HomeMy WebLinkAbout15260ORDINANCE NO. 15,260
AN ORDINANCE PROVIDING FOR THE ISSUANCE OF SEWER
CONSTRUCTION AND REFUNDING REVENUE .BONDS BY THE CITY OF
LITTLE ROCK, ARKANSAS FOR THE PURPOSE OF PAYING THE COST OF
CONSTRUCTING IMPROVEMENTS TO THE FOURCHE CREEK SEWAGE
TREATMENT PLANT AND CERTAIN OTHER EXTENSIONS, BETTERMENTS,
AND IMPROVEMENTS TO THE SANITARY SEWER SYSTEM OF THE CITY OF
LITTLE ROCK, ARKANSAS, AND FOR THE PURPOSE OF REFUNDING
CERTAIN OUTSTANDING SEWER REVENUE BONDS OF THE CITY;
AUTHORIZING PUBLIC SALE OF THE BONDS; PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS;
PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN
EMERGENCY.
WHEREAS, the City of Little Rock, Arkansas (the "City "), has
undertaken the construction of the improvements to the Fourche
Creek Sewage Treatment Plant and certain other extensions,
betterments, and improvements to the sanitary sewer facilities
of the City (the "System "); and
WHEREAS, the Sewer Committee of the City, the membership of
which consists of Catherine Hodges Hamilton, George S. Ivory,
Louis J. Schaufele, Theodore C. Treadway III, and Gus Michael
Vratsinas, has had prepared by Greeley and Hansen, Chicago,
Illinois, Consulting Engineers, an engineering report on
providing improvements to the Fourche Creek Sewage Treatment
Plant and estimates of cost of needed betterments and
improvements (the "engineering report "), which engineering
report has been approved by the Sewer Committee and recommended
to the Board of Directors of the City (the "Board of
Directors "), and copies of which are on file in the offices of
the City Clerk and the Manager of the System; and
WHEREAS, the Board of Directors has studied the engineering
report and a report of the Manager and staff of the System
which, generally stated, recommend a construction program
consisting of the following components: (1) Fourche Creek
Sewage Treatment Plant retrofit; (2) new and replacement sewer
mains; and (3) new maintenance facility, together with needed
and related equipment, improvements, and expenditures and, where
necessary, the acquisition of lands and easements (all of which
will be herein referred to as the "Improvements "); and
WHEREAS, the engineering report has estimated the cost of
that portion of the Improvements described in Al) above
(including the furnishing of all labor, materials, and other
services in connection with the completion of such portion of
the Improvements) to be approximately $9,620,000, and the
Manager and staff of the System have estimated the cost of that
portion of the Improvements described in (2) and (3) above
M
p-�.7.
C -9
• • 145,
(including the furnishing of all labor, materials, and other
services in connection with the completion of such portion of
the Improvements) to be approximately $2,919,800, for a total
estimated cost of approximately $12,539,800; and
WHEREAS, there are outstanding City of Little Rock, Arkansas
Sewer Revenue Bonds, dated February 1, 1966 (the "1966 Bonds "),
issued under the authority of Ordinance No. 11,695 of the City
duly adopted and passed December 20, 1965 ( "Ordinance No.
11,695 "); Department of Pollution Control and Ecology of the
State of Arkansas Pollution Control Revenue Bonds, dated June 1,
1972 (the "1972 Bonds "), issued under the authority of State of
Arkansas Resolution No. 19 -B duly adopted and passed
September 22, 1972 ( "State Resolution No. 19 -B "), and which are
secured by a pledge of revenues of the System derived from a
Water Quality Control Charge levied by the City under the
authority of Ordinance No. 12,632 of the City, duly adopted and
passed April 4, 1972; City of Little Rock, Arkansas Sewer
Revenue Bonds, Series 1981, dated May 1, 1981 (the "1981
Bonds "), issued under the authority of Ordinance No. 13,983 of
the City duly adopted and passed February 17, 1981; and City of
Little Rock, Arkansas Sewer Revenue Bonds, Series 1984, dated
October 1, 1984 (the "1984 Bonds "), issued under the authority
of Ordinance No. 14,738 of the City duly adopted and passed
September 12, 1984; and
WHEREAS, the Board of Directors has determined that in order
to achieve debt service savings it is in the best interest of
the City to refund the outstanding 1981 Bonds and 1984 Bonds;
and
WHEREAS, the City has obtained the certificate of an
independent certified public accountant that conditions
precedent to the issuance of parity bonds set forth in Ordinance
No. 11,695 and State Resolution No. 19 -B have been complied with
and the Sewer Committee has advised the Board of Directors that
the conditions set forth in Section 15 of Ordinance No. 11,695
have been fully met and complied with; and
WHEREAS, the City is authorized under Amendment No. 65 the
the Arkansas Constitution ( "Amendment 65 ") and Act No. 132 of
the Acts of the General Assembly of the State of Arkansas for
the year 1933, as amended ( "Act 132 "), to issue and sell revenue
bonds for the purpose of financing the cost of constructing
improvements and betterments to the System and refunding
outstanding sewer revenue bonds, including printing, legal,
underwriting, and other expenses incidental to the issuance of
the bonds; and
WHEREAS, to secure funds necessary to finance the
construction of the Improvements, refunding the 1981 Bonds and
the 1984 Bonds, and the printing, legal, underwriting, and other '
-2-
7 3 8 7 B
R L F 0 3 1 6 0 7
M
• 0
costs incidental to the issuance of revenue bonds for these
purposes (with it being comtemplated that additional moneys
necessary to complete the Improvements, if any, will be obtained
from the existing cash reserves of the Sewer Committee, from the
debt service reserves established and maintained for the 1981
Bonds and the 1984 Bonds, and from other sources), the City has
determined to issue revenue bonds upon the most favorable terms
to the City and upon the most favorable terms and conditions to
the users of the System of the City, in an aggregate principal
amount of not to exceed Twenty -Two Million, Eight Hundred Eighty
Thousand and No /100 Dollars ($22,880,000); and
WHEREAS, a form of Prelminary Official Statement (the
"Preliminary Official Statement ") offering City of Little Rock,
Arkansas Sewer Construction and Refunding .Bonds, Series 1987,
for public sale has been presented to and is before this meeting.
NOW, THEREFORE, BE IT ENACTED BY THE BOARD OF DIRECTORS OF
THE CITY OF LITTLE ROCK, ARKANSAS:
Section 1. (a) That the Improvements be accomplished. The
accomplishment of the Improvements shall be under the control
and supervision of, and all details in connection therewith
shall be handled by, the heretofore created and presently
existing Sewer Committee, and the Sewer Committee shall make all
contracts and agreements necessary or incidental to the
performance of its duties and the execution of its powers. The
Sewer Committee shall let all construction contracts pursuant to
and in accordance with existing laws and shall require such
performance bonds and insurance from the contractors as, in the
judgment of the Sewer Committee, will fully insure the
completion of the Improvements in accordance with the plans,
specifications, and drawings of the consulting engineers so as
to fully promote and protect the best interests of the City and
the registered owners of the revenue bonds authorized hereby.
The Board of Directors hereby finds and declares that the period
of usefulness of the System will be more than forty (40) years,
which is longer than the term of the Series 1987 Bonds.
(b) That the refunding of the 1981 Bonds and the 1984 Bonds
be accomplished. The Mayor and City Clerk are hereby authorized
to take or cause to be taken all action necessary to accomplish
the refunding and to execute all required contracts and
documents.
Section 2. That under the authority of the Constitution and
laws of the State of Arkansas, including particularly
Amendment 65 and Act 132, City of Little Rock, Arkansas Sewer
Construction and Refunding Revenue Bonds, Series 1987 (the
"Series 1987 Bonds "), are hereby authorized in the total
principal amount of not to exceed Twenty -Two Million, Eight
Hundred Eighty Thousand and No /100 Dollars ($22,880,000'), the
-3-
7aelB
R L F 0 3 1 6 8 7
146
proceeds of the sale of which are necessary to provide
sufficient funds, together with other funds available, to pay
the cost of accomplishing the refunding of the 1981 Bonds and
the 1984 Bonds and constructing the Improvements, including,
without limitation, the acquisition of necessary rights -of -way,
engineering fees, legal fees, and other necessary expenses
incidental to the accomplishment of the Improvements, and to the
issuance of the Series 1987 Bonds. The Series 1987 Bonds shall
be issued in fully registered form without interest coupons, and
payment of interest shall be by check or draft mailed to the
registered owners thereof as of the applicable record date. The
principal of the Series 1987 Bonds shall be payable to the
registered owners thereof at the principal corporate trust
office of the Trustee and Paying Agent (the purchaser is being
granted the right to designate the Trustee and Paying Agent,
which shall be any state or national bank located in Little
Rock, Arkansas, having a combined capital and surplus of not
less than $15,000,000, with such designation to be set forth in
a resolution of the Board of the Directors of the City,
hereafter referred to). The Series 1987 Bonds shall be issued
in the aggregate principal amount (which shall not exceed
$22,880,000), shall be dated, shall bear interest from their
date payable semiannually, shall be subject to optional and
extraordinary redemption, and shall mature (or shall be subject
to mandatory sinking fund redemption) annually all as specified
in a resolution of the Board of Directors of the City, hereafter
referred to.
The Board of Directors hereby finds and declares that the
conditions set forth in Section 15 of Ordinance No. 11,695 have
been fully met and complied with and that therefore, the Series
1987 Bonds shall be issued on a parity of security with the 1966
Bonds and the 1972 Bonds. The 1966 Bonds, the 1972 Bonds, the
Series 1987 Bonds, and any additional bonds issued on a parity
of security therewith under the terms and conditions of this
Ordinance shall hereafter be collectively referred to as "Sewer
Revenue Bonds."
Only such Series 1987 Bonds as shall have endorsed thereon a
Certificate of Authentication substantially in the form set
forth in Section 4 hererof duly executed by the Trustee shall be
entitled to any right or benefit under this Ordinance. No
Series 1987 Bond shall be valid and obligatory for any purpose
unless and until such Certificate of Authentication shall have
been duly executed by the Trustee, and such certificate of the
Trustee upon any such Bond shall be conclusive evidence that
such Bond has been authenticated and delivered under this
Ordinance. The Trustee's Certificate of Authentication on any
Series 1987 Bond shall be deemed to have been executed if signed
by an authorized officer of the Trustee, but it shall not be
necessary that the same officer sign the certificate of
authentication on ail of the Series 1987 Bonds issued hereunder.
73879
R L F 0 3 1 6 8 7
147,
• • 148
In case any Series 1987 Bond issued hereunder shall become
mutilated or be destroyed or lost, the City shall, if not then
prohibited by law, cause to be executed and the Trustee may
authenticate and deliver a new Series 1987 Bond of like date,
number, maturity, and tenor in exchange and substitution for and
upon cancellation of such mutilated Series 1987 Bond, or in lieu
of and in substitution for such Series 1987 Bond destroyed or
lost, upon the owner's paying the reasonable expenses and
charges of the City and Trustee in connection therewith, and, in
the case of a Series 1987 Bond destroyed or lost, his filing
with the Trustee evidence satisfactory to it that such Series
1987 Bond was destroyed or lost, and of his ownership thereof,
and furnishing the City and Trustee with indemnity satisfactory
to them. The Trustee is hereby authorized to authenticate any
such new Series 1987 Bond. In the event any such Series 1987
Bond shall have matured, instead of issuing a new Series 1987
Bond, the City may pay the same without the surrender thereof.
Upon the issuance of a new Series 1987 Bond under this
Section 2, the City may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
The City shall cause books to be kept for the registration
and for the transfer of the Series 1987 Bonds as provided herein
and in the Series 1987 Bonds. The Trustee shall act as the bond
registrar. Each Series 1987 Bond is transferable by the
registered owner thereof or by his attorney duly authorized in
writing at the principal office of the Trustee. Upon such
transfer a new fully registered Series 1987 Bond or Bonds of the
same maturity, of authorized denomination or denominations, for
the same aggregate principal amount will be issued to the
transferee in exchange therefor.
No charge shall be made to any owner of any Series 1987 Bond
for the privilege of transfer or exchange, but any owner of any
Series 1987 Bond requesting any such transfer or exchange shall
pay any tax or other governmental charge required to be paid
with respect thereto. Except as otherwise provided in the
immediately preceding sentence, the cost of preparing each new
Series 1987 Bond upon each exchange or transfer and any other
expenses of the City or the Trustee incurred in connection
therewith shall be paid by the City.
The person in whose name any Series 1987 Bond shall be
registered shall be deemed and regarded as the absolute owner
thereof for all purposes, and payment of or on account of the
principal of or premium, if any, or interest on any Series 1987
Bond shall be made only to or upon the order of the registered
owner thereof or his legal representative, but such registration
may be changed as hereinabove provided. All such payments shall
be valid and effectual to satisfy and discharge the liability
-5-
7 3878
upon such Bond to the extent of the sum or sums so paid. 149
Neither the City nor the Trustee shall be affected by any notice
to the contrary.
In any case where the date of maturity of interest on or
principal of the Series 1987 Bonds or the date fixed for
redemption of any Series 1987 Bonds shall be a Saturday or
Sunday or shall be in the State of Arkansas a legal holiday or a
day on which banking institutions are authorized by law to
close, then payment of interest or principal (and premium, if
any) need not be made on such date but may be made on the next
succeeding business day not a Saturday or Sunday or a legal
holiday or a day upon which banking institutions are authorized
by law to close with the same force and effect as if made on the
date of maturity or the date fixed for redemption, and no
interest shall accrue for the period after the date of maturity
or date fixed for redemption.
The City is hereby authorized to sell the Series 1987 Bonds
at public sale on sealed bids in such manner and on such terms
as the City shall deem to be in the best interest of the City
and users of the System which shall not be inconsistent with
applicable provisions of this Ordinance.
The Preliminary Official Statement is hereby approved in
substantially the form submitted to this meeting with such
changes as shall be approved by the Mayor, her execution to
constitute conclusive evidence of such approval. The use of the
Preliminary Official Statement in connection with the public
sale of the Series 1987 Bonds is hereby authorized, and the
Mayor be and she is hereby authorized, empowered, and directed,
for and on behalf of the City, to execute the Preliminary
Official Statement.
Section 3. That the actions of the City in accepting a bid
for the Series 1987 Bonds at the public sale thereof, in
approving the designation by the purchaser of the Trustee and
Paying Agent, in approving the aggregate principal amount of
Series 1987 Bonds to be issued (not to exceed $22,880,000), in
approving the details of the maturity and mandatory sinking fund
redemption schedule, in approving the details of the optional
and extraordinary redemption schedule, and in authorizing the
form and use of an Official Statement in connection with the
public offering of the Series 1987 Bonds shall be submitted to
the Board of Directors for approval by resolution. The Series
1987 Bonds shall be numbered consecutively as issued beginning
with number one (1) and shall be in denominations of $5,000 and
integral multiples thereof. The resolution of the Board of
Directors, referred to above, shall set forth in detail a
maturity schedule reflecting the years, annual principal
maturities and /or mandatory sinking fund redemptions, semiannual
interest, and total principal and interest requirements.
-6-
7387B
RLFO31687
0 0
Thereafter, the Series 1987 Bonds shall be executed on behalf of
the City by the Mayor and City Clerk and shall have imprinted
thereon a facsimile of the seal of the City. The facsimile
signatures of the Mayor and the City Clerk may be used upon
compliance with the provisions of Act No. 69 of the Acts of the
General Assembly of the State of Arkansas for the year 1959, as
amended. The facsimile signatures of the Mayor and, the City
Clerk shall have the same force and effect as if they had
personally signed the Series 1987 Bonds. In case the person
holding the office of Mayor or City Clerk, whose signature or a
facsimile of whose signature shall appear on the Series 1987
Bonds, shall cease to be such officer before the delivery of the
Series 1987 Bonds, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes, the same
as if he or she had remained in office until delivery of the
Series 1987 Bonds. The principal of and interest on the Series
1987 Bonds are secured by and payable solely out of the 1987
Sewer Revenue Bond Fund, as hereafter set forth. The Series
1987 Bonds shall be a valid claim of the bondholders only
against such fund and the revenues pledged to such fund, which
revenues are hereby pledged and mortgaged for the equal and
ratable payment of the principal of and premium, if any, and
interest on the Series 1987 Bonds, and shall be used for no
other purpose except as in this Ordinance specifically
provided. The principal of and interest on the Series 1987
Bonds shall not constitute an indebtedness of the City within
any constitutional or statutory debt limitation or restriction.
Section 4. That the Series 1987 Bonds shall be in
substantially the following form and the Mayor and City Clerk
are hereby authorized and directed to make all recitals
contained therein:
REGISTERED
NO.
(Form of Series 1987 Bond)
[FRONT OF BOND]
REGISTERED
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF LITTLE ROCK
SEWER CONSTRUCTION AND REFUNDING REVENUE BOND
SERIES 1987
Interest Maturity
Rate: Date:
73878
R L F 0 3 1 6 8 7
Interest
Commencement
Date: CUSIP:
-7-
150
M M M
•
Registered Owner:
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS:
u
v-
That the City of Little Rock, Arkansas (the "City "), hereby
acknowledges itself to owe, and for value received promises to
pay to the order of the Registered Owner shown above, or
registered assigns, but solely from the special fund provided
therefor as hereinafter set forth, in lawful money of the United
States of America, upon the presentation and surrender of this
bond, the Principal Amount shown above on the Maturity Date
shown above, and to pay in like coin or currency interest
thereon at the Interest Rate shown above from the Interest
Commencement Date shown above until paid, such interest to be
payable semiannually on the first day of February and August of
each year, commencing on the semiannual interest payment date
next succeeding the Interest Commencement Date, payable by check
or draft of Bank, in the City of
Little Rock, Arkansas (the "Trustee ") , mailed to the Registered
Owner hereof at the close of business as of the applicable
Record Date (as defined on the reverse hereof), irrespective of
any transfer or exchange of this Bond subsequent to such Record
Date and prior to such interest payment date. Principal of this
bond is hereby made payable to the Registered Owner at the
principal corporate trust office of the Trustee in Little Rock,
Arkansas.
This bond is part of an issue of Sewer Construction and
Refunding Revenue Bonds, Series 1987 (the "bonds "),
aggregating
Dollars ($ ), all of like tenor and effect, except as to
denomination, interest rate, maturity, and right of prior
redemption, and are issued for the purpose of financing the cost
of constructing extensions, betterments, and improvements to the
sanitary sewer system of the City (the "Sewer System ") and
refunding the City's outstanding Sewer Revenue Bonds, Series
1981, and Sewer Revenue Bonds, Series 1984.
This bond and all bonds of this issue are issued pursuant to
and in full compliance with the Constitution and laws of the
State of Arkansas, particularly Amendment No. 65 to the Arkansas
Constitution and Act No. 132 of the Acts of the General Assembly
of the State of Arkansas for the year 1933, as amended, and
pursuant to Ordinance No. of the Board of Directors of the
City, duly adopted and approved on the day of
1987, as supplemented by Resolution No. of the Board of
Directors of the City, duly adopted and approved on the _ day
of , 1987 (collectively, the "Authorizing Ordinance "),
-8-
3 8 ] B
R L F 0 3 1 6 8 ]
M
151
and do not constitute an indebtedness
constitutional or statutory limitation.
obligated to pay the principal of th
hereon except from the special fund
revenues of the Sewer System.
152
of the City within any
The City shall not be
is bond or the interest
provided from the net
[REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE HEREOF, WHICH HAVE THE SAME EFFECT
AS IF SET FORTH IN THIS PLACE.]
This bond shall not be valid until the Certificate of
Authentication hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, the City of Little Rock, Arkansas, by
its Board of Directors, has caused this bond to be executed in
its name by the facsimile signatures of the Mayor and City Clerk
thereof, with the seal of the City imprinted hereon, all as of
the first day of , 198
CITY OF LITTLE ROCK, ARKANSAS
By [Facsimile Signature]
Mayor
ATTEST:
[Facsimile Signature]
City Clerk
(FACSIMILE SEAL)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the bonds of the issue of Sewer Construction
and Refunding Revenue Bonds, Series 1987, of the City of Little
Rock, Arkansas, dated 1, 198_ , and aggregating
$ in principal amount, described in the bond to which
this certificate is attached.
Printed on the reverse hereof is the complete text of the
opinion of Rose Law Firm, a Professional Association, of Little
Rock, Arkansas, a signed original of which is on file with the
undersigned, delivered and dated the date of the original
delivery of and payment for the bonds.
Trustee
By:
(Authorized Signature)
7 l 8 7 B
R L F 0 3 1 6 8 7
1■r r � � � r
M M
0
Date of Authentication:
[REVERSE OF BOND]
M M
CITY OF LITTLE ROCK, ARKANSAS
SEWER CONSTRUCTION AND REFUNDING REVENUE BOND, SERIES 1987
ADDITIONAL PROVISIONS
M M
This bond is issued on a parity of security with (i) the
City of Little Rock, Arkansas Sewer Revenue Bonds, dated
February 1, 1966 (the "1966 Bonds "), issued under the authority
of Ordinance No. 11,695 of the City, and (ii) the Department of
Pollution Control and Ecology of the State of Arkansas Pollution
Control Revenue Bonds, dated June 1, 1972 (the "1972 Bonds "),
issued under the authority of State of Arkansas Resolution No.
19 -B, and which are secured by a pledge of revenues of the Sewer
System derived from a Water Quality Control Charge levied by the
City under the authority of Ordinance No. 12,632 of the City.
The bonds of this issue are not general obligations of the
City, but are special obligations payable solely from net
revenues derived from the operation of the Sewer System, an
amount of which sufficient to pay the principal of and premium,
if any, and interest on the bonds (ranking on a parity with the
1966 Bonds and the 1972 Bonds) is to be set aside in a special
fund for that purpose identified as the 1987 Sewer Revenue Bond
Fund. Reference is made to the Authorizing Ordinance for a
detailed statement of the nature and extent of security (the
flow of Sewer Revenue Funds is First, to an Operation and
Maintenance Fund; Second, to the Sewer Revenue Bond Fund
securing the 1966 Bonds, the Department Bond Fund securing the
1972 Bonds, the 1987 Sewer Revenue Bond Fund securing the bonds
of this issue, and into any sewer revenue bond funds established
in connection with additional bonds issued on a parity of
security with the 1966 Bonds, the 1972 Bonds, and the bonds of
this issue; and Third, to a Depreciation Fund), the rights and
obligations of the City, the Trustee, and registered owners of
the bonds, the terms and conditions upon which additional bonds
may be issued on a parity of security with the 1966 Bonds, the
1972 Bonds, the 1981 Bonds, and the bonds of this issue, and the
terms and conditions upon which the bonds are issued, including
without limitation the covenant of the City to maintain rates
for sewer services which shall be sufficient to produce revenues
adequate for the payment of the expenses of operation and
maintenance of the Sewer System, to provide for the payment of
the principal of and premium, if any, and interest on the bonds
of this issue, the 1966 Bonds and the 1972 Bonds, which rank on
a parity of security, as the same become due, and Trustee's and
Paying Agent's fees, and to make the required deposit into the
Depreciation Fund.
-10-
7397B
R L F 0 3 1 6 8 7
153
M M
M
M M M M M M
• • 154
The bonds are subject to redemption prior to maturity at the
option of the City as follows: (1) in part in inverse order of
maturity (and by lot within a maturity) from the unexpended
proceeds of the sale of the bonds not needed for paying the cost
of the construction work, on any interest payment date on and
after 1, 198_ at a redemption price equal to 1000 of
the principal amount of the bonds being redeemed plus accrued
interest to the date of redemption; and (2) in whole or in part
in inverse order of maturity (and by lot within a maturity) from
funds from any other source on any interest payment date on and
after February 1, 19 at redemption prices (expressed as
percentages of the principal amount of the bonds being
redeemed), set forth in the table below, plus accrued interest
to the date of redemption:
Redemption Dates
Redemption Prices
February
1,
_ and
August
1, _
1020
February
1,
_ and
August
1, _
101 -112%
February
1,
_ and
August
1, _
101%
February
1,
and
August
1, _
100 -1/2%
February
1,
_ and
thereafter
100%
To the extent not previously redeemed, the bonds maturing
February 1, are subject to mandatory sinking fund redemption
prior to maturity in part (the bonds to be redeemed to be
selected by the Trustee by lot) on February 1, and on each
February 1 thereafter to and including February 1, at a
redemption price equal to 100% of the principal amount of the
bonds being redeemed plus accrued interest to the date of
redemption, in the following amounts:
Year Principal Amount
The remaining $
maturing February 1,
sooner redeemed.
_ in principal amount of bonds
will be paid on such date unless
The City is hereby authorized to receive credit against
mandatory sinking fund redemption requirements for bonds
previously redeemed or for bonds acquired by. the City and
surrendered to the Trustee. In the case any outstanding bond is
now
7]878
R L F 0 3 1 6 8
155
in a denomination greater than $5,000, each $5,000 of face value
of such bond shall be treated as a separate bond of the
denomination of $5,000.
In the event any of the bonds or portions thereof are called
for redemption as aforesaid, notice thereof identifying the
bonds or portions thereof to be redeemed will be given by
mailing a copy of the redemption notice by Eirst class mail at
least thirty (30) but not more than sixty (60) days prior to the
date fixed for redemption to the Registered Owner of each bond
to be redeemed as of the applicable Record Date at the address
shown on the registration books. Failure to give any such
notice by mailing, or any defect therein, shall not affect the
validity of any proceeding for the redemption of any bond with
respect to which no such failure has occurred. All bonds or
portions thereof so called for redemption will cease to bear
interest after the specified redemption date provided funds for
their redemption are on deposit at the place of payment at that
time.
Any notice mailed as provided in the preceding paragraph
shall be conclusively presumed to have been duly given, whether
or not the Registered Owner receives the notice.
This bond is transferable by the Registered Owner hereof in
person or by his or her attorney duly authorized, only upon the
books of the City kept for that purpose at the office of the
Trustee, upon surrender of this bond together with a written
instrument of transfer in form and with guaranty of signature
satisfactory to the Trustee duly executed by the Registered
Owner or his or her duly authorized attorney. Upon such
transfer, a new bond or bonds in the same aggregate principal
amount will be issued to the transferee in exchange therefor as
provided in the Authorizing Ordinance, and upon payment of the
charges therein prescribed. The City, the Trustee, and the
Paying Agent may deem and treat the person in whose name this
bond is registered as the absolute owner hereof (whether or not
this bond shall be overdue) for the purpose of receiving payment
of, or on account of, principal hereof and premium, if any, and
interest due hereon and for all other purposes, and neither the
City, the Trustee, nor any paying agent shall be affected by any
notice to the contrary.
The bonds are issuable as fully registered bonds in
denominations of $5,000 or any integral multiple thereof.
Subject to the limitations and upon payment of the charges
provided in the Authorizing Ordinance, the Registered Owner of
any bond or bonds may surrender the same (together with a
written instrument of transfer and guaranty of signature
satisfactory to the Trustee duly executed by the Registered
Owner or his or her duly authorized attorney) in exchange for a
-12-
71870
E L F 0 3 1 6 0 7
like aggregate principal amount of bonds of other authorized 1
denominations of the same maturity.
The Trustee shall not be required to transfer or exchange
any bond during any period which begins on a Record Date for
such bond and ends on the next succeeding interest payment date
or redemption date, as the case may be. "Record Date" means (i)
the 15th calendar day of the month (whether or not a business
day) next preceding any interest payment date of such bond; or
(ii) the date of the mailing of notice calling such bond or
portion thereof for redemption as herein provided.
This bond is expressly made negotiable under Act 132 and is
issued with the intent that the laws of the State of Arkansas
will govern its construction.
No recourse shall be had for the payment of the principal
of, or premium, if any, or interest on any of the bonds or for
any claim based thereon or upon any obligation, covenant, or
agreement contained in the bonds or the Authorizing Ordinance
against any past, present, or future director, officer, or
employee of the City, or any incorporator, member, commissioner,
director, trustee, officer, or employee of any successor of the
City, as such, either directly or through the City or any
successor of the City, under any rule of law or equity, statute,
or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such
incorporator, member, commissioner, director, trustee, officer,
or employee as such is hereby expressly waived and released as a
condition of and consideration for the issuance of any of the
bonds.
IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all acts,
conditions, and things required to exist, happen, and be
performed precedent to and in the issuance of this bond do
exist, have happened, and have been performed in due time, form,
and manner as required by law; that the indebtedness represented
by the bonds of this issue does not exceed or violate any
constitutional or statutory limitation; and that sufficient net
revenues have been pledged to and will be set aside into the
1987 Sewer Revenue Bond Fund, referred to above, for the payment
of the principal of and premium, if any, and interest on the
bonds of this issue.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this bond, shall be construed as though they were
written out in full according to applicable laws or regulations:
-13-
73878
R L F 0 ] 1 6 8 7
TEN COM - as tenants
TEN ENT - as tenants
JT TEN - as joint
and not as
in common
157
by the entireties
tenants with right of survivorship
tenants in common
UNIF GIFT MIN ACT Custodian
(Gust) (Minor)
(State
Additional abbreviations may also be used, though not in the
above list.
FORM OF TRANSFER
FOR VALUE RECEIVED,
the undersigned, hereby sells,
unto
name, address, and Social Security
of assignee) the within bond and
hereby irrevocably constitutes and a
attorney
on the books kept for registration
substitution in the premises.
Dated:
Signature Guaranteed:
assigns, and transfers
(Please insert
or other identifying number
all rights thereunder, and
ppoints
to transfer the within bond
thereof, with full power of
NOTICE: The signature of this
assignment must correspond with the
name as it appears upon the face of
the within bond in every
particular, without alteration or
enlargement or any change
whatever.
NOTICE: Signature(s) must be
guaranteed by a member firm of
the New York Stock Exchange or
a commercial bank or a trust company.
Section 5. (a) That the City covenants that it will
continue in effect the present schedule of rates for sewer
services and that the rates will not be reduced except as
hereafter provided in this section, which schedule of rates was
established by Ordinance No. 13,982, adopted and approved on the
17th day of February, 1981, as amended by Ordinance No. 15,242,
adopted and approved on the 3rd day of February, 1987, to which
reference is hereby made for a detailed statement of the rates,
and the provisions of Ordinance No. 13,982, as amended by
-14-
]38"79
R L F 0 3 168
0 158
Ordinance No. 15,242, are hereby incorporated herein as though
fully set forth at this point.
(b) That the City covenants and agrees with the bondholders
that the rates will produce a total revenue at least sufficient
to pay the operation and maintenance expenses of the System, pay
the principal of and premium, if any, and interest on the 1966
Bonds, the 1972 Bonds, and the Series 1987 Bonds and Paying
Agent's fees in connection therewith, and make the required
deposit into the Depreciation Fund. The City also covenants and
agrees that the rates shall, from time to time, as and when
necessary, be increased to such an amount as will provide
revenues at least sufficient for the above purposes.
(c) That the City further covenants and agrees that the
rates shall never be reduced while any Sewer Revenue Bonds are
outstanding, unless there is obtained from an independent
certified public accountant a written opinion, based upon the
number of customers and customer usage as reflected by the
records of the Sewer Committee, that the proposed new rates will
produce sufficient revenue to provide for the cost of operation,
repair, and funded depreciation of the System for the then next
suceeding fiscal year and leave a balance equal to at least one
hundred thirty percent (130 %) of the maximum amount that will
become due in any year for principal, interest, and service
charges on all Sewer Revenue Bonds then outstanding; provided,
however, that so long as there are outstanding any 1966 Bonds or
1972 Bonds, the balance required shall equal at least one
hundred forty percent (140 %) of the maximum amount that will
become due in any year for principal, interest, and service
charges on all Sewer Revenue Bonds then outstanding.
(d) That none of the facilities or services afforded by the
System shall be furnished without a charge being made therefor.
In the event that the City or any department, agency, or
instrumentality thereof shall avail itself of the facilities and
services afforded by the System, the reasonable value of the
service or facilities so afforded shall be charged against the
City or such department, agency, or instrumentality and shall be
paid for as the charges accrue. The revenues so received shall
be deemed to be revenues derived from the operation of the
System and shall be used and accounted for in the same manner as
the other revenues derived from the operation of the System.
Section 6. Sewer Fund. That the System shall be
continuously operated as a revenue producing undertaking and all
revenues derived from the operation of the System shall be paid
into a special fund created pursuant to the provisions of
Ordinance No. 11,695 and designated "Sewer Fund." The revenues
so deposited in the Sewer Fund are hereby pledged and shall be
applied to the payment of the reasonable and necessary expenses
of operation, repair, and maintenance of the System, to the
-15-
7]97B
R L F 0 3 1 6 8 7
payment of the principal of and premium, if any, and interest on
159
the Sewer Revenue Bonds, to the establishment and maintenance of
a reserve for contingencies, and to the providing of a
Depreciation Fund, as hereafter set forth. The Sewer Fund, and
the other special funds hereafter in this Ordinance provided for
or referred to, shall be maintained in such depositories of the
City as shall from time to time be designated by the Sewer
Committee, with all such depositories to hold membership in the
Federal Deposit Insurance Corporation (the "FDIC "), to be
located in Little Rock, Arkansas, and to have a capital and
surplus of not less than Fifteen Million Dollars ($15,000,000),
and with all deposits in any depository in excess of the amount
insured by the FDIC to be secured by bonds or other direct or
fully guaranteed obligations of the United States of America
unless invested in accordance with Section 24 hereof.
Section 7. Sewer Operation 'and Maintenance Fund. That
there shall be paid from the Sewer Fund into a fund created
pursuant to the provisions of Ordinance No. 11,695 and
designated "Sewer Operation and Maintenance Fund," on the first
business day of each month while any Sewer Revenue Bonds are
outstanding, an amount sufficient to pay the reasonable and
necessary monthly expenses of operation, repair, and maintenance
of the System for such month and from which disbursements shall
be made only for those purposes. Fixed annual charges such as
insurance premiums and the cost of major repair and maintenance
expenses may be computed and set up on an annual basis, and
one - twelfth (1/12) of the amount thereof may be paid into the
Sewer Operation and Maintenance Fund each month.
If in any month for any reason there shall be a failure to
transfer and pay the required amount into Sewer Operation and
Maintenance Fund, the amount of any deficiency shall be added to
the amount otherwise required to be transferred and paid into
said Fund in the next succeeding month. If in any fiscal year a
surplus shall be accumulated in the Sewer Operation and
Maintenance Fund over and above the amount which shall be
necessary to defray the reasonable and necessary cost of
operation, repair, and maintenance of the System during the
remainder of the then current fiscal year and the next ensuing
fiscal year, such surplus may be transferred and deposited in
the Sewer Revenue Bond Funds (hereinafter created or referred
to) or to the Sewer Depreciation Fund (created pursuant to the
provisions of Ordinance No. 11,695) as the Sewer Committee may
designate; provided, however, that any such transfer into the
Sewer Revenue Bond Funds shall be in addition to all other
payments required to be made into such Funds.
Section 8. 1987 Sewer Revenue Bond Fund. (a) That after
making the monthly deposit into the Operation and Maintenance
Fund, there shall be transferred and paid from the Sewer Fund
(i) into the 1966 Sewer Revenue Bond Fund created pursuant to
-16-
] 3 8 I B
RLF031687
the provisions of Ordinance No. 11,695 the sums required by
Ordinance No. 11,695, (ii) into the 1972 Department Bond Fund
created pursuant to the provisions of Resolution No. 19 -B the
sums required by Resolution No. 19 -B, and (iii) into a special
fund, which is hereby created and designated "1987 Sewer Revenue
Bond Fund," the sums in the amounts and at the times hereafter
stated in subsection (b) for the purpose of providing funds for
the payment of the principal of and premium, if any, and
interest on the Series 1987 Bonds and the Paying Agent's fees in
connection therewith as the same become due (at maturity or upon
mandatory sinking fund redemption) according to the maturity
schedule to be set out in the Resolution of the Board of
Directors, hereinbefore referred to in Section 3 hereof, and to
create and maintain a reserve for contingencies. The 1966 Sewer
Revenue Bond Fund, the 1972 Department Bond Fund, the 1987 Sewer
Revenue Bond Fund, and any sewer revenue bond funds established
in connection with additional bonds issued on a parity of
security therewith shall hereafter be collectively referred to
as "Sewer Revenue Bond Funds."
(b) That there shall be paid from the Sewer Fund into the
1987 Sewer Revenue Bond Fund the following:
(i) into a special account within the 1987 Sewer
Revenue Bond Fund which is hereby created and designated
"Debt Service Account," commencing on the first business day
of the month succeeding the month in which the Series 1987
Bonds are originally issued and on the first business day of
each month thereafter until all outstanding Series 1987
Bonds, principal, premium, if any, and interest, have been
paid in full, or provision made for such payment, a sum
equal to one -sixth (1/6) of the next installment of interest
and one - twelfth (1/12) of the next installment of principal
(at maturity or upon mandatory sinking fund redemption),
plus an amount sufficient to pay the premium, if any, next
due on the outstanding Series 1987 Bonds, plus an amount
sufficient to provide for the Paying Agent's fees, on all
outstanding Series 1987 Bonds; plus
(ii) into a special account within the 1987 Sewer
Revenue Bond Fund which is hereby created and designated
"Reserve Account," commencing on the first business day of
the month succeeding the month in which the Series 1987
Bonds are originally issued and on the first business day of
each month thereafter until all outstanding Series 1987
Bonds, principal, premium, if any, and interest, have been
paid in full, or provision made for such payment, a sum
equal to one -one hundred twentieth (11120) -of the Reserve
Requirement (which shall be the maximum amount that will
become due in any year, as reflected by a maturity and
mandatory sinking fund redemption schedule to be set forth
in the Resolution of the Board of Directors, hereinbefore
-17-
73878
R L F 0 3 1 6 8 7
160
M
r M
M M � M M M M
0 0
M M M M
referred to in Section 3 hereof, for principal of and
interest on the outstanding Series 1987 Bonds, but not to
exceed 10e of the proceeds of the Series 1987 Bonds);
provided however than when in any year no principal of or
premium, if any, or interest on the Series 1987 Bonds is in
default and the amount in the Reserve Account is not less
than the Reserve Requirement, and so long as the said
Reserve Requirement is maintained, the additional deposit of
one -one hundred twentieth (1/120) of the Reserve Requirement
may be suspended, but shall be resumed in the event that the
amount in the Reserve Account becomes less than the Reserve
Requirement for any reason.
(c) That if the revenues of the System are insufficient to
make the required payments into the 1987 Sewer Revenue Bond Fund
on the first business day of any month, then the amount of any
deficiency in the payment shall be added to the amount otherwise
required to be paid into the 1987 Sewer Revenue Bond Fund on the
first business day the next month.
(d) That if for any reason there shall be a failure at any
time to make any of the required payments into the Debt Service
Account, any sums then held in the Reserve Account shall be used
to the extent necessary for the payment of the principal of and
premium, if any, and interest on the Series 1987 Bonds, and the
Paying Agent's fees, but the Reserve Account shall be reimbursed
from the Sewer Fund before any of the moneys in the Sewer Fund
shall be used for any other purpose except for making the
required monthly payments into the Operation and Maintenance
Fund and the Sewer Revenue Bond Funds (including the Debt
Service Account). The Reserve Account shall be used solely as
herein provided.
(e) That when the moneys in the 1987 Sewer Revenue Bond
Fund shall be and remain sufficient to pay the principal of and
premium, if any, and interest on all Series 1987 Bonds then
outstanding, and the Paying Agent's fees, there shall be no
obligation to make any further payments into the 1987 Sewer
Revenue Bond Fund.
(f) That all moneys in the 1987 Sewer Revenue Bond Fund
shall be used solely for the payment of the principal of and
premium, if any, and interest on the Series 1987 Bonds and the
Paying Agent's fees, except as herein specifically provided. If
a surplus shall exist in the 1987 Sewer Revenue Bond Fund over
and above the amount necessary to insure the prompt payment of
the principal of and premium, if any, and interest on the Series
1987 Bonds as the same become due and the Paying Agent's fees
and over and above the required reserve for contingencies, such
surplus may be used, at the option of the Sewer Committee, for
the redemption of the Series 1987 Bonds prior to maturity or for
-18-
7]67B
R L F 0 ] 1 6 8 7
161
r � �
constructing extensions
System.
betterments, and improvements to the
(g) That there shall be withdrawn from the 1987 Sewer
Revenue Bond Fund at least five (5) days before the maturity or
mandatory sinking fund redemption date of any Series 1987 Bond
and five (5) days before any interest payment date for any
Series 1987 Bond and deposited with the Paying Agent an amount
equal to the amount of such Series 1987 Bond coming due (at
maturity or upon mandatory sinking fund redemption) or premium,
if any, or interest thereon for the sole purpose of paying the
same, together with the Paying Agent's fee. Such deposit shall
be at the sole risk of the City and shall not operate as a
payment of the Series 1987 Bonds or premium, if any, or interest
thereon until so applied.
(h) That simultaneously with the issuance of the Series
1987 Bonds, moneys in the 1981 Sewer Revenue Bond Fund created
pursuant to the provisions of Ordinance No. 13,983 and in the
1984 Sewer Revenue Bond Fund created pursuant to the provisions
of Ordinance No. 14,738 shall be transferred to the "Transferred
Moneys" Subaccount within the Construction Fund created pursuant
to Section 23(d) hereof to be used for the construction of the
Improvements, and such moneys are hereby appropriated to such
purpose.
(i) That the Series 1987 Bonds shall be specifically
secured by a pledge of all the revenues required to be placed
into the 1987 Sewer Revenue Bond Fund. This pledge in favor of
the Series 1987 Bonds is hereby irrevocably made according to
the terms of this Ordinance, and the City and its officers and
employees shall execute, perform, and carry out the terms
thereof in strict conformity with the provisions of this
Ordinance.
Section 9. Sewer Depreciation Fund. That after making the
required payments into the Operation and Maintenance Fund and
the Sewer Revenue Bond Funds, there shall be paid from the Sewer
Fund into the "Sewer Depreciation Fund" created pursuant to the
provisions of Ordinance No. 11,695 on the first business day of
each month while any Sewer Revenue Bonds are outstanding, three
percent (3 %) of the revenues of the System which remain after
the required payment into the Operation and Maintenance Fund has
been made. The moneys in the Sewer Depreciation Fund shall be
used solely for the purpose of paying the cost of replacements
made necessary by the depreciation of the System, provided,
however, that moneys in the Sewer Depreciation Fund may be used
to the extent necessary to prevent a default in the payment of
the principal of and premium, if any, and interest on any
outstanding Sewer Revenue Bonds as the same become due (at
maturity or upon mandatory sinking fund redemption). If in any
fiscal year a surplus shall be accumulated in the Sewer
-19-
]3979
R L F 0 3 l 6 9 7
M
162
w e i M MM MM r � M r M M M
0 ! 163
Depreciation Fund over and above the amount necessary to defray
the cost of the probable replacements during the then current
fiscal year and the next ensuing fiscal year, such surplus may
be transferred and paid into the Sewer Revenue Bond Funds;
provided, however, that such payments into the Sewer Revenue
Bond Funds shall be in addition to all other payments required
to be made into the Sewer Revenue Bond Funds.
Section 10. That any surplus in the Sewer Fund, after
making the required monthly deposits into the other funds as set
forth above, may be used, at the option of the City,
(a) for the redemption of Sewer Revenue Bonds prior to
maturity in the manner and upon the terms set forth herein
(or in the ordinances or resolutions authorizing the
issuance of Sewer Revenue Bonds other than the Series 1987
Bonds) pertaining to redemption prior to maturity; or
(b) for the construction of extensions, betterments,
and improvements to the System (including payment of the
principal of and premium, if any, and interest on bonds
issued therefor); or '
(c) for any lawful purpose of the System, as approved
by the Sewer Committee.
Section 11. That the City hereby agrees that all payments
on the Series 1987 Bonds, principal, premium, if any, and
interest, shall be paid only through the designated Paying
Agent. All Series 1987 Bonds paid or purchased either at or
before maturity shall be cancelled when such payment or purchase
is made and held by the Manager of the System and shall not be
reissued.
Section 12. That the System shall be operated on a fiscal
year basis beginning January 1 and ending December 31 of each
year.
Section 13. That the Series 1987 Bonds shall be subject to
redemption prior to maturity in the manner and upon the terms
set forth in the bond form appearing in Section 4 hereof and as
more fully set forth in the resolution of the Board of Directors
mentioned in Section 3 hereof.
Section 14. That as long as any of the Series 1987 Bonds
authorized hereby are outstanding, the City shall not issue or
attempt to issue any bonds or obligations having or claimed to
be entitled to a priority of lien on the revenues of the System
over the lien securing the Series 1987 Bonds, including the
Improvements herein authorized and any and all future
extensions, betterments, and improvements to the System.
However, nothing in this Ordinance shall be construed to prevent
-20-
]3818
R L F 0 3 1 6 8 7
�■ r� it r �r r r
r r r r
the issuance by the City of additional bonds to refund any
outstanding Sewer Revenue Bonds or to finance or pay the cost of
constructing any future extensions, betterments, and
improvements to the System; provided, the City shall not
authorize or issue any such additional bonds ranking on a parity
with the outstanding Series 1987 Bonds unless and until (1)
there shall have been procured and filed with the Trustee a
statement by an independent certified public accountant not in
the regular employ of the .City reciting the opinion based upon
necessary investigation that gross revenues derived from the
operation of the System for the preceding fiscal year were
sufficient in amount to provide for the annual cost of
operation, repair, maintenance, and funded depreciation of the
System after the then contemplated extensions, betterments, and
improvements shall have been completed and placed in operation,
and to leave a balance equal tq at least one hundred thirty
percent (1300) of the maximum amount that will become due in any
year for principal, interest, and service charges on all Sewer
Revenue Bonds then outstanding and the Sewer Revenue Bonds then
proposed to be issued, provided, however, that so long as there
are outstanding any 1966 Bonds or 1972 Bonds, the balance
required shall equal at least one hundred forty percent (1400)
of the maximum amount that will become due in any year for
principal, interest, and service charges on all Sewer Revenue
Bonds then outstanding and the Sewer Revenue Bonds then proposed
to be issued; or (2) there shall have been procured and filed
with the Trustee a statement by an independent certified public
accountant not in the regular employ of the City or an
independent consulting engineer not in the regular employ of the
City reciting the opinion based upon necessary investigation
that gross revenues to be derived from the operation of the
System for the succeeding fiscal year will be sufficient in an
amount to provide for the annual cost of operation, repair,
maintenance, and funded depreciation of the System taking into
account the contemplated extensions, betterments, and
improvements as if completed and placed in service, and to leave
a balance equal to at least one hundred thirty percent (130 %) of
the maximum amount that will become due in any year for,
principal, interest, and service charges on all Sewer Revenue
Bonds then outstanding and the Sewer Revenue Bonds then proposed
to be issued, provided, however, that so long as there are
outstanding any 1966 Bonds or 1972 Bonds, the balance required
shall equal at least one hundred forty percent (140 %) of the
maximum amount that will become due in any year for principal,
interest, and service charges on all Sewer Revenue Bonds then
outstanding and the Sewer Revenue Bonds then proposed to be
issued.
The additional bonds, the issuance of which is restricted
and conditioned by this Section 14, shall not be deemed to mean
bonds or other obligations, the security and source of payment
-21-
7]87B
R L F 0 ] t 6 8 7
164
0
of which are subordinate and subject to the priority of the
Sewer Revenue Bonds.
Section 15. That it is covenanted and agreed by the City
with the registered owners of the Series 1987 Bonds, or any of
them, that the City and the Sewer Committee will faithfully and
punctually perform all duties with reference to the System
required by the Constitution and laws of the State of Arkansas,
including the charging and collecting of reasonable and
sufficient rates lawfully established for services rendered by
the System, the segregating of the revenues of the System as
herein required, and the applying of revenues to the respective
funds herein created or referred to.
Section 16. That the City and the Sewer Committee covenant
and agree that they will maintain the System in good condition
and operate the same in an efficient manner and at reasonable
cost. While any Sewer Revenue Bonds are outstanding, the City
and the Sewer Committee agree that they will insure and at all
times keep insured, in the amount of the actual value thereof,
in a responsible insurance company or companies authorized and
qualified under the laws of the State of Arkansas to assume the
risk thereof, all properties of the System against loss or
damage from fire, lightning, tornado, winds, riot, strike, civil
commotion, malicious damage, explosion, and against loss or
damage from any other causes customarily insured against by
private companies engaged in a similar type of business. The
insurance policies are to be taken with companies approved by
the Sewer Committee and the Trustee, are to carry a clause
making them payable to the Sewer Committee and Trustee as their
interests may appear, and are either to be placed in the custody
of the Trustee or satisfactory evidence of insurance shall be
filed with the Trustee. In the event of loss, the proceeds of
such insurance shall be applied solely toward the
reconstruction, replacement, or repair of the System, and in
such event the City and the Sewer Committee will, with
reasonable promptness, cause to be commenced and completed the
reconstruction, replacement, and repair work. If such proceeds
are more than sufficient for such purposes, the balance
remaining shall be deposited to the credit of the Sewer Fund and
if such proceeds shall be insufficient for such purposes, the
deficiency shall be supplied first, from moneys in the Sewer
Depreciation Fund, and second, from moneys in the Sewer
Operation and Maintenance Fund, and third, from available moneys
in the Sewer Fund. Nothing herein shall be construed as
requiring the City to expend any funds for operation and
maintenance, of the System or for premiums on insurance which are
derived from sources other than the operation of the System, but
nothing herein shall be construed as preventing the City from
doing so.
_22_
7a a 7B
R L F 0 3 1 6 8 7
M
165
M M= w w w r
Section 17. That the City and the Sewer Committee covenant
and agree that so long as any Sewer Revenue Bonds are
outstanding, that they will not mortgage, pledge, or otherwise
encumber the System, or any part thereof or any revenues derived
from the operation thereof, except as herein specifically
provided, and will not sell, lease, or otherwise dispose of all
or any substantial portion of the same.
Section 18. That the Sewer Committee shall keep or cause to
be kept proper books of accounts and records (separate from all
other records and accounts of the City) in which complete and
correct entries shall be made of all transactions relating to
the construction of the herein authorized Improvements and
relating to the operation of the System and its revenues. Such
books shall be available for inspection by the registered owners
of any of the Sewer Revenue Bonds at reasonable times and under
reasonable circumstances. The City and the Sewer Committee
agree to have these records audited by an independent certified
public accountant at least once each year, and a copy of the
audit shall be delivered to the Trustee and any bondholder who
shall request the same in writing from the Sewer Committee. In
the event the City and the Sewer Committee fail or refuse to
make the audit, the Trustee may, and upon request of the holders
of not less than ten percent (10 %) in principal amount of the
Sewer Revenue Bonds then outstanding shall, have the audit made,
and the cost thereof shall be charged against the Sewer
Operation and Maintenance Fund. In addition, at least once in
each twelve (12) months period during the construction of the
herein authorized Improvements, the City and the Sewer Committee
shall cause an audit to be made by a certified public accountant"
covering all moneys pertaining to the construction fund
(hereinafter created or referred to), and the security held
therefor and any investments thereof, and all disbursements made
pursuant to requisitions filed by the Manager of the System, and
copies of such audit shall be furnished to the Trustee and any
bondholder who shall request the same in writing from the Sewer
Committee.
Section 19. That the owner or owners of all improved
property lying within the area that will be served by the
System, after the proposed Improvements have been completed, are
hereby directed and required, upon written request from the
Sewer Committee, to connect all toilet and waste water
facilities of such improved property with the System; and the
owners of property that is improved after the completion of the
proposed Improvements shall, upon written request of the Sewer
Committee, immediately connect the toilet and waste water
facilities of such property with the System. The required
notice by the Sewer Committee shall be given at least thirty
(30) days prior to the final date for connection, and if any
property owner shall fail to make such connection after having
been so requested in writing, the City and the Sewer Committee
-23-
73819
R L F 0 3 1 6 8 7
ime
� r r
167
hereby covenant and agree to institute appropriate proceedings
in a court of competent jurisdiction to compel such connection.
Furthermore, any property owner who fails or refuses to connect
his or her improved property with the System after having been
so requested by the Sewer Committee shall be guilty of a
misdemeanor and upon conviction shall be fined in any sum now or
hereafter provided in Act 132, and each day's failure or refusal
after the expiration of the time fixed in the notice to make the
connection shall be a separate offense; provided, however, that
the provisions hereof pertaining to a misdemeanor shall be
effective only in the event that the City Health Officer, or
other duly designated individual or board, has found and
declared that such failure on the part of any particular
property owner constitutes a hazard to the public health and
safety of the City and its inhabitants.
Section 20. (a) That the City covenants and agrees that
the holders and registered owners of the Sewer Revenue Bonds
shall have the protection of the provisions of Section 13 of
Act 132, as amended (Ark. Stat. Ann. §19- 4113), and that the
City will diligently proceed to collect the amount due together
with the penalty and expenses authorized by Act 132. If the
City shall fail to proceed within thirty (30) days after written
request shall have been filed by the Trustee, the Trustee may,
and upon the written request of the holders and registered
owners of not less than ten percent (10 %) in principal amount of
the Sewer Revenue Bonds then outstanding shall, proceed to
recover the amount of unpaid sewer charges together with a
penalty of 10% and reasonable attorney's fee, in accordance with
and pursuant to the authorization of Act 132.
(b) That if there be any default in the payment of the
principal of or premium, if any, or interest on any Sewer
Revenue Bonds, or if the City defaults in any Sewer Revenue Bond
Funds requirements or in the performance of any of the other
covenants contained and set forth in this Ordinance (including,
without limitation, failure on the part of the City to maintain
the Reserve Requirement), or if there shall be filed by or
against the City a petition in bankruptcy, the Trustee may, and
upon the written request of the holders and registered owners of
not less than ten percent (10 %) in principal amount of Sewer
Revenue Bonds then outstanding shall, by proper suit compel the
performance of the duties of the officials of the City as set
forth in Act 132. In the case of a default in payment of the
principal of and premium, if any, and interest on any of the
outstanding Sewer Revenue Bonds, or if the City fails to
complete any other obligation which it herein assumes, and such
default shall continue for thirty (30) days thereafter, the
Trustee may, and upon the written request of the holders and
registered owners of not less than ten percent (10 %) in
principal amount of the Sewer Revenue Bonds then outstanding
shall, apply in a proper action to a court of competent
-24-
7.38IB
R L F 0 3 1 6 8
■r r r r r w� r. �■■ � r r r r r
• 9 168
jurisdiction for the appointment of a receiver to administer the
System on behalf of the City and the holders and registered
owners of the Sewer Revenue Bonds, with power to charge and
collect (or by mandatory injunction or otherwise to cause to be
charged and collected) rates sufficient to provide for the
payment of the expenses of operation, repair, and maintenance
and to pay the Sewer Revenue Bonds, principal and interest,
outstanding and to apply the revenues in conformity with the
provisions of Act 132 and this Ordinance. When all defaults in
principal, premium, and interest payments have been cured, the
custody and operation of the System shall revert to the City.
(c) That no holder or registered owner of any of the
outstanding Sewer Revenue Bonds shall have any right to
institute any suit, action, mandamus, or other proceeding in
equity or in law for the protection or enforcement of any right
under this Ordinance or under Act 132, unless such holder or
registered owner previously shall have given to the Trustee
written notice of the default on account of which such suit,
action, or proceeding is to be taken, and unless the holders and
registered owners of not less than ten percent (10 %) in
principal amount of the Sewer Revenue Bonds then outstanding
shall have made written request of the Trustee after the right
to exercise such powers or right of action, as the case may be,
shall have accrued, and shall have afforded the Trustee a
reasonable opportunity either to proceed to exercise the powers
herein granted or granted by said Act 132 or the laws of the
State of Arkansas, or to institute such action, suit, or
proceeding in the Trustee's name, and unless, also, there shall
have been offered to the Trustee reasonable security and
indemnity against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee shall have refused
or neglected to comply with such request within a reasonable
time, and such notification, request, and offer of indemnity are
hereby declared in every such case, at the option of the
Trustee, to be conditions precedent to the execution of the
powers and trusts of this Ordinance or to any other remedy
hereunder.
It is hereby declared and intended that no one or more
registered owners of the Series 1987 Bonds shall have any right
in any manner whatever by his, her, or their action to affect,
disturb, or prejudice the security of this Ordinance or to
enforce any right hereunder except in the manner herein
provided, that all proceedings at law or in equity shall be
instituted, had, and maintained in the manner herein provided
and for the benefit of all holders and registered owners of the
outstanding Sewer Revenue Bonds, and that any individual rights
of action or other right given to one or more of such holders
and registered owners by law are restricted by this Ordinance to
the rights and remedies herein provided.
-25-
7 3 8 l 8
R L F 0 3 1 6 8
• • 169
(d) That all rights and remedies enforceable by the Trustee
may be enforced by it without the possession of any of the
Series 1987 Bonds, and any such suit, action, or proceeding
instituted by the Trustee shall be brought in its name for the
benefit of all the registered owners of all outstanding Sewer
Revenue Bonds, subject to the provisions of this Ordinance.
(e) That no remedy conferred upon or reserved to the
Trustee or the registered owners of the Series 1987 Bonds is
intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing or available at law or in equity.
(f) That no delay or omission of the Trustee or any
registered owners of the Series 1987 Bonds to exercise any right
or power accrued upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default
or an acquiescence therein; and every power and remedy given by
this Ordinance to the Trustee and the registered owners of the
Series 1987 Bonds may be exercised from time to time and as
often as may be deemed expedient.
(g) That the Trustee may, and upon the written request of
the registered owners of not less than ten percent (10 %) in
principal amount of Sewer Revenue Bonds then outstanding shall,
waive any default which shall have been remedied before the
entry of final judgment or decree in any suit, action, or
proceeding instituted under the provisions of this Ordinance or
before the completion of the enforcement of any other remedy,
but no such waiver shall extend to or affect any other existing
or any subsequent default or defaults of impair any rights or
remedies consequent thereon.
Section 21. That the Trustee shall only be responsible for
the exercise of good faith and reasonable prudence in the
execution of its trust. The recitals in this Ordinance and on
the face of the Series 1987 Bonds, other than the Trustee's
Certificate of Authentication appearing thereon, are the
recitals of the City and not of the Trustee. The Trustee shall
not be required to take any action as Trustee unless it shall
have been requested to do so in writing by the holders and
registered owners of not less than ten percent (10 %) in
principal amount of the Sewer Revenue Bonds then outstanding and
shall have been offered reasonable security and indemnity
against the costs, expenses, and liabilities to be incurred
therein or thereby. The Trustee may resign at any time upon ten
(10) days' notice in writing to the City and to the owners of
the outstanding Series 1987 Bonds, and the majority in value of
the registered owners of the outstanding Series 1987 Bonds at
any time, with or without cause, may remove the Trustee. In the
event of a vacancy in the office of Trustee, either by
-26-
7387B
R L F 0 3 1 6 8 7
resignation or by removal, the majority in value of the
registered owners of the outstanding Series 1987 Bonds may
appoint a new Trustee, such appointment to be evidenced by a
written instrument or instruments filed with the City Clerk. If
the majority in value of the registered owners of the
outstanding Series 1987 Bonds shall fail to fill a vacancy
within sixty (60) days after the same shall occur, then the City
shall forthwith designate a new Trustee by a written instrument
filed in the office of the City Clerk. The original Trustee and
any successor Trustee shall file a written acceptance and
agreement to execute the trust imposed upon it or them by this
Ordinance, but only upon the terms and conditions set forth in
this Ordinance and subject to the provisions of this Ordinance,
to all of which the registered owners of the Series 1987 Bonds
agree. Such written acceptance shall be filed with the City
Clerk, and a copy thereof shall be placed in the bond
transcript. Any successor Trustee shall have all the powers
herein granted to the original Trustee. Any Trustee that
resigns or is removed pursuant to the provisions hereof shall
cease to be Paying Agent and any successor Trustee shall be and
become Paying Agent.
Section 22. Series 1987 Bonds for the payment or full
redemption of which moneys or direct, non - callable obligations
of the United States of America shall have been deposited with
the Trustee (whether upon or prior to the maturity or the
redemption date of such Bonds) shall be deemed to be paid and
discharged; provided, however, that if such Series 1987 Bonds
are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been duly given or the Trustee shall have
been irrevocably instructed in writing to give such notice of
redemption in a timely fashion.
Section 23. That when the Series 1987 Bonds have been
executed by the Mayor and City Clerk and the seal of the City
imprinted thereon, as herein provided, they shall be delivered
to the Trustee, which shall authenticate them and deliver them
to the purchaser upon the payment of the purchase price (the
"total sale proceeds ").
The total sale proceeds shall be handled as follows:
(a) There shall be deposited into the 1987 Sewer Revenue
Bond Fund the amount of the accrued interest paid by the
purchaser;
(b) There shall be deposited with Worthen Bank & Trust
Company, N.A., trustee for the 1981 Bonds and the 1984 Bonds, an
amount of total sale proceeds that is sufficient to accomplish
the refunding of the 1981 Bonds and the 1984 Bonds, and such
moneys shall be deposited into an escrow account (the "Escrow
Account ") to be established with Worthen Bank & Trust Company,
_27_
73878
RLF031607
i
170
M
171
N.A., as trustee for the owners of the 1981 Bonds and the 1984
Bonds, for such purpose; and
(c) The balance of the total sale proceeds shall be paid
into the "New Money" Subaccount of a special fund of the City
which is hereby created and designated "1987 Sewer Construction
Fund" (the "Construction Fund "). The Construction Fund shall be
maintained in a depository or depositories, designated by the
Sewer Committee, which hold membership with the FDIC, are
located in Little Rock, Arkansas, and have a capital and surplus
of not less than Fifteen Million Dollars ($15,000,000). The
moneys in the Construction Fund in excess of the amount insured
by the FDIC shall be continuously secured by bonds or other
direct or fully guaranteed obligations of the United States of
America or shall be invested as hereafter authorized. The
moneys in the Construction Fund shall be disbursed for the
payment of the cost of accomplishing the Improvements, paying
necessary expenses and making necessary expenditures incidental
thereto, paying engineering fees, paying legal fees, and paying
the expenses of the authorization and issuance of the Series
1987 Bonds. For each disbursement there shall be prepared a
requisition signed by the Manager of the System stating in
respect of each such payment:
(1) The item number of the payment;
(2) The name of the person, firm, or corporation to
whom payment is due;
(3) The amount to be paid; and
(4) The purpose by general classification for which
the obligation to be paid was incurred.
Each requisition shall be accompanied by a certificate
signed by the Manager of the System certifying:
(1) That obligations in the stated amounts have been
incurred by the City and that each item thereof is a proper
charge against the Construction Fund and has not been paid;
(2) That there has not been filed with or served upon
the Sewer Committee notice of any lien, right to lien,
attachment upon, or claim affecting the right to receive
payment of any of the moneys payable to any of the persons,
firms, or corporations named in such requisition, which has
not been released or will not be released simultaneously
with the payment of such obligation; and
(3) That such requisition contains no item
representing payment on account of any retained percentage
-28-
73978
R L F 0 3 t 6 8 7
172
which the City is at the date of such certificate entitled
to retain.
In the case of all expenses over which the consulting
engineers shall exercise supervision (which generally shall
include all expenses and expenditures with respect to the
Improvements except engineering fees, legal fees, expenses
pertaining to the authorization and issuance of the Series 1987
Bonds, and incidental expenses not directly related to the
construction), the applicable requisition shall be accompanied
by a certificate signed by a duly authorized representative of
the consulting engineers certifying approval thereof. One copy
of each requisition with accompanying certificates shall be
filed with the depository of the Construction Fund and one copy
shall be filed with the Manager of the System. Upon receipt of
each requisition the depository of the Construction Fund shall
disburse funds sufficient to pay the persons, firms, or
corporations. designated in the requisition. Moneys shall be
disbursed first, from the "Transferred Money" Subaccount until
it is exhausted and then from the "New Money" Subaccount. The
Sewer Committee shall cause each depository of the Construction
Fund to execute an appropriate agreement whereby it accepts it
responsibilities as set forth above.
When the Improvements have been completed and all authorized
expenditures from the Construction Fund have been made, if there
be any remaining balance in the Construction Fund, the Manager
of the System shall file a certificate with the depository of
the Construction Fund, with a copy of the certificate to be
filed with the Trustee, stating that the Improvements have been
accomplished and that all authorized expenditures have been made
and specifying the disposition to be made of the remaining
balance in the Construction Fund. In this regard, any such
remaining balance may be used for redeeming Series 1987 Bonds
prior to maturity or transferred to the Sewer Fund, as shall be
determined by the Sewer Committee. Upon receipt of such
certificate, the depository of the Construction Fund shall
disburse or transfer the remaining balance as directed in the
certificate.
Section 24. (a) That moneys held for the credit of the
Construction Fund, the Reserve Fund, and any other fund and
account shall, as nearly as may be practicable, be maintained in
such depositories of the City as may from time to time be
designated by the Sewer Committee, with all such depositories to
hold memberships in the FDIC, and with all deposits in any
depository in excess of the amount insured by the FDIC to be
continuously invested and reinvested by the Sewer Committee in
direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States Government ( "U.S. Government Obligations "), or in
certificates of deposit or repurchase agreements issued by any
-29-
7JB 7 B
R L F 0 3 1 6 8 7
M M M M M M M M
9 0 173
state or national bank which shall have combined capital and
surplus of not less than $15,000,000 (which may include the
Trustee), such certificates or agreements, to the extent not
insured by the FDIC, to be secured by a pledge of U.S.
Government Obligations having a market value, to be determined
at intervals not exceeding six (6) months, exclusive of accrued
interest, equal at least to the principal amount of such
certificates of deposit or repurchase agreements. Such
investments shall mature, or shall be subject to redemption by
the holder thereof at the option of such holder, not later than
the date or dates when the moneys held for the credit of the
particular fund will be required for the purposes intended, but
not later than six (6) months after the date of such investment
for moneys in the Construction Fund and not later than five (5)
years after the date of such investment for moneys in the
Reserve Account.
(b) That obligations so purchased as an investment of
moneys in any such fund shall be placed in the custody of the
Trustee or at such place or places as the Trustee may designate
and shall be deemed at all times to be a part of such fund. The
interest accruing thereon and any profit realized from such
investment shall be credited to such fund, and any loss
resulting from such investment shall be charged to such fund;
provided, however, that if earnings on investments of moneys in
the Reserve Account increase the amount thereof in excess of the
Reserve Requirement, the earnings to the the extent of the
excess may be transferred out of the Reserve Account and into
the Debt Service Account and may be used as any other moneys may
be used in the 1987 Sewer Revenue Bond Fund.
(c) That moneys so invested in U.S. Government Obligations
or in certificates of deposit of banks to the extent insured by
the FDIC need not be secured by the depository bank or banks.
(d) For purposes of this Section 24, the following
definitions shall apply:
Bond Year. The term "Bond Year" means the twelve month
period beginning on the anniversary of the Closing Date in each
year and ending on the day prior to the anniversary date of the
Closing Date in the following year except that the first Bond
Year shall begin on the Closing Date.
Closing Date. The term "Closing Date" means the date
upon which there is an exchange of the Series 1987 Bonds for the
proceeds representing the purchase of the Series 1987 Bonds by
the Original Purchaser.
Code. The term "Code" means the Internal Revenue Code
of 1986, as amended.
-30-
7397B
R L F 0 3 1 6 8 7
M M M M M M M
0 0
Debt Service. The term "Debt Service" means the
scheduled amount of interest and amortization of principal
payable on the Series 1987 Bonds during the period of
computation, excluding amounts scheduled during such period
which relate to principal which has been retired before the
beginning of such period.
Excess Investment Earnings. The term "Excess
Investment Earnings" means an amount equal to the sum of:
(i) the excess of
(A) the aggregate amount earned from the
Closing Date on all Nonpurpose Investments in which
Gross Proceeds of the Series 1987 Bonds are invested
(other than amounts attributable to an excess described
in this paragraph (i)), over
(B) the amount that would have been earned
if the Yield on such Nonpurpose Investments (other than
amounts attributable to an excess described in this
paragraph (i)) had been equal to the Yield on the
Series 1987 Bonds,
plus (ii) any income attributable to the excess
described in paragraph (i).
Gross Proceeds. The term "Gross Proceeds" means the
sum of the following amounts:
(i) original proceeds,
or for the City as a result
Bonds, excluding original p
proceeds (determined in
Regulations) of obligations
part the Series 1987 Bonds;
namely, net amounts received by
of the sale of the Series 1987
roceeds which become transferred
accordance with applicable
issued to refund in whole or in
(ii) investment proceeds, namely, amounts received at
any time by or for the City, such as interest and dividends,
resulting from the investment of any original proceeds (as
referenced in clause (i) above) or investment proceeds (as
referenced in this clause (ii)) in Nonpurpose Investments,
increased by any profits and decreased (if necessary, below
zero) by any losses on such investments, excluding
investment proceeds which become transferred proceeds
(determined in accordance with applicable Regulations) of
obligations issued to refund in whole or in part the Series
1987 Bonds;
(iii) transferred proceeds, namely, original proceeds of
the 1966 Bonds and the 1972 Bonds and interest earnings and
profits less losses resulting from investment of such
-31-
738lB
R L F 0 3 1 6 8
174
0 0
original proceeds in Nonpurpose Investments, which are
deemed to become proceeds of the Series 1987 Bonds ratably
as original proceeds of the Series 1987 Bonds, and interest
earnings and profits resulting from investment of such
original proceeds in Nonpurpose Investments, discharge the
outstanding principal of the 1966 Bonds and the 1972 Bonds,
all on the date of such ratable discharge;
(iv) sinking fund proceeds, namely, amounts, other than
original proceeds, investment proceeds, or transferred
proceeds (as referenced in clauses (i) through (iii) above),
of the Series 1987 Bonds, which are held in the Debt Service
Account and any other fund to the extent that the City
reasonably expects to use such other fund to pay Debt
Service on the Series 1987 Bonds;
(v) amounts in the Reserve Account and in any other
fund established as a reasonably required reserve or
replacement fund;
(vi) Investment Property pledged as security for
payment of Debt Service on the Series 1987 Bonds by the City;
(vii) amounts, other than as specified in this
definition, used to pay Debt Service on the Series 1987
Bonds; and
(viii) amounts received as a result of investing amounts
described in this definition.
Investment Property. The term "Investment Property"
means any security (as said term is defined in section
165(g)(2)(A) or (B) of the Code), obligation, annuity contract,
or investment -type property,'excluding, however, obligations the
interest on which is excluded from gross income, under section
103 of the Code, for federal income tax purposes.
Net Proceeds. The term "Net Proceeds," when used with
reference to the Series 1987 Bonds, means the face amount of the
Series 1987 Bonds, plus accrued interest and premium, if any,
less original issue discount, if any, and less proceeds
deposited in the Reserve Account, if any.
Nonpurpose Investment. The term "Nonpurpose
Investment" means any Investment Property which is acquired with
the Gross Proceeds of the Series 1987 Bonds and is not acquired
in order to carry out the governmental purpose of the Series
1987 Bonds.
Original Purchaser. The term "Original Purchaser"
means the first purchaser of the Series 1987 Bonds from the City.
-32-
7]878
R L F O 3 1 6 8 7
175
r � �
M M M M M
0 0
Purchase Price. The term "Purchase Price," for the
purpose of computation of the Yield of the Series 1987 Bonds,
has the same meaning as the term "issue price" in sections
1273(b) and 1274 of the Code, and, in general, means the initial
offering price of the Series 1987 Bonds to the public (not
including bond houses and brokers, or similar persons or
organizations acting in the capacity of underwriters or
wholesalers) at which price a substantial amount of the Series
1987 Bonds are sold or, if the Series 1987 Bonds are privately
placed, the price paid by the first buyer of the Series 1987
Bonds or the acquisition cost of the first buyer. The term
"Purchase Price," for the purpose of computation of the Yield of
Nonpurpose Investments, means the fair market value of the
Nonpurpose Investments on the date of use of Gross Proceeds of
the Series 1987 Bonds for acquisition thereof, or if later, on
the date that Investment Property constituting a Nonpurpose
Investment becomes a Nonpurpose Investment of the Series 1987
Bonds.
Regulations. The term "Regulations" means temporary
and permanent regulations promulgated under the Code.
Yield. The term "Yield" means that yield which, when
used in computing the present worth of all payments of principal
and interest (or other payments in the case of Nonpurpose
Investments which require payments in a form not characterized
as principal and interest) on a Nonpurpose Investment or on the
Series 1987 Bonds produces an amount equal to the Purchase Price
of such Nonpurpose Investment or the Series 1987 Bonds, all
computed as prescribed in applicable Regulations.
(e) (A) Creation of Funds. There are hereby created, to
be held by the Trustee as separate funds distinct from all other
funds and accounts held by the Trustee hereunder, the Earnings
Fund and the Rebate Fund. All interest earnings and profits on
amounts in all funds and accounts established hereunder, other
than (i) interest earnings and profits on the Debt Service
Account and any other funds referenced in subsection (C)(5) of
this Section 24(e) if such earnings in any Bond Year are less
than $100,000, (ii) interest earnings and profits on amounts in
funds and accounts which do not constitute Gross Proceeds, and
(iii) interest earnings and profits on the Rebate Fund shall,
upon receipt by the Trustee, be deposited in the Earnings Fund.
In addition, all interest earnings and profits on Gross Proceeds
in funds held by the City shall, upon receipt, be paid to the
Trustee for deposit in the Earnings Fund. Annually, on the last
day of each Bond Year or on the preceding business day in the
event that such last day is not a business day, the Trustee
shall transfer from the Earnings Fund to the Rebate Fund for
purposes of ultimate payment to the United States an amount
equal to Excess Investment Earnings, all as more particularly
described in this Section 24(e). Following the transfer
-33-
73878
R L F 0 3 1 6 8 7
176
referenced in the preceding sentence, the Trustee shall transfer
all amounts remaining in the Earnings Fund to the Debt Service
Account to be used for the payment of Debt Serivice on the next
interest payment date and for such purpose, Debt Service due
from the City on such date shall be credited by an amount equal
to the amount so tranferred.
(B) Duties of City in General. The City shall
calculate Excess Investment Earnings in accordance with
subsection (C) and shall assure payment of an amount equal to
Excess Investment Earnings to the United States in accordance
with subsections (D) and (E).
(C) Calculation of Excess Investment Earnings. Within
thirty (30) days following the last day of the first Bond Year,
the City shall calculate, and shall provide written notice to
the Trustee of, the Excess Investment Earnings referenced in
paragraph (i) of the definition of Excess Investment Earnings.
Thereafter, within thirty (30) days following the last day of
each Bond Year and within thirty (30) days following the date of
the retirement of the Series 1987 Bonds, the City shall
calculate, and shall provide written notice to the Trustee of,
the amount of Excess Investment Earnings. Said calcualtions
shall be made or caused to be made by the City in accordance
with the following:
(1) Except as provided in (2), in determining the
amount described in paragraph (i)(A) of the definition of
Excess Investment Earnings, the aggregate amount earned on
Nonpurpose Investments shall include (i) all income realized
under federal income tax accounting principles (whether or
not the person earning such income is subject to federal
income tax) with respect to such Nonpurpose Investments and
with respect to the reinvestment of investment receipts from
such Nonpurpose Investments (without regard to the
transaction costs incurred in acquiring, carrying, selling,
or redeeming such Nonpurpose Investments), including, but
not limited to, gain or loss realized on the disposition of
such Nonpurpose Investments (without regard to when such
gains are taken into account under section 453 of the Code
relating to taxable year of inclusion of gross income), and
income under section 1272 of the Code (relating to original
issue discount) and (ii) any unrealized gain or loss as of
the date of retirement of the Series 1987 Bonds in the event
that any Nonpurpose Investment is retained after such date.
(2) In determining the amount described in paragraph
(i) of the definition of Excess Investment Earnings,
Investment Property shall be treated as acquired for its
fair market value at the time it becomes a Nonpurpose
Investment, so that gain or loss on the disposition of such
-34-
73978
R L F 0 3 1 6 3 7
or
177
178
Investment Property shall be computed with reference to such
fair market value as its adjusted basis.
(3) In determining the amount described in paragraph
(i)(B) of the definition of Excess Investment Earnings, the
Yield on the Series 1987 Bonds shall be determined based on
the actual Yield of the Series 1987 Bonds during the period
between the Closing Date of the Series 1987 Bonds and the
date the computation is made (with adjustments for original
issue discount or premium).
(4) In determining the amount described in paragraph
(ii) of the definition of Excess Investment Earnings, all
income attributable to the excess described in paragraph (i)
of said definition must be taken into account, whether or
not that income exceeds the Yield on the Series 1987 Bonds,
and no amount may be treated as "negative arbitrage."
(5) The City hereby elects, in accordance with Section
149(f)(4) of the Code, that in determining the amount of
Excess Investment Earnings, there shall be included any
amount earned on any fund or account (e.g., the Debt Service
Account) which is used primarily to achieve a proper
matching of revenues and Debt Service within each Bond Year
and which is depleted at least once a year except for a
reasonable carryover amount not in excess of the greater of
one year's earnings on such fund or account or one - twelfth
of annual Debt Service as well as amounts earned on said
earnings if the gross earnings on such fund or account for
the Bond Year are less than $100,000.
(D) Payment to the United States. The City shall
direct the Trustee to pay from the Rebate Fund an amount equal
to Excess Investment Earnings to the United States in
installments with the first payment to be made not' later than
thirty (30) days after the end of the fifth Bond Year and with
subsequent payments to be made not later than five (5) years
after the preceding payment was due. The City shall assure that
each such installment is in an amount equal to at least 90
percent of the Excess Investment Earnings with respect to the
Gross Proceeds as of the close of the computation period. Not
later than sixty (60) days after the retirement of the Series
1987 Bonds, the City shall direct the Trustee to pay from the
Rebate Fund to the United States 100 percent of the theretofore
unpaid Rebate Fund. In the event that there are any amounts
remaining in the Rebate Fund following the payment required by
the preceding sentence, the Trustee shall pay said amounts to
the City to be used for any lawful purpose of the City. The
City shall remit payments to the United States at the address
prescribed by the Regulations as the same may be from time to
time in effect with such reports and statements as may be
prescribed by such Regulations. In the event that, for any
-35-
7A87B
R L F 0 ] 1 6 8 7
M M M
•
reason, amounts in the Rebate Fund are
payments to the United States which
subsection (D) , the City shall assure
made by the City to the United States,
any funds lawfully available therefor.
0 179
insufficient to make the
are required by this
that such payments are
on a timely basis, from
(E) Further Obligation of City. The City shall assure
that Excess Investment Earnings are not paid or disbursed except
as required in this Section 24(e). To that end the City shall
assure that investment transactions are on an arm's length basis
and that Nonpurpose Investments are acquired at their fair
market value. In the event that Nonpurpose Investments consist
of certificates of deposit or investment contracts, investment
in such Nonpurpose Investments shall be made in accordance with
the procedures described in applicable Regulations as from time
to time in effect.
(F) Maintenance of Records. The City shall keep, and
retain for a period of six (6) years following the retirement of
the Series 1987 Bonds, records of the determinations made
pursuant to this Section 24(e).
(G) Independent Consultants. In order to provide for
the administration of this Section 24(e), the City and the
Trustee may provide for the employment of independent attorneys,
accountants, and consultants compensated on such reasonable
basis as the City or the Trustee may deem appropriate.
(E) The Trustee will agree to additions, deletions, or
modifications of any provision of subsection (d) or (e) of this
Section 24 as may be necessary to assure compliance with section
148(f) of the Code relating to required rebate of Excess
Investment Earnings to the United States or otherwise as may be
necessary to assure exemption from federal income taxation of
interest on the Series 1987 Bonds.
Section 25. That the City covenants that it shall not take
any action or suffer or permit any action to be taken or
condition to exist which causes or may cause the interest
payable on the Series 1987 Bonds to be subject to federal income
taxation. without limiting the generality of the foregoing, the
City covenants that the proceeds of the sale of the Series 1987
Bonds will not be used directly or indirectly in such manner as
to cause the Series 1987 Bonds to be treated as "arbitrage
bonds" within the meaning of Section 148 of the Code.
Section 26. That all terms used in this Section 26 shall
have the meanings ascribed thereto in the Code. The City
represents, warrants, and covenants that:
(a) The City has not used or permitted the use of, and will
not use or permit the use of, the System or the System
-36-
7d87B
R L F 0 3 l 6 8 7
M M M M M
improvements financed by the 1981 Bonds, the 1984 Bonds, or the
Series 1987 Bonds in such manner as to cause the Series 1987
Bonds to be "private activity bonds" within the meaning of
Section 141 of the Code.
(b) None of the gross proceeds of the Series 1987 Bonds
(hereby defined to include the original proceeds of the sale of
the Series 1987 Bonds, amounts received as a result of investing
the original proceeds, and amounts used to pay principal of and
interest on the Series 1987 Bonds) will be, and none of the
proceeds of the 1981 Bonds or the 1984 Bonds were or will be,
used (directly or indirectly) either (A) to make or finance
loans to persons other than governmental units, or (B) in any
trade or business carried on by any person (i) other than a
governmental unit or (ii) other than as a member of the general
public. In addition, charges for use of the System will be
based upn rates for usage only and not by contract with any
nongovernmental person and the improvements financed by the 1981
Bonds, the 1984 Bonds, or the Series 1987 Bonds will only be
used by persons on a basis as members of the general public.
(c) The City will take no action which would cause the
Series 1987 Bonds to be "federally guaranteed," specifically,
(A) the payment of any portion of principal or interest with
respect to the Series 1987 Bonds will not be guaranteed
(directly or indirectly) by the United States or any agency or
instrumentality thereof, (B) none of the proceeds of the Series
1987 Bonds will be used in making loans the payment of any
portion of the principal or interest with respect to which are
to be guaranteed by the United States or any agency or
instrumentality thereof, and (C) none of the proceeds of the
Series 1987 Bonds (exclusive of proceeds invested for an initial
temporary period until needed for the purpose for which the
Series 1987 Bonds were issued and proceeds deposited into the
1987 Sewer Revenue Bond Fund) will be invested (directly or
indirectly) in federally insured deposits or accounts. Nothing
in this paragraph (c) shall prohibit investments in bonds issued
by the United States Treasury.
(d) The City will submit to the Secretary of the Treasury
of the United States, not later than the 15th day of the second
calendar month after the close of the calendar quarter in which
the Series 1987 Bonds are issued, a statement on Form 8038 -G
concerning the Series 1987 Bonds.
(e) All net proceeds of the Series 1987 Bonds deposited in
the Construction Fund will be spent within three years of the
date of issue of the Series 1987 Bonds.
( f ) The Trustee will agree to modification or rescission of
any provisions of this Section 26 in the event that there is
delivered to the Trustee an opinion of Bond Counsel, acceptable
-37-
rmw -u.�
R L F 0 3 l 6 8 7
i Ij
181
to the Trustee, to the effect that the modification of
rescission (i) is necessary to preserve the exemption of
interest on the Series 1987 Bonds from regular federal income
tax or (ii) will not adversely affect such federal income tax
exemption.
Section 27. That in the event the office of Mayor, City
Clerk, Finance Director, Manager of the System, Board of
Directors, or Sewer Committee shall be abolished, or any two or
more of such offices shall be merged or consolidated, or in the
event the duties of a particular office shall be transferred to
another office or officer, or in the event of a vacancy in any
such office by reason of death, resignation, removal from
office, or otherwise, or in the event any such officer shall
become incapable of performing the duties of his office by
reason of sickness, absence from the City, or otherwise, all
powers conferred and all obligations and duties imposed upon
such office or officer shall be performed by the office or
officer succeeding to the principal function thereof, or by the
office or officer upon whom such powers, obligations, and duties
shall be imposed by law.
Section 28. That the provisions of this Ordinance shall
constitute a binding contract between the City and the
registered owners of the Series 1987 Bonds issued hereunder, and
the City will at all times strictly adhere to the terms and
provisions hereof and fully discharge all of its obligations
hereunder. Subject to the terms and provisions contained in
this section and not otherwise, the City may adopt ordinance(s)
supplemental hereto as shall be necessary or desirable for any
one or more of the following purposes: (i) curing, correcting,
or supplementing any defective or inconsistent provisions
contained herein as the City may deem necessary or desirable and
not inconsistent with this Ordinance and which shall not
adversely affect the interest of the owner of the outstanding
Sewer Revenue Bonds, (ii) to subject any additional property to
the lien of this Ordinance, (iii) to provide for the issuance of
additional Sewer Revenue Bonds pursuant to the terms of
Section 14 hereof, or (iv) to provide for the amendment of
Section 24 or Section 26 hereof, in accordance with the
provisions of Section 24(f) or Section 26(f), respectively. In
addition, the registered owners of not less than seventy -five
percent (75 %) in aggregate principal amount of the Series 1987
Bonds then outstanding shall have the right, from time to time,
anything contained in this Ordinance to the contrary
notwithstanding, to consent to and approve the adoption by the
City of such ordinance or ordinances supplemental hereto as
shall be necessary or desirable for the purpose of modifying,
altering, amending, adding to, or resinding, in any particular,
any of the terms or provisions contained in this Ordinance or in
any supplemental ordinance or ordinances; provided, however,
that nothing herein contained shall permit or be construed as
-38-
71876
R L F 0 3 1 6 8 7
M M M M M M � A
182
permitting (a) an extension of the maturity of the principal of
or premium, if any, or the interest on any Series 1987 Bond, or
(b) a reduction in the principal amount of any Series 1987 Bond
or the rate of interest thereon, or (c) the creation of a lien
upon or a pledge of revenues other than the lien and pledge
created by this Ordinance, or (d) a privilege of priority of any
Series 1987 Bond or Bonds over any other Series 1987 Bond or
Bonds, or (e) a reduction in the aggregate principal amount of
the Series 1987 Bonds required for consent to such supplemental
ordinance or ordinances.
Section 29. Anything herein to the contrary
notwithstanding, all rights of any owner of any Series 1987 Bond
to or with respect to any moneys or investments held in any fund
or account hereunder shall terminate at the expiration of
five (5) years from the date of maturity of such Series 1987
Bond, whether by scheduled maturity or by call for redemption
prior to maturity in accordance with the terms hereof.
Section 30. That this Ordinance shall not create any right
of any kind and no right of any kind shall arise hereunder or
pursuant hereto until the Series 1987 Bonds authorized by this
Ordinance shall be issued and delivered.
Section 31. That the provisions of this Ordinance are
hereby declared to be separable and if any provision shall for
any reason be held illegal or invalid, such holding shall not
affect the validity of the remainder of this Ordinance.
Section 32. That all ordinances and parts of ordinances in
conflict herewith are hereby repealed to the extent of such
conflict.
Section 33. That it is hereby ascertained and declared that
the Improvements must be accomplished as soon as possible in
order to alleviate immediate hazards to the health, safety, and
welfare of the City, its inhabitants, and their property, that
the refunding must be accomplished as soon as possible in order
to lower the interest cost on obligations payable from System
revenues with the resulting saving being available for the City
to make improvements to the System adequate for the needs of the
City and its inhabitants, without which the life, health,
safety, and welfare thereof are jeopardized, and that the
Improvements and refunding can be accomplished only by the
issuance of the Series 1987 Bonds. It is, therefore, declared
that an emergency exists and this Ordinance being necessary for
the immediate preservation of the public peace, health, and
safety shall take effect and be enforced from and after its
passage.
-39-
7 ] 8 7 8
R L F 0 3 1 6 8 7
PASSED: march 17, 1987 183
APPROVED:
Mayer Lott'e Shackelford
ATTEST,
City ClerOk Jane Czech
(S E A L)
"138]9
R L F 0 3 1 6 8
O