)
CITY CLERK USE ONLY
FISCAL NOTE (CONT) Request
Ord/Res 2A 1 AG-
LONG-TERM FINANCIAL IMPACT OF LEGISLATION:
SPENDING PLAN & BUDGET 2013 2014 2015 2016 2017 TOTAL
Salaries/Benefits
Start-up
On-going
Maintenance & Operations
Capital $42 $52 $94 million
million million
TOTAL $42 $52 $94 million
FUNDING SOURCE 2013 2014 2015 2016 2017 TOTAL
Tacoma Power 2013 $42 $52 $94 million
Bond Construction Fund million million
TOTAL $42 $52 $94 million
million million
The financial cost of not implementing the legislation:
Estimate the cost to the City if the legislation is not implemented, including the potential conflicts with
regulatory requirements, cost avoidance, or other potential costs.
OTHER ISSUES:
t:@ "
I '(.'; J
cotclerk\forins\RequestResolutionOrdinance.doc Office of the City Clerk (12/14/2012)
TACOMA PUBLIC UTILITIES
3628 South 35th Street 2 8
Tacoma, Washington 98409-3192
April 11, 2013
TO Honorable Mayor and Members of City Council
Chair and Members of the Public Utility Board
REQUEST
Tacoma Power requests that the Public Utility Board and the City Council approve the
issuance of up to $375 million of City of Tacoma Electric Revenue and Refunding
Bonds, Series 2013. The purpose of the new issuance is to fund capital projects
included in the adopted 13/14 Budget, including implementing the Cowlitz and Cushman
hydroelectric generation licenses. The Refunding Bonds take advantage of historically
low interest rates to produce savings for Tacoma Power ratepayers as well as
restructure debt to maintain stable debt service costs. Tacoma Power also seeks
approval for the delegation of authority for the Director of Utilities and Power
Superintendent to conduct this sale.
BACKGROUND
Tacoma Power regularly issues bonds to finance construction and renovation on long-
lived capital assets. Debt financing such assets is equitable because it transfers the
cost of long-lived assets to future ratepayers who are the beneficiaries of those assets.
Currently, Tacoma Power is planning to issue up to $100 million in new-money bonds
proceeds in May 2013. In order to provide the least-cost financing current and future
capital needs, the utility has developed a long-term financing plan that includes multiple
structures for current and future new-money bonds, refunding and restructuring of
existing bonds, and use of cash reserves to defease bonds.
In 2013, the utility plans to issue the new money bonds to mature between 2037 and
2041, issue refunding bonds to capture economic savings from lower interest rates on
up to $235 million of Series 2004 and 2005A existing debt, issue up to $32 million in
restructuring bonds to levelize debt service from Series 2004A and 2005A debt, and
defease up to $37 million of Series 2007 and 2005B bonds with cash, also to levelize
debt service requirements. This proposed financing plan would help Tacoma Power
maintain stable rates. Additional Series 2007 and 2005B bonds may also be refunded to--.W,
capture economic savings depending on market conditions at the time of sale.
PROCESS AND TIMELINE TACOMA
POWER
With the assistance from the Tacoma Finance Department, our financial advisors,
Montague DeRose and Associates, and bond counsel, Foster Pepper, we have
prepared a bond ordinance for Public Utility Board and City Council action (the current 16@_
request) that would authorize Tacoma Power to execute a sale within a "not to exceed"
amount and other constraints. In order to conduct this bond sale in the most efficient TACOMA
WATER
manner, Tacoma Power also seeks approval for the delegation of authority for the
Director of Utilities and Power Superintendent to conduct this sale within limits defined
by the Bond Ordinance.
7,
TACOMA
RAIL
PROPOSED STRUCTURE
At this time memorandum, we expect to issue approximately $240 million in City of
Tacoma Electric System Revenue Bonds. Approximately $100 million would provide
funding for $93 million of Tacoma Power's approved 13/14 capital budget. The
remaining approximately $140 million of bond proceeds would be used to refund
outstanding Series 2004 and 2005A Revenue Bonds for debt service savings and to
restructure debt service payments. At current interest rates, the refunding bonds would
yield present value debt service savings of $5.6 million, or 4.2 percent of refunded par.
The proposed ordinance provides authorization to issue additional Refunding Bonds if
the market improves sufficiently to make the additional issuance economic.
We request your approval of the proposed sale of up to $375 million City of Tacoma
Electric Revenue and Refunding Bonds (Series 2013).
Sincerely,
William A. Gaines
Director of Utilities/CEO
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28 1 4A i-
Ordinance No. J. * v
First Reading of Ordinance: APR 2 3 2013
Final Reading of Ordinance: APR 3 0 2013
Passed: APR 3 0 2013
Roll Call Vote:
MEMBERS AYES NAYS ABSTAIN ABSENT
Mr. Boe
Mr. Campbell
Mr. Ibsen
Mr. Lonergan
Mr. Mello
Mr. Thoms
Ms. Walker
Ms. Woodards
Mayor Strickland
MEMBERS AYES NAYS ABSTAIN ABSENT
Mr. Boe
Mr. Campbell
Mr. Ibsen
Mr. Lonergan
Mr. Mello
Mr. Thorns
Ms. Walker
Ms. Woodards
Mayor Strickland
llccagenda@agenda procedures and forms@ordinancevotingrecorddoc