HomeMy WebLinkAbout19746ORDINANCE NO. 19,746
AN ORDINANCE AUTHORIZING THE CONSTRUCTION
OF BETTERMENTS AND IMPROVEMENTS TO THE
SEWER SYSTEM OF THE CITY OF LITTLE ROCK,
ARKANSAS; AUTHORIZING THE ISSUANCE AND SALE
OF SEWER CONSTRUCTION REVENUE BONDS, SERIES
2007A; PROVIDING FOR THE PAYMENT OF THE
PRINCIPAL OF AND INTEREST ON THE BONDS; AND
PRESCRIBING OTHER MATTERS RELATING
THERETO.
WHEREAS, the City of Little Rock, Arkansas (the "City ") owns a sewer system (the
"System "), which is operated by the Sanitary Sewer Committee of the City (the "Committee ");
and
WHEREAS, the Committee has determined that certain betterments and improvements
to the System (collectively, the "Improvements ") are necessary in order to make the services of
the System adequate for the needs of the City and its inhabitants; and
WHEREAS, the Committee has caused to be prepared by the engineering staff of the
Little Rock Wastewater Utility a preliminary engineering report containing a general description
and estimates of costs for the Improvements which report has been examined and approved by
the Committee and Board of Directors and a copy of which report is on file in the office of the
City Clerk and the Chief Executive Officer of the System where they may be inspected by any
interested person; and
WHEREAS, the City can pay the costs of one or more of the Improvements (or a portion
thereof) through the issuance of its Sewer Construction Revenue Bonds, Series 2007A, in the
principal amount of $63,050,000 (the "Series 2007A Bonds "); and
WHEREAS, the City and the Committee have made arrangements for the sale of the
Series 2007A Bonds to Morgan Keegan & Company, Inc. and Crews & Associates, Inc. (the
"Purchasers "), at a price of $64,435,610.20 (equal to the principal amount thereof plus a net
original issue premium of $1,890,101.20 and less underwriter's discount of $504,400.00) plus
accrued interest on the Series 2007A Bonds from the date of the Series 2007A Bonds until the
date of issuance (the "Purchase Price "), on a negotiated basis pursuant to a Bond Purchase
Agreement between the City and the Purchasers (the "Agreement ") which has been presented to
and is before this meeting; and
WHEREAS, payment of the principal of and interest on the Series 2007A Bonds when
due will be insured by a municipal bond insurance policy (the "Insurance Policy ") to be issued
by Financial Security Assurance Inc., a New York stock insurance company ( "Financial
Security" or the "Insurer "); and
4845- 8094 - 2849.4
WHEREAS, the Preliminary Official Statement dated May 2, 2007, offering the Series
2007A Bonds for sale (the "Preliminary Official Statement ") has been presented to and is before
this meeting; and
WHEREAS, the Continuing Disclosure Agreement between the City and Regions Bank,
Little Rock, Arkansas, as Dissemination Agent (the "Disclosure Agreement "), providing for the
ongoing disclosure obligations of the City with respect to the Series 2007A Bonds has been
presented to and is before this meeting; and
WHEREAS, the City has outstanding (a) its Sewer Revenue Bond, Series 1990 (the
"Series 1990 Bond "), authorized by Ordinance No. 15,966, adopted November 20, 1990 (the
"1990 Ordinance "); (b) its Sewer Revenue Bond, Series 1991 (the "Series 1991 Bond "),
authorized by Ordinance No. 16,030, adopted April 2, 1991 (the "1991 Ordinance "); (c) its
Sewer Revenue Bond, Series 1996 (the "Series 1996 Bond "), authorized by Ordinance No.
17,097, adopted January 16, 1996 (the "1996 Ordinance "); (d) its Sewer Revenue Bond, Series
1999 (the "Series 1999 Bond "), authorized by Ordinance No. 18,067, adopted July 20, 1999 (the
"1999 Ordinance "); (e) its Sewer Refunding and Construction Revenue Bonds, Series 2001 (the
"Series 2001 Bonds "), authorized by Ordinance 18,557, adopted September 4, 2001 (the "2001
Ordinance "); (f) its Sewer Revenue Bond, Series 2004A (the "Series 2004A Bond "), authorized
by Ordinance No. 19,006, adopted December 16, 2003 (the "2004A Ordinance "); (g) its Sewer
Revenue Bond, Series 2004B (the "Series 2004B Bond "), authorized by Ordinance 19,007,
adopted December 16, 2003 (the "2004B Ordinance "); (h) its Sewer Revenue Bond, Series
2004C (the "Series 2004C Bond), authorized by Ordinance No. 19,229, adopted November 1,
2004 (the "2004C Ordinance "); and (i) Sewer Refunding and Construction Revenue Bonds,
Series 2005 (the "Series 2005 Bonds "), authorized by Ordinance 19,307, adopted April 19, 2005
(the "2005 Ordinance "); and
WHEREAS, the coverage tests in the 2001 Ordinance and the 2005 Ordinance for
securing the Series 2007A Bonds with a lien on the net revenues of the System on a parity of
security with the Series 2001 Bonds and the Series 2005 Bonds (collectively, the "Parity Bonds ")
have been or will be satisfied; and
WHEREAS, the coverage tests in the 1990 Ordinance, the 1991 Ordinance, the 1996
Ordinance, the 1999 Ordinance, the 2004A Ordinance, the 2004B Ordinance and the 2004C
Ordinance for securing the bonds with a lien on the net revenues of the System prior to the lien
on System revenues in favor of the Series 1990 Bond, the Series 1991 Bond, the Series 1996
Bond, the Series 1999 Bond, the Series 2004A Bond, the Series 2004B Bond and the Series
2004C Bond (collectively, the "Subordinate Bonds ") have been or will be met;
NOW, THEREFORE, BE IT ORDAINED by the Board of Directors of the City of
Little Rock, Arkansas, that:
Section 1. The Improvements shall be accomplished. The Mayor and City Clerk are
hereby authorized to take, or cause to be taken, all action necessary to accomplish the financing
and completion of the Improvements and to execute all required contracts in connection
therewith. The accomplishment of the Improvements shall be under the control and supervision
of, and all details in connection therewith shall be handled by, the Committee, and the
2
4845- 8094 - 2849.4
Committee shall make all contracts and agreements necessary or incidental to the performance of
its duties and the execution of its powers. The 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 Committee, will fully insure the
completion of the Improvements in accordance with the plans and specifications therefor.
Section 2. The Board of Directors hereby finds and declares that the period of
usefulness of the Improvements will be more than thirty (30) years, which is longer than the term
of the Series 2007A Bonds.
Section 3. The offer of the Purchasers for the purchase of the Series 2007A Bonds
from the City at the Purchase Price for bonds bearing interest at the rates per annum, maturing
and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail
be, and is hereby accepted, and the Agreement, in substantially the form submitted to this
meeting, is approved and the Series 2007A Bonds are hereby sold to the Purchasers. The
Mayor's approval and execution of the Agreement on May 10, 2007 is hereby ratified and the
Mayor is hereby authorized to deliver the Agreement on behalf of the City and to take all action
required on the part of the City to fulfill its obligations under the Agreement.
Section 4. The Preliminary Official Statement is hereby approved and the previous
use of the Preliminary Official Statement by the Purchasers in connection with the offer and sale
of the Series 2007A Bonds is hereby in all respects authorized and approved, and the Mayor be,
and he is hereby authorized and directed, for and on behalf of the City, to execute the
Preliminary Official Statement and the final Official Statement as set forth in the Agreement.
Section 5. The Disclosure Agreement, in substantially the form submitted to this
meeting, is hereby approved, and the Mayor is hereby authorized and directed to execute and
deliver the Disclosure Agreement on behalf of the City. The Mayor and the Chief Executive
Officer of the Little Rock Wastewater Utility (the "CEO ") are each authorized and directed to
take all action required on the part of the City to fulfill the City's obligations under the
Disclosure Agreement.
Section 6. Under the authority of the Constitution and laws of the State of Arkansas
(the "State "), including particularly Title 14, Chapter 164, Subchapter 4, and Title 14, Chapter
235, Subchapter 2 of the Arkansas Code of 1987 Annotated, City of Little Rock, Arkansas Sewer
Construction Revenue Bonds, Series 2007A, are hereby authorized and ordered issued in the
principal amount of $63,050,000 for the purpose of financing all or a portion of the costs of the
Improvements, costs incidental thereto, the funding of a debt service reserve, paying the
premium on the Insurance Policy and paying expenses of issuing the Series 2007A Bonds. The
Series 2007A Bonds shall bear interest at the rates and shall mature on the dates and in the
amounts as follows:
3
4845 -8094- 2849.4
* Term Bond, subject to mandatory sinking fund redemption
The Series 2007A Bonds shall be dated June 1, 2007 and shall be issuable only as fully
registered bonds, without coupons, in the denomination of $5,000 or any integral multiple
thereof. Unless the City shall otherwise direct, the Series 2007A Bonds shall be numbered from
R07A -1 upward in order of issuance. Each Series 2007A Bond shall be assigned a CUSIP
number.
The Series 2007A Bonds shall be registered initially in the name of Cede & Co., as
nominee for the Depository Trust Company ( "DTC "), which shall be considered to be the
registered owner of the Series 2007A Bonds for all purposes under this Ordinance, including,
without limitation, payment by the City of the principal of, redemption price, premium, if any,
and interest on the Series 2007A Bonds, and the receipt of notices and the exercise of rights of
registered owners. There shall be one certificated, typewritten bond for each stated maturity date
which shall be immobilized in the custody of DTC with the beneficial owners having no right to
receive the Series 2007A Bonds in the form of physical securities or certificates. DTC and its
participants shall be responsible for maintenance of records of the ownership of beneficial
interests in the Series 2007A Bonds by book -entry on the system maintained and operated by
DTC and its participants, and transfers of ownership of beneficial interests shall be made only by
DTC and its participants, by book - entry, the City having no responsibility therefor. DTC is
expected to maintain records of the positions of participants in the Series 2007A Bonds, and the
participants and persons acting through participants are expected to maintain records of the
purchasers of beneficial interests in the Series 2007A Bonds. The Series 2007A Bonds as such
shall not be transferable or exchangeable, except for transfer to another securities depository or
to another nominee of a securities depository, without further action by the City.
If any securities depository determines not to continue to act as a securities depository for
the Series 2007A Bonds for use in a book -entry system, the City may establish a securities
depository /book -entry system relationship with another securities depository. If the City does
not or is unable to do so, or upon request of the beneficial owners of all outstanding Series
2007A Bonds, the City and the Trustee (hereinafter identified), after the Trustee has made
provision for notification of the beneficial owners by the then securities depository, shall permit
4
4845 -8094- 2849.4
Principal
Principal
Date
Amount
Interest Rate
Date
Amount
Interest Rate
June 1, 2008
$ 1,050,000
4.000%
June 1, 2018
$ 1,590,000
4.000%
June 1, 2009
1,095,000
4.000%
June 1, 2019
1,650,000
4.375%
June 1, 2010
1,135,000
4.000%
June 1, 2020
1,725,000
4.500%
June 1, 2011
1,185,000
3.625%
June 1, 2021
1,800,000
4.500%
June 1, 2012
1,225,000
4.000%
June 1, 2022
1,880,000
4.500%
June 1, 2013
1,275,000
4.000%
June 1, 2027*
10,815,000
4.750%
June 1, 2014
1,325,000
4.500%
June 1, 2031*
10,690,000
5.000%
June 1, 2015
1,385,000
4.500%
June 1, 2033*
6,160,000
4.375%
June 1, 2016
1,445,000
4.500%
June 1, 2037*
14,105,000
4.750%
June 1, 2017
1,515,000
5.000%
* Term Bond, subject to mandatory sinking fund redemption
The Series 2007A Bonds shall be dated June 1, 2007 and shall be issuable only as fully
registered bonds, without coupons, in the denomination of $5,000 or any integral multiple
thereof. Unless the City shall otherwise direct, the Series 2007A Bonds shall be numbered from
R07A -1 upward in order of issuance. Each Series 2007A Bond shall be assigned a CUSIP
number.
The Series 2007A Bonds shall be registered initially in the name of Cede & Co., as
nominee for the Depository Trust Company ( "DTC "), which shall be considered to be the
registered owner of the Series 2007A Bonds for all purposes under this Ordinance, including,
without limitation, payment by the City of the principal of, redemption price, premium, if any,
and interest on the Series 2007A Bonds, and the receipt of notices and the exercise of rights of
registered owners. There shall be one certificated, typewritten bond for each stated maturity date
which shall be immobilized in the custody of DTC with the beneficial owners having no right to
receive the Series 2007A Bonds in the form of physical securities or certificates. DTC and its
participants shall be responsible for maintenance of records of the ownership of beneficial
interests in the Series 2007A Bonds by book -entry on the system maintained and operated by
DTC and its participants, and transfers of ownership of beneficial interests shall be made only by
DTC and its participants, by book - entry, the City having no responsibility therefor. DTC is
expected to maintain records of the positions of participants in the Series 2007A Bonds, and the
participants and persons acting through participants are expected to maintain records of the
purchasers of beneficial interests in the Series 2007A Bonds. The Series 2007A Bonds as such
shall not be transferable or exchangeable, except for transfer to another securities depository or
to another nominee of a securities depository, without further action by the City.
If any securities depository determines not to continue to act as a securities depository for
the Series 2007A Bonds for use in a book -entry system, the City may establish a securities
depository /book -entry system relationship with another securities depository. If the City does
not or is unable to do so, or upon request of the beneficial owners of all outstanding Series
2007A Bonds, the City and the Trustee (hereinafter identified), after the Trustee has made
provision for notification of the beneficial owners by the then securities depository, shall permit
4
4845 -8094- 2849.4
withdrawal of the Series 2007A Bonds from the securities depository, and shall authenticate and
deliver bond certificates in fully registered form (in denominations of $5,000 or integral
multiples thereof) to the assigns of the securities depository or its nominee, all at the cost and
expense (including costs of printing definitive bonds) of the City, if the City fails to maintain a
securities depository /book -entry system, or of the beneficial owners, if they request termination
of the system.
Prior to issuance of the Series 2007A Bonds, the City shall have executed and delivered
to DTC a written agreement (the "Representation Letter ") setting forth (or incorporating therein
by reference) certain undertakings and responsibilities of the City with respect to the Series
2007A Bonds so long as the Series 2007A Bonds or any portion thereof are registered in the
name of Cede & Co. (or a substitute nominee) and held by DTC. Notwithstanding such
execution and delivery of the Representation Letter, the terms thereof shall not in any way limit
the provisions of this Section or in any other way impose upon the City any obligation
whatsoever with respect to persons having interests in the Series 2007A Bonds other than the
registered owners, as shown on the registration books kept by the Trustee. The Trustee shall take
all action necessary for all representations of the City in the Representation Letter with respect to
the Trustee to at all times be complied with.
The authorized officers of the Trustee and the City shall do or perform such acts and
execute all such certificates, documents and other instruments as they or any of them deem
necessary or advisable to facilitate the efficient use of a securities depository for all or any
portion of the Series 2007A Bonds; provided that neither the Trustee nor the City may assume
any obligations to such securities depository or beneficial owners of the Series 2007A Bonds that
are inconsistent with their obligations to any registered owner under this Ordinance.
Interest on the Series 2007A Bonds shall be payable on December 1, 2007, and
semiannually thereafter on June 1 and December 1 of each year. Payment of each installment of
interest shall be made to the person in whose name the Series 2007A Bond is registered on the
registration books of the City maintained by Regions Bank, Little Rock, Arkansas, as trustee and
paying agent (the "Trustee "), at the close of business on the fifteenth day of the month (whether
or not a business day) next preceding each interest payment date (the "Record Date "),
irrespective of any transfer or exchange of any such Series 2007A Bond subsequent to such
Record Date and prior to such interest payment date.
Each Series 2007A Bond shall bear interest from the payment date next preceding the
date on which it is authenticated unless it is authenticated on an interest payment date, in which
event it shall bear interest from such date, or unless it is authenticated prior to the first interest
payment date, in which event it shall bear interest from June 1, 2007, or unless it is authenticated
during the period from the Record Date to the next interest payment date, in which case it shall
bear interest from such interest payment date, or unless at the time of authentication thereof
interest is in default thereon, in which event it shall bear interest from the date to which interest
has been paid.
Only such Series 2007A Bonds as shall have endorsed thereon a Certificate of
Authentication substantially in the form set forth in Section 8 hereof (the "Certificate ") duly
executed by the Trustee shall be entitled to any right or benefit under this ordinance. No Series
5
4845 -9094- 2849.4
2007A Bond shall be valid and obligatory for any purpose unless and until the Certificate shall
have been duly executed by the Trustee, and the Certificate upon any such Series 2007A Bond
shall be conclusive evidence that such Series 2007A Bond has been authenticated and delivered
under this Ordinance. The Certificate on any Series 2007A 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 on all of the Series 2007A Bonds.
In case any Series 2007A Bond 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 2007A Bond of like date, number, maturity and tenor in exchange and
substitution for and upon cancellation of such mutilated Series 2007A Bond, or in lieu of and in
substitution for such Series 2007A Bond destroyed or lost, upon the owner paying the reasonable
expenses and charges of the City and Trustee in connection therewith, and, in the case of a Series
2007A Bond destroyed or lost, his filing with the Trustee evidence satisfactory to it that such
Series 2007A 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 2007A Bond. In the event any such Series 2007A Bond shall
have matured, instead of issuing a new Series 2007A Bond, the City may pay the same without
the surrender thereof Upon the issuance of a new Series 2007A Bond under this Section 6, 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 maintain, or cause to be maintained, books for the registration and for the
transfer of the Series 2007A Bonds, as provided herein and in the Series 2007A Bonds. The
Trustee shall act as the bond registrar. Each Series 2007A 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 2007A 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 2007A Bond for the privilege of
transfer or exchange, but any owner of any Series 2007A 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 2007A 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 City shall not be
required to transfer or exchange any Series 2007A Bonds selected for redemption in whole or in
part.
The person in whose name any Series 2007A 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 or premium, if any, or interest on any Series 2007A 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 upon such Series 2007A Bond to the extent of the sum or sums so paid.
6
4845- 8094- 2849.4
In any case where the date of maturity of interest on or principal of the Series 2007A
Bonds or the date fixed for redemption of any Series 2007A Bonds shall be a Saturday or Sunday
or shall be in the State 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 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.
Section 7. The Series 2007A Bonds shall be executed on behalf of the City by the
manual or facsimile signatures of the Mayor and City Clerk, and shall have impressed or
imprinted thereon the seal of the City. The Series 2007A Bonds, together with interest thereon,
are secured by and are payable solely from the net revenues derived from the System (the "Net
Revenues ") which are hereby pledged and mortgaged for the equal and ratable payment of the
Series 2007A Bonds. The pledge of Net Revenues in favor of the Series 2007A Bonds shall be
(i) on a parity with the pledge in favor of the Parity Bonds, and (ii) prior to the pledge in favor of
the Subordinate Bonds. The Series 2007A Bonds and the interest thereon shall not constitute an
indebtedness of the City within the meaning of any constitutional or statutory limitation.
Section 8. The Series 2007A Bonds and the Certificate shall be in substantially the
following form, and the Mayor and City Clerk are hereby expressly authorized and directed to
make all recitals contained therein:
7
4845 -8094- 2849.4
(Form of Series 2007A Bond)
REGISTERED REGISTERED
STSIBNOW.11
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF LITTLE ROCK
SEWER CONSTRUCTION REVENUE BOND
SERIES 2007A
Maturity Date: June 1, 20
Dated Date: June 1, 2007
Registered Owner: CEDE & CO.
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS:
Interest Rate: %
CUSIP No.:
DOLLARS
That the City of Little Rock, County of Pulaski, State of Arkansas (the "City "), for value
received, hereby promises to pay, but solely from the source as hereinafter provided and not
otherwise, to the Registered Owner shown above upon the presentation and surrender hereof at
the principal corporate office of Regions Bank, Little Rock, Arkansas, or its successor or
successors, as trustee and paying agent (the "Trustee "), on the Maturity Date shown above, the
Principal Amount shown above, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private debts and to pay
by check or draft interest thereon, but solely from the source as hereinafter provided and not
otherwise, in like coin or currency from the interest commencement date specified below at the
Interest Rate per annum shown above, payable December 1, 2007 and semiannually thereafter on
the first days of June and December of each year, until payment of such principal sum or, if this
bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption,
and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate
borne by this bond. Payment of each installment of interest shall be made to the person in whose
name this bond is registered on the registration books of the City maintained by the Trustee at
the close of business on the fifteenth day of the month (whether or not a business day) next
preceding each interest payment date (the "Record Date "), irrespective of any transfer or
exchange of this bond subsequent to such Record Date and prior to such interest payment date.
Unless this bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ( "DTC "), to the Trustee for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is made to Cede
& Co. or to such other entity as is required by an authorized representative of DTC), any transfer,
pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
8
4845 -8094- 2849.4
This bond shall bear interest from the payment date next preceding the date on which it is
authenticated unless it is authenticated on an interest payment date, in which event it shall bear
interest from such date, or unless it is authenticated prior to the first interest payment date, in
which event it shall bear interest from the Dated Date shown above, or unless it is authenticated
during the period from the Record Date to the next interest payment date, in which case it shall
bear interest from such interest payment date, or unless at the time of authentication hereof
interest is in default hereon, in which event it shall bear interest from the date to which interest
has been paid.
This bond is one of an issue of City of Little Rock, Arkansas Sewer Construction
Revenue Bonds, Series 2007A, aggregating Sixty -Three Million and Fifty Thousand Dollars
($63,050,000) in principal amount (the "Series 2007A Bonds "), and is issued for the purposes of
financing all or a portion of the costs of the acquisition, construction and equipping by the City
of certain betterments and improvements to the City's sewer system (the "System "), paying
expenses incidental thereto and to the authorization, funding a debt service reserve, paying the
premium on a policy of municipal bond insurance, and paying expenses of issuance of Series
2007A Bonds.
The Series 2007A Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Arkansas (the "State "), including particularly Title 14,
Chapter 164, Subchapter 4 and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of
1987 Annotated, and pursuant to Ordinance No. duly adopted on May , 2007 (the
"Authorizing Ordinance "), and do not constitute an indebtedness of the City within the meaning
of any constitutional or statutory limitation. The Series 2007A Bonds are not general obligations
of the City, but are special obligations payable solely from the net revenues derived from the
operation of the System (the "Net Revenues ") on a parity of security with the City's outstanding
Sewer Refunding and Construction Revenue Bonds, Series 2001, and Sewer Refunding and
Construction Revenue Bonds, Series 2005, and prior to the pledge of Net Revenues in favor of
the City's Sewer Revenue Bonds, Series 1990, Series 1991, Series 1996, Series 1999, Series
2004A, Series 2004B, and Series 2004C. An amount of Net Revenues sufficient to pay the
principal of and interest on the Series 2007A Bonds has been duly pledged and set aside into the
2007A Sewer Revenue Bond Fund created by the Authorizing Ordinance. Reference is hereby
made to the Authorizing Ordinance for a detailed statement of the terms and conditions upon
which the Series 2007A Bonds are issued, of the nature and extent of the security for the Series
2007A Bonds, and the rights and obligations of the City, the Trustee and the registered owners of
the Series 2007A Bonds. The City has fixed and has covenanted and agreed to maintain rates for
the services of the System which shall be sufficient at all times to provide for the proper and
reasonable expenses of operation and maintenance of the System and for the payment of the
principal of and interest on the Series 2007A Bonds, including Trustee's fees, as the same
become due and payable, to establish and maintain a debt service reserve and to make the
required deposit for the depreciation of the System.
The Series 2007A Bonds shall be subject to optional and mandatory sinking fund
redemption as follows:
1. The Series 2007A Bonds maturing on and after June 1, 2018 are subject to
redemption at the option of the City, from funds from any source, on and after June 1, 2017, in
9
4845 -8094- 2849.4
whole at any time or in part on any interest payment date, at a redemption price equal to the
principal amount being redeemed plus accrued interest to the redemption date. If fewer than all
of the Series 2007A Bonds shall be called for redemption, the particular maturities of the Series
2007A Bonds to be redeemed shall be selected by the City in its discretion. If fewer than all of
the Series 2007A Bonds of any one maturity shall be called for redemption, the particular Series
2007A Bonds or portion thereof to be redeemed from such maturity shall be selected by lot by
the Trustee.
2. To the extent not previously redeemed, the Series 2007A Bonds are subject to
mandatory sinking fund redemption by lot in such manner as the Trustee shall determine, on the
dates and in the amounts set forth below, at a redemption price equal to the principal amount
being redeemed plus accrued interest to the date of redemption:
Bonds maturing June 1, 2027
Redemption Dates Principal Amounts
June 1, 2023
$1,965,000
June 1, 2024
2,060,000
June 1, 2025
2,160,000
June 1, 2026
2,260,000
June 1, 2027 (Maturity)
2,370,000
Bonds maturing June 1, 2031
Redemption Dates
Principal Amounts
June 1, 2028
$2,480,000
June 1, 2029
2,605,000
June 1, 2030
2,735,000
June 1, 2031 (Maturity)
2,870,000
Bonds maturing June 1, 2033
Redemption Dates Principal Amounts
June 1, 2032 $3,015,000
June 1, 2033 (Maturity) 3,145,000
Bonds maturing June 1, 2037
Redemption Dates
June 1, 2034
June 1, 2035
June 1, 2036
June 1, 2037 (Maturity)
10
4845- 8094 - 2849.4
Principal Amounts
$3,285,000
3,440,000
3,605,000
3,775,000
The provisions for mandatory sinking fund redemption of the Series 2007A Bonds are
subject to the provisions of the Authorizing Ordinance which permit the City to receive credit for
Series 2007A Bonds previously redeemed or for Series 2007A Bonds acquired by the City and
surrendered to the Trustee.
In case any outstanding Series 2007A Bond is in a denomination greater than $5,000,
each $5,000 of face value of such Series 2007A Bond shall be treated as a separate Series 2007A
Bond of the denomination of $5,000.
Notice of redemption identifying the Series 2007A Bonds or portions thereof (which shall
be $5,000 or a multiple thereof) to be redeemed shall be given by the Trustee, not less than thirty
(30) nor more than sixty (60) days prior to the date fixed for redemption, by mailing a copy of
the redemption notice by first class mail, postage prepaid, to all registered owners of Series
2007A Bonds to be redeemed. Failure to mail an appropriate notice or any such notice to one or
more registered owners of Series 2007A Bonds to be redeemed shall not affect the validity of the
proceedings for redemption of other Series 2007A Bonds as to which notice of redemption is
duly given in proper and timely fashion. All such Series 2007A Bonds or portions thereof thus
called for redemption and for the retirement of which funds are duly provided in accordance with
the Authorizing Ordinance prior to the date fixed for redemption will cease to bear interest on
such redemption date.
STATEMENT OF INSURANCE
Financial Security Assurance Inc. ( "Financial Security "), New York, New York, has
delivered its municipal bond insurance policy with respect to the scheduled payments due of
principal of and interest on this Series 2007A Bond to Regions Bank, Little Rock, Arkansas, or
its successor, as paying agent for the Series 2007A Bonds (the "Paying Agent "). Said Insurance
Policy is on file and available for inspection at the principal office of the Paying Agent and a
copy thereof may be obtained from Financial Security or the Paying Agent.
This bond is transferable by the registered owner hereof in person or by his attorney -in-
fact duly authorized in writing at the principal corporate trust office of the Trustee, but only in
the manner, subject to the limitations and upon payment of the charges provided in the
Authorizing Ordinance, and upon surrender and cancellation of this bond. Upon such transfer a
new fully registered Series 2007A 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. This bond is issued -with the intent that the laws of the State
shall govern its construction.
The City and the Trustee may deem and treat the registered owner hereof as the absolute
owner hereof for the purpose of receiving payment of or on account of principal hereof and
premium, if any, hereon and interest due hereon and for all other purposes, and neither the City
nor the Trustee shall be affected by any notice to the contrary.
The Series 2007A Bonds are issuable only as fully registered bonds in the denomination
of $5,000, and any integral multiple thereof. Subject to the limitations and upon payment of the
charges provided in the Authorizing Ordinance, fully registered bonds may be exchanged for a
11
4845 -8094- 2849.4
like aggregate principal amount of fully registered bonds of the same maturity of other
authorized denominations.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the issuance of the Series
2007A Bonds do exist, have happened and have been performed in due time, form and manner as
required by law; that the indebtedness represented by the Series 2007A Bonds, together with all
obligations of the City, does not exceed any constitutional or statutory limitation; and that the
above referred to Net Revenues pledged to the payment of the principal of and premium, if any,
and interest on the Series 2007A Bonds as the same become due and payable will be sufficient in
amount for that purpose.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Authorizing Ordinance until the Certificate of Authentication
hereon shall have been signed by the Trustee.
IN WITNESS WHEREOF, the City of Little Rock, Arkansas has caused this bond to be
executed by its Mayor and City Clerk and its corporate seal to be impressed or imprinted on this
bond, all as of the Dated Date shown above.
ATTEST:
City Clerk
(SEAL)
CITY OF LITTLE ROCK, ARKANSAS
am
Mayor
(Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds designated Series 2007A in and issued under the provisions
of the within mentioned Authorizing Ordinance.
Date of Authentication:
REGIONS BANK
Little Rock, Arkansas, Trustee
an
12
4845 -8094- 2849.4
Authorized Signature
(Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED, ( "Transferor "),
hereby sells, assigns and transfers unto the within bond and all
rights thereunder, and hereby irrevocably constitutes and appoints _ as
attorney to transfer the within bond on the books kept for registration thereof with full power of
substitution in the premises.
DATE:
Transferor
GUARANTEED BY:
NOTICE: Signature(s) must be guaranteed by a member of or participant in the Securities
Transfer Agents Medallion Program (STAMP), or in another signature guaranty program
recognized by the Trustee.
13
4845- 8094 - 2849.4
Section 9. The rates charged for services of the System heretofore fixed by
ordinances of the City and the conditions, rights and obligations pertaining thereto, as set out in
those ordinances, are hereby ratified, confirmed and continued. 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.
The City covenants and agrees that System rates shall never be reduced while any of the
Series 2007A Bonds are outstanding unless there is obtained from an independent certified
public accountant ( "Accountant ") a certificate that the Net Revenues of the System ( "Net
Revenues" being defined as gross revenues of the System less the expenses of operation and
maintenance of the System, including all expense items properly attributable to the operation
and maintenance of the System under generally accepted accounting principles applicable to
municipal sewer facilities, excluding depreciation, interest and amortization of deferred bond
discount expenses), with the reduced rates, will always be equal to the amount required to be set
aside for the Depreciation Fund (hereinafter identified), and leave a balance equal to at least
130% of the average annual principal and interest requirements on all outstanding bonds
payable from System revenues ( "System Bonds "). The City further covenants and agrees that
the rates shall, if and when necessary, from time to time, be increased in such manner as will
produce revenues at least sufficient to pay the principal and interest on all System Bonds when
due, to pay the operation and maintenance expenses of the System, and to deposit the amounts
required to be paid into the Depreciation Fund and the Debt Service Reserve (hereinafter
identified) in accordance with this Ordinance.
The City covenants and agrees that the existing rates will produce total System revenues
at least sufficient to pay the operation and maintenance expenses of the System, to pay the
principal of and premium, if any, and interest on all outstanding System Bonds and trustee fees
in connection therewith, and to make the required deposits into the Debt Service Reserve and the
Depreciation Fund.
Section 10. The System shall be continuously operated as a revenue producing
undertaking and all System revenues shall be paid into a special fund heretofore created and
designated "Sewer Fund" (the "Revenue Fund "). The System revenues so deposited in the
Revenue 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 payment of the
principal of and premium, if any, and interest on System Bonds, to the establishment and
maintenance of a Debt Service Reserve, and to the providing of a Depreciation Fund, as
hereinafter set forth. The Revenue Fund, and the other special funds hereinafter 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 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 $15,000,000, and with all
deposits in any depository in excess of the amount insured by the FDIC to be secured by bonds
14
4845 -8094- 2849.4
or other direct or fully guaranteed obligations of the United States of America unless invested in
accordance with Section 27 hereof.
Section 11. There shall be paid from the Revenue Fund into a fund heretofore created
and designated "Sewer Operation and Maintenance Fund" (the "Operation and Maintenance
Fund ") on or before the tenth day of each month while any Series 2007A 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 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 Operation and Maintenance Fund, the amount of any deficiency shall be added to
the amount otherwise required to be transferred and paid into such fund in the next succeeding
month. If in any fiscal year a surplus shall be accumulated in the Operation and Maintenance
Fund over and above the amount which shall be necessary to defray the reasonable and necessary
costs of operation, 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
Revenue Fund.
Section 12. After making the required monthly deposits into the Operation and
Maintenance Fund, there shall be paid from the Revenue Fund, pro rata, the required monthly
deposits into (i) the 2001 Bond Fund being maintained in connection with the Series 2001
Bonds, (ii) the 2005 Bond Fund being maintained in connection with the Series 2005 Bonds, and
(iii) into a special fund in the name of the City which is hereby created and designated the
"2007A Sewer Revenue Bond Fund" (the "2007A Bond Fund ") on or before the fifteenth day of
each month, commencing in July 2007, until all outstanding Series 2007A Bonds, with interest
thereon, have been paid in full or provision made for such payment, a sum equal to 1/6 of the
next installment of interest due on the Series 2001 Bonds, the Series 2005 Bonds and the Series
2007A Bonds, and 1/12 of the next installment of principal due on the Series 2001 Bonds, the
Series 2005 Bonds and the Series 2007A Bonds; provided, however, that payments made into the
2007A Bond Fund with respect to interest for the first five (5) months shall be increased to 115 of
the next installment of interest due on the Series 2007A Bonds and payments made into the
2007A Bond Fund with respect to principal for the first eleven (11) months shall be increased to
1 /11 of the next installment of principal due on the Series 2007A Bonds.
The City shall also pay into the 2001 Bond Fund, the 2005 Bond Fund and the 2007A
Bond Fund such additional sums as necessary to provide for the Trustee's fees and expenses and
any arbitrage rebate due the United States Treasury under Section 148(f) of the Internal Revenue
Code of 1986, as amended (the "Code "). The City shall realize a credit against monthly deposits
into the 2001 Bond Fund, the 2005 Bond Fund and the 2007A Bond Fund from bond proceeds
deposited therein, all interest earnings on moneys in the 2001 Bond Fund, the 2005 Bond Fund
and the 2007A Bond Fund and all transfers made from the respective debt service reserves for
said funds during the preceding month.
15
4845 -8094- 2849.4
There is hereby created, as a part of the 2007A Bond Fund, a debt service reserve (the
"Debt Service Reserve ") which shall be maintained by the City in an amount equal to the
maximum annual principal and interest requirement on the Series 2007A Bonds or 10% of the
proceeds of the Series 2007A Bonds (excluding accrued interest but including Underwriters'
discount), whichever is lesser (the "Required Level "). Should the Debt Service Reserve become
impaired or be reduced below the Required Level by reason of withdrawal or valuation, the City
shall make additional monthly payments from the Revenue Fund until the impairment or
reduction is corrected within a twenty -four month period.
If for any reason the City should fail at any time to make any of the required payments
into the 2007A Bond Fund, any sums then held in the Debt Service Reserve shall be used to the
extent necessary for the payment of principal of or interest on the Series 2007A Bonds, but the
Debt Service Reserve shall be reimbursed from the Revenue Fund before any moneys in the
Revenue Fund shall be used for any other purpose other than the making of payments required
to be made into the Operation and Maintenance Fund and the 2001 Bond Fund, the 2005 Bond
Fund and the 2007A Bond Fund. The Debt Service Reserve shall be used solely as provided
herein.
If Net Revenues are insufficient to make the required payment on the first business day
of the following month into the 2007A Bond Fund, the amount of any such deficiency in the
payment made shall be added to the amount otherwise required to be paid into the 2007A Bond
Fund on the first business day of the next month.
When the moneys held in the 2007A Bond Fund shall be and remain sufficient to pay the
principal of and interest on all of the Series 2007A Bonds then outstanding plus Trustee's fees
and any arbitrage rebate due as provided above, the City shall not be obligated to make any
further payments into the 2007A Bond Fund.
It shall be the duty of the City to cause to be withdrawn from the 2007A Bond Fund and
deposited with the Trustee at least one (1) business day before the due date of any principal
and /or interest on any Series 2007A Bond, at maturity or redemption prior to maturity, and
deposited with the Trustee an amount equal to the amount of such Series 2007A Bond and
interest due thereon for the sole purpose of paying the same, together with the Trustee's fee.
There shall also be withdrawn and paid to the United States Treasury any arbitrage rebate due at
the times and in the amounts required by Section 148(f) of the Code. No withdrawal of funds
from the 2007A Bond Fund shall be made for any other purpose except as otherwise authorized
in this Ordinance.
The Series 2007A Bonds shall be specifically secured by a pledge of all Net Revenues
remaining after the deposits have been made to the Operation and Maintenance Fund. This
pledge in favor of the Series 2007A 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 13. After making the deposits into the Operation and Maintenance Fund and
the 2001 Bond Fund, the 2005 Bond Fund and the 2007A Bond Fund, there shall be transferred
from the Revenue Fund (a) into (i) the "ADFA Bond Fund" being maintained in connection with
16
4845 -8094- 2849.4
the 1990 Bond and the 1991 Bond, (ii) the "1996 ADFA Bond Fund" being maintained in
connection with the 1996 Bond, (iii) the "1999 ADFA Bond Fund" being maintained in
connection with the 1999 Bond, (iv) the "2004A Bond Fund" being maintained in connection
with the 2004A Bond; (v) the "2004B Bond Fund" being maintained in connection with the
2004B Bond, and (vi) the "Series 2004C Bond Fund" being maintained in connection with the
2004C Bond, the amounts required by the 1990 Ordinance, the 1991 Ordinance, the 1996
Ordinance, the 1999 Ordinance, the 2004A Ordinance, the 2004B Ordinance and the 2004C
Ordinance, respectively, and (b) the administration and servicing fees due in connection with the
Subordinate Bonds.
Section 14. After making the required payments into the Operation and Maintenance
Fund, the 2001 Bond Fund, the Series 2005 Bond Fund, the 2007A Bond Fund, the ADFA Bond
Fund, the 1996 ADFA Bond Fund, the 1999 ADFA Bond Fund, the 2004A Bond Fund, the
2004B Bond Fund and the 2004C Bond Fund, there shall be paid from the Revenue Fund into a
fund heretofore created and designated the "Sewer Depreciation Fund" (the "Depreciation
Fund ") on, or before the 15th day of each month while any Series 2007A Bonds are outstanding,
three percent (3 %) of the System revenues which remain after the required payment into the
Operation and Maintenance Fund has been made. The moneys in the Depreciation Fund shall be
used solely for the purpose of paying the cost of replacements made necessary by the
depreciation of the System. If in any fiscal year a surplus shall be accumulated in the
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 Revenue Fund.
Section 15. Any surplus in the Revenue Fund, after making the required monthly
deposits into all of the funds as set forth above, may be used, at the option of the City, for any
lawful purpose of the System, as approved by the Committee.
Section 16. So long as any of the Series 2007A Bonds are outstanding, the City shall
not issue or attempt to issue any bonds claimed to be entitled to a priority of lien on Net
Revenues over the lien securing the Series 2007A Bonds and the Parity Bonds. The City
reserves the right to issue additional bonds to finance or pay the cost of making any future
extensions, betterments or improvements to the System, or to refund bonds issued for such
purposes, but the City shall not authorize or issue any such additional bonds ranking on a parity
with the Series 2007A Bonds and the Parity Bonds unless and until there have been procured and
filed with the City Clerk and the Trustee a statement by an Accountant reciting the opinion,
based upon necessary investigation, that the Net Revenues of the System for the fiscal year
immediately preceding the fiscal year in which it is proposed to issue such additional bonds shall
equal not less than 120% of the average annual principal and interest requirements on all the then
outstanding System Bonds and the additional bonds then proposed to be issued. The term "Net
Revenues" means gross System revenues less operation and maintenance expenses other than
depreciation, interest and amortization of deferred bond discount expenses, determined in
accordance with generally accepted accounting principles. In making the computation set forth
above, the City, and the Accountant on behalf of the City, may, based upon the opinion or report
of a registered professional engineer not in the regular employ of the City, treat any increase in
rates for the System enacted subsequent to the first day of such preceding fiscal year as having
been in effect during or throughout such fiscal year and may include in gross System revenues
17
4845 -8094- 2849.4
for such fiscal year the amount that would have been received, based on such opinion or report,
had the increase been in effect during or throughout such fiscal year.
Section 17. The City covenants and agrees that it will maintain the System in good
condition and operate the same in an efficient manner and at reasonable cost. While any of the
Series 2007A Bonds are outstanding, the City agrees that it will insure and at all times keep
insured, in the amount of the full insurable value thereof, in a responsible insurance company or
companies selected by the Committee and authorized and qualified under the laws of the State to
assume the risk thereof, all aboveground structures of the System, to the extent that such
structures would be covered by insurance by private companies engaged in similar types of
businesses, against loss or damage thereto from fire, lightning, tornados, winds, riot, strike, civil
commotion, malicious damage, explosion and against any other loss or damage from any other
causes customarily insured against by private companies engaged in similar types of business.
The insurance policies are to carry a clause making them payable to the Committee and the
Trustee as their interests may appear, and satisfactory evidence of said insurance shall be filed
with the Trustee. In the event of loss, the proceeds of such insurance shall be applied solely
toward the reconstruction, replacement or repair of the System, and in such event the City will,
with reasonable promptness, cause to be commenced and completed the reconstruction,
replacement and repair work. If such proceeds are more than sufficient for such purposes, the
balance remaining shall be deposited to the credit of the Revenue Fund, and if such proceeds
shall be insufficient for such purposes, the deficiency shall be supplied first from moneys in the
Depreciation Fund, second from moneys in the Operation and Maintenance Fund, and third from
surplus moneys in the Revenue Fund. Nothing shall be construed as requiring the City to expend
any moneys for operation and maintenance of the System or for premiums on its insurance which
are derived from sources other than the operation of the System, but nothing shall be construed
as preventing the City from doing so.
Section 18. The Series 2007A Bonds shall be subject to redemption prior to maturity
in accordance with the terms set out in the Series 2007A Bond form. The City may acquire
Series 2007A Bonds by purchase at a price not in excess of par plus accrued interest, inclusive
of brokerage fees, and surrender to the Trustee any Series 2007A Bonds so acquired, in
exchange for which the City shall receive a credit under this Ordinance in an amount equal to
the principal amount of the Series 2007A Bonds so acquired and surrendered, for and of the then
next date for mandatory sinking fund redemption of Series 2007A Bonds of the same maturity.
Section 19. The Committee will keep 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 operation of the System, and such books shall be
available for inspection by the Trustee and any registered owner of any of the Series 2007A
Bonds at reasonable times and under reasonable circumstances. The City and the Committee
agree to have these records audited by an Accountant at least once each year, and a copy of the
audit shall be delivered to the Trustee and made available to interested registered owners
requesting the same in writing. In the event that the City or the Committee fail or refuse to
make the audit, the Trustee, or any registered owner of the Series 2007A Bonds, may have the
audit made, and the cost thereof shall be charged against the Operation and Maintenance Fund.
18
4845 - 8094 - 2849.4
Section 20. Any Series 2007A Bond shall be deemed to be paid within the meaning of
this Ordinance when payment of the principal of and interest on such Series 2007A Bond
(whether at maturity or upon redemption as provided herein, or otherwise), either (i) shall have
been made or caused to be made in accordance with the terms thereof, or (ii) shall have been
provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside
exclusively for such payment (1) cash sufficient to make such payment and /or (2) direct
obligations of (including obligations issued or held in book entry form on the books of) the
Department of the Treasury of the United States of America ( "Government Securities ")
(provided that such deposit will not affect the tax exempt status of the interest on any of the
Series 2007A Bonds or cause any of the Series 2007A Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148 of the Code), maturing as to principal and interest in
such amounts and at such times as will provide sufficient moneys to make such payment, and all
necessary and proper fees, compensation and expenses of the Trustee shall have been paid or the
payment thereof provided for to the satisfaction of the Trustee.
On the payment of any such Series 2007A Bonds within the meaning of this Ordinance,
the Trustee shall hold in trust, for the benefit of the owners of such Series 2007A Bonds, all such
moneys and /or Government Securities.
When all the Series 2007A Bonds shall have been paid within the meaning of this
Ordinance, if the Trustee has been paid its fees and expenses and if any arbitrage rebate due the
United States Treasury has been paid or provided for to the satisfaction of the Trustee, the
Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be
discharged and cancelled, and (ii) all moneys held by it pursuant to this Ordinance and which are
not required for the payment of such Series 2007A Bonds to be paid over or delivered to or at the
direction of the City. In determining the sufficiency of the deposit of Government Securities,
there shall be considered the principal amount of such Government Securities and interest to be
earned thereon until the maturity of such Government Securities.
Section 21. If there be any default in the payment of the principal of or interest on any
of the Series 2007A Bonds, or if the City defaults in any 2007A Bond Fund requirement or in the
performance of any of the other covenants contained in this Ordinance and such failure continues
unremedied for thirty (30) days, or if the City declares bankruptcy or seeks relief from its
creditors under the provisions of any other similar state or federal law, the Trustee may, and
upon the written request of the registered owners of not less than 10% in principal amount of the
then outstanding Series 2007A Bonds, shall, by proper suit, compel the performance of the duties
of the officials of the City under the laws of Arkansas, subject to the rights of Insurer provided
for herein. And in the case of a default in the payment of the principal of and interest on any of
the Series 2007A Bonds, the Trustee may and upon written request of the registered owners of
not less than 10% in principal amount of the then outstanding Series 2007A Bonds, shall apply in
a proper action to a court of competent jurisdiction for the appointment of a receiver to
administer the System on behalf of the City and the registered owners of the Series 2007A 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,
maintenance and repair and to pay any Series 2007A Bonds and interest outstanding and to apply
the System revenues in conformity with the laws of Arkansas and with this Ordinance, subject to
19
4845- 8094 - 2849.4
the rights of Insurer provided for herein. When all defaults in principal and interest payments
have been cured, the custody and operation of the System shall revert to the City.
No registered owner of any of the outstanding Series 2007A Bonds shall have any right
to institute any suit, action, mandamus or other proceeding in equity or at law for the protection
or enforcement of any power or right unless such 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 registered owners of not less than 10% in principal amount of the Series
2007A Bonds then outstanding shall have made written request of the Trustee after the right to
exercise such power 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 granted to
the Trustee, or to institute such action, suit or proceeding in its name, and unless, also, there shall
have been offered to the Trustee reasonable security and indemnity against the costs, expenses
and liabilities to be incurred therein or thereby and the Trustee shall have refused or neglected to
comply with such request within a reasonable time. Such notification, request and offer of
indemnity are, at the option of the Trustee, conditions precedent to the execution of any remedy.
No one or more registered owners of the Series 2007A Bonds shall have any right in any manner
whatever by his or their action to affect, disturb or prejudice the security of this Ordinance, or to
enforce any right hereunder except in the manner herein described. All proceedings at law or in
equity shall be instituted, had and maintained in the manner herein described and for the benefit
of all registered owners of the outstanding Series 2007A Bonds.
No remedy conferred upon or reserved to the Trustee or to the registered owners of the
Series 2007A Bonds is intended to be exclusive of any other remedy or remedies, and every such
remedy shall be cumulative and shall be in addition to every other remedy given under this
Ordinance or by law.
Subject to the rights of the Insurer provided for herein, the Trustee may, and upon the
written request of the registered owners of not less than 50% in principal amount of the Series
2007A Bonds then outstanding shall, waive any default which shall have been remedied before
the entry of final judgment or decree in any suit, action or proceeding instituted under the
provisions of this Ordinance or before the completion of the enforcement of any other remedy,
but no such waiver shall extend to or affect any other existing or any subsequent default or
defaults or impair any rights or remedies consequent thereon.
All rights of action under this Ordinance or under any of the Series 2007A Bonds,
enforceable by the Trustee, may be enforced by it without the possession of any of the Series
2007A 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 such Series 2007A Bonds, subject to
the provisions of this Ordinance.
No delay or omission of the Trustee or of any registered owners of the Series 2007A
Bonds to exercise any right or power accrued upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default or an acquiescence therein; and
every power and remedy given by this ordinance to the Trustee and to the registered owners of
the Series 2007A Bonds, respectively, may be exercised from time to time and as often as may
be deemed expedient.
20
4845 -8094- 2849.4
In any proceeding in which any plaintiff bondholder prevails to enforce the provisions of
this Ordinance, such plaintiff bondholder shall be entitled to recover from the City all costs of
such proceeding, including reasonable attorneys' fees.
Section 22. (a) The terms of this Ordinance shall constitute a contract between the
City and the registered owners of the Series 2007A Bonds and no variation or change in the
undertaking herein set forth shall be made while any of the Series 2007A Bonds are outstanding,
except as hereinafter set forth in subsections (b) and (c).
(b) Subject to the rights of the Insurer provided for herein, the Trustee may consent to
any variation or change in this Ordinance without the consent of the owners of the outstanding
Series 2007A Bonds (a) in connection with the issuance of additional parity bonds under this
Ordinance, (b) in order to cure any ambiguity, defect or omission herein or to correct or
supplement any defective or inconsistent provisions contained herein as the City may deem
necessary or desirable and not inconsistent herewith, or (c) in order to make any other variation
or change which the Trustee determines shall not adversely affect the interests of the owners of
the Series 2007A Bonds.
(c) Subject to the rights of the Insurer provided for herein, the owners of not less
than 75% in aggregate principal amount of the Series 2007A 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 supplemental hereto as
shall be necessary or desirable for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this Ordinance or in any
supplemental ordinance; provided, however, that nothing contained in this Section 22 shall
permit or be construed as permitting (a) an extension of the maturity of the principal of or the
interest on any Series 2007A Bond, or (b) a reduction in the principal amount of any Series
2007A Bond or the rate of interest thereon, or (c) the creation of a lien or pledge superior to the
lien and pledge created by this Ordinance, or (d) a privilege or priority of any Series 2007A
Bond or Bonds over any other Series 2007A Bond or Bonds, or (e) a reduction in the aggregate
principal amount of the Series 2007A Bonds required for consent to such supplemental
ordinance.
Section 23. When the Series 2007A Bonds have been executed and sealed as herein
provided, they shall be authenticated by the Trustee, and the Trustee shall deliver the Series
2007A Bonds to the Purchasers upon payment in cash of the Purchase Price. The accrued
interest thereon shall be remitted to the City for deposit into the 2007A Bond Fund. The
expenses of issuing the Series 2007A Bonds as set forth in the delivery instructions to the
Trustee signed by the Mayor and City Clerk shall also be paid from the Purchase Price (the
"Delivery Instructions "). The remainder of the Purchase Price shall be remitted to the City for
deposit into an account of the City heretofore created and designated "Little Rock Wastewater
Utility Construction Fund" ( "Construction Fund "). The moneys deposited into the Construction
Fund, including earnings thereon, shall be disbursed in payment of the costs of accomplishing
the Improvements, paying necessary expenses incidental thereto and paying expenses of issuing
the Series 2007A Bonds. Disbursements shall be on the basis of checks which shall contain at
least the following information: the person to whom payment is being made; the amount of the
payment; and the purpose by general classification of the payment. Each check must be signed
21
4845- 8094 - 2849.4
by the CEO or Finance Director of the Little Rock Wastewater Utility. The Committee shall be
required to keep accurate records of all payments made on the basis of checks.
Section 24. In the event any of the offices of Mayor, City Clerk, Chief Executive
Officer, Committee or Board of Directors shall be abolished, or any two or more of such offices
shall be merged or consolidated, or in the event the duties of a particular office shall be
transferred to another office or officer, or in the event of a vacancy in any such office by reason
of death, resignation, removal from office or otherwise, or in the event any such officer shall
become incapable of performing the duties of his office by reason of sickness, absence from the
City or otherwise, all powers conferred and all obligations and duties imposed upon such office
or officer shall be performed by the office or officer succeeding to the principal functions
thereof, or by the office or officer upon whom such powers, obligations and duties shall be
imposed by law.
So long as the System is under the control of the Committee, performance by the
Committee of any obligation of the City hereunder shall be deemed performance by the City.
The Committee presently consists of James R. Pender, Dale J. Wintroath, Andrew L. Harper,
Charles G. Goss and Patrick D. Miller.
Section 25. (a) The City covenants that it shall not take any action or suffer or
permit any action to be taken or conditions to exist which causes or may cause the interest
payable on the Series 2007A Bonds to be included in gross income for federal income tax
purposes. Without limiting the generality of the foregoing, the City covenants that the proceeds
of the sale of the Series 2007A Bonds and System revenues will not be used directly or indirectly
in such manner as to cause the Series 2007A Bonds to be treated as "arbitrage bonds" within the
meaning of Section 148 of the Code.
(b) The City shall assure that (i) not in excess of 10% of the Net Proceeds of the
Series 2007A Bonds is used for Private Business Use if, in addition, the payment of more than
10% of the principal or 10% of the interest due on the Series 2007A Bonds during the term
thereof is, under the terms of the bonds or any underlying arrangement, directly or indirectly
secured by any interest in property used or to be used for a Private Business Use or in payments
in respect of, property used or to be used for a Private Business Use or is to be derived from
payments, whether or not to the City, in respect of property or borrowed moneys used or to be
used for a Private Business Use; and (ii) that, in the event that both (A) in excess of 5% of the
Net Proceeds of the Series 2007A Bonds are used for a Private Business Use, and (B) an amount
in excess of 5% of the principal or 5% of the interest due on the Series 2007A Bonds during the
term thereof is, under the terms of the Series 2007A Bonds or any underlying arrangement,
directly or indirectly, secured by any interest in property used or to be used for said Private
Business Use or in payments in respect of property used or to be used for said Private Business
Use or is to be derived from payments, whether or not to the City, in respect of property or
borrowed money used or to he used for said Private Business Use, then said excess over said 5%
of Net Proceeds of the Series 2007A Bonds used for a Private Business Use shall be used for a
Private Business Use related to the governmental use of the Improvements.
22
4845 -8094- 2849.4
The City shall assure that not in excess of 5% of the Net Proceeds of the Series 2007A
Bonds are used, directly or indirectly, to make or finance a loan to persons other than state or
local governmental units.
As used in this subsection (b), the following terms shall have the following meanings:
"Net Proceeds" means the face amount of the Series 2007A Bonds, plus accrued interest
and premium, if any, less original issue discount, if any, less any amounts deposited into the
Debt Service Reserve from Series 2007A Bond proceeds.
"Private Business Use" means use directly or indirectly in a trade or business carried on
by a natural person or in any activity carried on by a person other than a natural person,
excluding, however, use by a state or local governmental unit and use as a member of the general
public.
(c) The City covenants that it will take no action which would cause the Series
2007A Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code.
Nothing in this Section shall prohibit investments in bonds issued by the United States Treasury.
(d) The City covenants that it will submit to the Secretary of the Treasury of the
United States, not later than the 15th day of the second calendar month after the close of the
calendar quarter in which the Series 2007A Bonds are issued, the statement required by Section
149(e) of the Code.
(e) The City covenants that it will not reimburse itself from proceeds of the Series
2007A Bonds for costs paid prior to the date the Series 2007A Bonds are issued except in
compliance with United States Treasury Regulation Section 1.150 -2 (the "Regulation "). This
Ordinance shall constitute an "official intent" for the purpose of the Regulation.
(f) The City covenants that it will, in compliance with the requirements of Section
148(f) of the Code, pay with moneys in the 2007A Bond Fund to the United States Government
in accordance with the requirements of Section 148(f) of the Code, from time to time, an amount
equal to the sum of (1) the excess of (A) the amount earned on all Non - purpose Investments (as
therein defined) attributable to the Series 2007A Bonds, other than investments attributable to
such excess, over (B) the amount which would have been earned if such Non - purpose
Investments attributable to the Series 2007A Bonds were invested at a rate equal to the Yield (as
defined in the Code) on the Series 2007A Bonds, plus (2) any income attributable to the excess
described in (1), subject to the exceptions set forth in Section 148 of the Code. The City further
covenants that in order to assure compliance with its covenants herein, it will employ a qualified
consultant to advise the City in making the determination required to comply with this subsection
(f). Anything herein to the contrary notwithstanding, this provision may be modified or
rescinded if in the opinion of Bond Counsel such modification or rescission will not affect the
tax - exempt status of the Series 2007A Bonds for federal income tax purposes.
Section 26. 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 2007A Bonds are the recitals of the City and not of the Trustee. The Trustee shall
not be required to take any action as Trustee unless it shall have been requested to do so in
23
4845 -8094- 2949.4
writing by the owners of not less than 10% in principal amount of the Series 2007A Bonds then
outstanding, or the Insurer as provided herein, and shall have been offered reasonable security
and indemnity against the costs, expenses and liabilities to be incurred therein or thereby. The
Trustee may resign at any time by sixty (60) days' notice in writing to the City Clerk, to the
registered owners of the Series 2007A Bonds, the Insurer, and the City or the majority in value
of the registered owners of the outstanding Series 2007A Bonds at any time, with or without
cause, subject to the rights of the Insurer provided for herein, may remove the Trustee. In the
event of a vacancy in the office of Trustee, either by resignation or by removal, the City shall
(subject to the rights of the Insurer provided for herein) appoint a new Trustee, such appointment
to be evidenced by a written instrument or instruments filed with the City Clerk. Every
successor Trustee appointed pursuant to this Section 26 shall be a trust company or bank in good
standing, duly authorized to exercise trust powers and subject to examination by federal or state
authority. 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 respective owners of the Series 2007A 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. The Trustee's
resignation shall become effective upon the acceptance of the trusts by the successor Trustee.
Section 27. (a) Moneys held for the credit of the 2007A Bond Fund shall be
continuously invested and reinvested pursuant to the direction of the Committee in Eligible
Investments, all of which shall mature, or which shall be subject to redemption by the holder
thereof, at the option of such holder, not later than the payment date for interest or principal and
interest on the Series 2007A Bonds.
(b) Moneys held for the credit of the Debt Service Reserve shall be invested and
reinvested at the direction of the Committee in Eligible Investments, all of which shall mature, or
which shall be subject to redemption by the holder thereof, at the option of such holder, not later
than seven (7) years after the date of investment or the final maturity date of the Series 2007A
Bonds, whichever is earlier.
(c) Moneys held for the credit of any other fund shall be continuously invested and
reinvested pursuant to the direction of the Committee in Eligible Investments, which shall
mature, or which shall be subject to redemption by the holder thereof, at the option of such
holder, not later than the date or dates when the moneys held for the credit of the particular fund
will be required for purposes intended.
(d) "Eligible Investments" means any of the securities that are at the time legal for
investment of City funds pursuant to a Resolution of the City adopted May 15, 2007, and
Arkansas Code Annotated (1999 Supp.) §14 -58 -309, as each may be amended from time to time,
and as permitted pursuant to the Financial Guaranty Agreement between the City and the Insurer.
At May 15, 2007, "Eligible Investments" include:
(1) U.S. Treasury obligations which carry the full faith and credit
guarantee of the United States government and are considered to be the most
secure investments available;
24
4845- 8094 - 2849.4
(2) U.S. government agency obligations and U.S. government
instrumentality obligations, which have a liquid market with a readily
determinable market value;
(3) Certificates of deposit and other evidences of deposit at financial
institutions;
(4) Commercial paper, rated in the highest tier (e.g., A -1, P -1, F -1, D-
1 or higher) by a nationally recognized rating agency;
(5) Investment -grade obligations of state, provincial and local
governments and public authorities;
(6) Money market mutual funds regulated by the Securities and
Exchange Commission and whose portfolios consist only of dollar- denominated
securities; and
(7) Local government investment pools either State - administered or
developed through joint powers statutes and other intergovernmental agreement
legislation.
(e) Obligations so purchased as an investment of moneys in any fund shall be
deemed at all times to be a part of such fund and the interest accruing thereon and any profit
realized from such investments shall be credited to such fund, and any loss resulting from such
investment shall be charged to such fund, except that interest earnings and profits on investments
of moneys in the Debt Service Reserve which increase the amount thereof above the Required
Level shall to the extent of any such excess be transferred from time to time into the 2007A
Bond Fund.
(f) Moneys so invested in Government Securities or in certificates of deposit of
banks to the extent insured by FDIC, need not be secured by the depository bank or banks.
(g) All investments and deposits shall have a par value (or market value when less
than par), exclusive of accrued interest, at all times at least equal to the amount of money
credited to such funds and shall be made in such a manner that the money required to be
expended from any fund will be available at the proper time or times.
(h) Investments of moneys in all funds shall be valued in terms of current market
value as of the last day of each year, except that direct obligations of the United States (State and
Local Government Series) in book -entry form shall be continuously valued at par or face
principal amount.
(i) The City covenants that it will make all arbitrage rebate payments to the United
States in accordance with Section 148(f) of the Code.
Section 28. It is covenanted and agreed by the City with the registered owners of the
Series 2007A Bonds, or any of them, that the City and the Committee will faithfully and
punctually perform all duties with reference to the System required by the Constitution and laws
25
4845 -8094- 2849.4
of the State, including the charging and collecting of reasonable and sufficient rates lawfully
established for services rendered by the System, the segregating of System revenues as herein
required, and the applying of System revenues to the respective funds herein created or referred
to.
Section 29. The City covenants that it will not sell or lease the System, or any
substantial portion thereof; provided, however, that nothing herein shall be construed to prohibit
the City from making such dispositions of properties of the System and such replacements and
substitutions for properties of the System as shall be necessary or incidental to the efficient
operation of the System as a revenue - producing undertaking. All revenues derived from such
dispositions shall be deposited into the Revenue Fund.
Section 30. Provisions Relating to Bond Insurance. (a) When used in this Ordinance,
"Insurance Policy" shall mean the insurance policy issued by the Insurer guaranteeing the
scheduled payment of principal of and interest on the Series 2007A Bonds when due.
(b) When used in this Ordinance, "Insurer" shall mean Financial Security Assurance
Inc., a New York stock insurance company, or any successor thereto or assignee thereof.
(c) The prior written consent of the Insurer shall be a condition precedent to the
deposit of any credit instrument provided in lieu of a cash deposit into the Debt Service Reserve.
Notwithstanding anything to the contrary set forth in this Ordinance, amounts on deposit in the
Debt Service Reserve shall be applied solely to the payment of debt service on the Series 2007A
Bonds.
(d) The Insurer shall be deemed to be the sole holder of the Series 2007A Bonds for
the purpose of exercising any voting right or privilege or giving any consent or direction or
taking any other action that the holders of the Series 2007A Bonds are entitled to take pursuant
to the provisions of this Ordinance pertaining to (i) defaults and remedies and (ii) the duties and
obligations of the Trustee.
(e) The maturity of the Series 2007A Bonds shall not be accelerated without the
consent of the Insurer. In the event the maturity of the Series 2007A Bonds is accelerated, the
Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued on such
principal to the date of acceleration (to the extent unpaid by the City) and the Trustee shall be
required to accept such amounts. Upon payment of such accelerated principal and interest
accrued to the acceleration date as provided above, the Insurer's obligations under the Insurance
Policy with respect to the Series 2007A Bonds shall be fully discharged.
(f) No grace period for a covenant default under this Ordinance shall exceed thirty
(30) days or be extended for more than sixty (60) days without the prior written consent of the
Insurer. No grace period shall be permitted for payment defaults hereunder.
(g) The Insurer shall be deemed to be a third party beneficiary to this Ordinance.
(h) Upon the occurrence of an optional redemption of the Series 2007A Bonds in
part, the selection by the City of Series 2007A Bonds to be redeemed shall be subject to the
approval of the Insurer. The exercise of any provision of this Ordinance that permits the
26
4845- 8094 - 2849.4
purchase of the Series 2007A Bonds in lieu of redemption shall require the prior written approval
of the Insurer if any Series 2007A Bond so purchased is not cancelled upon such purchase.
(i) Any amendment, supplement, modification to, or waiver of this Ordinance that
requires the consent of the registered owners of the Series 2007A Bonds or adversely affects the
rights and interests of the Insurer shall be subject to the prior written consent of the Insurer.
0) Unless the Insurer otherwise directs, upon the occurrence and continuance of a
default hereunder, or an event which with notice or lapse of time would constitute a default
hereunder, any unspent proceeds of the Series 2007A Bonds shall not be disbursed, but shall
instead be applied to the payment of debt service or the redemption price of the Series 2007A
Bonds.
(k) The rights granted to the Insurer under this Ordinance to request, consent to or
direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance
Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's
contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf
of, the registered owners of the Series 2007A Bonds, and such action does not evidence any
position of the Insurer, affirmative or negative, as to whether the consent of the registered
owners of the Series 2007A Bonds or any other person is required in addition to the consent of
the Insurer.
(1) Only (1) cash, (2) non - callable direct obligations of the United States of America
( "Treasuries "), (3) evidences of ownership of proportionate interests in future interest and
principal payments on Treasuries held by a bank or trust company as custodian, under which
the owner of the investment is the real parry in interest and has the right to proceed directly and
individually against the obligor and the underlying Treasuries are not available to any
person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the
prior written consent of the Insurer, pre - refunded municipal obligations rated "AAA" and "Aaa" by
S &P and Moody's, respectively, or (5) subject to the prior written consent of the Insurer,
securities eligible for "AAA" defeasance under then existing criteria of S & P or any combination
thereof, shall be used to effect defeasance of the Series 2007A Bonds pursuant to Section 20 of this
Ordinance unless the Insurer otherwise approves. To accomplish such defeasance, the City shall
cause to be delivered (i) a report of an independent firm of nationally recognized certified public
accountants or such other accountant as shall be acceptable to the Insurer ( "Accountant ") verifying the
sufficiency of the escrow established to pay the Series 2007A Bonds in full on the maturity or
redemption date ( "Verification "), (ii) an Escrow Deposit Agreement (which shall be acceptable in
form and substance to the Insurer), (iii) an opinion of nationally recognized bond counsel to the
effect that the Series 2007A Bonds are no longer "Outstanding" under this Ordinance and (iv) a
certificate of discharge of the Trustee with respect to the Series 2007A Bonds. Each Verification and
defeasance opinion shall be acceptable in form and substance, and addressed, to the City, the
Trustee and the Insurer. The Insurer shall be provided with final drafts of the above -
referenced documentation not less than five (5) business days prior to the funding of the escrow. The
Series 2007A Bonds shall be deemed "Outstanding" under this Ordinance unless and until they are in
fact paid and retired or the above criteria are met.
27
4845- 8094 - 2849.4
(m) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid
for purposes of this Ordinance, and the Series 2007A Bonds relating to such payments shall
remain Outstanding and continue to be due and owing until paid by the City in accordance with
this Ordinance. This Ordinance shall not be discharged unless all amounts due or to become due to
the Insurer have been paid in full or duly provided for.
(n) Each of the City and the Trustee covenant and agree to take such action (including, as
applicable, filing of UCC financing statements and continuations thereof) as is necessary from time
to time to preserve the priority of the pledge of the Trust Estate under applicable law.
(o) (i) If, on the third business day prior to the related scheduled interest payment
date or principal payment date with respect to the Series 2007A Bonds ( "Payment Date ") there is
not on deposit with the Trustee, after making all transfers and deposits required under this Ordinance,
moneys sufficient to pay the principal of and interest on the Series 2007A Bonds due on such
Payment Date, the Trustee shall give notice to the Insurer and to its designated agent (if any) (the
"Insurer's Fiscal Agent ") by telephone or telecopy of the amount of such deficiency by 12:00
noon, New York City time, on such business day. If, on the second business day prior to the
related Payment Date, there continues to be a deficiency in the amount available to pay the
principal of and interest on the Series 2007A Bonds due on such Payment Date, the Trustee shall
make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if
any) by telephone of the amount of such deficiency, and the allocation of such deficiency between
the amount required to pay interest on the Series 2007A Bonds and the amount required to pay
principal of the Series 2007A Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal
Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of
Notice of Claim and Certificate delivered with the Insurance Policy.
(ii) The Trustee shall designate any portion of payment of principal on the
Series 2007A Bonds paid by the Insurer, whether by virtue of mandatory sinking fund
redemption, maturity or other advancement of maturity, on its books as a reduction in the
principal amount of Series 2007A Bonds registered to the then current registered owner,
whether DTC or its nominee or otherwise, and shall issue a replacement Series 2007A
Bond to the Insurer, registered in the name of Financial Security Assurance Inc., in a
principal amount equal to the amount of principal so paid (without regard to authorized
denominations): provided that the Trustee's failure to so designate any payment or issue any
replacement Series 2007A Bond shall have no effect on the amount of principal or interest
payable by the Issuer on any Series 2007A Bond or the subrogation rights of the Insurer.
(iii) The Trustee shall keep a complete and accurate record of all funds
deposited by the Insurer into the Policy Payments Account (defined below) and the
allocation of such funds to payment of interest on and principal of any Series 2007A Bond.
The Insurer shall have the right to inspect such records at reasonable times upon reasonable
notice to the Trustee.
(iv) Upon payment of a claim under the Insurance Policy, the Trustee shall
establish a separate special purpose trust account for the benefit of the registered owners of
the Series 2007A Bonds referred to herein as the "Policy Payments Account" and over which
the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall
28
4845 -8094- 2849.4
receive any amount paid under the Insurance Policy in trust on behalf of the registered
owners of the Series 2007A Bonds and shall deposit any such amount in the Policy
Payments Account and distribute such amount only for purposes of making the payments
for which a claim was made. Such amounts shall be disbursed by the Trustee to the
registered owners of the Series 2007A Bonds in the same manner as principal and
interest payments are to be made with respect to the Series 2007A Bonds under the
sections hereof regarding payment of the Series 2007A Bonds. It shall not be necessary
for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such
payments. Notwithstanding anything herein to the contrary, the City agrees to pay to the
Insurer (1) a sum equal to the total of all amounts paid by the Insurer under the Insurance
Policy (the "Insurer Advances "); and (2) interest on such Insurer Advances from the date paid
by the Insurer until payment thereof in full, payable to the Insurer at the Late Payment Rate
per annum (collectively, the "Insurer Reimbursement Amounts "). "Late Payment Rate"
means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced
from time to time by JPMorgan Chase Bank at its principal office in The City of New
York, as its prime or base lending rate (any change in such rate of interest to be effective
on the date such change is announced by JPMorgan Chase Bank) plus 3 %, and (ii) the then
applicable highest rate of interest on the Series 2007A Bonds and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates. The Late
Payment Rate shall be computed on the basis of the actual number of days elapsed over a
year of 360 days. The City hereby covenants and agrees that the Insurer Reimbursement
Amounts are secured by a lien on and pledge of the Net Revenues and payable from such Net
Revenues on a parity with debt service due on the Series 2007A Bonds.
(v) Funds held in the Policy Payments Account shall not be invested by the
Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee.
Any funds remaining in the Policy Payments Account following a Payment Date shall
promptly be remitted to the Insurer.
(p) The Insurer shall, to the extent it makes any payment of principal of or interest on
the Series 2007A Bonds, become subrogated to the rights of the recipients of such payments in
accordance with the terms of the Insurance Policy. Each obligation of the City to the Insurer
hereunder shall survive discharge or termination this Ordinance.
(q) The City shall pay or reimburse the Insurer any and all charges, fees, costs and
expenses that the Insurer may reasonably pay or incur in connection with (i) the
administration, enforcement, defense or preservation of any rights or security hereunder; (ii) the
pursuit of any remedies under this Ordinance or otherwise afforded by law or equity; (iii) any
amendment, waiver or other action with respect to, or related to, this Ordinance whether or not
executed or completed; or (iv) any litigation or other dispute in connection with the Ordinance or
the transactions contemplated thereby, other than costs resulting from the failure of the Insurer to
honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect
of this Ordinance.
29
4845 -8094- 2849.4
(r) After payment of reasonable expenses of the Trustee, the application of funds
realized upon default shall be applied to the payment of expenses of the City or rebate only after the
payment of past due and current debt service on the Series 2007A Bonds and amounts required to
restore the Debt Service Reserve to the Required Level.
(s) The Insurer shall be entitled to pay principal or interest on the Series 2007A
Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City
(as such terms are defined in the Insurance Policy) and any amounts due on the Series 2007A Bonds
as a result of acceleration of the maturity thereof in accordance with this Ordinance, whether or not
the Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy)
or a claim upon the Insurance Policy.
(t) The notice address of the Insurer is: Financial Security Assurance Inc., 31 West
52nd Street, New York, New York 10019, Attention: Managing Director -- Surveillance, Re: Policy
No. , Telephone: (212) 826 -0100; Telecopier: (212) 339 -3556. In each case in which notice
or other communication refers to a default, then a copy of such notice or other communication
shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT
MATERIAL ENCLOSED."
(u) The Insurer shall be provided with the following information by the City or the
Trustee, as the case may be:
(i) Annual audited financial statements of the System within 150 days after
the end of the City's fiscal year (together with a certification of the City that it is not aware of
any default under the Ordinance), and the System's annual budget within 30 days
after the approval thereof, together with such other information, data or reports as the Insurer
shall reasonably request from time to time;
(ii) Notice of any, draw upon the Debt Service Reserve within two business days
after knowledge thereof other than (i) withdrawals of amounts in excess of the Required
Level and (ii) withdrawals in connection with a refunding of the Series 2007A Bonds;
(iii) Notice of any default known to the Trustee or the City within five business
days after knowledge thereof,
(iv) Prior notice of the advance refunding or redemption of any of the Series
2007A Bonds, including the principal amount, maturities and CUSIP numbers thereof;
(v) Notice of the resignation or removal of the Trustee and the appointment of,
and acceptance of duties by, any successor thereto:
(vi) Notice of the commencement of any proceeding by or against the City
commenced under the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding ");
(vii) Notice of the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer of any payment of principal of,
or interest on, the Series 2007A Bonds;
30
4845 -8094- 2849.4
(viii) A full original transcript of all proceedings relating to the execution of any
amendment, supplement, or waiver to this Ordinance; and
(ix) All reports, notices and correspondence to be delivered to the registered
owners of the Series 2007A Bonds under the terms of this Ordinance.
(v) Notwithstanding satisfaction of the other conditions to the issuance of Additional
Bonds set forth in this Ordinance, no such issuance may occur (1) if a default (or any event which,
once all notice or grace periods have passed, would constitute a default) exists unless such default shall
be cured upon such issuance, and (2) unless the Debt Service Reserve is fully funded at the Required
Level (including the proposed issue) upon the issuance of such Additional Bonds, in either case
unless otherwise permitted by the Insurer.
(w) In determining whether any amendment, consent, waiver or other action to be taken,
or any failure to take action, under this Ordinance would adversely affect the security for the Series
2007A Bonds or the rights of the registered owners of the Series 2007A Bonds, the Trustee shall
consider the effect of any such amendment, consent, waiver, action or inaction as if there were no
Insurance Policy.
(x) No contract shall be entered into or any action taken by which the rights of the
Insurer or security for or sources of payment of the Series 2007A Bonds may be impaired or
prejudiced in any material respect except upon obtaining the prior written consent of the Insurer.
Section 31. The requirements of Ordinance No. 15,249, as they may relate to the
authorization and sale of the Bonds, are hereby waived.
Section 32. 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 33. All ordinances and resolutions or parts thereof, in conflict herewith are
hereby repealed to the extent of such conflict. „ _ _
PASSED: May 15, 2007.
A 11
Na y Woo ,City Clerk
Approved as to form:
Tom Carpenter, City Attorne
31
4845- 8094 - 2849.4
BOND PURCHASE AGREEMENT
May 10, 2007
City of Little Rock
City Hall, 500 W. Markham
Little Rock, Arkansas 72201
$63,050,000
City of Little Rock, Arkansas
Sewer Construction Revenue Bonds
Series 2007A
Ladies and Gentlemen:
EXECUTION COPY
On the basis of the representations, warranties and agreements and upon the terms and
conditions contained herein, the undersigned, Morgan Keegan & Company, Inc. (the
"Representative "), acting for and on behalf of ourselves and Crews & Associates, Inc.
(collectively, the "Underwriters "), hereby offer to enter into this Bond Purchase Agreement (this
"Bond Purchase Agreement ") with you, the City of Little Rock, Arkansas (the "City "), which,
upon your acceptance of this offer, will be binding upon you and upon the Underwriters. The
Underwriters have designated the Representative to act as their representative, and the
Representative hereby represents that it has been duly authorized to execute this Bond Purchase
Agreement for and on behalf of the Underwriters. Terms not otherwise defined herein shall have
the same meanings as set forth in the Authorizing Ordinance defined and described below.
This offer is made subject to your acceptance of this Bond Purchase Agreement on or
before midnight on May 10, 2007.
1. General. Upon the terms and conditions and in reliance upon the respective
representations, warranties and covenants herein, the Underwriters hereby agree to purchase
from the City, and the City hereby agrees to sell to the Underwriters, all (but not less than all) of
$63,050,000 City of Little Rock, Arkansas Sewer Construction Revenue Bonds, Series 2007A
(the "Bonds "), at a purchase price (the "Purchase Price"•) of $64,435,610.20 (equal to the par
amount of the Bonds plus a net reoffering premium of $1,890,010.20 and less underwriters'
discount of $504,400.00) plus accrued interest, if any, from June 1, 2007, to the Closing Date
(hereinafter defined).
The Bonds shall be issued by the City pursuant to the provisions of the Constitution and
laws of the State of Arkansas, including, particularly, Amendment 65 to the Constitution and
Arkansas Code Annotated (1998 Repl. & 2005 Supp.) § §14- 164 -401 et seq. and Arkansas Code
Annotated (1998 Repl.) § §14- 235 -201 et seq. (collectively, the "Authorizing Legislation ").
The Bonds will constitute special and limited obligations of the City, secured solely by
and payable from (a) a pledge of the net revenues (the "Net Revenues ") of the City's sewer
4826- 1578- 0865.2
system (the "System ") and from (b) moneys on deposit in the 2007A Bond Fund (and the Debt
Service Reserve therein) established by an Ordinance of the City to be adopted May 15, 2007
(the "Authorizing Ordinance "). In the Authorizing Ordinance, Regions Bank, N.A., Little Rock,
Arkansas, is designated as trustee (the "Trustee ") for the Bonds. The System is managed by the
City of Little Rock Sanitary Sewer Committee (the "Committee "), a commission of the City, and
is operated and maintained by the Little Rock Wastewater Utility, an arm of the City. Payment
of the principal of and interest on the Bonds when due will be guaranteed under the terms of an
insurance policy (the "Policy ") to be issued concurrently with the delivery of the Bonds by
Financial Security Assurance, Inc. (the "Insurer ").
The pledge of Net Revenues securing the Bonds will be made on a parity basis with an
existing pledge of Net Revenues securing (i) the City's outstanding Sewer Refunding and
Construction Revenue Bonds, Series 2001 (the "Series 2001 Bonds "), and (ii) the City's
outstanding Sewer Refunding and Construction Revenue Bonds, Series 2005 (the "Series 2005
Bonds," and together with the Series 2001 Bonds, the "Parity Bonds "). The pledge of Net
Revenues securing the Bonds will be made on a prior and senior basis to an existing pledge of
Net Revenues securing (i) the City's outstanding Sewer Revenue Bond, Series 1990 (the "Series
1990 Bond "), (ii) the City's outstanding Sewer Revenue Bond, Series 1991 (the "Series 1991
Bond "), (iii) the City's outstanding Sewer Revenue Bond, Series 1996 (the "Series 1996 Bond "),
(iv) the City's outstanding Sewer Revenue Bond, Series 1999 (the "Series 1999 Bond "), (v) the
City's outstanding Sewer Revenue Bond, Series 2004A (the "Series 2004A Bond "), (vi) the
City's outstanding Sewer Revenue Bond, Series 2004B (the "Series 2004B Bond "), and (vii) the
City's outstanding Sewer Revenue Bond, Series 2004C (the "Series 2004C Bond," and together
with the Series 1990 Bond, the Series 1991 Bond, the Series 1996 Bond, the Series 1999 Bond,
the Series 2004A Bond and the Series 2004B Bond, the "Subordinate Bonds ").
The Bonds shall be issued and secured pursuant to the Authorizing Ordinance. The
Bonds shall have the maturities and interest rates as set forth in Exhibit A hereto. The Bonds
shall be subject to redemption as set forth in the Authorizing Ordinance and in the Official
Statement (hereinafter defined).
The proceeds of the Bonds will be utilized (a) to acquire, construct and equip certain
betterments and improvements to the System (the "Project "), (b) to fund a debt service reserve,
(c) to pay the premium on the Policy, and (d) to pay the costs of issuance of the Bonds.
The City will undertake, pursuant to a Continuing Disclosure Agreement to be dated as of
the date of delivery of the Bonds (the "Continuing Disclosure Agreement "), to provide certain
annual financial and operating information with respect to the System and notices of the
occurrence of certain events, if material, as required by Section (b)(5)(i) of Rule 15c2 -12 under
the Securities Exchange Act of 1934, as amended (the "Rule "). A description of this undertaking
is set forth in the Preliminary Official Statement and will also be set forth in the Official
Statement (each hereinafter defined).
In order to ensure compliance with the provisions of the Internal Revenue Code of 1986,
as amended (the "Code "), the City will enter into a Tax Regulatory Agreement dated as of the
date of delivery of the Bonds (the "Tax Regulatory Agreement ").
4826 -1578- 0865.2 2
2. Bona Fide Public Offering. The Underwriters agree to make a bona fide public
offering of all of the Bonds at the offering prices set forth on the inside cover of the final Official
Statement described below.
3. Delivery of Official Statement. (a) The City has previously provided the
Underwriters with copies of its Preliminary Official Statement, including the cover page and the
appendices thereto, dated May 2, 2007, relating to the Bonds (the "Preliminary Official
Statement "). As of its date, the Preliminary Official Statement is "deemed final" by the City for
purposes of Rule 15c2- 12(b)(1) under the Securities and Exchange Act of 1934 (the "Rule "),
except for the omission of such information as is permitted pursuant to the Rule. The
Preliminary Official Statement, as amended to conform to the terms of this Bond Purchase
Agreement, including Exhibit A hereto, and with such other changes and amendments as are
mutually agreed to by the City and the Underwriters, is herein referred to as the "Official
Statement."
(b) The City agrees to deliver to the Underwriters, at such address or
addresses as the Representative shall specify, as many copies of the final Official
Statement dated May 15, 2007, relating to the Bonds as the Underwriters shall reasonably
request as necessary to comply with paragraph (b)(4) of the Rule (as defined above) and
with MSRB Rule G -32 and all other applicable rules of the Municipal Securities
Rulemaking Board. The City agrees to deliver such final Official Statement within seven
(7) business days after the execution hereof.
(c) The City hereby authorizes and approves the Preliminary Official
Statement and the final Official Statement, consents to their distribution and use by the
Underwriters and authorizes the execution of the final Official Statement by a duly
authorized officer of the City. The City ratifies and confirms the use by the Underwriters
prior to the date hereof of the Preliminary Official Statement in connection with the
public offering of the Bonds.
(d) The Underwriters shall give notice to the City on the date after which no
participating underwriter, as such term is defined in the Rule, remains obligated to deliver
final Official Statements pursuant to paragraph (b)(4) of the Rule.
4. City's Representation and Warranties. The City represents and warrants to the
Underwriters that:
(a) The City is a duly organized and existing political subdivision under the
Constitution and laws of the State of Arkansas (the "State ");
(b) The City is authorized by the provisions of the Authorizing Legislation to
issue the Bonds for the purpose of financing the Project;
(c) The City has the full legal right, power and authority (i) to adopt the
Authorizing Ordinance authorizing the issuance of and sale of the Bonds, and (ii) to
adopt Ordinance No. 19,647 on November 28, 2006 (the "Rate Ordinance "), for the
purpose of establishing rates for System services;
4826-1578-0865.2 3
(d) Upon the adoption of the Authorizing Ordinance, the City will have full
legal right, power and authority (i) to enter into this Bond Purchase Agreement, the
Continuing Disclosure Agreement and the Tax Regulatory Agreement, (ii) to issue, sell
and deliver the Bonds to the Underwriters as provided herein, (iii) to pledge irrevocably
the Net Revenues to the payment of the principal of, premium, if any, and interest on the
Bonds, and (iv) to carry out and consummate all other transactions contemplated by each
of the aforesaid documents, and the City will comply with all provisions of applicable
law, including the Authorizing Legislation, in all matters relating to such transactions;
(e) Upon the adoption of the Authorizing Ordinance, the City will have duly
authorized (i) the execution and delivery of the Bonds and the execution, delivery and
due performance of this Bond Purchase Agreement, the Continuing Disclosure
Agreement and the Tax Regulatory Agreement, (ii) the distribution and use of the
Preliminary Official Statement and the execution, delivery and distribution of the final
Official Statement, and (iii) the taking of any and all such actions as may be required on
the part of the City to carry out, give effect to and consummate the transactions
contemplated by such instruments. Upon the adoption of the Authorizing Ordinance, all
consents or approvals necessary to be obtained by the City in connection with the
foregoing will have been received, and the consents or approvals so received will remain
in full force and effect;
(f) The Rate Ordinance has been duly adopted by Board of Directors of the
City, is in full force and effect and constitutes the legal, valid and binding act of the City;
and this Bond Purchase Agreement, the Continuing Disclosure Agreement and the Tax
Regulatory Agreement, when executed and delivered, will constitute legal, valid and
binding obligations of the City, and this Bond Purchase Agreement, the Continuing
Disclosure Agreement and the Tax Regulatory Agreement will be enforceable against the
City in accordance with their respective terms, except as enforceability thereof may be
limited by bankruptcy, insolvency or other laws affecting creditors' rights generally;
(g) When delivered to or at the direction of the Underwriters, the Bonds will
have been duly authorized, executed, authenticated, issued and delivered and will
constitute legal, valid and binding obligations of the City in conformity with the laws of
the State of Arkansas, including the Authorizing Legislation, and will be entitled to the
benefit and security of the Authorizing Ordinance;
(h) Upon adoption of the Authorizing Ordinance, the City will have duly
approved and authorized the distribution and use of the Preliminary Official Statement
and the execution, delivery and distribution of the Official Statement;
(i) The information contained in the Preliminary Official Statement is, and as
of the Closing Date such information in the final Official Statement will be, true and
correct in all material respects, and the Preliminary Official Statement does not and the
final Official Statement will not contain any untrue or misleading statement of a material
fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
4826 - 1578- 0865.2 4
(j) If, at any time prior to the earlier of (i) receipt of notice from the
Underwriters pursuant to Section 3(d) hereof that Official Statements are no longer
required to be delivered under the Rule or (ii) 25 days after the Closing Date, any event
occurs as a result of which the Official Statement, as then amended or supplemented,
might include an untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, the City shall promptly notify the Underwriters in writing of
such event. Any information supplied by the City for inclusion in any amendments or
supplements to the Official Statement will not contain any untrue or misleading statement
of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
Upon the request of the Underwriters therefor, the City shall prepare and deliver to the
Underwriters, at the City's expense, as many copies of an amendment or supplement to
the Official Statement which will correct any untrue statement or omission therein as the
Underwriters may reasonably request;
(k) Neither the adoption of the Authorizing Ordinance, the adoption of the
Rate Ordinance, the execution and delivery of this Bond Purchase Agreement, the Bonds,
the Continuing Disclosure Agreement or the Tax Regulatory Agreement, nor the
consummation of the transactions contemplated herein or therein or the compliance with
the provisions hereof or thereof will conflict with, or constitute on the part of the City a
violation of, or a breach of or default under, (i) any statute, indenture, mortgage,
commitment, note or other agreement or instrument to which the City is a party or by
which it is bound, (ii) any provision of the Constitution of the State of Arkansas, or
(iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the
City (or the members of its Board of Directors or any of its officers in their respective
capacities as such) is subject. Upon adoption of the Authorizing Ordinance, all consents,
approvals, authorizations and orders of governmental or regulatory authorities, if any,
which are required for the City's execution and delivery of, consummation of the
transactions contemplated by, and compliance with the provisions of this Bond Purchase
Agreement, the Authorizing Ordinance, the Bonds, the Continuing Disclosure Agreement
and the Tax Regulatory Agreement will have been obtained;
(1) The City has never been in default at any time as to the payment of
principal of or interest on any obligation which it has issued, including those which it has
issued as a conduit for another entity, except as specifically disclosed in the Official
Statement;
(m) Except as is specifically disclosed in the Official Statement, there is no
action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, pending or, to the best knowledge of the City, threatened,
which in any way questions the powers of the City referred to in subparagraphs 4(c) and
(d) above, or the validity of any proceeding taken by the City in connection with the
issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could
materially adversely affect the transactions contemplated by this Bond Purchase
Agreement, or of any other document or instrument required or contemplated by the
Bond financing, or which, in any way, could adversely affect the validity or
4826 - 1578- 0865.2 5
enforceability of the Authorizing Ordinance, the Rate Ordinance, the Bonds, the
Continuing Disclosure Agreement, the Tax Regulatory Agreement or this Bond Purchase
Agreement or, to the knowledge of the City, which in any way questions the exclusion
from gross income of the recipients thereof of the interest on the Bonds for federal
income tax purposes or in any other way questions the status of the Bonds under federal
or State of Arkansas tax laws or regulations;
(n) Any certificate signed by any official of the City and delivered to the
Underwriters shall be deemed a representation and warranty by the City to the
Underwriters as to the truth of the statements therein contained;
(o) The City has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon;
(p) The audited financial statements and supplemental financial statements of
the System for the years ended December 31, 2005 and December 31, 2006, included in
the Official Statement, present fairly the financial position of the System as of the dates
indicated and the results of the System's operations for the periods specified, and such
financial reports and statements have been prepared in conformity with generally
accepted governmental accounting principles consistently applied in all material respects
to the periods involved, except as otherwise stated in the notes thereto. There has been
no material change in the general affairs, management, properties, financial position,
capitalization or results of operations of the System since the date of such financial
statements except as set forth in the Official Statement;
(q) The City will not knowingly take or omit to take any action, which action
or omission will in any way cause the proceeds from the sale of the Bonds to be applied
in a manner other than as provided in the Authorizing Ordinance, or which would cause
the interest on the Bonds to be includable in gross income for federal income tax
purposes; and
(r) The City has not defaulted with respect to any obligations under previous
undertakings pursuant to the Rule.
5. City's Covenants. The City covenants with the Underwriters as follows:
(a) The City will cooperate with the Underwriters in qualifying the Bonds for
offer and sale under the securities or Blue Sky laws of such jurisdictions of the
United States as the Underwriters may request; provided, however, that the City shall not
be required to consent to suit or to service of process in any jurisdiction. The City
consents to the use by the Underwriters in the course of its compliance with the securities
or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds,
subject to the right of the City to withdraw such consent for cause by written notice to the
Underwriters.
(b) Prior to the earlier of (i) receipt of notice from the Underwriters pursuant
to Section 3(d) hereof that final Official Statements are no longer required under the Rule
4826 -1578- 0865.2 6
or (ii) 25 days after the Closing Date, the City shall provide the Underwriters with such
information regarding the City, the System, and the current financial condition and
ongoing operations of the City and the System, all as the Underwriters may reasonably
request.
6. Closing. At 10:00 a.m., Little Rock, Arkansas time on June 19, 2007, or at such
other time and /or date as shall have been mutually agreed upon by the City and the Underwriters
(the "Closing Date "), the City will deliver the Bonds, or cause the Bonds to be delivered, to or at
the direction of the Underwriters, said Bonds to be in definitive form duly executed by the City
and authenticated by the Trustee, together with the other documents hereinafter mentioned; and
the Underwriters will accept such delivery and pay the Purchase Price of the Bonds by making a
wire transfer of federal funds payable to the order of the Trustee for the account of the City.
The Bonds shall be delivered to The Depository Trust Company in New York,
New York, and the activities relating to the final execution and delivery of the Authorizing
Ordinance, the Continuing Disclosure Agreement and the Tax Regulatory Agreement and the
other documents related to the Bonds and the payment for the Bonds and the delivery of the
certificates, opinions and other instruments as described in Section 8 of this Bond Purchase
Agreement shall occur in the offices of Kutak Rock LLP, 124 West Capitol Avenue, Suite 2000,
Little Rock, Arkansas ( "Bond Counsel ") or at such other place as shall have been mutually
agreed upon by the City and the Underwriters. The payment for the Bonds and simultaneous
delivery of the Bonds to or at the direction of the Underwriters is herein referred to as the
"Closing."
7. Underwriters' Right to Cancel. The Underwriters shall have the right to cancel
their obligation to purchase the Bonds hereunder by notifying the City in writing or by telegram
of their election to do so between the date hereof and the Closing, if at any time hereafter and
prior to the Closing:
(a) the House of Representatives or the Senate of the Congress of the
United States, or a committee of either, shall have pending before it, or shall have passed or
recommended favorably, legislation introduced previous to the date hereof, which
legislation, if enacted in its form as introduced or as amended, would have the purpose or
effect of imposing federal income taxation upon revenues or other income of the general
character to be derived by the City or by any similar body under the Authorizing Ordinance
or similar documents or upon interest received on obligations of the general character of the
Bonds or the Bonds, or of causing interest on obligations of the general character of the
Bonds, or the Bonds, to be includable in gross income for purposes of federal income
taxation, and such legislation, in the Representative's opinion, materially adversely affects
the market price of the Bonds; or
(b) a tentative decision with respect to legislation shall be reached by a
committee of the House of Representatives or the Senate of the Congress of the
United States, or legislation shall be favorably reported or rereported by such a committee or
be introduced, by amendment or otherwise, in or be passed by the House of Representatives
or the Senate, or recommended to the Congress of the United States for passage by the
President of the United States, or be enacted or a decision by a federal court of the
4826 -1578- 0865.2 7
United States or the United States Tax Court shall have been rendered, or a ruling, release,
order, regulation or official statement by or on behalf of the United States Treasury
Department, the Internal Revenue Service or other governmental agency shall have been
made or proposed to be made having the purpose or effect, or any other action or event shall
have occurred which has the purpose or effect, directly or indirectly, of adversely affecting
the federal income tax consequences of owning the Bonds or of any of the transactions
contemplated in connection herewith, including causing interest on the Bonds to be included
in gross income for purposes of federal income taxation, or imposing federal income
taxation upon revenues or other income of the general character to be derived by the City or
by any similar body under the Authorizing Ordinance or similar documents or upon interest
received on obligations of the general character of the Bonds, or the Bonds which, in the
opinion of the Representative, materially adversely affects the market price of or market for
the Bonds; or
(c) legislation shall have been enacted, or actively considered for enactment
with an effective date prior to the Closing, or a decision by a court of the United States shall
have been rendered, the effect of which is that the Bonds, including any underlying
obligations, or the Authorizing Ordinance, as the case may be, is not exempt from the
registration, qualification or other requirements of the Securities Exchange Act of 1933, as
amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then
in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or
(d) a stop order, ruling, regulation or official statement by the Securities and
Exchange Commission or any other governmental agency having jurisdiction of the subject
matter shall have been issued or made or any other event occurs, the effect of which is that
the issuance, offering or sale of the Bonds, including any underlying obligations, or the
execution and delivery of the Authorizing Ordinance as contemplated hereby or by the
Official Statement, is or would be in violation of any provision of the federal securities laws,
including the Securities Act of 1933, as amended and as then in effect, the Securities
Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939,
as amended and as then in effect; or
(e) any event shall have occurred or any information shall have become known
to the Underwriters which causes the Underwriters to reasonably believe that the Official
Statement as then amended or supplemented includes an untrue statement of a material fact,
or omits to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or
(f) there shall have occurred any outbreak of hostilities or any national or
international calamity or crisis, including a financial crisis, the effect of which on the
financial markets of the United States is such as, in the reasonable judgment of the
Representative, would materially adversely affect the market for or market price of the
Bonds; or
(g) there shall be in force a general suspension of trading on the New York
Stock Exchange, the effect of which on the financial markets of the United States is such as,
4826 - 1578- 0865.2 8
in the reasonable judgment of the Representative, would materially adversely affect the
market for or market price of the Bonds; or
(h) a general banking moratorium shall have been declared by federal,
New York or State authorities; or
(i) any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the City; or
0) additional material restrictions not in force as of the date hereof shall have
been imposed upon trading in securities generally by any governmental authority or by any
national securities exchange; or
(k) the New York Stock Exchange or other national securities exchange, or any
governmental authority, shall impose, as to the Bonds or obligations of the general character
of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by, or the charge to the net capital requirements
of the Underwriters.
8. Conditions to Underwriters' Obligations. The obligation of the Underwriters
to purchase the Bonds shall be subject (a) to the performance by the City of its obligations to be
performed hereunder at and prior to the Closing, (b) to the accuracy of the representations and
warranties of the City herein as of the date hereof and as of the time of the Closing, and (c) to the
following conditions, including the delivery by the City of such documents as are enumerated
herein in form and substance satisfactory to the Representative:
(i) The Bonds shall have been duly authorized, executed and delivered in the
form approved by the City in the Authorizing Ordinance with only such changes therein
as the Underwriters and the City shall mutually agree upon, which shall in all instances
be as described in the final Official Statement;
(ii) At the time of Closing, (1) the Official Statement, this Bond Purchase
Agreement, the Authorizing Ordinance, the Rate Ordinance, the Continuing Disclosure
Agreement and the Tax Regulatory Agreement shall be in full force and effect and shall
not have been amended, modified or supplemented from the date hereof, except as may
have been agreed to in writing by the Underwriters, (2) the proceeds of the sale of the
Bonds and other funds shall be deposited and applied as described in the Authorizing
Ordinance, (3) no default or event of default under the Authorizing Ordinance shall have
occurred and be continuing, and (4) no material adverse change affecting the City or the
System shall have occurred, nor shall any development involving a prospective and
material adverse change in, or affecting the business, financial condition, results of
operations, prospects or properties of the City or the System have occurred;
(iii) Receipt of fully executed originals of the Authorizing Ordinance, the Rate
Ordinance, the Continuing Disclosure Agreement and the Tax Regulatory Agreement at
or prior to the Closing;
4826 - 1578 - 0865.2 9
(iv) At or prior to the Closing, the Underwriters shall receive the following
documents in such number of counterparts as shall be mutually agreeable to the
Underwriters and Bond Counsel:
(1) A final approving opinion of Bond Counsel, dated the Closing
Date, in substantially the form set forth in Exhibit B hereto;
(2) A supplemental opinion of Bond Counsel, addressed to the City,
the Trustee and the Underwriters and dated the Closing Date, in substantially the
form set forth in Exhibit C hereto;
(3) An opinion of Don F. Hamilton, Esq., Counsel to the Committee,
in substantially the form set forth in Exhibit D hereto;
(4) The Official Statement executed by a duly authorized officer of the
City;
(5) Certified copies of the Authorizing Ordinance and Rate Ordinance
and all other ordinances and resolutions of the City relating to the Bonds;
(6) Photocopies of the Bonds as executed and delivered;
(7) A letter or letters from Moody's Investor Service, Inc. to the effect
that the Bonds have been assigned a rating of no less than "Aaa" based on the
delivery of the Policy (as defined herein) and an underlying rating of "Al", which
ratings shall be in effect as of the Closing Date;
(8) The municipal bond insurance policy (the "Policy ") issued by
Financial Security Assurance Inc. ( "FSA "), together with such supporting
certificates of FSA and opinions of counsel to FSA as shall be satisfactory to
Bond Counsel;
(9) A letter from Cobb & Suskie, Ltd., independent certified public
accountants, in which consent is given to the use of its report on the audited
financial statements of the System in the Official Statement and to the references
made to the firm in the Official Statement;
(10) A letter from Cobb & Suskie, Ltd., independent certified public
accountants, stating that the debt service coverage tests required for the issuance
and security of the Bonds on a parity basis with the Parity Bonds have been
satisfied;
(11) A certificate, in form and substance satisfactory to the
Underwriters and Bond Counsel, of the Mayor of the City and the Chief
Executive Office of Little Rock Wastewater (the "Utility ") or any duly authorized
officer or official of the City or the Utility satisfactory to the Underwriters and to
Bond Counsel, dated as of the Closing Date, to the effect that: (i) each of the
City's representations contained herein are true and correct in all material respects
f
4826 - 1578- 0865.2
10
t.
on and as of the Closing Date, as if made on the Closing Date; (ii) the City has
authorized, by all action necessary under the Authorizing Legislation, the
adoption of the Authorizing Ordinance and the execution, delivery and due
performance of the Bonds, the Continuing Disclosure Agreement, the Tax
Regulatory Agreement and this Bond Purchase Agreement, and the pledging of
the Net Revenues, and the City has complied with all agreements and covenants
and satisfied all conditions on its part to be complied with or satisfied prior to the
Closing; (iii) there is no action, suit, proceeding or investigation involving the
City before or by any court or public board or body pending, or to his knowledge
threatened, wherein an unfavorable decision, ruling or finding would (A) affect
the existence or powers of the City or the titles of its officers to their respective
offices, (B) restrain or enjoin the issuance, sale or delivery of the Bonds or the
collection of any moneys or property pledged or to be pledged under the
Authorizing Ordinance or the pledge thereof, (C) in any way question or affect
any of the rights, powers, duties or obligations of the City with respect to the
moneys and assets pledged or to be pledged to pay the principal of and premium,
if any, and interest on the Bonds, (D) in any way question the authority for the
issuance of the Bonds or the validity or enforceability of the Bonds, the
Authorizing Ordinance, the Rate Ordinance, the Continuing Disclosure
Agreement or the Tax Regulatory Agreement, or (E) in any way question or affect
this Bond Purchase Agreement or the transactions contemplated hereby, or by the
Official Statement, the documents referred to in the Official Statement, or any
other agreement to which the City is a party and relating to the System; (iv) the
Bonds, as executed by the City, are in the form or in substantially the form
approved for such execution by appropriate proceedings of the City; (v) since
December 31, 2006, there has not been any material adverse change in the
properties, financial position or results of operations of the System, whether or not
arising from transactions in the ordinary course of business, other than such
changes which are disclosed in the Official Statement, and since such date the
City has not entered into any transaction or incurred any liability material as to the
System except as disclosed in the Official Statement; (vi) there are not pending or,
to their knowledge, threatened legal proceedings which are not disclosed in the
Official Statement, and which are material as to the City or the System, or to
which the City or the System is a party, or of which property of the City or the
System is the subject, which will adversely affect the transactions contemplated
hereby or by the Official Statement; (vii) the information contained in the Official
Statement relating to the City, the System, their organization, properties,
operations and financial condition, and the descriptions of the Bonds, the
Authorizing Ordinance, the Continuing Disclosure Agreement and the Net
Revenues is true and correct in all material respects and does not contain any
untrue or incorrect statement of a material fact and does not omit to state a
material fact necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading; (viii) to the best
of their knowledge, no event affecting the City or the System has occurred since
the date of the Official Statement which should be disclosed therein in order to
make the statements and information therein not misleading in any respect; and
4826 -1578- 0865.2 11
(ix) the City has duly authorized by all necessary action the signing of the Official
Statement by its Mayor; and
(12) A certified copy of the resolution of the Committee authorizing
and approving the distribution of the Preliminary Official Statement and the
execution and delivery of the Official Statement, the Continuing Disclosure
Agreement, the Tax Regulatory Agreement and this Bond Purchase Agreement;
(13) Evidence that Federal Form 8038 -G has been executed by the City
and is ready for filing with the Internal Revenue Service; and
(14) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Underwriters and Bond Counsel may
reasonably request to evidence compliance by the City with legal requirements,
the truth and accuracy, as of the time of Closing, of the representations of the City
herein contained and the due performance or satisfaction by the City at or prior to
such time of all agreements then to be performed and all conditions then to be
satisfied.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriters
contained in this Bond Purchase Agreement, or if the obligation of the Underwriters to purchase
and accept delivery of the Bonds shall be terminated for any reason permitted by this Bond
Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the
Underwriters nor the City shall be under further obligation hereunder; except that the respective
obligations to pay expenses, as provided in Section 12 hereof, shall continue in full force and
effect.
9. Conditions to Obligations of the City. The obligations of the City hereunder are
subject to the performance by the Underwriters of their obligations hereunder.
10. Survival. All representations, warranties and agreements of the City shall remain
operative and in full force and effect, regardless of any investigations made by or on behalf of
the Underwriters, and shall survive the Closing. The obligations of the City under Sections 11 or
12 hereof shall survive any termination of this Bond Purchase Agreement by the Underwriters
pursuant to the terms hereof.
11. Indemnification. The City, to the extent permitted by law, agrees to indemnify
and hold harmless the Underwriters, each member, officer, director, partner or employee of the
Underwriters and each person who controls the Underwriters within the meaning of Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended (collectively called the "Indemnified Parties "), against any and all losses, claims,
damages, liabilities or expenses (including any legal or other expenses incurred by an
Indemnified Party in connection with investigating any claims against an Indemnified Party and
defending any actions) whatsoever caused by any untrue statement or misleading statement or
alleged untrue statement or alleged misleading statement of a material fact contained in the
Official Statement or caused by any omission or alleged omission from the Official Statement of
any material fact required to be stated therein or necessary in order to make the statements made
4826- 1578- 0865.2 12
therein, in the light of the circumstances under which they were made, not misleading insofar as
such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading
statement or omission or alleged untrue or misleading statement or omission in the information
contained in the Official Statement; provided, however, that the City shall not be liable to an
Indemnified Party in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in reliance upon and in conformity
with written information furnished to the City by the Underwriters specifically for use therein.
No Indemnified Parties shall be indemnified hereunder for any losses, claims, damages or
liabilities resulting from the negligence of such Indemnified Parties.
In case any action shall be brought against one or more of the Indemnified Parties based
upon the Official Statement and in respect of which indemnity may be sought against the City,
the Indemnified Parties shall promptly notify the City in writing, and, to the extent permitted by
law, the City shall promptly assume the defense thereof, including the employment of counsel,
the payment of all expenses and the right to negotiate and consent to settlement. Any one or
more of the Indemnified Parties shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Indemnified Parties unless employment of such
counsel has been specifically authorized by the City. The City shall not be liable for any
settlement of any such action effected without its consent by any of the Indemnified Parties, but
if settled with the consent of the City, the City agrees to indemnify and hold harmless the
Indemnified Parties to the extent provided in this Bond Purchase Agreement and to the extent
permitted by law.
12. Payment of Expenses. The City will pay or cause to be paid all reasonable
expenses incident to the performance of its obligations under this Bond Purchase Agreement,
including, but not limited to, expenses of mailing or delivery of the Bonds, legal publication
costs, charges for obtaining CUSIP numbers on the Bonds, fees payable to The Depository Trust
Company relating to the Bonds, Federal funds charges, costs of printing the Bonds, the
Preliminary and final Official Statements, any amendment or supplement to the Preliminary or
final Official Statement and this Bond Purchase Agreement, fees and disbursements of Bond
Counsel and counsel to the City, if any, accountants' fees and expenses, any fees charged by
investment rating agencies for the rating of the Bonds, bond insurance premiums, if any, fees of
the Trustee and any paying agent fees, and any fees and disbursements in connection with the
qualification of the Bonds for sale under the securities or "Blue Sky" laws of the various
jurisdictions and the preparation of "Blue Sky" memoranda. In the event this Bond Purchase
Agreement shall terminate because of the default of the Underwriters, the City will, nevertheless,
pay, or cause to be paid, all of the expenses specified above. The Underwriters shall pay all
advertising expenses in connection with the public offering of the Bonds, and all other expenses
incurred by them in connection with the public offering and distribution of the Bonds, including
the fees and expenses of any counsel retained by the Underwriters. If the City defaults under this
Bond Purchase Agreement, the Underwriters may bring whatever legal action they may have
against the City to recover damages, if any, incurred by the Underwriters.
13. Notices. Any notice or other communication to be given to the City under this
Bond Purchase Agreement may be given by delivering the same in writing at the address set
4826 - 1578- 0865.2 13
forth above, and any notice or other communication to be given to the Underwriters under this
Bond Purchase Agreement may be given by delivering the same in writing to the Representative,
Morgan Keegan & Company, Inc., 100 Morgan Keegan Drive, Suite 400, Little Rock, AR
72202, Attention: Mr. Jim Alexander.
14. Non assign ability. This Bond Purchase Agreement is made solely for the benefit
of the City and the Underwriters (including any successors or assigns of the Underwriters), and
no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder
or by virtue hereof.
15. Applicable Law. This Bond Purchase Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4826 -1578- 0865.2 14
16. Counterparts. This Bond Purchase Agreement shall become effective upon your
acceptance hereof and may be executed in counterparts, each of which shall be regarded as an
original and all of which shall constitute one and the same document.
Very truly yours,
MORGAN KEEGAN & COMPANY, INC., as
Representative for the Underwriters
By:_
Title:
Approved and recommended to the City
this 10th day of May, 2007:
LITTLE ROCK SANITARY SEWER COMMITTEE
By:
Title: Reggie A. Corbitt, P.E., Chief Executive Officer
Accepted and agreed to as of p.m.
on the date first above written:
CITY OF LITTLE ROCK, ARKANSAS
By:
Title: Mark Stodola, Mayor
4826 - 1578 - 0865.2 15
EXHIBIT A
$6390509000
CITY OF LITTLE ROCK, ARKANSAS
SEWER CONSTRUCTION REVENUE BONDS
SERIES 2007A
MATURITY SCHEDULE
(June 1)
Principal
Interest
(June 1)
Principal
Interest
Maturity
Amount
Rate
Price
Maturity
Amount
Rate
Price
2008
$1,050,000
4.000%
100.331%
2023*
$1,965,000
4.750%
103.527%
2009
1,095,000
4.000%
100.651%
2024*
2,060,000
4.750%
103.527%
2010
1,135,000
4.000%
100.913%
2025*
2,160,000
4.750%
103.527%
2011
1,185,000
3.625%
99.798%
2026*
2,260,000
4.750%
103.527%
2012
1,225,000
4.000%
101.343%
2027
2,370,000
4.750%
103.527%
2013
1,275,000
4.000%
101.373%
2028*
2,480,000
5.000%
106.365%
2014
1,325,000
4.500%
104.362%
2029*
2,605,000
5.000%
106.365%
2015
1,385,000
4.500%
104.692%
2030*
2,735,000
5.000%
106.365%
2016
1,445,000
4.500%
104.957%
2031
2,870,000
5.000%
106.365%
2017
1,515,000
5.000%
109.170%
2032*
3,015,000
4.375%
98.396%
2018
1,590,000
4.000%
99.647%
2033
3,145,000
4.375%
98.396%
2019
1,650,000
4.375%
101.898%
2034*
3,285,000
4.750%
102.793%
2020
1,725,000
4.500%
102.499%
2035*
3,440,000
4.750%
102.793%
2021
1,800,000
4.500%
102.253%
2036*
3,605,000
4.750%
102.793%
2022
1,880,000
4.500%
102.009%
2037
3,775,000
4.750%
102.793%
(with accrued interest on all Bonds from June 1, 2007)
* Mandatory sinking fund redemption.
4826 -1578- 0865.2 A -1
EXHIBIT B
PROPOSED FORM OF BOND COUNSEL APPROVING OPINION
City of Little Rock
Little Rock, Arkansas
Regions Bank, as trustee.
Little Rock, Arkansas
Financial Security Assurance Inc.
New York, New York
Ladies and Gentlemen:
June , 2007
Morgan Keegan & Company, Inc.
Little Rock, Arkansas
Crews & Associates, Inc.
Little Rock, Arkansas
$63,050,000
City of Little Rock, Arkansas
Sewer Construction Revenue Bonds
Series 2007A
We have acted as bond counsel in connection with the issuance and sale by the City of
Little Rock, Arkansas (the "City "), a political subdivision of the State of Arkansas, of its
$63,050,000 Sewer Construction Revenue Bonds, Series 2007A (the "Bonds ").
The Bonds are being issued pursuant to and in full compliance with the provisions of the
Constitution and laws of the State of Arkansas, including, particularly, Amendment 65 and Title
14, Chapter 164, Subchapter 4, and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of
1987 Annotated (as from time to time amended, the "Authorizing Legislation "), and pursuant to
Ordinance No. of the City, duly adopted and approved on May 15, 2007 (the
"Authorizing Ordinance ").
The Bonds are issued under and secured and entitled to the protection given by the
Authorizing Ordinance. In the Authorizing Ordinance, Regions Bank, Little Rock, Arkansas, is
named as trustee for the Bonds (the "Trustee "). Reference is hereby made to the Authorizing
Ordinance for the provisions, among others, with respect to the conditions for the issuance of
parity debt by the City, the nature and extent of the security for the Bonds, the rights, duties and
obligations of the City, the Trustee and the holders of the Bonds, and the terms upon which the
Bonds are issued and secured.
We have examined the law and such certified proceedings and other papers as we have
deemed necessary to render this opinion. As to questions of fact material to our opinion, we
have relied upon the representations of the City contained in the Authorizing Ordinance and in
4826 -1578- 0865.2 B -1
the certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing laws, regulations, rulings
and judicial decisions, as follows:
1. The City is duly created and validly existing as a municipal corporation and
political subdivision of the State of Arkansas. Pursuant to the Constitution and laws of the State
of Arkansas, including, particularly, Amendment 65 and the Authorizing Legislation, the City is
empowered to adopt the Authorizing Ordinance, to perform the agreements on its part contained
therein, and to issue the Bonds.
2. The Authorizing Ordinance has been duly adopted by the City and constitutes a
legal, valid and binding obligation of the City enforceable upon the City in accordance with its
terms.
3. The Bonds have been validly authorized, executed, issued and delivered by the
City and represent legal, valid and binding special obligations of the City. The principal,
premium, if any, and interest on the Bonds shall be payable from, and shall be secured by a valid
assignment and pledge by the City to the Trustee of, and a lien on, the Net Revenues (as defined
in the Authorizing Ordinance) of the City's sewer system in the manner and to the extent
described in Section 10 of the Authorizing Ordinance. Such pledge is (i) subject to the existing
parity pledge of Net Revenues securing the City's Sewer Refunding and Construction Revenue
Bonds, Series 2001, and the City's Sewer Refunding and Construction Revenue Bonds, Series
2005, and (ii) senior to the pledge of Net Revenues securing the City's Sewer Revenue Bond,
Series 1990, the City's Sewer Revenue Bond, Series 1991, the City's Sewer Revenue Bond,
Series 1996, the City's Sewer Revenue Bond, Series 1999, the City's Sewer Revenue Bond,
Series 2004A, the City's Sewer Revenue Bond, Series 2004B, and the City's Sewer Revenue
Bond, Series 2004C. The City is duly authorized to pledge such Net Revenues, and no further
action on the part of the City or any other party is required to perfect the same or the interest of
the owners of the Bonds therein.
4. Interest on the Bonds is excluded from gross income for federal income tax
purposes and is not a specific preference item for purposes of the federal alternative minimum
tax. The opinion described in the preceding sentence assumes the accuracy of certain
representations and compliance by the City with covenants designed to satisfy the requirements
of the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance
of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of issuance of
the Bonds. The City has covenanted to comply with such requirements. We express no opinion
regarding other federal tax consequences arising with respect to the Bonds.
5. The interest on the Bonds is exempt from all state, county and municipal taxes in
the State of Arkansas.
4826-1578-0865.2 B -2
6. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as
amended, and the Authorizing Ordinance is not required to be qualified under the Trust
Indenture Act of 1939, as amended, in connection with the offer and sale of the Bonds.
It is to be understood that the rights of the registered owners of the Bonds and the
enforceability of the Bonds and the Authorizing Ordinance may be subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
heretofore or hereafter enacted to the extent constitutionally applicable and that their
enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
Very truly yours,
4826 - 1578- 0865.2 B -3
EXHIBIT C
PROPOSED FORM OF BOND COUNSEL SUPPLEMENTAL OPINION
City of Little Rock
Little Rock, Arkansas
Regions Bank, as trustee.
Little Rock, Arkansas
Financial Security Assurance Inc.
New York, New York
Ladies and Gentlemen:
June , 2007
Morgan Keegan & Company, Inc.
Little Rock, Arkansas
Crews & Associates, Inc.
Little Rock, Arkansas
$63,050,000
City of Little Rock, Arkansas
Sewer Construction Revenue Bonds
Series 2007A
We have acted as Bond Counsel in connection with the issuance by the City of Little
Rock, Arkansas (the "City ") of $63,050,000 aggregate principal amount of its Sewer
Construction Revenue Bonds, Series 2007A (the "Bonds "), and have delivered on this date our
approving opinion with respect thereto. Reference is hereby made to such approving opinion.
All terms not defined herein shall have the meanings assigned thereto in such approving opinion.
We have examined the law and such certified proceedings and other papers as we have
deemed necessary to render this opinion. As to questions of fact material to our opinion, we
have relied upon the representations of the City contained in the Authorizing Ordinance and in
the certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, that:
1. The Bond Purchase Agreement dated May 10, 2007 (the "Bond Purchase
Agreement "), by and between the City and Morgan Keegan & Company, Inc. (for Morgan
Keegan & Company, Inc. and as authorized representative of Crews & Associates, Inc., together,
the "Underwriters "), has been duly authorized, executed and delivered by the City and, assuming
due execution by the Underwriters, and subject to the extent that the rights and remedies set forth
therein may be limited by bankruptcy, insolvency or other laws affecting creditors' rights
generally, constitutes a legal, valid and binding agreement in accordance with its terms.
2. The City has ratified the distribution of the Preliminary Official Statement.
4826 - 1578 - 0865.2 C -1
3. The Authorizing Ordinance conforms as to form and tenor with the terms and
provisions thereof as summarized and set out in the Official Statement dated May 15, 2007,
relating to the Bonds (the "Official Statement ").
4. Other than as described in the Official Statement, to the best of our knowledge,
there is no action, suit, proceeding or investigation at law or in equity before or by any court,
agency, public board or other administrative body (either State or Federal), pending or threatened
against or affecting the City, challenging the validity of the transactions contemplated by the
Official Statement or the validity of the Bonds, the Authorizing Ordinance or the Bond Purchase
Agreement, or which could have a material adverse effect on (i) the financial condition of the
City, (ii) the ability of the City to perform its obligations under the Authorizing Ordinance, (iii)
the security for the Bonds, (iv) the transactions contemplated by the Authorizing Ordinance, or
(v) the ability of the City to maintain and operate the System.
5. Based upon our work as Bond Counsel, including discussions with officers of and
counsel to the City and the Little Rock Sanitary Sewer Committee, nothing has come to our
attention that would lead us to believe that the Official Statement (except for information
provided by Financial Security Assurance Inc. and except for the financial statements and the
other financial and statistical data included in the Official Statement and in the appendices
thereto, as to which no view is expressed), contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading in any
material respect.
This opinion is being rendered to you solely for your use and benefit and may not be
relied upon in any manner, nor used, by any other person.
Very truly yours,
4826- 1578- 0865.2 C -2
EXHIBIT D
PROPOSED FORM OF OPINION OF COUNSEL TO THE COMMITTEE
June , 2007
Morgan Keegan & Company, Inc.
Little Rock, Arkansas
Kutak Rock LLP
Little Rock, Arkansas
63,050,000
City of Little Rock, Arkansas
Sewer Construction Revenue Bonds
Series 2007A
Ladies and Gentlemen:
I am General Counsel to the Little Rock Sanitary Sewer Committee (the "Committee ")
and have acted as its counsel in connection with the issuance by the City of Little Rock,
Arkansas (the "City ") of its $63,050,000 Sewer Construction Revenue Bonds, Series 2007A,
dated June 1, 2007 (the "Bonds ").
I have examined the law and such certified proceedings and other papers as I have
deemed necessary to render this opinion. As to questions of fact material to my opinion, I have
relied upon representations of management of Little Rock Wastewater and members of the
Committee and other certifications of public officials furnished to me, without undertaking to
verify the same by independent investigation.
Based upon my examination, I am of the opinion, as of the date hereof and under existing
law, as follows:
1. The Committee is properly constituted pursuant to the laws of the State of
Arkansas and ordinances of the City, and the Committee has duly approved the Bond Purchase
Agreement dated May 10, 2007 (the "Bond Purchase Agreement "), by and between the City and
Morgan Keegan & Company, Inc. (for Morgan Keegan & Company, Inc. and as authorized
representative of Crews & Associates, Inc., together, the "Underwriters "), and has taken all
appropriate action pursuant to duly adopted resolutions in connection with the issuance of the
Bonds. The Committee has legislative responsibility and authority to operate, manage and
maintain the sewer facilities of the City.
2. To the best of my knowledge and belief, there is no litigation of any nature
pending or threatened against the City or the Committee to restrain or enjoin the issuance, sale,
4826 -1578- 0865.2 D -1
execution or delivery of the Bonds or the execution and delivery by the Issuer and the Committee
of the Bond Purchase Agreement or in any way contesting or affecting the validity of Ordinance
No. 19,647 of the City establishing rates for sewer services, or any proceedings of the City with
respect to the issuance or sale of the Bonds.
Yours truly,
Don F. Hamilton
General Counsel
4826 -1578- 0865.2 D -2
�b
y
O y
a
�y
y
ro
� r
�v
w
o 15
o
c
U.
J f
� U
^ � J
'J
G c
y
�y
b
U
s C
J
U ,
U
� � 3
G s
U
c >
E
L C; J
h
PRELIMINARY OFFICIAL STATEMENT DATED MAY 2, 2007
NEW ISSUE *RATINGS: Moody's: "Aaa" (Underlying "Al")
BOOK -ENTRY ONLY (FSA Insured)
t
In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the
accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2007A Bonds is excluded
from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum
tax. Under existing law, Bond Counsel is of the opinion that the Series 2007A Bonds and the interest thereon are exempt from all state,
county and municipal taxes in the State of Arkansas. See the caption "TAX MATTERS" herein.
Dated: June 1, 2007
$64,865,000 **
CITY OF LITTLE ROCK, ARKANSAS
SEWER CONSTRUCTION REVENUE BONDS
SERIES 2007A
Due: June 1, as shown on inside cover
The Sewer Construction Revenue Bonds, Series 2007A (the "Series 2007A Bonds "), are being issued by the City of Little Rock,
Arkansas (the "City ") for the purpose of financing the acquisition, construction and equipping of certain betterments and improvements to
the City's sewer system (the "System "), funding a debt service reserve, paying the premium for a municipal bond insurance policy, and
paying certain expenses in connection with the issuance of the Series 2007A Bonds. See the captions "ESTIMATED SOURCES AND USES
OF FUNDS" and "THE PROJECT" herein.
The Series 2007A Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co.,
as nominee of The Depository Trust Company ( "DTC "), New York, New York, to which principal, premium, if any, and interest
payments on the Series 2007A Bonds will be made so long as Cede & Co. is the registered owner of the Series 2007A Bonds. Individual
purchases of the Series 2007A Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof.
Individual purchasers ( "Beneficial Owners ") of Series 2007A Bonds will not receive physical delivery of bond certificates. See the
caption "BOOK -ENTRY ONLY SYSTEM' herein.
The Series 2007A Bonds shall bear interest from their dated date, payable on June 1 and December 1 of each year, commencing
December 1, 2007. All such interest payments shall be payable to the persons in whose name such Series 2007A Bonds are registered on
the bond registration books maintained by Regions Bank, Little Rock, Arkansas, as trustee (the "Trustee "), as of the fifteenth day of the
calendar month next preceding the applicable interest payment date. Principal of and premium, if any, on the Series 2007A Bonds shall
be payable at the principal corporate trust office of the Trustee. So long as DTC or its nominee is the registered owner of the Series
2007A Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of such payments
to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully described herein.
Payment of the principal of, premium, if any, and interest on the Series 2007A Bonds is secured by a pledge of the net revenues of
the System (the "Net Revenues "). The pledge of Net Revenues securing the Series 2007A Bonds shall be on a parity with the pledge of
Net Revenues securing (i) $20,065,000 outstanding principal amount of the City's Sewer Refunding and Construction Revenue Bonds,
Series 2001, and (ii) $9,655,000 outstanding principal amount of the City's Sewer Refunding and Construction Revenue Bonds, Series
2005. Such pledge of Net Revenues is senior and superior to the pledge of Net Revenues securing the payment of certain Subordinate
Bonds (defined herein) of the City. In the ordinance of the City authorizing the issuance of the Series 2007A Bonds (the "Authorizing
Ordinance "), the City has covenanted that rates for System services shall, if and when necessary, be increased in such manner as will
produce total System revenues sufficient to pay debt service on all outstanding indebtedness to which revenues of the System are
pledged, to pay System operation, repair and maintenance expenses and to fund deficiencies in the debt service reserve and the
depreciation fund as directed in the Authorizing Ordinance. See the captions "SECURITY FOR THE BONDS" and "SUMMARY OF
THE AUTHORIZING ORDINANCE" herein. The Series 2007A Bonds are subject to optional and mandatory sinking fund redemption
prior to maturity as more fully described herein under the caption "THE SERIES 2007A BONDS - Redemption."
The scheduled payment of principal of and interest on the Series 2007A Bonds when due will be guaranteed under an insurance
policy to be issued concurrently with the delivery of the Series 2007A Bonds by Financial Security Assurance Inc.
The Series 2007A Bonds are special obligations of the City secured by and payable solely from the Net Revenues of the
System. The Series 2007A Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or
statutory debt limitation or restriction. The issuance of the Series 2007A Bonds shall not directly, indirectly or contingently
obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2007A
Bonds, except as described herein with respect to Net Revenues of the System.
The Series 2007A Bonds are offered when, as and if issued by the City and are subject to the final approving opinion of Kutak Rock
LLP, Little Rock, Arkansas, Bond Counsel. Certain matters will be passed upon for the Sanitary Sewer Committee of the City by its
counsel, Don F. Hamilton, Esq., Little Rock, Arkansas. It is expected that the Series 2007A Bonds will be available for delivery in
New York, New York, on or about June 19, 2007.
Morgan Keegan & Company, Inc. ,,
Crews&Associates
The date of this Official Statement is May _, 2007.
* For an explanation of the ratings, see the caption "RATINGS" herein.
** Preliminary, subject to change.
Maturity
Principal Interest
June 1
Amount Rate Yield
2008
$ 1,165,000 % %
2009
1,210,000
2010
1,255,000
2011
1,305,000
2012
1,355,000
2013
1,405,000
2014
1,455,000
2015
1,515,000
MATURITY SCHEDULE*
Maturity
Principal
Price June 1
Amount
% 2016
$ 1,570,000
2017
1,635,000
2018
1,700,000
2019
1,765,000
2020
1,835,000
2021
1,910,000
2022
1,985,000
Interest
Rate Yield Price
$11,205,000 _% Term Bonds due June 1, 2027 Yield - _% Price - %
$13,725, 000 _% Term Bonds due June 1, 2032 Yield - _% Price - _%
$16,870, 000 _% Term Bonds due June 1, 2037 Yield - % Price -
(Plus accrued interest from June 1, 2007)
" Preliminary, subject to change.
No dealer, broker, salesman or other person has been authorized by the City or by Morgan Keegan & Company, Inc. or
Crews & Associates, Inc. (collectively, the "Underwriters ") to give any information or to make any representations, other than
those contained in this Official Statement; and, if given or made, such other information or representations must not be relied
upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of any Series 2007A Bonds in any jurisdiction in which such offer is not
authorized, or in which the person making such offer, solicitation or sale is not qualified to do so, or to any person to whom it is
unlawful to make such offer, solicitation or sale. The information and expressions of opinion contained herein are subject to
change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the business, operations or financial condition of the City
or the System since the date hereof.
THE SERIES 2007A BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, NOR HAS THE AUTHORIZING ORDINANCE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT
OF 1939, AS AMENDED, IN RELIANCE UPON CERTAIN EXEMPTIONS FROM SUCH REGISTRATION AND
QUALIFICATION CONTAINED IN SUCH LAWS.
CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THE CITY, THE UTILITY,
THE DEPOSITORY TRUST COMPANY, FINANCIAL SECURITY ASSURANCE, INC. AND OTHER SOURCES WHICH
ARE BELIEVED TO BE RELIABLE. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THE
OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, THEIR RESPONSIBILITIES TO INVESTORS
UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS
TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION.
OTHER THAN WITH RESPECT TO INFORMATION CONCERNING FINANCIAL SECURITY ASSURANCE
INC. ( "FINANCIAL SECURITY ") CONTAINED UNDER THE CAPTION "BOND INSURANCE" AND IN APPENDIX C
"SPECIMEN OF MUNICIPAL BOND INSURANCE POLICY" HEREIN, NONE OF THE INFORMATION
IN THIS
OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY FINANCIAL SECURITY AND FINANCIAL
SECURITY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (1) THE ACCURACY
OR COMPLETENESS OF SUCH INFORMATION; (2) THE VALIDITY OF THE SERIES 2007A BONDS; OR
(3) THE
TAX- EXEMPT STATUS OF THE INTEREST ON THE SERIES 2007A BONDS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2007A BONDS AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
Page
IntroductoryStatement ....................................................................................................................... ...............................
l
TheSeries 2007A Bonds .................................................................................................................... ...............................
2
Securityfor the Bonds .......................................................................................................................... ...............................
5
BondInsurance ..................................................................................................................................... ...............................
6
Book -Entry Only System .................................................................................................................... ...............................
7
Estimated Sources and Uses of Funds .................................................................................................. ...............................
9
TheProject .......................................................................................................................................... ...............................
10
Estimated Debt Service Requirements ................................................................................................ ...............................
I 1
Estimated Debt Service Coverage ....................................................................................................... ...............................
12
TheSystem ......................................................................................................................................... ...............................
12
TheCity and the County ..................................................................................................................... ...............................
20
Definitionsof Certain Terms .............................................................................................................. ...............................
25
Summaryof the Authorizing Ordinance ............................................................................................. ...............................
26
Summary of the Continuing Disclosure Agreement ........................................................................... ...............................
32
Underwriting....................................................................................................................................... ...............................
35
TaxMatters ......................................................................................................................................... ...............................
36
Ratings................................................................................................................................................ ...............................
37
LegalMatters ...................................................................................................................................... ...............................
37
FinancialStatements ........................................................................................................................... ...............................
37
Miscellaneous..................................................................................................................................... ...............................
38
Accuracy and Completeness of Official Statement .............................................................................. ...............................
38
APPENDIX A - Audited Financial Statements of the System as of and for the
fiscal years ended December 31, 2005 and December 31, 2006 ............................. ...............................
A -1
APPENDIX B - Form of Bond Counsel Opinion .................................................................................. ...............................
B -1
APPENDIX C - Specimen of Municipal Bond Insurance Policy ........................................................... ...............................
C -1
OFFICIAL STATEMENT
$6498659000*
CITY OF LITTLE ROCK, ARKANSAS
SEWER CONSTRUCTION REVENUE BONDS
SERIES 2007A
INTRODUCTORY STATEMENT
The following introductory statement is subject in all respects to the more complete information set forth in
this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their
entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms under the caption "DEFINITIONS OF CERTAIN TERMS" herein.
This Official Statement, including the cover page and the Appendices hereto, is furnished in connection
with the offering of $64,865,000* Sewer Construction Revenue Bonds, Series 2007A (the "Series 2007A Bonds "),
by the City of Little Rock, Arkansas (the "City ").
The City is a city of the first class organized and existing under the laws of the State of Arkansas (the
"State "). The City is authorized and empowered under Amendment 65 to the Constitution of the State
( "Amendment 65 ") and the laws of the State, including particularly Title 14, Chapter 164, Subchapter 4 and Title
14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated (the "Authorizing Legislation "), to issue
and sell its revenue bonds for the purpose of financing the cost of betterments and improvements to its sewer system
(the "System "). The System, also known as Little Rock Wastewater (the "Utility "), is a component unit of the City
and is managed and operated through the Little Rock Sanitary Sewer Committee (the "Committee "), whose
members are appointed by the governing body of the City. See the caption "THE SYSTEM" herein.
The Series 2007A Bonds are to be issued by the City pursuant to Amendment 65, the Authorizing
Legislation and Ordinance No. , adopted and approved on May _, 2007 (the "Authorizing
Ordinance "), for the purpose of (i) financing the costs of acquiring, constructing and equipping betterments and
improvements to the System, (ii) funding a debt service reserve for the Series 2007A Bonds, (iii) paying the
premium for a municipal bond insurance policy, and (iv) paying the costs of issuing the Series 2007A Bonds. See
the captions "ESTIMATED SOURCES AND USES OF FUNDS," `THE PROJECT" and "SUMMARY OF THE
AUTHORIZING ORDINANCE" herein.
The Series 2007A Bonds are special obligations of the City, payable solely from and secured by a pledge of
revenues derived from the operation of the System after the payment of the operation, maintenance and repair
expenses of the System (the "Net Revenues "). Such pledge of Net Revenues is made on a parity basis with an
existing pledge of Net Revenues securing (i) $20,065,000 outstanding principal amount of the City's Sewer
Refunding and Construction Revenue Bonds, Series 2001 (the "Series 2001 Bonds "), and (ii) $9,655,000
outstanding principal amount of the City's Sewer Refunding and Construction Revenue Bonds, Series 2005 (the
"Series 2005 Bonds" and, collectively with the Series 2001 Bonds, the "Parity Bonds "). The pledge of Net
Revenues securing the Series 2007A Bonds and the Parity Bonds is prior and senior to the pledge of Net Revenues
securing (i) $3,097,871 outstanding principal amount of the City's Sewer Revenue Bond, Series 1990 (the "Series
1990 Bond "), (ii) $2,655,318 outstanding principal amount of the City's Sewer Revenue Bond, Series 1991 (the
"Series 1991 Bond "), (iii) $4,083,478 outstanding principal amount of the City's Sewer Revenue Bond, Series 1996
(the "Series 1996 Bond "), (iv) $10,019,036 outstanding principal amount of the City's Sewer Revenue Bond, Series
1999 (the "Series 1999 Bond"), (v) $21,544,954 outstanding principal amount of the City's Sewer Revenue Bond,
Series 2004A (the "Series 2004A Bond "), (vi) $11,583,907 outstanding principal amount of the City's Sewer
Revenue Bond, Series 2004B (the "Series 2004B Bond "), and (vii) $4,730,435 outstanding principal amount of the
City's Sewer Revenue Bond, Series 2004C (the "Series 2004C Bond" and, collectively with the Series 1990 Bond,
the Series 1991 Bond, the Series 1996 Bond, the Series 1999 Bond, the Series 2004A Bond and the Series 2004B
Bond, the "Subordinate Bonds "). In the Authorizing Ordinance, the City has covenanted that rates for System
services shall, if and when necessary, be increased in such manner as will produce total System revenues sufficient
to pay debt service on all outstanding indebtedness to which revenues of the System are pledged (including the
* Preliminary, subject to change.
Series 2007A Bonds, the Parity Bonds and the Subordinate Bonds), to pay System operation, repair and maintenance
expenses and to fund debt service reserve and depreciation fund deficiencies. See the caption "SECURITY FOR
THE BONDS" herein.
In the Authorizing Ordinance, Regions Bank, Little Rock, Arkansas, has been designated as trustee and
paying agent (the "Trustee ") with respect to the Series 2007A Bonds.
Concurrently with the issuance of the Series 2007A Bonds, Financial Security Assurance Inc. ( "Financial
Security ") will issue its Municipal Bond Insurance Policy for the Series 2007A Bonds (the "Policy "). The Policy
guarantees the scheduled payment of principal of and interest on the Series 2007A Bonds when due as set forth in
the form of the Policy included as Appendix C to this Official Statement. It is expected that, based on the
commitment of Financial Security to insure the Series 2007A Bonds, Moody's Investors Service will assign a rating
of "Aaa" to the Series 2007A Bonds. However, there is no guarantee that such rating will be received. See the
captions `BOND INSURANCE" and "RATINGS" herein. So long as Financial Security is not in default under the
Policy, it is subrogated to, and may enjoy and exercise, all rights and remedies of the owners of the Series 2007A
Bonds and may direct the Trustee in the exercise of any remedies provided in the Authorizing Ordinance and
described herein. No remedy provided in the Authorizing Ordinance and described herein may be exercised by the
Trustee or by the owner of any Series 2007A Bond without ithe prior written approval of Financial Security. See the
caption "SUMMARY OF THE AUTHORIZING ORDINNCE — Certain Powers of Financial Security as Bond
Insurer" herein.
The Series 2007A Bonds are special obligations of the City secured by and payable solely from the
Net Revenues of the System. The faith and credit of the City are not pledged to the payment of the Series
2007A Bonds, and the Series 2007A Bonds do not constitute an indebtedness of the City within the meaning of
any constitutional or statutory debt limitation or restriction. The issuance of the Series 2007A Bonds shall
not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any
appropriation for the payment of the Series 2007A Bonds, except as described herein with respect to Net
Revenues of the System.
Additional Bonds may be issued on a parity of security with the Series 2007A Bonds and the Parity Bonds
under certain circumstances set forth in the Authorizing Ordinance. See the caption "THE SERIES 2007A BONDS
- Additional Bonds" herein. The Series 2007A Bonds, the Parity Bonds and any Additional Bonds are herein
collectively referred to as the "Bonds."
Pursuant to the provisions of a Continuing Disclosure Agreement dated as of the date of delivery of the
Series 2007A Bonds, by and between the City and the Trustee (the "Continuing Disclosure Agreement "), the City
has undertaken certain obligations with respect to providing ongoing disclosure of certain financial and operating
data concerning the System and of the occurrence of certain material events. See the caption "SUMMARY OF THE
CONTINUING DISCLOSURE AGREEMENT" herein.
Descriptions of the City, the System, the Series 2007A Bonds, the Continuing Disclosure Agreement and
the Authorizing Ordinance are included in this Preliminary Official Statement. Copies of the Continuing Disclosure
Agreement and the Approving Ordinance are available upon request from Morgan Keegan & Company, Inc., 100
Morgan Keegan Drive, Suite 400, Little Rock, Arkansas 72202, Attention: Public Finance. All references to the
Series 2007A Bonds are qualified in their entirety by reference to the definitive form thereof and the information
with respect thereto included in the Authorizing Ordinance. Certain financial data has been provided by the City
from the audited records of the System and certain demographic information has been obtained from other sources
which are believed to be reliable.
THE SERIES 2007A BONDS
Description. The Series 2007A Bonds will be initially dated June 1, 2007, and will bear interest payable
semiannually on June 1 and December 1 of each year, commencing December 1, 2007, at the rates set forth on the
inside cover page hereof. The Series 2007A Bonds will mature on June 1 in the years and in the principal amounts
set forth on the inside cover page hereof.
The Series 2007A Bonds are issuable only in the form of fully registered bonds and, when issued, will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "), New York,
New York, to which principal, premium, if any, and interest payments on the Series 2007A Bonds will be made so
2
long as Cede & Co. is the registered owner of the Series 2007A Bonds. Individual purchases of the Series 2007A
Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual
purchasers (`Beneficial Owners ") of Series 2007A Bonds will not receive physical delivery of bond certificates.
See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
All interest payments on the Series 2007A Bonds shall be payable to the persons in whose name such
Series 2007A Bonds are registered on the bond registration books maintained by the Trustee, as of the close of
business on fifteenth day of the calendar month next preceding the applicable interest payment date. Principal of
and premium, if any, on the Series 2007A Bonds shall be payable at the principal corporate trust office of the
Trustee. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2007A
Bond to the extent of the sum or sums so paid. So long as DTC or its nominee is the registered owner of the Series
2007A Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the
disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect
Participants, as more fully described herein.
Redemption. The Series 2007A Bonds are subject to optional and mandatory redemption as follows:
(1) Optional Redemption. The Series 2007A Bonds maturing on and after June 1, 2018 are
subject to redemption prior to maturity, at the option of the City, from funds from any source, on and after
June 1, 2017, in whole at any time or in part on any interest payment date, at a redemption price equal to
the principal amount of the Series 2007A Bonds being redeemed, plus accrued interest to the date of
redemption. If fewer than all of the Series 2007A Bonds shall be called for redemption, the particular
maturities of the Series 2007A Bonds to be redeemed shall be selected by the City in its discretion.
(2) Mandatory Sinking Fund Redemption. To the extent not previously redeemed, the
Series 2007A Bonds maturing on the dates set forth below are subject to mandatory sinking fund
redemption by lot in such manner as the Trustee shall determine, on the dates and in the principal amounts
set forth below, at a redemption price equal to the principal amount of the Series 2007A Bonds being
redeemed, plus accrued interest to the date of redemption:
Series 2007A Bonds Maturing June 1, 2027
Redemption Dates Principal Amounts*
June 1, 2023
$2,065,000
June 1, 2024
2,150,000
June 1, 2025
2,235,000
June 1, 2026
2,330,000
June 1, 2027 (maturity)
2,425,000
Series 2007A Bonds Maturing June 1, 2032
Redemption Dates Principal Amounts*
June 1, 2028
$2,525,000
June 1, 2029
2,630,000
June 1, 2030
2,740,000
June 1, 2031
2,855,000
June 1, 2032 (maturity)
2,975,000
* Preliminary, subject to change.
Series 2007A Bonds Maturing June 1, 2037
Redemption Dates
Principal Amounts*
June 1, 2033
$3,100,000
June 1, 2034
3,230,000
June 1, 2035
3,370,000
June 1, 2036
3,510,000
June 1, 2037 (maturity)
3,660,000
* Preliminary, subject to change.
The provisions for mandatory sinking fund redemption of the Series 2007A Bonds are subject to
provisions of the Authorizing Ordinance which permit the City to receive credit for Series 2007A Bonds of
the particular maturity to be redeemed for Series 2007A Bonds of such maturity previously redeemed or
acquired by the City and surrendered to the Trustee.
Partial Redemption of a Series 2007A Bond. If fewer than all of the Series 2007A Bonds of any one
maturity shall be called for redemption, the particular Series 2007A Bonds or portions thereof to be redeemed from
such maturity shall be selected by lot by the Trustee. In selecting Series 2007A Bonds for redemption prior to
maturity, in the case any outstanding Series 2007A Bond is in a denomination greater than $5,000, each $5,000 of
face value of such Series 2007A Bond shall be treated as a separate Series 2007A Bond in the denomination of
$5,000; provided, however, that so long as DTC or its nominee is the sole registered owner of the Series 2007A
Bonds, the particular Series 2007A Bonds or portions thereof to be redeemed within a maturity shall be selected by
lot in such manner as DTC shall determine.
Notice of Redemption. Notice of the call for any redemption, identifying the Series 2007A Bonds or
portions thereof (which shall be $5,000 or a multiple thereof) to be redeemed and the date on which they shall be
presented for payment, shall be given by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to
the date fixed for redemption, by mailing a copy of the redemption notice by first class mail, postage prepaid, to all
registered owners of the Series 2007A Bonds to be redeemed. Failure to mail an appropriate notice or any such
notice to registered owners of Series 2007A Bonds to be redeemed by mailing, shall not affect the validity of any
proceeding for the redemption of any Series 2007A Bond with respect to which no such failure or defect has
occurred. After the date fixed for redemption, no further interest shall accrue on any Series 2007A Bond called for
redemption if funds for their redemption have been deposited with the Trustee as provided in the Authorizing
Ordinance.
Notwithstanding the above, so long as DTC or its nominee is the sole registered owner of the Series 2007A
Bonds, notice of redemption will be given only to Cede & Co., as nominee for DTC. The Trustee will not give any
notice of redemption to the Beneficial Owners of the Series 2007A Bonds.
Additional Bonds. The City may issue from time to time one or more series of Additional Bonds for the
purpose of (i) making future extensions, betterments or improvements to the System; (ii) refunding the Series 2007A
Bonds, the Parity Bonds, any series of Additional Bonds or Subordinate Bonds issued for such purposes; or (iii) any
combination thereof. Additional Bonds shall be secured equally and ratably with the Series 2007A Bonds, the Parity
Bonds and any other Additional Bonds theretofore issued and then outstanding, except insofar as any terms or
conditions of redemption or purchase established under the Authorizing Ordinance may afford additional benefit or
security for the Bonds of any particular series. Before the issuance of any such Additional Bonds, there shall be
delivered to the City and the Trustee a statement by an Accountant reciting the opinion, based upon necessary
investigation, that the Net Revenues of the System for the fiscal year immediately preceding the fiscal year in which
it is proposed to issue such Additional Bonds were equal to not less than 120% of the average annual principal and
interest requirements on all then outstanding Bonds and Subordinate Obligations, plus the Additional Bonds then
proposed to be issued.
The term "Net Revenues" means gross revenues of the System less operation and maintenance expenses
other than depreciation, interest and amortization of deferred bond discount expenses, determined in accordance
with generally accepted accounting principles.
In making the computation described above, the City, and the Accountant on behalf of the City, may,
based upon the opinion or report of a registered professional engineer not in the regular employ of the City, treat any
increase in System rates enacted subsequent to the first day of the immediately preceding fiscal year as having been
in effect throughout such fiscal year and may include in gross revenues of the System for such fiscal year the
amount that would have been received, based on such opinion or report, had the rate increase been in effect
throughout such preceding fiscal year.
Subordinate Obligations. Nothing in the Authorizing Ordinance prevents the City from authorizing and
issuing bonds, notes, bond anticipation notes, warrants, certificates or other obligations or evidences of
indebtedness, the payment of the principal of and premium, if any, and interest on which shall be made from Net
Revenues, provided payments from Net Revenues and the lien and charge on such Net Revenues shall be made
junior and subordinate to the lien, pledge and charge created in the Authorizing Ordinance for the security and
payment of the Bonds.
Transfer or Exchange. The Series 2007A Bonds may be transferred on the books of registration kept by
the Trustee by the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof,
together with a written instrument of transfer duly executed by the registered owner or the owner's duly authorized
attorney. Upon surrender for transfer of any Series 2007A Bond at the principal corporate office of the Trustee, the
City shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new
Series 2007A Bond or Bonds of the same maturity, in the same aggregate principal amount and of any authorized
denomination or denominations.
Transfers of registration or exchanges of Series 2007A Bonds shall be without charge to the holders of such
Series 2007A Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall
be paid by the holder of the Series 2007A Bond requesting such transfer or exchange as a condition precedent to the
exercise of such privilege.
Neither the City nor the Trustee shall be required (i) to transfer or exchange any Series 2007A Bond during
the period beginning at the opening of business 15 days before any selection of Series 2007A Bonds of that maturity
for redemption and ending at the close of business of the date of the first mailing of the relevant notice of
redemption, or (ii) to transfer or exchange any Series 2007A Bond selected for redemption in whole or in part.
So long as DTC or its nominee is the sole registered owner of the Series 2007A Bonds, transfers of
beneficial interests in the Series 2007A Bonds shall be in accordance with the rules and procedures of DTC and its
direct and indirect participants. See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
SECURITY FOR THE BONDS
General. The Series 2007A Bonds are not general obligations of the City, but are special obligations
payable solely from and secured by a pledge of the Net Revenues derived from operation of the System. The Series
2007A Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory
debt limitation. The issuance of the Series 2007A Bonds shall not directly, indirectly or contingently obligate the
City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2007A
Bonds except as described herein with respect to the Net Revenues of the System.
The Series 2007A Bonds are issued and secured on a parity basis with an existing pledge of Net Revenues
securing (i) $20,065,000 outstanding principal amount of the City's Sewer Refunding and Construction Revenue
Bonds, Series 2001 (the "Series 2001 Bonds "), and (ii) $9,655,000 outstanding principal amount of the City's Sewer
Refunding and Construction Revenue Bonds, Series 2005 (the "Series 2005 Bonds" and, collectively with the Series
2001 Bonds, the "Parity Bonds "). The Series 2007A Bonds, the Parity Bonds and any Additional Bonds hereafter
issued are herein collectively referred to as the "Bonds." The pledge of Net Revenues securing the Bonds is prior
and senior to the pledge of Net Revenues securing (i) $3,097,871 outstanding principal amount of the City's Sewer
Revenue Bond, Series 1990 (the "Series 1990 Bond "), (ii) $2,655,318 outstanding principal amount of the City's
Sewer Revenue Bond, Series 1991 (the "Series 1991 Bond "), (iii) $4,083,478 outstanding principal amount of the
City's Sewer Revenue Bond, Series 1996 (the "Series 1996 Bond "), (iv) $10,019,036 outstanding principal amount
of the City's Sewer Revenue Bond, Series 1999 (the "Series 1999 Bond "), (v) $21,544,954 outstanding principal
amount of the City's Sewer Revenue Bond, Series 2004A (the "Series 2004A Bond "), (vi) $11,583,907 outstanding
principal amount of the City's Sewer Revenue Bond, Series 2004B (the "Series 2004B Bond "), and (vii) $4,730,435
5
outstanding principal amount of the City's Sewer Revenue Bond, Series 2004C (the "Series 2004C Bond" and,
collectively with the Series 1990 Bond, the Series 1991 Bond, the Series 1996 Bond, the Series 1999 Bond, the
Series 2004A Bond and the Series 2004B Bond, the "Subordinate Bonds ").
Rate Covenant. In the Authorizing Ordinance, the City covenants and agrees that the rates and charges
fixed for services of the System will never be reduced while any of the Series 2007A Bonds are outstanding unless
there shall be obtained from an independent certified public accountant a certificate to the effect that the Net
Revenues with the reduced rates will be equal to the amount required by the Authorizing Ordinance to be set aside
for the Depreciation Fund and leave a balance equal to at least 130% of the average annual principal and interest
requirements on all outstanding indebtedness payable from revenues of the System, including the Bonds and the
Subordinate Bonds ( "System Bonds "). The City further covenants and agrees in the Authorizing Ordinance that
System rates shall, if and when necessary, be increased in such manner and amount as will produce revenues at least
sufficient to pay the principal and interest on all System Bonds when due, to pay the operation and maintenance
expenses of the System, and to deposit the amounts required to be paid into the Depreciation Fund and the Debt
Service Reserve in accordance with the Authorizing Ordinance. In the Authorizing Ordinance, the City represents
that existing System rates will produce total revenues at least sufficient to pay the operation and maintenance
expenses of the System, to pay the principal of and premium, if any, and interest on all outstanding System Bonds
and trustee fees in connection therewith, and to deposit the amounts required to be paid into the Depreciation Fund
and the Debt Service Reserve in accordance with the Authorizing Ordinance. See the caption "SUMMARY OF
THE AUTHORIZING ORDINANCE — Rates and General Covenants to Operate" herein.
Debt Service Reserve. From the proceeds of sale of the Series 2007A Bonds, there shall be deposited into
the Debt Service Reserve established within the Bond Fund an amount equal to the lesser of (i) the maximum annual
principal and interest requirement on the Series 2007A Bonds or (ii) 10% of the proceeds of the Series 2007A Bonds
(excluding accrued interest but including underwriters' discount) (the "Required Level ").
If the amount in the Debt Service Reserve is ever reduced below the Required Level, it shall be reimbursed
to the Required Level through monthly payments from the Revenue Fund over a 24 -month period. If a surplus shall
exist in the Debt Service Reserve over and above the Required Level, such surplus shall be deposited into the Bond
Fund to the extent of any deficiency therein, then into the Depreciation Fund to the extent of any deficiency therein,
and then into the Revenue Fund.
The moneys on deposit in the Debt Service Reserve (i) shall be used to the extent necessary to prevent a
default in the payment of debt service on the Series 2007A Bonds and (ii) may be used, together with other available
funds, to provide for the payment at maturity or to redeem prior to maturity all, but not less than all, of the
outstanding Series 2007A Bonds under the Authorizing Ordinance.
Bond Insurance. As described below under the caption "BOND INSURANCE," the scheduled payment of
principal of and interest on the Series 2007A Bonds when due will be guaranteed under an insurance policy (the
"Policy ") to be issued concurrently with the delivery of the Series 2007A Bonds by Financial Security Assurance
Inc. ( "Financial Security ").
BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the Series 2007A Bonds, Financial Security Assurance Inc. ( "Financial
Security ") will issue its Municipal Bond Insurance Policy for the Series 2007A Bonds (the "Policy "). The Policy
guarantees the scheduled payment of principal of and interest on the Series 2007A Bonds when due as set forth in
the form of the Policy included as Appendix C to this Official Statement.
The Policy is not covered by any insurance security or guaranty fund established under New York,
California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
Financial Security is a New York domiciled financial guaranty insurance company and a wholly owned
subsidiary of Financial Security Assurance Holdings Ltd. ( "Holdings "). Holdings is an indirect subsidiary of Dexia,
S.A., a publicly held Belgian corporation, and of Dexia Credit Local, a direct wholly -owned subsidiary of Dexia,
S.A. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance, banking and
asset management in France, Belgium and other European countries. No shareholder of Holdings or Financial
Security is liable for the obligations of Financial Security.
At December 31, 2006, Financial Security's combined policyholders' surplus and contingency reserves
were approximately $2,554,147,000 and its total net unearned premium reserve was approximately $2,070,751,000
in accordance with statutory accounting principles. At December 31, 2006, Financial Security's consolidated
shareholder's equity was approximately $2,722,312,000 and its total net unearned premium reserve was
approximately $1,648,334,000 in accordance with generally accepted accounting principles.
The consolidated financial statements of Financial Security included in, or as exhibits to, the annual and
quarterly reports filed after December 31, 2005 by Holdings with the Securities and Exchange Commission are
hereby incorporated by reference into this Official Statement. All financial statements of Financial Security
included in, or as exhibits to, documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this Official Statement and before the termination of the offering
of the Series 2007A Bonds shall be deemed incorporated by reference into this Official Statement. Copies of
materials incorporated by reference will be provided upon request to Financial Security Assurance Inc.: 31 West
52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) 826- 0100).
The Policy does not protect investors against changes in market value of the Series 2007A Bonds, which
market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or
other causes. Financial Security makes no representation regarding the Series 2007A Bonds or the advisability of
investing in the Series 2007A Bonds. Financial Security makes no representation regarding the Official Statement,
nor has it participated in the preparation thereof, except that Financial Security has provided to the City the
information presented under this caption for inclusion in the Official Statement.
BOOK -ENTRY ONLY SYSTEM
The Series 2007A Bonds will be issued only as one fully registered Series 2007A Bond for each maturity,
in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "), as
registered owner of all the Series 2007A Bonds. The fully registered Series 2007A Bonds will be retained and
immobilized in the custody of DTC.
DTC (or any successor securities depository) or its nominee will be considered by the City and the Trustee
to be the owner or holder of the Series 2007A Bonds for all purposes under the Authorizing Ordinance.
Owners of any book entry interests in the Series 2007A Bonds (the "book entry interest owners ") described
below, will not receive or have the right to receive physical delivery of the Series 2007A Bonds, and will not be
considered by the City and the Trustee to be, and will not have any rights as, owners or holders of the Series 2007A
Bonds under the bond proceedings and the Authorizing Ordinance except to the extent, if any, expressly provided
thereunder.
CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH
BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE CITY, THE UNDERWRITERS AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS.
DTC, the world's largest depository, is a limited - purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation' ' within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non -U.S. equity, corporate
and municipal debt issues and money market instruments from over 100 countries that DTC's participants ( "Direct
Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic computerized book -entry transfers and
pledges among Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The
Depository Trust & Clearing Corporation ( "DTCC "). DTCC, in turn, is owned by a number of Direct Participants
of DTC and by Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and
Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities
brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has Standard &
Poor's highest rating: AAA. The DTC Rules applicable to its Direct and Indirect Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at www.dtc.com and
www.dtc.orR.
Purchases of Series 2007A Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Series 2007A Bonds on DTC's records. The ownership interest of each actual
purchaser of each Series 2007A Bond ( "Beneficial Owner ") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Series 2007A Bonds are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in Series 2007A Bonds, except in the
event that use of the Book -Entry System for the Series 2007A Bonds is discontinued.
To facilitate subsequent transfers, all Series 2007A Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an
authorized representative of DTC. The deposit of Series 2007A Bonds with DTC and their registration in the name
of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Series 2007A Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Series 2007A Bonds are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to
time. Redemption notices shall be sent to DTC. If less than all of the Series 2007A Bonds within a maturity are to
be redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series
2007A Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date. The Omnibus
Proxy will assign Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series
2007A Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).
Payment of debt service and redemption proceeds with respect to the Series 2007A Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is
to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the
City or the Trustee on payable date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants.
P.,
BENEFICIAL OWNERS SHOULD CONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT
PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN
INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD
NOTICES OF REDEMPTION AND OF OTHER INFORMATION.
THE CITY AND THE TRUSTEE HAVE NO RE PONSIBILITY OR LIABILITY FOR ANY ASPECTS
OF THE RECORDS OR NOTICES RELATING TO, C R PAYMENTS MADE ON ACCOUNT OF, BOOK
ENTRY INTEREST OWNERSHIP, OR FOR MAIN AINING, SUPERVISING OR REVIEWING ANY
RECORDS RELATING TO THAT OWNERSHIP.
The Trustee and the City, so long as a book entry method of recording and transferring interest in the Series
2007A Bonds is used, will send any notice of redemption or of any Authorizing Ordinance amendment or
supplement or other notices to Bondholders under the Authorizing Ordinance only to DTC (or any successor
securities depository) or its nominee. Any failure of DTC to advise any Direct Participants, or of any Direct
Participants or Indirect Participants to notify any Beneficial Owner, of any such notice and its content or effect will
not affect the validity of the redemption of the Series 2007A Bonds called for redemption, the Authorizing
Ordinance amendment or supplement, or any other action premised on notice given under the Authorizing
Ordinance.
The City and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect
Participants or others will distribute payments of debt service on the Series 2007A Bonds made to DTC or its
nominee as the registered owner of the Series 2007A Bonds, or any redemption or other notices, to the Beneficial
Owners, or that they will do so on a timely basis, or that DTC will serve and act in a manner described in this
Official Statement.
DTC may discontinue providing its services as securities depository with respect to the Series 2007A
Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event
that a successor securities depository is not obtained, bond certificates are required to be printed and delivered.
In addition, the City may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, bond certificates will be printed and delivered.
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds of the Series 2007A Bonds are expected to be used as follows:
Sources of Funds*
Series 2007A Bond Proceeds $64,865,000
Net Reoffering [Premium] [Discount]
Total Sources: $64,865,000
Uses of Funds*
Deposit to Construction Fund $60,000,983
Debt Service Reserve Deposit 3,819,343
Costs of Issuance (including Underwriters' Discount
and Bond Insurance Premium) 1,044,674
Total Uses: 64.865.000
* Preliminary, subject to change.
THE PROJECT
The proceeds of the Series 2007A Bonds may be utilized to acquire, construct and equip all or a portion of
any of the following capital projects to be selected by the Utility staff (collectively, the "Project "):
(1) Peak Flow Attenuation Facilities — By far the largest component part of the Project, the
Peak Flow Attenuation Facilities will include the construction of two concrete diversion structures,
approximately 2,000 linear feet of gravity pump station influent lines, a 50 million gallon per day (MGD)
peak flow pump station, approximately 15,000 linear feet of 48" diameter force main, and a two -cell
concrete storage basin with total volume capacity of 30 million gallons. The primary purpose of this
improvement is to reduce capacity related sanitary sewer overflows. When completed, the attenuation
facilities will provide peak flow storage of wastewater resulting from significant rainfall events. The
storage basin will be located in an area of the System where inadequate interceptor capacity currently
results in sewer overflows. In addition to the aforementioned items, operation of the attenuation facilities
will require the existing Arch Street Pump Station and related force main to be renovated to increase
capacity from 38 MGD to 45 MGD. The total estimated cost for the Peak Flow Attenuation Facilities and
related work is $60,500,000, and its estimated date of completion is December 31, 2009. This component
of the Project is being constructed in response to the Settlement Agreement and the CAO described under
the caption "THE SYSTEM — Litigation" herein.
(2) Adams Field Wastewater Treatment Plant Disinfection Upgrade — Due to the particular
physical properties of the effluent at the Adams Field Wastewater Treatment Plant, it has been determined
that ultraviolet (UV) disinfection is the preferred method of treating the effluent. Modifications are
required to replace the existing chlorine dispensing equipment with new UV disinfection equipment sized
to treat up to 72 MGD. The total estimated cost of this upgrade is $3,500,000, and its estimated date of
completion is December 31, 2008.
(3) Longfellow Pump Station Elimination — The existing Longfellow Pump Station is dated
and has very limited access. As the pump station has continued to age, required access is becoming more
frequent and operating costs are escalating. The elimination of this pump station will require that
approximately 2,250 linear feet of 8" gravity sewer pipe be installed from the station's current location to
an existing collection point of the System. The estimated costs associated with the elimination of the
Longfellow Pump Station are $363,400. This component of the Project is expected to be completed by the
end of 2007.
(4) Plantation and Longstreet Pump Station Replacements — Each of these pump stations
have exceeded their useful lives and are in need of replacement. They were originally installed on an
emergency basis as a result of flooding during 1990. The planned project will consist of replacing both the
Plantation and Longstreet Pump Stations with one new pump station. An additional 400 linear feet of 8"
ductile iron gravity pipe will be needed to transport the sewer flow to the new station. The total cost of the
new station is estimated to be $479,500, and its anticipated completion date is December 31, 2007.
(5) Fourche Creek Wastewater Treatment Plant Capacity Upgrade and Modification — The
current hydraulic capacity of the Fourche Creek Wastewater Treatment Plant is 38 MGD. It has been
determined that the Arch Street Pike Pump Station must be able to pump at the rate of 45 MGD in order to
prevent overflows in the collection system. Because the Arch Street Pike Pump Station pumps to the
Fourche Creek Wastewater Treatment Plant, the treatment capacity of the plant must be extended beyond
the pumping capacity of the Arch Street Pump Station. In connection with the capacity upgrade, it is
anticipated that there will be modifications required to the plant's influent bar screens, grit removal systems
and primary clarifiers. Alternate disinfection methods for the plant effluent will be the subject of an
engineering study and such evaluation may lead to additional components of the upgrade and modification.
The total estimated cost associated with the Fourche Creek Wastewater Treatment Plant improvements is
$18,300,000. It is currently anticipated that this component of the Project will be completed by December
31, 2009.
As noted above, the total estimated cost of the Project is approximately $83,142,900. Proceeds of the
Series 2007A Bonds, together with anticipated Construction Fund earnings, are expected to fund approximately
$63,400,000 of this amount. The remaining costs of the Project are presently expected to be funded through future
sewer revenue bond issues, loans from the State of Arkansas Clean Water Revolving Loan Fund and/or surplus
System revenues.
10
ESTIMATED DEBT SERVICE REQUIREMENTS
As of the date of closing, the Parity Bonds, the Series 2007A Bonds and the Subordinate Bonds will
constitute the only debt obligations secured by revenues of the System. It is the present intention of the City and the
Utility to issue certain additional indebtedness to finance capital improvements to the System. See the caption
"THE SYSTEM — Capital Improvement Plans" herein. The following table details amounts required to pay
scheduled principal and interest on the Parity Bonds, the Series 2007A Bonds and the Subordinate Bonds during
each year as noted.
Totals: $45,360 .955 94.631.888 64.865.000 49.636.268 254.494;111
(1) Includes mandatory sinking fund redemption.
(Z) Assumes the drawdown of the entire principal amounts authorized of (i) the Series 2004A Bond ($23,100,000),
(ii) the Series 2004B Bond ($14,000,000), and (iii) the Series 2004C Bond ($13,000,000).
(3) Preliminary, subject to change. Assuming an average coupon rate of 4.157% per annum on the Series 2007A
Bonds.
11
Parity Bond
Subordinate Bond
Series 2007A
Series 2007A
Total Debt
Year
Debt Service(l)
Debt Service (2)
Principal(')(')
interest (1)(3)
Service (1)(2)(3)
2007
$2,103,599
$3,018,234
$ --
$1,325,936
$ 6,447,769
2008
2,107,024
4,765,584
1,165,000
2,629,738
10,667,346
2009
2,108,423
5,654,646
1,210,000
2,584,612
11,557,681
2010
2,103,425
5,654,646
1,255,000
2,537,778
11,550,849
2011
2,102,716
5,654,646
1,305,000
2,489,137
11,551,499
2012
2,098,628
5,654,646
1,355,000
2,438,598
11,546,872
2013
2,101,105
5,654,646
1,405,000
2,386,157
11,546,908
2014
2,574,645
5,179,419
1,455,000
2,331,454
11,540,518
2015
3,053,076
4,704,196
1,515,000
2,274,281
11,546,553
2016
3,048,749
4,704,196
1,570,000
2,214,503
11,537,448
2017
3,045,205
4,704,196
1,635,000
2,151,596
11,535,997
2018
3,052,712
4,704,196
1,700,000
2,085,730
11,542,638
2019
3,254,175
4,494,339
1,765,000
2,016,855
11,530,369
2020
3,468,223
4,284,530
1,835,000
1,944,855
11,532,608
2021
3,462,328
4,284,530
1,910,000
1,869,955
11,526,813
2022
3,468,453
4,284,512
1,985,000
1,791,559
11,529,524
2023
736,125
3,426,310
2,065,000
1,709,546
7,936,981
2024
736,594
3,426,310
2,150,000
1,623,655
7,936,559
2025
735,750
3,426,310
2,235,000
1,533,763
7,930,823
2026
--
3,426,310
2,330,000
1,439,597
7,195,907
2027
--
2,636,424
2,425,000
1,340,931
6,402,355
2028
--
889,062
2,525,000
1,238,219
4,652,281
2029
--
--
2,630,000
1,130,595
3,760,595
2030
--
--
2,740,000
1,017,825
3,757,825
2031
--
--
2,855,000
900,330
3,755,330
2032
--
--
2,975,000
777,900
3,752,900
2033
--
--
3,100,000
650,325
3,750,325
2034
--
--
3,230,000
516,588
3,746,588
2035
--
--
3,370,000
376,337
3,746,337
2036
--
--
3,510,000
230,138
3,740,138
2037
--
--
3,660,000
77,775
3,737,775
Totals: $45,360 .955 94.631.888 64.865.000 49.636.268 254.494;111
(1) Includes mandatory sinking fund redemption.
(Z) Assumes the drawdown of the entire principal amounts authorized of (i) the Series 2004A Bond ($23,100,000),
(ii) the Series 2004B Bond ($14,000,000), and (iii) the Series 2004C Bond ($13,000,000).
(3) Preliminary, subject to change. Assuming an average coupon rate of 4.157% per annum on the Series 2007A
Bonds.
11
ESTIMATED DEBT SERVICE COVERAGE
The following table shows Net Revenues available to pay System debt service on the basis of the audited
financial statements of the System (attached hereto as Appendix A) for the fiscal year ended December 31, 2006,
prepared by Cobb & Suskie, Ltd., independent certified public accountants, Little Rock, Arkansas, and the extent to
which average annual debt service on the Parity Bonds, the Series 2007A Bonds and the Subordinate Bonds is
covered by such moneys.
Ordinance No. 19,647, adopted by the City Board of Directors on November 28, 2006, increased sewer
rates pursuant to schedules set forth therein, with stepped increases effective January 1, 2007, July 1, 2007, January
1, 2008, January 1, 2009 and January 1, 2010. See the caption "THE SYSTEM- Sewer Rates" herein. The Net
Revenues available to pay System debt service shown below are based on 2006 usage figures and two different rate
schedules.
Adjusted (2) Adjusted (2)(1)
2006 Net Income (')
$ 1,002,123
$ 1,002,123
Additional Revenues from 15% Rate Increase (2)
4,508,853
4,508,853
Additional Revenues from 8% Rate Increase (3)
—
2,404,721
Adjusted Net Income
$ 5,510,976
$ 7,915,697
Plus: Depreciation
5,818,269
5,818,269
Interest and Amortization Expense
2,267,389
2,267,389
Loss on Disposal of Assets
104,896
104,896
Net Revenues Available for Debt Service (4)
$ 13,701,530
$ 16,106,251
Average Annual Debt Service Requirement (5)
$ 8,209,487
$ 8,209,487
Debt Service Coverage
1.67X
1.96X
(1) Audited. See the audited financial statements of the System attached hereto as Exhibit A.
(2) Additional Revenues projected assuming 2006 usage and the 15% System rate increase effective January 1,
2007
(3) Additional revenues projected assuming 2006 usage and the 8% System rate increase effective July 1, 2007.
(4) Gross revenues of the System less operation and maintenance expenses other than depreciation, interest and
amortization of deferred bond discount expenses, determined in accordance with generally accepted accounting
principles.
(5) Assuming for the purposes of this Preliminary Official Statement an average interest rate on the Series 2007A
Bonds of 4.157% per annum, as set forth under the caption "ESTIMATED DEBT SERVICE
REQUIREMENTS" above.
THE NET REVENUES AVAILABLE FOR SYSTEM DEBT SERVICE SET FORTH ABOVE ARE BASED ON
THE HISTORICAL RESULTS OF OPERATION OF THE SYSTEM. FUTURE NET REVENUES AVAILABLE
FOR DEBT SERVICE WILL DEPEND ON NUMEROUS FACTORS, AND THERE CAN BE NO ASSURANCE
THAT FUTURE NET REVENUES AVAILABLE FOR SYSTEM DEBT SERVICE WILL APPROXIMATE
SUCH HISTORICAL RESULTS.
THE SYSTEM
General Prior to 1935, the System consisted of a series of discontinuous neighborhood systems
discharging partially treated sewage into neighborhood septic tanks or directly into open streams and ditches. The
sewers were maintained in part by the Street Department of the City and in part by neighborhood volunteers.
In May 1935, the City created the System and, pursuant to Act No. 132 of 1933, appointed the City's first
Sanitary Sewer Committee (the "Committee "). Initially the Committee was charged with the responsibility for
administering a Public Works Administration grant made to the City for the purpose of constructing a series of trunk
sewers for transporting and discharging collected wastes into the Arkansas River. This undertaking was the City's
first major capital project and was completed in two years at a cost of $1,640,000. The new system provided the
12
first central sewer collection facilities in the City's history. The System is presently operated and managed by the
Committee through Little Rock Wastewater (the "Utility "), a component unit of the City.
In the 70 years since its creation, the System has been operated and improved exclusively from the
collection of user charges and fees, supplemented by Federal grants for some capital improvements. During these
years, the service area has been greatly expanded such that at present it includes over 122 square miles containing
approximately 1,248 miles of public sewers serving approximately 65,770 homes and businesses.
The facilities of the System include 28 remote, unattended pumping stations and two secondary treatment
plants discharging into the Arkansas River. The Adams Field Plant, constructed in 1961, had an original treatment
capacity of 36 million gallons per day ( "MGD "), but was recently upgraded to a capacity of 94 MGD utilizing the
activated sludge method of treatment. The Fourche Creek Plant, constructed in 1983, has a design capacity of 38
MGD and also utilizes the activated sludge method of treatment. Sewage sludge from both plants is processed at the
Fourche Creek Plant in anaerobic digesters and resulting methane gas is used as a fuel for electric generation.
Capital Improvement Plans. The Utility's five -year capital expenditure forecast represents years five
through ten of a fifteen -year capital improvement implementation strategy outlined in a System Evaluation and
Capacity Assurance Plan ( "SECAP "). The SECAP was completed in 2002 and was adopted as part of the Sierra
Club Settlement Agreement. See the caption "THE SYSTEM - Litigation" herein. The capital expenditures planned
for the years 2007 -2011 represent the majority of the cost of improvements required to meet the goals of the
SECAP.
Unfinished capital projects carried over to 2007 primarily relate to wastewater collection, transmission and
treatment improvements driven by the SECAP, and have already resulted in expenditures in excess of $47,500,000.
Total capital expenditures of $58,917,000 are planned for 2007. Of this amount, $47,252,000 relates to the
carryover projects and $11,665,000 is proposed for new capital projects. Total capital expenditures of nearly $177
million are planned for 2008 -2011.
In addition to the components of the Project described under the caption "THE PROJECT" herein,
improvements which are included in the Utility's five -year capital expenditure forecast are as follows:
1. Adams Field Wastewater Treatment Plant Upgrade. This project will modernize the preliminary
and primary treatment processes at the Adams Field Wastewater Treatment Plant, which was originally constructed
in 1959. Plant hydraulic capacity will also be upgraded from 72 MGD to 94 MGD to mitigate collection system
overflows and better manage wet weather peaks. Remaining costs of this project are approximately $1,060,000,
with the overwhelming majority of this amount to be paid in 2007. This project is being funded through the State of
Arkansas Revolving Loan Fund Program and from surplus System revenues.
2. Little Maumelle Basin Wastewater Treatment Plant. A new treatment facility is needed in the
western portion of the City to serve existing customers and to provide for future growth in the Little Maumelle River
Basin. $1,838,545 was expended during 2006 for preliminary design work on this facility. $2,500,000 is budgeted
for 2007 for the completion of the design and bidding process. The five -year forecast includes an additional
$62,661,455 for engineering, construction, administration and contingencies. Construction is scheduled to begin in
early 2008 and to be substantially completed in 2009. This project is forecasted to be funded with a sewer revenue
bond issue.
3. Electrical Switch ear Replacement at Fourche Creek Wastewater Treatment Plant. The principal
power supply at the Fourche Creek Wastewater Treatment Plant is through three digester -gas burning engines
coupled to electrical generators, all of which are controlled through switchgear which has reached the end of its
reliable service life. An estimated $1,580,000 has been allocated in 2007 from the proceeds of the Series 2005
Bonds for completion of this project.
4. Unsewered Areas. The purpose of the $13,000,000 Series 2004C Bond is to fund the extension of
sewer service into thirteen areas of the City not currently served by the Utility. The Utility anticipates that
approximately $7,000,000 will be expended for this purpose during 2007.
5. Collection System Rehabilitation Capacity Assurance. Various rehabilitation projects are forecast
to require expenditures of over $41 million during 2007 -2011. The total cost of work scheduled during 2007 is
$8,466,500 and will be funded with proceeds of the Series 2004B Bond. Two additional components of the
rehabilitation projects will be funded with proceeds of an $18 million loan from the State of Arkansas Clean Water
Revolving Loan Fund Program scheduled to close during the summer of 2007. The remaining components of the
13
rehabilitation projects will be funded with future sewer revenue bond issues, loans from the State of Arkansas Clean
Water Revolving Loan Fund and/or surplus System revenues.
6. Trenchless Sewerline Rehabilitation. A number of structurally deteriorated sewer line segments
have been identified. Many of these segments are located in areas where conventional replacement is very costly. It
is estimated that $1,750,000 will be expended during 2007 for trenchless rehabilitation of a number of these
segments, and it is anticipated that $2,500,000 will be needed annually during 2008, 2009 and 2011 for currently
identified lines. All of these projects will be funded with surplus System revenues.
7. Cantrell Road Pump Station Upgrade. Improvements called for in the SECAP will increase the
hydraulic capacity of the Cantrell Road Pump Station from 25 MGD to 40 MGD. The five -year forecast allocates
project costs of $1,962,000 during 2009 and $4,260,000 during 2010 for this project. It is anticipated that these
funds will be provided through a loan from the State of Arkansas Clean Water Revolving Loan Fund or from surplus
System revenues.
8. Fourche Creek Wastewater Treatment Plan Solids Processing Improvements. The Fourche Creek
Wastewater Treatment Plant currently serves as the City's regional solids handling facility for both existing
treatment plants, and it is anticipated that solids handling for the Little Maumelle Basin Wastewater Treatment Plant
will be added once that plant becomes operational. The five -year forecast allocates project costs of $8,938,000 in
2011. This amount is anticipated to be funded with proceeds of a sewer revenue bond.
Awards. The Utility has received awards from the Environmental Protection Agency ( "EPA "), the
National Association of Clean Water Agencies ( "NACWA "), formerly known as the Association of Metropolitan
Sewerage Agencies ( "AMSA "), which is a national association of municipal authorities operating sewer systems
throughout the United States, and other state and local organizations. In 1989, the Utility was awarded the EPA
Region 6 Administrators Environmental Excellence Award on Beneficial Sewerage Sludge Use Regional Award,
Pretreatment Program Implementation, and Beneficial Use of Municipal Wastewater Sludge -State Award. In 1990
thru 2000, the Utility was awarded the AMSA Peak Performance Gold Award for achieving 100% compliance with
the System's National Pollutant Discharge Elimination System ( "NPDES ") permits. In 1991, the Utility was
awarded the EPA Region 6 Administrators Environmental Excellence Award for Exemplary Implementation of
Industrial Pretreatment Program and the EPA Region 6, Regional Environmental "Compliance Plus" Recognition
Award for Maintaining Regulatory Compliance and Implementing Innovative Solutions to Environmental /Public
Health Problems. In 1992, the Utility received an EPA Region 6 Certificate of Appreciation in Recognition of the
City's Contribution to the Region's Beneficial Sewerage Sludge Use Program and the City's Leadership in
Promoting the Beneficial Use of Sludge. In 1993, the Utility was awarded the Regional Administrators
Environmental Excellence Award in Excellent Wastewater Treatment Operations and Maintenance and the AMSA
Public Information and Education Award to Recognize the Outstanding Leadership in the Protection and
Improvement of our Nation's Water Quality for Little Rock Wastewater Utility's Captain Sewer Water
Conservation Education Program. In 1994, the Utility received the National Association of Professional
Environmental Communicators Environmental Education Merit Award for the Captain Sewer Environmental
Education Program and the first of many United Way Awards of Recognition (1995, 1997, 1998 and 2001). The
Utility received the Arkansas Department of Labor Accumulative Safety Award in 1995 for the dates of July 23,
1993 to September 30, 1995. In 1997, the Utility received the Water Environment Federation Public Education
Award for Outstanding Volunteer Commitment and Inspirational Leadership for Clean Water for the 21" Century.
In 2003, the Utility received the AMSA Peak Performance Gold Award for achieving 100% compliance with the
System's NPDES permits and Best Large Partnership Volunteers in Public Schools. In 2004 and 2005, the Utility
received the Certificate of Achievement for Excellence in Financial Reporting for the Little Rock Wastewater
Comprehensive Annual Financial Report.
Management. The System is governed by the Committee which is comprised of five residents of the
City who are appointed by the City Board of Directors and an ex- officio member who also serves on the City Board
of Directors. The members serve staggered terms of four years each and may be reappointed to the Committee. The
following are the names, occupations and dates of term expiration of the present members of the Committee:
14
Name
Patrick D. Miller, Chair
Charles G. Goss, Vice Chair
James R. Pender, Secretary
Dale J. Wintroath, Member
Andrew L. Harper, Jr., Member
Brad Cazort, Ex- Officio
Term Expires
Occupation
(August 1)
Investment Counselor
2007
Retired
2008
Attorney
2009
Retired
2009
Banker
2010
Attorney
2008
Key Employees. As of February 5, 2007, the Utility employed 241 persons to operate and maintain the
System. The following are the names and ages of key employees of the Utility and how long each has been
employed by the Utility:
Name
Position
Age
Length of Service
Reggie A. Corbitt, P.E.
Chief Executive Officer
59
22 years
James A. Barham
Manager of Finance
57
32 years
Stanley Miller
Manager of Operations
49
1 year
Mack M. Vought
Manager of Engineering,
53
22 years
Maintenance and Construction
Don F. Hamilton
General Counsel
70
17 years
John B. Jarratt
Director of Administration and
55
13 years
Community Relations
Howell Anderson, P.E.
Director of Engineering Services
46
4 years
Bryan S. Bull
Director of Information Services
42
11 years
Stanley B. Suel
Director of Environmental Assessment
50
26 years
Employee Relations and Benefits. None of the employees of the Utility are members of any collective
bargaining group.
The Utility offers a voluntary 401(a) qualified pension plan, administered by the Committee, to all of its
employees upon initial employment. The 401(a) plan requires that all participating employees contribute 1% to 5%
of their base salary depending upon years of service, and these contributions are matched by the Utility. Participants
are fully vested after five years of service. The Utility also participates in a cost - sharing multiple - employee plan,
administered by the Arkansas Public Employees Retirement System ( "APERS "). A contributory plan and a
noncontributory plan are offered which provide retirement and disability benefits, annual cost -of- living adjustments,
and death benefits to plan members and beneficiaries. Employer contributions to the APERS plans are actuarially
determined on an annual basis. The Utility has no unfunded liabilities to these plans. For a detailed discussion
regarding the Utility's pension plans, see Note 10 to the audited financial statements of the System in Appendix A
hereto.
The Utility provides post- retirement benefits in the form of medical insurance coverage to all retirees.
Currently, 21 retirees are eligible to receive these benefits, which are funded from the Utility's current operations.
Expenditures for postretirement benefits amounted to $136,651 and $139,432, respectively, for fiscal years 2005 and
2006. Governmental Accounting Standards Bulletin (GASB) 45, which became applicable to the Utility as of
January 1, 2007, requires the disclosure of certain unfunded liabilities relating to post- retirement benefits such as
those provided by the Utility. Such unfunded liabilities are currently $9,137,000, and it is the Utility's present
intent to fund these liabilities over a thirty (30) year period, commencing in 2007, at approximately $688,000 per
year.
Management considers employee relations to be excellent.
15
Users. As of December 2006, there were approximately 65,770 sewer users, of which 639 were located
outside City limits. The average number of
sewer users by category for each of the past five (5) years is as follows:
Year Residential
Commercial
Industrial
OtherM Total
2002 56,978
5,849
55
302 63,184
2003 57,245
5,976
54
396 63,671
2004 57,866
6,028
56
414 63,364
2005 58,610
6,090
82
410 65,192
2006 59,085
6,099
80
506 65,770
(1) Municipalities, schools and
other pubic entities.
No user of the System presently
accounts for more
than 1% of the gross
revenues of the System. The
following were the ten largest users of
System services, based upon revenues
produced from volumetric and
availability charges, during 2006:
Average 2006
Percentage of
2006
Monthly
Total 2006
Customer
Revenues(')
Revenues(l)
Revenues (2)
UA Medical Sciences Center
$ 289,380
$ 24,115
0.98%
Odom Sausage
262,466
21,872
0.89%
Central Arkansas Water
233,896
19,491
0.79%
Baptist Regional Medical Center
212,013
17,668
0.72%
City of Shannon Hills
133,682
11,140
0.45%
Coleman Dairy
123,159
10,263
0.42%
Conway Mills
116,907
9,742
0.40%
St. Vincent's Hospital
113,681
9,473
0.39%
Coca -Cola Bottling
113,326
9,444
0.38%
Arkansas Children's Hospital
103,807
8,651
0.35%
Totals:
1 702 317
141 59
5.77%
(1) Revenues shown are for assessments based on volumetric and availability charges only. Revenues collected
from sewer surcharges, connection fees and miscellaneous charges are not included.
(2) Percentage shown reflects a comparison of individual customers' assessments to total 2006 revenue from
assessments of $29,482,516.
Litigation. There is no material litigation pending or threatened against the Utility or the System except
as described below:
Sierra Club Litigation. The City, the Committee and the Utility are defendants in a lawsuit filed on January
13, 2000 in the U.S. District Court by the Sierra Club (the "Plaintiff') based upon alleged violations of the Federal
Clean Water Act arising out of sanitary sewer overflows ( "SSOs ") in the System. A written settlement agreement
dated September 12, 2001 (the "Settlement Agreement ") was entered into to resolve this litigation, and such
Settlement Agreement was approved by the District Court on November 16, 2001, subject to the fulfillment of
certain conditions regarding the payment of Plaintiff's attorneys' fees. Said conditions being satisfied, final
judgment was entered on December 13, 2002. However, pursuant to the Settlement Agreement, the District Court
retained jurisdiction for the purpose of enforcing the nonmonetary provisions of the Settlement Agreement, which
include certain reporting, notice and maintenance procedures as well as the requirement of completion of a study
addressing the elimination of SSOs in the System. These requirements are specified in the Settlement Agreement,
and the schedules for developing, adopting and implementing the necessary programs and improvements within
specified deadlines, which the Committee has done or is doing, are set forth in a separate System Evaluation and
Capacity Assurance Plan ( "SECAP ").
Management is of the opinion that the Utility is generally in compliance with the provisions of the
Settlement Agreement and the SECAP. Due to the Utility's success during 2005 and 2006 in reducing dry weather
SSOs ( "non- capacity SSOs "), management believes it has complied with all provisions of the Settlement Agreement
relating to non - capacity SSOs. However, due to various delays in the acquisition of a site for the proposed Little
Maumelle Treatment Plant, selection of the treatment process type for the Little Maumelle Treatment Plant, and
16
adoption of an ordinance increasing sewer rates, as well as delay in securing the necessary financing, the Little
Maumelle Treatment was not completed in 2006 as originally scheduled. Final site selection was approved on April
20, 2005, a treatment method was finally approved by the City on May 17, 2006, and an ordinance increasing sewer
rates was approved on November 28, 2006. The Plaintiff could elect to pursue further court action as a consequence
of these delays, but there is no indication that such action is likely.
Management expects to remain in compliance with the Settlement Agreement, except for completion of the
Little Maumelle Treatment Plant within the time originally allotted in the Settlement Agreement. It is currently
projected that the Little Maumelle Treatment Plant will be completed in 2009. The Utility intends to take all
reasonable steps to comply with the other provisions of the Settlement Agreement. Such compliance will require the
expenditure of substantial sums (currently estimated at $235,845,000) with respect to various capital improvements
to be completed by 2011. See the caption "THE SYSTEM - Capital Improvement Plans" herein.
Consent Administrative Order of the Arkansas Department of Environmental Quality. On February 5,
2004, staff representatives of the Arkansas Department of Environmental Quality ( "ADEQ ") and the Utility met to
discuss provisions of the Settlement Agreement (defined above). Following these discussions and the review of
certain documents provided by the Utility to ADEQ and the United States Environmental Protection Agency
( "EPA "), an agreement was negotiated with ADEQ with respect to compliance with certain provisions of the Federal
Clean Water Act not covered by the Settlement Agreement. Based on this agreement, ADEQ and the Utility entered
into a Consent Administrative Order ( "CAO ") dated March 6, 2006, which addresses a variety of issues, including,
but not limited to, maintenance practices, secondary treatment bypasses at the Adams Field Treatment Plant,
administrative requirements, design and performance provisions, monitoring, measurement and program
modifications, a sanitary sewer overflow plan, a system evaluation and capacity assurance plan, audits,
communications and monetary penalties for failure to comply with performance and specific project completion
deadlines. Such penalties range from $100 to $500 per day, depending on the duration of any CAO violation.
The CAO will not terminate until such time as full compliance has been achieved and the Utility is given
written notice of termination by ADEQ. Management is of the opinion that the Utility is presently in compliance
with the CAO, and is diligently working to complete the various projects mandated by the CAO in accordance with
the deadlines set forth therein. Management expects to remain in compliance with the CAO throughout its term.
Sewer Rates. The City has established sewer rates by Ordinance No. 19,647 adopted and approved by the City
Board of Directors on November 28, 2006. Such rates are as follows:
(1) Service Availability Charge.
A.
Inside City
Effective Date
Jan 1, 2007
July 1, 2007
Jan 1, 2008
Jan 1, 2009
Jan 1, 2010
Rate Increase %
15%
8%
3%
4%
5%
Meter Size
5/8"
$ 12.65
$ 13.66
$ 14.07
$ 14.63
$ 15.37
3/4"
$ 14.84
$ 16.02
$ 16.50
$ 17.16
$ 18.02
1"
$ 19.84
$ 21.42
$ 22.07
$ 22.95
$ 24.10
1.5"
$ 32.49
$ 35.09
$ 36.14
$ 37.58
$ 39.46
2"
$ 47.61
$ 51.42
$ 52.96
$ 55.08
$ 57.83
3"
$ 82.80
$ 89.42
$ 92.11
$ 95.79
$100.58
4"
$133.23
$143.89
$148.20
$154.13
$161.84
6"
$259.21
$279.95
$288.35
$299.88
$314.87
17
B.
Outside City
$0.12
$0.12
$0.13
$0.13
Effective Date
Jan 1, 2007
July 1, 2007
Jan 1, 2008
Jan 1, 2009
Jan 1, 2010
Rate Increase %
15%
8%
3%
4%
5%
Meter Size
$0.13
$0.14
COD >400mg /L
pounds
$0.12
5/8"
$ 18.98
$ 20.49
$ 21.11
$ 21.95
$ 23.05
3/4"
$ 22.31
$ 24.09
$ 24.82
$ 25.81
$ 27.10
1"
$ 29.73
$ 32.11
$ 33.07
$ 34.39
$ 36.11
1.5"
$ 48.76
$ 52.66
$ 54.24
$ 56.41
$ 59.23
2"
$ 72.85
$ 78.68
$ 81.04
$ 84.28
$ 88.50
3"
$124.20
$134.14
$138.16
$143.69
$150.87
4"
$199.87
$215.86
$222.34
$231.23
$242.79
6"
$388.82
$419.92
$432.52
$449.82
$472.31
(2) Volumetric Charge. (for all water consumed over 200 cubic feet per month)
A. Inside City
Effective Date Jan 1, 2007 July 1, 2007 Jan 1, 2008 Jan 1, 2009
Unit Flow Rates $2.54 $2.74 $2.83 $2.94
(per hundred cu. ft.
over 200 cu. ft. per mo.)
B. Outside City
Effective Date Jan 1, 2007
Unit Flow Rates $3.82
(per hundred cu. ft.
over 200 cu. ft. per mo.)
July 1, 2007 Jan 1, 2008 Jan 1, 2009
$4.12 $4.24 $4.41
(3) Unit Strength Surcharges. (Inside and Outside City)
Jan 1, 2010
$3.09
Jan 1, 2010
$4.63
Each customer is required to limit the Biochemical Oxygen Demand (BOD) and the Total
Suspended Solids (TSS) of its wastewater to 250 mg /L and the Oils and Grease (O &G) of its
wastewater to 50 mg /L. Discharge of wastewaters with characteristics exceeding these parameters
is allowed only upon payment of a surcharge to defray the additional treatment costs. Surcharges
for BOD, TSS and O &G shall be computed separately on the total consumption. When, in the
opinion of the Utility, the strength of a non - domestic wastewater discharge is best characterized by
a Chemical Oxygen Demand (COD) concentration, the Utility may substitute COD for BOD for
purposes of the billing surcharge.
Description Cost Rate Based Jan 1, 2007 July 1, 2007 Jan 1, 2008 Jan 1, 2009 Jan 1, 2010
on Units of:
BOD >250mg /L
pounds
$0.12
$0.12
$0.13
$0.13
$0.14
TSS >250mg /L
pounds
$0.10
$0.11
$0.12
$0.12
$0.13
O &G >50mg /L
pounds
$0.12
$0.12
$0.13
$0.13
$0.14
COD >400mg /L
pounds
$0.12
$0.12
$0.13
$0.13
$0.14
Outside pH Range
>5.0 to <12.0 pH S.U.
CCF
$1.59
$1.71
$1.77
$1.84
$1.93
Billing Procedures, Delinquency and Uncollectible Accounts. Volumetric charges are based on the water
consumption of customers. For residential customers (defined as single family residences or multi- metered, multi-
family residences or apartments all of which utilize meters less than one inch in size) only, the monthly volumetric
sewer charge is based upon the average monthly water consumption for the months of October, November,
December, January, February and March. In the case of water used for irrigation or lawn sprinkling purposes,
18
customers may have an additional water service meter installed so that such water is billed separately without a
sewer charge being computed thereon.
Customers whose usage requires rendering a bill by means other than through a water billing by Central
Arkansas Water pay an additional monthly service charge as determined by the Utility's schedule of fees.
Bills for System services are due and payable upon presentation. Bills not paid on or within thirty (30)
days from the billing date of presentation are considered delinquent and unpaid balances bear interest at the
maximum rate permitted by law until paid in full.
The following table details historical account data for the System:
Fiscal Year Ending
December 31
System Revenues
Bad Debt Expense
Percentage
2002
$21,136,586
$172,198
0.81%
2003
27,811,390
268,174
0.96%
2004
30,295,588
235,183
0.78%
2005
30,609,507
200,142
0.65%
2006
30,398,264
206,129
0.68%
Financial Information. Set forth in Appendix A to this Official Statement are the financial statements
regarding the System for the fiscal years ended December 31, 2005 and 2006, which statements have been audited
by Cobb & Suskie, Ltd., certified public accountants, Little Rock, Arkansas. The accountant's report with respect to
such financial statements also appears in Appendix A. The notes set forth in Appendix A are an integral part of the
financial statements, and the statements and the notes should be read in their entirety.
The City has covenanted in the Authorizing Ordinance to have System finances audited by an independent
certified public accountant at least once each year.
The following table sets forth a summary of the operating results of the System for each of the five years
ended December 31, 2006, 2005, 2004, 2003 and 2002, and has been summarized from the audited financial
statements of the System. The table should be read in conjunction with the audited financial statements and related
notes attached as Exhibit A.
Operating Revenues
Operating Expenses (excluding
Depreciation expense)
Net Operating Income Before
Depreciation
Depreciation Expense
Interest & Other Non -
Operating Income
Interest, Amortization & Non -
Operating Expense
Net Income (Loss)
Years Ended December 31
2002 2003 2004 2005 2006
$21,136,586 $27,811,390 $30,295,588 $30,609,507 $30,398,264
(16,208,850) (17,498,220) (19,348,737) (20,810,362) (22,088,849)
4,927,736 10,313,170 10,946,851 9,799,145
8,309,415
(4,860,468)
(4,924,975)
(5,098,192)
(5,496,016)
(5,818,269)
553,591
369,841
700,887
615,104
883,262
(1,818,536)
(2,073,166)
(2,149,811)
(2,327,0711
(2,372,285
($1.197.677)
$3,684,870
$4,399,735
$2,591,162
$1,002,123
19
THE CITY AND THE COUNTY
General. The City is organized under the laws of the State of Arkansas as a city of the first class. It is the
capital of the State and was chartered in 1835. Through annexation the area of the City has grown from 111.43
square miles in 1990 to 122.31 square miles in 2006.
The City is the largest city in the State as well as the governmental, economic, cultural and financial center.
It is nearly equidistant from the four corners of the State and is the county seat of Pulaski County (the "County ").
Within a radius of 500 miles of the City are located 24 metropolitan areas and substantial portions of 17 states
containing more than one third of the nation's population. Major metropolitan areas near the City include St. Louis,
360 miles northeast; Kansas City, 400 miles northwest; New Orleans, 440 miles south; Oklahoma City, 350 miles
west; Dallas, 310 miles southwest; and Memphis, 135 miles east.
Government. The City operates under the City Manager /City Board form of municipal government. It
has an 11- member Board of Directors, including the Mayor, with seven Directors elected from wards and three
Directors elected citywide. The Mayor's position is a citywide elected position and requires a plurality vote of at
least 40% of the votes cast. If no candidate for Mayor receives the required 40% of the votes cast, the two
candidates receiving the most votes face each other in a run -off election. All Directors and the Mayor serve four -
year terms. The current Mayor and members of the Board of Directors are as follows:
Name
Term Expires
Principal Occupation
Mark Stodola, Mayor
12/31/10
Attorney, Catlett & Stodola PLC
Stacy Hurst, Vice Mayor
12/31/10
Florist, Tipton & Hurst
and Ward 3 Director
Erma Hendrix, Ward 1
12/31/10
Retired Psychiatric Nurse
Director
Ken Richardson, Ward 2
12/31/10
Director of Program Services, New
Director
Futures for Youth
Brad Cazort, Ward 4
12/31/08
Attorney, Cazort Law Firm
Director
Michael Keck, Ward 5
12/31/10
Admin. Director of Medical Staff
Director
Development, St. Vincent Health
System
Doris Wright, Ward 6
12/31/10
Grants Coordinator, Arkansas Dept.
Director
of Health & Human Services
B.J. (Brenda) Wyrick,
12/31/10
Account Representative, State of
Ward 7 Director
Arkansas
Dr. Dean Kumpuris, At-
12/31/08
Gastroenterologist
Large Position 8
Gene Fortson, At -Large
12/31/08
Director of First Security Bank and
Position 9(')
First Security Bancorp
Joan Adcock, At -Large
12/31/08
Director, The Hope Center, Inc.
Position 10
Mr. Fortson is a director of First
Security Bancorp, the sole shareholder of Crews & Associates, Inc., one of
the Underwriters of the Series 2007A Bonds.
The principal executive officers of the City are:
Name and Office
Bruce T. Moore, City Manager
Thomas M. Carpenter, City
Attorney
Robert K. Biles, Finance
Director and Treasurer
Five -Year
Employment History
Little Rock City Manager
(2002 - present)
Little Rock City Attorney
(_-present)
Finance Director and Treasurer
(2001- present)
Education
Henderson State University (BS
1989); Arkansas State (MPA
1994)
Hendrix College (BA 1974);
University of Arkansas School
of Law, Fayetteville (JD 1977)
Pittsburg State University
(BSBA Accounting 1977)
The City Manager and the City Attorney are appointed by the Board of Directors. The Finance Director is
employed by the City Manager.
The City provides a broad range of municipal services through departments under the direction of the City
Manager, including: Police, Fire, Parks and Recreation, Finance, Human Resources, Community Programs, Housing
and Neighborhood Programs, Planning and Development, Public Works, Information Technology, and the Little
Rock Zoo. Boards and commissions have primary responsibility for the operation of the City's airport, wastewater
utility and emergency medical service. The water utility of the City has been conveyed for operation by a joint
board known as Central Arkansas Water consisting of the former Little Rock and North Little Rock Water Utilities.
Employees. The City operates a full service Human Resources Department under the leadership of Don
Flegal, Human Resources Manager. There are presently approximately 2,423 employees, 322 of whom are part-
time. City workers are represented by a number of trade unions. The primary ones are the American Federation of
State, County and Municipal Employees, representing blue - collar employees; the Fraternal Order of Police,
representing police officers; and the International Association of Fire Fighters, representing fire department
employees.
Police and Fire. Little Rock's Interim Chief of Police is Stuart Thomas, who heads an armed force of 511
at 4 stations. The Fire Chief is Rhoda Mae Kerr. There are 391 uniformed members in the fire department and 20
stations, as well as an airport station.
Airport. The Little Rock National Airport is the 77th largest commercial airport in the nation. It has three
runways and twelve gates (ten with jetways). Nine airlines and a variety of private charter services operate at the
Airport. In 2006, approximately 2.6 million passengers traveled through this facility. A $3 million renovation of
the baggage claim wing has been completed and upgrades to the second level, including the concourse, are now
underway. During the past 14 years, almost $180 million in improvements have been made at the airport.
Port. The Little Rock Port handles rail and barge cargo that is shipped in or out of the area. In 2006,
705,786 tons of cargo were handled at the port. The port operates its own railroad, services 40 major industries in
the Port Industrial Park, has an industrial harbor, and switches 5,500 railroad cars annually. Its connections include
the deep water ports along the Gulf Coast, allowing for the export of products to worldwide markets. The port has a
designated Foreign Trade Zone.
21
Population. The following chart sets out population data for the City, the County and the State:
Year
City of Little Rock
Pulaski County
State of Arkansas
2005*
184,564
366,463
2,779,154
2000
183,133
361,474
2,673,400
1990
175,795
349,660
2,350,725
1980
159,151
340,613
2,286,435
1970
132,483
287,189
1,923,322
1960
107,813
242,980
1,786,272
Source: U.S. Bureau of Census and Arkansas Institute for Economic Advancement.
* Annual Estimates of the Population for Counties of Arkansas; April 1, 2000 to July 1, 2005- Population
Division,
U.S. Census Bureau; release date March 16, 2006.
Land Use. The City's Planning and Development Department reports the following use of buildings and
structures in the City for 2006;
Type of Use
Number
Percentage ( %)
Single Family
59,038
64.51
Accessory Building
19,195
20.97
Multi- Family
4,118
4.50
Commercial
2,875
3.14
Mobile Homes
2,302
2.51
Public
1,620
1.77
Manufacturing /Industrial
1,295
1.42
Office
1,040
1.14
Residential Commercial
33
0.04
Public Schools. Enrollment in the Little Rock School
District is reported by the Arkansas Department of
Education as follows:
School Year
Enrollment
2006 -2007
25,500
2005 -2006
25,095
2004 -2005
24,424
2003 -2004
24.392
2002 -2003
24,501
2001 -2002
24,460
2000 -2001
24,462
22
Higher Education. Enrollment in institutions of higher education located in the City is reported by the
Arkansas Department of Higher Education for 2006 as follows:
Arkansas Baptist College
Philander Smith College
Shorter College
University of Arkansas at Little Rock 11,230
University of Arkansas Medical Sciences 2,240
Pulaski Technical College 8,276
* Enrollment Figures for these institutions not reported.
Building Permits.
Commercial and residential construction in the City is shown below:
Year
Permits Issued
Estimated Cost
2005
5,330
620,819,782
2004
5,032
475,269,768
2003
4,432
458,553,311
2002
4,561
489,610,493
2001
2,243
300,318,597
Source: City of Little Rock
Principal Employers. Principal employers in the County are identified below:
Employer
Product /Service
Retail Sales. Historical
retail sales (in
thousands) in the City are as follows:
Employees
Arkansas State Government
2001
2002
2003
2004
2005
Food/Beverage
$ 303,372
$ 300,506
$ 309,967
$ 330,649
$ 343,087
Food Service/Drinking
Medical Services
7,618
Triad Hospitals Inc.
Medical Services
5,500
Establishments
272,900
274,059
270,116
285,759
312,638
General
433,274
406,592
391,961
384,624
401,931
Furniture
247,033
226,902
246,124
249,065
237,645
Motor Vehicle
955,159
929,527
832,735
869,047
889,921
Totals:
2 211 738
S2,07,5_86
$2,050,903
2 119 144
2 185 222
Source: Survey of Buying Power, Sales and Marketing Management.
Principal Employers. Principal employers in the County are identified below:
Employer
Product /Service
Number of
Employees
Arkansas State Government
Government
51,405
Wal -Mart Stores, Inc.
Retail
44,638
Tyson Foods, Inc.
Food Processing
24,000
U.S. Government
Government
20,800
Baptist Health Inc.
Medical Services
7,618
Triad Hospitals Inc.
Medical Services
5,500
Whirlpool Corp.
Manufacturing
4,500
Pilgrim's Pride Corp.
Food Processing
4,100
Georgia - Pacific Corp.
Manufacturing
4,070
Arkansas Children's Hospital
Medical Services
3,687
ConAgra Foods Inc.
Food Processing
3,600
Source: The companies, Arkansas Department of Economic Development and U.S. Bureau of
Labor Statistics;
originally published April 4, 2005.
23
Employment. The Arkansas Employment Security Division has provided the following data about the
labor force and rate of unemployment for the Little Rock/North Little Rock MSA:
Source: Bureau of Economic Analysis, Washington, D.C.
Total
*Most recent year available.
Unemployment
Year
Labor Force
Employed
Unemployed
Rate
2005
339,525
324,700
14,825
4.4%
2004
325,500
309,325
16,175
5.0%
2003
313,750
297,575
16,175
5.2%
2002
311,800
296,900
14,900
4.8%
2001
310,200
297,650
12,550
4.0%
County Economic Data. Per capita personal income estimates for the County are
as follows:
Per Capita
Personal Income
Average
Year
(In $000)
Annual Growth
2004*
$35,264
5.86%
2003
$33,313
1.45%
2002
$32,837
5.05%
2001
$31,258
4.12%
2000
$30,021
5.44%
Source: Bureau of Economic Analysis, Washington, D.C.
Total
*Most recent year available.
$4,899,809,094
Total personal income estimates for the County are as follows:
4,741,185,228
Total
5,081,624,126
Personal Income
Average
Year (In $000)
Annual Growth
2004* $12,879,376
6.02%
2003 12,148,476
6.75%
2002 11,938,994
5.43%
2001 11,324,438
4.29%
2000 10,858,731
5.84%
Source: Bureau of Economic Analysis, Washington, D.C.
Historical real and personal property assessments in the County are as follows:
Tax Year Real Estate Personal Utility & Carrier
Total
2005 $3,430,597,461 $1,197,031,441 $272,180,192
$4,899,809,094
2004 3,396,486,012 1,106,609,415 238,089,801
4,741,185,228
2003 3,774,362,087 1,076,727,205 230,534,834
5,081,624,126
2002 2,805,001,819 1,047,149,635 210,055,674
4,062,207,128
2001 3,705,525,379 1,030,322,800 259,954,703
3,995,802,882
Source: Arkansas Assessment Coordination Department.
Litigation. The City is a party to multiple matters of litigation and regulatory proceedings arising from the
City's various governmental activities. No such pending litigation or regulatory proceedings directly impact on the
System or the Project except as hereinafter described under THE SYSTEM - Litigation.
There are no lawsuits or
24
regulatory proceedings pending or, to the knowledge of the City, threatened against the City, in which claims of
damage are made which, individually or in the aggregate, create a financial exposure which would substantially
impair the financial solvency of the City.
DEFINITIONS OF CERTAIN TERMS
The following are definitions of certain terms used in this Official Statement:
"Accountant" means an independent certified public accountant or a firm of independent certified public
accountants.
"Additional Bonds " means additional sewer revenue bonds issued by the City upon the terms and
conditions specified in the Authorizing Ordinance and secured on a parity basis with the Parity Bonds and the Series
2007A Bonds.
"Authorizing Ordinance" means Ordinance No. adopted by the Board of Directors of the City on
May_, 2007.
"Beneficial Owner" means any person who has or shares the power, directly or indirectly, to make
investment decisions concerning ownership of any Series 2007A Bonds (including persons holding Series 2007A
Bonds through nominees, depositories or other intermediaries).
"Bond Fund" means the 2007A Bond Fund created in the Authorizing Ordinance.
"Bonds" means the Series 2001 Bonds, the Series 2005 Bonds, the Series 2007A Bonds and any series of
Additional Bonds hereafter issued.
"City" means the City of Little Rock, Arkansas.
"Code" means the Internal Revenue Code of 1986, as amended, and Treasury Regulations promulgated or
proposed thereunder.
"Committee" means Little Rock Sanitary Sewer Committee.
"Construction Fund" means the Construction Fund heretofore created by ordinance of the Board of
Directors of the City.
"Debt Service Reserve" means the Debt Service Reserve to be established at the Required Level in the
Bond Fund as provided in the Authorizing Ordinance.
"Depreciation Fund" means the Depreciation Fund heretofore created by ordinance of the Board of
Directors of the City.
"Financial Security" or "Insurer" means Financial Security Assurance Inc., a New York stock insurance
company, or any successor thereto or assignee thereof.
"Government Securities" means direct obligations of (including obligations issued or held in book entry
form on the books of) the Department of the Treasury of the United States of America.
" Moody's" means Moody's Investors Services, Inc.
"Net Revenues" means gross revenues of the System less operation and maintenance expenses other than
depreciation, interest and amortization of deferred bond discount expenses, determined in accordance with generally
accepted accounting principles.
"Operation and Maintenance Fund" means the Operation and Maintenance Fund heretofore created by
ordinance of the Board of Directors of the City.
"Parity Bonds " means the Series 2001 Bonds and the Series 2005 Bonds.
"Policy" means the insurance policy to be issued by Financial Security concurrently with the delivery of
the Series 2007A Bonds and guaranteeing the scheduled payment of principal of and interest on the Series 2007A
Bonds when due.
25
"Project" means, collectively, the various capital improvements to be acquired, constructed and equipped
with the proceeds of the Series 2007A Bonds.
"Required Level" means the lesser of (i) the maximum annual principal and interest requirement on the
Series 2007A Bonds or (ii) 10% of the proceeds of the Series 2007A Bonds (excluding accrued interest but
including underwriters' discount).
City.
"Revenue Fund" means the Revenue Fund heretofore created by ordinance of the Board of Directors of the
"Series 1990 Bond" means the City's Sewer Revenue Bond, Series 1990.
"Series 1991 Bond" means the City's Sewer Revenue Bond, Series 1991.
"Series 1996 Bond" means the City's Sewer Revenue Bond, Series 1996.
"Series 1999 Bond" means the City's Sewer Revenue Bond, Series 1999.
"Series 2001 Bonds" means the City's Sewer Refunding and Construction Revenue Bonds, Series 2001.
"Series 2004A Bond" means the City's Sewer Revenue Bond, Series 2004A.
"Series 2004B Bond" means the City's Sewer Revenue Bond, Series 2005B.
"Series 2004C Bond" means the City's Sewer Revenue Bond, Series 2005C.
"Series 2005 Bonds" means the City's Sewer Refunding and Construction Revenue Bonds, Series 2005.
"Series 2007A Bonds" means the City's $64,865,000* original principal amount of Sewer Construction
Revenue Bonds, Series 2007A.
"State" means the State of Arkansas.
"Subordinate Bonds" means the Series 1990 Bond, the Series 1991 Bond, the Series 1996 Bond, the Series
1999 Bond, the Series 2004A Bond, the Series 2004B Bond and the Series 2004C Bond.
"System " means the City's sewer system.
"System Bonds" means all outstanding indebtedness payable from revenues of the System, including the
Bonds and the Subordinate Bonds.
"Trustee" means Regions Bank, Little Rock, Arkansas, or its successors designated as provided in the
Authorizing Ordinance.
"Underwriters" means, collectively, Morgan Keegan & Company, Inc. and Crews & Associates, Inc.
"Utility" means Little Rock Wastewater, a component arm of the City, responsible for the day -to -day
operations of the System.
* Preliminary; subject to change.
SUMMARY OF THE AUTHORIZING ORDINANCE
The Series 2007A Bonds are being issued and secured pursuant to the provisions of the Authorizing
Ordinance, to which reference may be had in its entirety for a detailed statement of its provisions, the description set
forth below being a summary of certain provisions. The City will covenant as set forth below in the Authorizing
Ordinance.
Rates and General Covenants to Operate. (a) The rates charged for services of the System heretofore
fixed by ordinances of the City and the conditions, rights and obligations pertaining thereto, as set out in those
ordinances, are ratified, confirmed and continued. 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 a 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
26
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. }
The City covenants that the rates shall never be reduced while any of the Series 2007A Bonds are
outstanding unless there is obtained from an independent certified public accountant ( "Accountant ") a certificate
that the Net Revenues of the System (Net Revenues being defined as gross revenues less the expenses of operation
and maintenance of the System, including all expense items properly attributable to the operation and maintenance
of the System under generally accepted accounting principles applicable to municipal sewer facilities other than
depreciation, interest and amortization of deferred bond discount expenses), with the reduced rates, will always
leave a balance equal to at least 130% of the average annual principal and interest requirements on all outstanding
bonds to which System revenues are pledged ( "System Bonds "). The City further covenants that the rates shall, if
and when necessary from time to time, be increased in such manner as will produce revenues at least sufficient to
pay the principal and interest on all System Bonds when due, to pay the operation, repair and maintenance expenses
of the System, and to deposit the amounts required to be paid into the Depreciation Fund and the Debt Service
Reserve.
(b) The System shall be continuously operated as a revenue producing undertaking, and all moneys
received from its operation shall be deposited in such depository or depositories for the City as may be lawfully
designated from time to time by the Committee, subject, however, to the giving of security as now or as hereafter
may be required by law, and provided that such depositories are located in the City, have a capital and surplus of not
less than $15,000,000, and hold membership in the Federal Deposit insurance Corporation ( "FDIC ").
Funds and Disposition of Revenues. (a) All revenues derived from the operation of the System shall
be paid into a special fund designated "Sewer Fund" (the "Revenue Fund "). Moneys in the Revenue Fund shall be
applied to the payment of the reasonable and necessary expenses of operation and maintenance of the System, to the
payment of the principal of and interest on the System Bonds, to the providing of the Depreciation Fund, to the
maintenance of debt service reserves and otherwise as described in the Authorizing Ordinance.
(b) There shall be first paid from the Revenue Fund into a fund designated "Sewer Operation and
Maintenance Fund" (the "Operation and Maintenance Fund "), on or before the 10th day of each month, an amount
sufficient to pay the reasonable and necessary monthly expenses of operation, repair and maintenance of the System
for such month and from which disbursements shall be made only for those purposes. Fixed annual charges such as
insurance premiums and the cost of major repair and maintenance expenses may be computed and set up on an
annual basis, and 1/12 of the amount thereof may be paid into the Operation and Maintenance Fund each month.
If in any month for any reason there shall be a failure to transfer and pay the required amount into the
Operation and Maintenance Fund, the amount of any deficiency shall be added to the amount otherwise required to
be transferred and paid therein during the next succeeding month. If any surplus shall be accumulated in the
Operation and Maintenance Fund over and above the amount which shall be necessary to defray the reasonable and
necessary costs of operation, 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 to the Revenue Fund.
(c) After making the required monthly deposits to the Operation and Maintenance Fund, there shall
next be paid from the Revenue Fund into the 2001 Bond Fund and the 2005 Bond Fund being maintained in
connection with the Series 2001 Bonds and the Series 2005 Bonds, the required monthly deposits pursuant to the
2001 Ordinance and the 2005 Ordinance and into a special fund designated "2007 Sewer Revenue Bond Fund" (the
"Bond Fund ") on or before the 15'h day of each month, commencing in July 2007, until all outstanding Series
2007A Bonds, with interest thereon, have been paid in full or provision made for such payment a sum equal to 1/6 of
the next installment of interest due on the Series 2007A Bonds and 1/12 of the next installment of principal due on
the Series 2007A Bonds; provided, however, that payments made into the Bond Fund for the first five months shall
be increased to 115 of the next installment of interest due on the Series 2007A Bonds and for the first eleven months
to 1 /11 of the next installment of principal due on the Series 2007A Bonds.
The City shall also pay into the 2001 Bond Fund, the 2005 Bond Fund and the Bond Fund such additional
sums as necessary to provide for the Trustee's fees and expenses and any arbitrage rebate payment due to be paid to
the United States Treasury under Section 148 (f) of the Internal Revenue Code of 1986, as amended (the "Code ").
The City shall realize a credit against monthly deposits into the 2001 Bond Fund, the 2005 Bond Fund and the Bond
Fund from bond proceeds deposited therein, all interest earnings on moneys in the 2001 Bond Fund, the 2005 Bond
27
Fund and the Bond Fund and for transfers into the bond funds derived from earnings on the respective debt service
reserves during the preceding month.
There is created, as a part of the Bond Fund, a Debt Service Reserve which shall be maintained by the City
in an amount equal to the maximum annual principal and interest requirements on the Series 2007A Bonds or 10%
of the proceeds of the Series 2007A Bonds (excluding accrued interest but including Underwriters' discount),
whichever is less (the "Required Level "). Should the Debt Service Reserve become impaired or be reduced below
the Required Level, the City shall make additional monthly payments from the Revenue Fund until the impairment
or reduction is corrected within a twenty -four month period.
If for any reason the City should fail at any time to make any of the required payments into the Bond Fund,
any sums then held in the Debt Service Reserve shall be used to the extent necessary for the payment of principal of
or interest on the Series 2007A Bonds.
If Net Revenues are insufficient to make the required payment on the first business day of the following
month into the Bond Fund, then the amount of any such deficiency in the payment made shall be added to the
amount otherwise required to be paid into the Bond Fund on the first business day of the next month. There shall
be withdrawn from the Bond Fund and deposited with the Trustee at least one business day before the due date for
the principal and/or interest on any Series 2007A Bond, at maturity or redemption prior to maturity, an amount equal
to the amount of such Series 2007A Bond or interest due thereon for the sole purpose of paying the same, together
with the Trustee's fee. There shall also be withdrawn and paid to the United States Treasury any arbitrage rebate
due at the times and in the amounts in accordance with Section 148(f) of the Code.
(d) There shall next be paid from the Revenue Fund the amounts required to be paid into (a) the
"ADFA Bond Fund" being maintained in connection with the 1990 Bond and the 1991 Bond, (b) the "1996 ADFA
Bond Fund" being maintained in connection with the 1996 Bond (c) the "1999 ADFA Bond Fund" being maintained
in connection with the 1999 Bond, (d) the "2004A Bond Fund" being maintained in connection with the 2004A
Bond, (e) the "2004B Bond Fund" being maintained in connection with the 2004B Bond, and (f) the "2004C Bond
Fund" being maintained in connection with the 2004C Bond, for the purpose of providing for the payment of the
principal of and interest on the Subordinate Bonds when due.
(e) There shall next be paid from the Revenue Fund the administrative and servicing fees due in
connection with the Subordinate Bonds.
(f) There shall next be paid from the Revenue Fund into a fund designated "Sewer Depreciation
Fund" (the "Depreciation Fund "), on or before the 15th day of each month while any of the Series 2007A Bonds are
outstanding, 3% of System revenues for the preceding month which remain after the required payment into the
Operation and Maintenance Fund. The moneys in the Depreciation Fund shall be used solely for the purpose of
paying the cost of replacements made necessary by the depreciation of the System.
If in any fiscal year a surplus shall be accumulated in the Depreciation Fund over and above the amount
which shall be necessary to defray the cost of the probable replacements during the then current fiscal year and next
ensuing fiscal year, such surplus may be transferred into the Revenue Fund.
(g) Any surplus in the Revenue Fund after making all disbursements and providing for all funds
described above may be used, at the option of the City, for any lawful purpose related to the System authorized by
the Committee.
Parity Bonds. So long as any of the Series 2007A Bonds are outstanding, the City shall not issue or
attempt to issue any bonds claimed to be entitled to a priority of lien on revenues of the System over the lien
securing the Series 2007A Bonds.
The City reserves the right to issue Additional Bonds to finance or pay the cost of making any future
extensions, betterments or improvements to the System, or to refund bonds issued for such purposes, but the City
shall not authorize or issue any such Additional Bonds ranking on a parity with the Series 2007A Bonds and the
Parity Bonds unless and until there have been, procured and filed with the City Clerk and the Trustee a statement by
an Accountant reciting the opinion, based upon necessary investigation, that the Net Revenues of the System for the
fiscal year immediately preceding the fiscal year in which it is proposed to issue such Additional Bonds shall equal
not less than 120% of the average annual principal and interest requirement on all the then outstanding System
Bonds and the Additional Bonds then proposed to be issued. The term "Net Revenues" means gross revenues of the
System less operation and maintenance expenses other than depreciation, interest and amortization of deferred bond
28
discount expenses, determined in accordance with generally accepted accounting principles. In making the
computation set forth above, the City, and the Accountant on behalf of the City, may, based upon the opinion or
report of a registered professional engineer not in the regular employ of the City, treat any increase in rates for the
System enacted subsequent to the first day of such preceding fiscal year as having been in effect during or
throughout such fiscal year and may include in gross revenues for such fiscal year the amount that would have been
received, based on such opinion or report, had the increase been in effect during or throughout such fiscal year.
Accounts and Records. The City will keep proper books of accounts and records (separate from all other
records and accounts) in which complete and correct entries shall be made of all transactions relating to the
operation of the System, and such books shall be available for inspection by the Trustee and any registered owner of
any of the Series 2007A Bonds at reasonable times and under reasonable circumstances. The City and the
Committee agree to have these records audited by an Accountant at least once each year, and a copy of the audit
shall be delivered to the Trustee and made available to interested registered owners requesting the same in writing.
In the event that the City fails or refuses to make the audit, the Trustee or any registered owner of the Series 2007A
Bonds may have the audit made, and the cost thereof shall be charged against the Operation and Maintenance Fund.
Maintenance; Insurance. The City covenants and agrees that it will maintain the System in good
condition and operate the same in an efficient manner and at reasonable cost. While any of the Series 2007A Bonds
are outstanding, the City agrees that it will insure and at all times keep insured, in the amount of the full insurable
value thereof, in a responsible insurance company or companies selected by the Committee and authorized and
qualified under the laws of the State to assume the risk thereof, all above - ground structures of the System to the
extent that such structures would be covered by insurance by private companies engaged in similar types of
business, against loss or damage thereto from fire, lightning, tornados, winds, riot, strike, civil commotion,
malicious damage, explosion and against any other loss or damage from any other causes customarily insured
against by private companies engaged in similar types of business. The insurance policies are to carry a clause
making them payable to the Committee and the Trustee as their interests may appear, and satisfactory evidence of
said insurance shall be filed with the Trustee. In the event of loss, the proceeds of such insurance shall be applied
solely toward the reconstruction, replacement or repair of the System, and in such event the City will, with
reasonable promptness, cause to be commenced and completed the reconstruction, replacement and repair work. If
such proceeds are more than sufficient for such purposes, the balance remaining shall be deposited to the credit of
the Revenue Fund, and if such proceeds shall be insufficient for such purposes, the deficiency shall be supplied first
from moneys in the Depreciation Fund, second from moneys in the Operation and Maintenance Fund, and third from
surplus moneys in the Revenue Fund. Nothing shall be construed as requiring the City to expend any moneys for
operation and maintenance of the System or for premiums on its insurance which are derived from sources other
than the operation of the System, but nothing shall be construed as preventing the City from doing so.
Defeasance. Any Series 2007A Bond shall be deemed to be paid within the meaning of the
Authorizing Ordinance when payment of the principal of and interest on such Series 2007A Bond (whether at
maturity or upon redemption, or otherwise), either (1) shall have been made or caused to be made in accordance
with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and
irrevocably set aside exclusively for such payment (1) cash sufficient to make such payment and/or (2) direct
obligations of (including obligations issued or held in book entry form on the books of) the Department of the
Treasury of the United States of America ( "Government Securities ") (provided that such deposit will not affect the
tax exempt status of the interest on any of the Series 2007A Bonds or cause any of the Series 2007A Bonds to be
classified as "arbitrage bonds" within the meaning of Section 148 of the Code), maturing as to principal and interest
in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and
proper fees, compensation and expenses of the Trustee pertaining to the Series 2007A Bonds with respect to which
such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee.
On the payment of any Series 2007A Bonds within the meaning of the Authorizing Ordinance, the Trustee
shall hold in trust, for the benefit of the owners of such Series 2007A Bonds, all such moneys and/or Government
Securities.
When all the Series 2007A Bonds shall have been paid within the meaning of the Authorizing Ordinance, if
the Trustee has been paid its fees and expenses and if any arbitrage rebate due the United States Treasury under
Section 148(f) of the Code has been paid or provided for to the satisfaction of the Trustee, the Trustee shall take all
appropriate action to cause (i) the pledge and lien of the Authorizing Ordinance to be discharged and cancelled, and
(ii) all moneys held by it pursuant to the Authorizing Ordinance and which are not required for the payment of such
29
Series 2007A Bonds to be paid over or delivered to or at the direction of the City.
Default and Remedies. If there be any default in the payment of the principal of or interest on any of the
Series 2007A Bonds, or if the City defaults in any Bond Fund requirement or in the performance of any of the other
covenants contained in the Authorizing Ordinance, and such failure continues unremedied for thirty (30) days, or if
the City declares bankruptcy or seeks relief from its creditors under the provisions of any other similar state or
federal law, the Trustee may, and upon the written request of the registered owners of not less than ten percent
(10 %) in principal amount of the Series 2007A Bonds then outstanding shall, by proper suit, compel the
performance of the duties of the officials of the City under the laws of Arkansas; and in the case of a default in the
payment of the principal of and interest on any of the Series 2007A Bonds, the Trustee may, and upon the written
request of registered owners of not less than ten percent (10 %) in principal amount of the Series 2007A Bonds then
outstanding shall, apply in a proper action to a court of competent jurisdiction for the appointment of a receiver to
administer the System on behalf of the City and the registered owners of the Series 2007A 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, maintenance and repair and to pay any Series 2007A Bonds
and interest outstanding and to apply the System revenues in conformity with the laws of Arkansas and with the
Authorizing Ordinance. When all defaults in principal and interest payments have been cured, the custody and
operation of the System shall revert to the City.
No registered owner of any of the outstanding Series 2007A Bonds shall have any right to institute any suit.
action, mandamus or other proceeding in equity or at law for the protection or enforcement of any power or right
unless such 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 registered owners of not less than ten percent (10 %) in
principal amount of the Series 2007A Bonds then outstanding shall have made written request of the Trustee after
the right to exercise such power 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 granted to the Trustee, or to institute
such action, suit or proceeding in its name, and unless, also, there shall have been offered to the Trustee reasonable
security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee
shall have refused or neglected to comply with such request within a reasonable time. Such notification, request and
offer of indemnity are, at the option of the Trustee, conditions precedent to the execution of any remedy. No one or
more registered owners of the Series 2007A Bonds shall have any right in any manner whatever by his or their
action to affect, disturb or prejudice the security of the Authorizing Ordinance, or to enforce any right thereunder
except in the manner described in the Authorizing Ordinance. All proceedings at law or in equity shall be instituted,
had and maintained in the manner herein described and for the benefit of all registered owners of the outstanding
Series 2007A Bonds.
No remedy conferred upon or reserved to the Trustee or to the registered owners of the Series 2007A
Bonds is intended to be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and
shall be in addition to every other remedy given under the Authorizing Ordinance or by law.
The Trustee may, and upon the written request of the registered owners of not less than a majority in
principal amount of the Series 2007A 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 the Authorizing Ordinance or before the completion of the enforcement of any other remedy, but no
such waiver shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or
remedies consequent thereon.
Amendment of'Authorizing Ordinance. The terms of the Authorizing Ordinance constitute a contract
between the City and the owners of the Series 2007A Bonds and no variation or change in the undertaking set forth
in the Authorizing Ordinance shall be made while any of the Series 2007A Bonds are outstanding, except as
hereinafter set forth below.
The Trustee may, with written notice to Financial Security, consent to any variation or change in the
Authorizing Ordinance without the consent of the owners of the outstanding Series 2007A Bonds (a) in connection
with the issuance of additional parity bonds under the Authorizing Ordinance, (b) in order to cure any ambiguity,
defect or omission therein or to correct or supplement any defective or inconsistent provisions contained therein as
the City may deem necessary or desirable and not inconsistent therewith, or (c) in order to make any other variation
or change which the Trustee determines shall not adversely affect the interests of the owners of the Series 2007A
Bonds.
30
The owners of not less than seventy -five percent (75 %) in aggregate principal amount of the Series 2007A
Bonds then outstanding, with written notice to Financial Security, shall have the right, from time to time, anything
contained in the Authorizing Ordinance to the contrary notwithstanding, to consent to and approve the adoption by
the City of such ordinance supplemental thereto as shall be necessary or desirable for the purpose of modifying,
altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the
Authorizing Ordinance or in any supplemental ordinance; provided, however, that nothing contained in the
Authorizing Ordinance shall permit or be construed as permitting (a) an extension of the maturity of the principal of
or the interest on any Series 2007A Bond, or (b) a reduction in the principal amount of any Series 2007A Bond or
the rate of interest thereon, or (c) the creation of a lien or pledge superior to the lien and pledge created by the
Authorizing Ordinance, or (d) a privilege or priority of any Series 2007A Bond or Bonds over any other Series
2007A Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Series 2007A Bonds required for
consent to such supplemental ordinance.
The Trustee. The Trustee shall only be responsible for the exercise of good faith and reasonable prudence
in the execution of its trust. The Trustee shall not be required to take any action as the Trustee unless it shall have
been requested to do so in writing by the registered owners of not less than ten percent (10 %) in principal amount of
the Series 2007A Bonds then outstanding and shall have been offered reasonable security and indemnity against the
costs, expenses and liabilities to be incurred therein or thereby. The Trustee may resign at any time by giving sixty
(60) days notice in writing to the City Clerk, the registered owners of the Series 2007A, and Financial Security, and
the City or the majority in value of the registered owners of the outstanding Series 2007A Bonds, at any time, with
or without cause, but with the consent of Financial Security, may remove the Trustee. In the event of a vacancy in
the office of Trustee, either by resignation or by removal, the City shall, with written notice to Financial Security,
forthwith designate a new Trustee by a written instrument filed in the office of the City Clerk. Every successor
Trustee shall be a trust company or bank in good standing, duly authorized to exercise trust powers and subject to
examination by federal or state authority. The original Trustee and any successor Trustee shall file a written
acceptance and agreement to execute the trusts imposed upon it or them but only upon the terms and conditions set
forth in the Authorizing Ordinance and subject to the provisions of the Authorizing Ordinance, to all of which the
respective registered owners of the Series 2007A Bonds agree. Any successor Trustee shall have all the powers
granted to the original Trustee.
Investments. (a) Moneys held for the credit of the Bond Fund shall be continuously invested and
reinvested pursuant to the direction of the Committee in Eligible Investments, all of which shall mature, or which
shall be subject to redemption by the holder thereof, at the option of such holder, not later than the payment date for
interest or principal and interest.
(b) Moneys held for the credit of the Debt Service Reserve shall be invested and reinvested at the
direction of the Committee in Eligible Investments, all of which shall mature, or which shall be subject to
redemption by the holder thereof, at the option of such holder, not later than seven (7) years after the date of
investment or the final maturity date of the Series 2007A Bonds whichever is earlier.
(c) Moneys held for the credit of any other fund shall be continuously invested and reinvested pursuant
to the direction of the Committee in Eligible Investments which shall mature, or which shall be subject to
redemption by the holder thereof, at the option of such holder, not later than the date or dates when the moneys held
for the credit of the particular fund will be required far purposes intended.
(d) "Eligible investments" means any of the securities that are at the time legal for investment of City
funds pursuant to Resolution No. 10,609 of the City and Arkansas Code Annotated (2005 Supp.) §14-58-309, as
each may be amended from time to time. At March 1, 2007, "Eligible Investments" include:
(1) U.S. government obligations, U.S. government agency obligations, and U.S.
government instrumentality obligations, which have a liquid market with a readily determinable
market value;
(2) Certificates of deposit and other evidences of deposit at financial institutions, and
commercial paper, rated in the highest tier (e.g., A -1, P -1, F -1, D -1, or higher) by a nationally
recognized rating agency;
(3) Investment -grade obligations of state, provincial, and local governments and
public authorities; and
31
(4) Money market mutual funds regulated by the Securities and Exchange
Commission and whose portfolios consist only of dollar - denominated securities.
Not more than 20% of the City's funds may be invested in uninsured certificates of deposit or other
evidences of deposit at financial institutions; commercial paper, state, provincial, and local government obligations
that do not constitute general obligations; and money market funds with a portfolio not limited to U.S. government
obligations.
The City's investment policy prohibits investments in derivative products, common stocks, and long -term
bonds and for speculation.
(e) Obligations so purchased as an investment of moneys in any fund shall be deemed at all times to be
a part of such fund and the interest accruing thereon and any profit realized from such investments shall be credited
to such fund, and any loss resulting from such investment shall be charged to such fund, except that interest earnings
and profits on investments of moneys in the Debt Service Reserve which increase the amount thereof above the
Required Level shall to the extent of any such excess be transferred from time to time into the Bond Fund.
(f) Moneys so invested in Government Securities or in certificates of deposit of banks to the
extent insured by FDIC, need not be secured by the depository bank or banks.
(g) All investments and deposits shall have a par value (or market value when less than par), exclusive
of accrued interest, at all times at least equal to the amount of money credited to such funds and shall be made in
such a manner that the money required to be expended from any fund will be available at the proper time or times.
(h) Investments of moneys in all funds shall be valued in terms of current market value as of the last day
of each year, except that direct obligations of the United States (State and Local Government Series) in book -entry
form shall be continuously valued at par or face principal amount.
(i) The City covenants. that it will make all arbitrage rebate payments to the United States in accordance
with Section 148 of the Code.
Certain Powers of Financial Security as Bond Insurer. The exercise of various rights, powers and
remedies set forth in the Authorizing Ordinance is subject to the prior approval of Financial Security as Bond
Insurer.
SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT
Purpose of the Continuing Disclosure Agreement. The Continuing Disclosure Agreement is executed and
delivered by the City and the Trustee for the benefit of the Beneficial Owners of the Series 2007A Bonds and
Financial Security, and in order to assist the Underwriters in complying with the Securities and Exchange
Commission, Rule 15c2- 12(b)(5).
Definitions. In addition to the definitions set. forth in this Official Statement, the following capitalized
terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described
in, the Continuing Disclosure Agreement.
"Authorizing Ordinance" shall mean Ordinance No. of the ordinances of the City
approved May _, 2007.
"Beneficial Owner" of a Series 2007A Bond shall mean any person who has or shares the power,
directly or indirectly, to make investment decisions concerning ownership of any Series 2007A Bonds
(including persons holding Series 2007A Bonds through nominees, depositories or other intermediaries).
"Dissemination Agent" shall mean the Trustee, acting in its capacity as Dissemination Agent, or
any successor Dissemination Agent designated in writing by the City and which has filed with the Trustee a
written acceptance of such designation.
"Financial Security" or "Insurer" shall mean Financial Security Assurance Inc., a New York stock
insurance company, or any successor thereto or assignee thereof.
"Listed Events" shall mean any of the events listed hereunder.
32
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule.
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
"State Repository" shall mean any public or private repository or entity designated by the State of
Arkansas as a state repository for the purpose of the Rule. As of the date hereof, there is no State
Repository.
Provision of Annual Report. (a) The City shall, or cause the Dissemination Agent to, not later than one
hundred fifty (150) days after the end of the System's fiscal year (presently December 31), commencing with the
report with respect to the 2007 fiscal year, provide to each Repository and Financial Security an Annual Report
which is consistent with the requirements of the Continuing Disclosure Agreement. The Annual Report may be
submitted as a single document or as separate documents comprising a package and may cross - reference other
information as provided in the Continuing Disclosure Agreement; provided that the audited financial statements of
the System may be submitted separately from the balance of the Annual Report and later than the date required
above for the filing of the Annual Report if they are not available by that date, but, in such event, such audited
financial statements shall be submitted not less than thirty (30) days after receipt thereof by the City.
(b) No later than fifteen (15) days prior to the date specified in subsection (a) for providing the Annual
Report to Repositories, the City shall provide the Annual Report to the Dissemination Agent and the Trustee (if the
Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report,
the Trustee shall contact the City and the Dissemination Agent to determine if the City is in compliance with the
first sentence of this subsection (b).
(c) If the Trustee is unable to verify that an Annual Report has been provided to Repositories and
Financial Security by the date required in subsection (a), the Trustee shall send a notice to each Repository,
Financial Security and the Municipal Securities Rulemaking Board.
Content of Annual Reports. The City's Annual Report shall contain or incorporate by reference the
following:
1. Information of the type set forth in this Official Statement under the caption "THE
SYSTEM" with respect to (i) the number of sewer users for the fiscal year then ended and the four previous
fiscal years; and (ii) a statement as to which users, if any, accounted for 5% or more of System revenues for
the preceding fiscal year.
2. The annual audit of the System prepared in accordance with generally accepted
government auditing standards.
Any or all of the items above may be incorporated by reference from other documents, including official
statements of debt issues of the City or related public entities, which have been submitted to each of the
Repositories, Financial Security, or the Securities and Exchange Commission. If the document incorporated by
reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The
City shall clearly identify each such other document so incorporated by reference.
Reporting of Significant Events. (a) This caption describes the giving of notices of the occurrence of
any of the following events.
1. Principal and interest payment delinquencies.
2. Non - payment related defaults.
3. Unscheduled draws on debt service reserves reflecting financial difficulties.
4. Unscheduled draws on credit enhancements reflecting financial difficulties.
5. Substitution of credit or liquidity providers, or their failure to perform.
6. Adverse tax opinions or events affecting the tax - exempt status of the security.
33
7. Modification to rights of security holders.
8. Bond calls (excluding mandatory sinking fund redemption).
9. Defeasances.
10. Release, substitution, or sale of property securing repayment of the securities.
11. Rating changes.
(b) When the City obtains knowledge of the occurrence of any of the Listed Events, the City shall
notify the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence.
(c) Whenever the Trustee obtains actual knowledge of the occurrence of any of the Listed Events,
whether from notice by the City or otherwise, the Trustee shall file a notice of such occurrence with the Municipal
Securities Rulemaking Board, each State Repository, Financial Security and the City. Notwithstanding the
foregoing, notice of the Listed Event described in subsection (a) (8) need not be given under this subsection any
earlier than the notice for the underlying event is given to registered owners of affected Series 2007A Bonds
pursuant to the terms of the Series 2007A Bonds. Each notice of the occurrence of a Listed Event shall be captioned
"Notice of Material Event" and shall properly state the date, title and CUSIP number of the Series 2007A Bonds.
Termination of Reporting Obligation. The City's obligations under the Continuing Disclosure Agreement
shall terminate upon the defeasance, prior redemption or payment in full of all the Series 2007A Bonds.
Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist
it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such
Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall
not be responsible in any manner for the content of any notice or report prepared by the City pursuant to the
Continuing Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee
shall be the Dissemination Agent. The initial Dissemination Agent shall be the Trustee.
Amendment; Waiver. Notwithstanding any other provision of the Continuing Disclosure Agreement, the
City and the Trustee may amend, with the consent of Financial Security, the Continuing Disclosure Agreement, and
any provisions of the Continuing Disclosure Agreement may be waived, provided that the following conditions are
satisfied:
(a) If the amendment or waiver relates to the requirements for providing an Annual Report, to
the contents of the Annual Report or the reporting of Listed Events, it may only he made in connection
with a change in circumstances that arises from a change in legal requirements, change in law, or change
in the identity, nature or status of an obligated person with respect to the Series 2007A Bonds, or the type
of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of
nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the
original issuance of the Series 2007A Bonds, after taking into account any amendments or interpretations
of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Beneficial Owners of the Series
2007A Bonds in the same manner as provided in the Authorizing Ordinance for amendments to the
Authorizing Ordinance with the consent of Beneficial Owners, or (ii) does not, in the opinion of the
Trustee, materially impair the interests of the Beneficial Owners of the Series 2007A Bonds.
In the event of any amendment or waiver of a provision of the Continuing Disclosure Agreement, the City
shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation
of the reason of the amendment or waiver and its impact on the type (or in the case of a change of accounting
principles, on the presentation) of financial information or operating data being presented by the City. In addition, if
the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of
such change shall be given in the same manner as for a Listed Event, and (ii) the Annual Report for the year in
which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles.
34
Additional Information. Nothing in the Continuing Disclosure Agreement shall be deemed to prevent the
City from disseminating any other information, using the means of dissemination set forth in the Continuing
Disclosure Agreement or any other means of communication, or including any other information in any Annual
Report or notice of occurrence of a Listed Event, in addition to that which is required by the Continuing Disclosure
Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed
Event in addition to that which is specifically required by the Continuing Disclosure Agreement, the City shall have
no obligation under the Continuing Disclosure Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
Default. At the direction of or with the consent of Financial Security, in the event of a failure of the City
or the Trustee to comply with any provision of the Continuing Disclosure Agreement, the Trustee, the City or any
Beneficial Owner may (and the Trustee, at the request of the Underwriters or the Beneficial Owners of at least 25%
aggregate principal amount of outstanding Series 2007A Bonds, shall) take such actions as may be necessary and
appropriate, including seeking mandamus or specific performance by court order, to cause the City or the Trustee, as
the case may be, to comply with its obligations under the Continuing Disclosure Agreement. A default under the
Continuing Disclosure Agreement shall not be deemed a default under the Authorizing Ordinance, and the sole
remedy under the Continuing Disclosure Agreement in the event of any failure of the City or the Trustee to comply
with the Continuing Disclosure Agreement shall be an action to compel performance.
Duties of Trustee and Dissemination Agent and Right of Indemnity. The Dissemination Agent (if other
than the Trustee) and the Trustee in its capacity as Dissemination Agent shall have only such duties as are
specifically set forth in the Continuing Disclosure Agreement, and the City agrees to indemnify and save the
Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss,
expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and
duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's or the Trustee's gross negligence or willful
misconduct.
Beneficiaries. The Continuing Disclosure Agreement shall inure solely to the benefit of the City, the
Trustee, the Dissemination Agent, the Underwriters, Financial Security and the Beneficial Owners and shall create
no rights in any other person or entity.
UNDERWRITING
Under a bond purchase agreement entered into by and among the City and Morgan Keegan & Company,
Inc. and Crews & Associates, Inc. (the "Underwriters "), the Series 2007A Bonds are being purchased at a purchase
price of $ (representing the stated principal amount of the Series 2007A Bonds [less][plus] a
net reoffering [discount] [premium] of $ and less an underwriting discount of $ ), plus accrued
interest, if any, from June 1, 2007 to the date of delivery of the Series 2007A Bonds. The bond purchase agreement
provides that the Underwriters will purchase all of the Series 2007A Bonds if any are purchased. The obligation of
the Underwriters to accept delivery of the Series 2007A Bonds is subject to various conditions contained in the bond
purchase agreement, including the absence of pending or threatened litigation questioning the validity of the Series
2007A Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse
changes in the financial condition of the City or the System.
The Underwriters intend to offer the Series 2007A Bonds to the public initially at the offering prices as set
forth on the inside cover page of this Official Statement, which offering prices (or bond yields establishing such
offering prices) may subsequently change without any requirement of prior notice. The Underwriters reserve the
right to join with dealers and other underwriters in offering the Series 2007A Bonds to the public, and may offer the
Series 2007A Bonds to such dealers and other underwriters at a price below the public offering price.
The City has agreed to indemnify the Underwriters against certain civil liabilities in connection with the
offering and sale of the Series 2007A Bonds, including certain liabilities under federal securities laws.
35
TAX MATTERS
Federal Income Taxes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations,
rulings and judicial decisions, interest on the Series 2007A Bonds is excluded from the gross income for federal
income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The
opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the
City with certain covenants designed to satisfy the requirements of the Code that must be satisfied subsequent to the
issuance of the Series 2007A Bonds. Failure to comply with certain of such requirements may cause interest on the
Series 2007A Bonds to be included in gross income for federal income tax purposes retroactive to the date of
issuance of the Series 2007A Bonds. The City has covenanted to comply with such requirements.
Notwithstanding Bond Counsel's opinion that interest on the Series 2007A Bonds is not a specific
preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted
current earnings of certain corporations, and such corporations are required to include in the calculation of
alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over its
alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for
certain net operating losses).
Original Issue Discount. The Series 2007A Bonds maturing June 1, 20_, 20_, 20_ and 20
(collectively, the "Discount Bonds ") are being sold at an original issue discount. The difference between the initial
public offering prices of such Discount Bonds and their stated amounts to be paid at maturity constitutes original
issue discount treated in the same manner for federal income tax purposes as interest, as described above.
The amount of original issue discount which is treated as having accrued with respect to a Discount Bond is
added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of
such Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of
such Discount Bond which are attributable to accrued original issue discount will be treated as tax - exempt interest,
rather than as taxable gain, for federal income tax purposes.
Original issue discount is treated as compounding semiannually, at a rate determined by reference to the
yield to maturity of each individual Discount Bond, on days which are determined by reference to the maturity date
of such Discount Bond. The amount treated as original issue discount on such Discount Bond for a particular
semiannual accrual period is equal to the product of (i) the yield to maturity for such Discount Bond (determined by
compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such
Discount Bond at the beginning of any particular accrual period if held by the original purchaser, less the amount of
any interest payable for such Discount Bond during the accrual period. The tax basis is determined by adding to the
initial public offering price on such Discount Bond the sum of the amounts which have been treated as original issue
discount for such purposes during all prior periods. If such Discount Bond is sold between semiannual
compounding dates, original issue discount which would have been accrued for that semiannual compounding
period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding
period.
Owners of Discount Bonds should consult their tax advisors with respect to the determination and treatment
of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a
Discount Bond.
Original Issue Premium. The Series 2007 Bonds maturing June 1, 20_, 20_, 20_ and 20
(collectively, the "Premium Bonds ") are being sold at a premium. An amount equal to the excess of the issue price
of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. An
initial purchaser of a Premium Bond must amortize any premium over such Premium Bond's term using constant
yield principles, based on the purchaser's yield to maturity (or, in the case of Premium Bonds callable prior to their
maturity, by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect
to the call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of
interest for the period and the purchaser's basis in such Premium Bond is reduced by a corresponding amount
resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a
sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced,
no federal income tax deduction is allowed. Purchasers of the Premium Bonds should consult their tax advisors with
respect to the determination and treatment of premium for federal income tax purposes and with respect to the state
and local tax consequences of owning a Premium Bond.
36
Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to
the Series 2007A Bonds.
The accrual or receipt of interest on the Series 2007A Bonds may otherwise affect the federal income tax
liability of the owners of the Series 2007A Bonds. The extent of these other tax consequences will depend upon
such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion
regarding any such consequences. Purchasers of the Series 2007A Bonds, particularly purchasers that are
corporations (including S corporations and foreign corporations operating branches in the United States), property or
casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security or
Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may
be deemed to have incurred or continued indebtedness to purchase or carry tax - exempt obligations, should consult
their tax advisors as to the tax consequences of purchasing or owning the Series 2007A Bonds.
Changes in Federal Tax Law. From time to time, there are legislative proposals in the Congress that, if
enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the
Series 2007A Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether
if enacted it would apply to bonds issued prior to enactment. Purchasers of the Series 2007A Bonds should consult
their tax advisors regarding any pending or proposed tax legislation. The opinions expressed by Bond Counsel are
based upon existing legislation as of the date of issuance and delivery of the Series 2007A Bonds, and Bond Counsel
has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation.
State Taxes. Bond Counsel is of the opinion that, under existing law, the interest on the Series 2007A
Bonds is exempt from all state, county and municipal taxes in the State of Arkansas.
RATINGS
Moody's Investors Service ( "Moody's "), will assign the Series 2007A Bonds the rating of "Aaa" based on
the delivery of the Policy by Financial Security and has assigned an underlying rating of "Al" to the Series 2007A
Bonds. Such ratings reflect only the views of Moody's at the time such ratings were given. An explanation of the
significance of the ratings may be obtained from Moody's. There is no assurance that such ratings will continue for
any given period of time or that the ratings will not be revised downward or withdrawn entirely by Moody's, if in its
judgment circumstances so warrant. Any downward revision or withdrawal of a rating may have an adverse effect
on the market price of the Series 2007A Bonds.
Neither the City nor the Underwriters have undertaken any responsibility subsequent to the issuance of the
Series 2007A Bonds to assure the maintenance of the ratings or to oppose any revision or withdrawal of the ratings.
No application has been made to any rating agency other than Moody's for a rating on the Series 2007A Bonds.
LEGAL MATTERS
Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2007A Bonds are
subject to the unqualified approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel, a copy of
whose approving opinion will be delivered with the Series 2007A Bonds. Certain legal matters will be passed upon
for the Sanitary Sewer Committee of the City by its counsel, Don F. Hamilton, Esq., Little Rock, Arkansas.
Litigation. Don F. Hamilton, Esq., counsel to the Sanitary Sewer Committee of the City, will deliver as to
the sale of the Series 2007A Bonds, his opinion that, to the best of his knowledge and belief, there is no litigation
pending seeking to restrain or enjoin the issuance or delivery of the Series 2007A Bonds or questioning or affecting
the legality of the Series 2007A Bonds or the proceedings and authority under which the Series 2007A Bonds are to
be issued, or questioning the right of the City to issue the Series 2007A Bonds.
FINANCIAL STATEMENTS
Set forth in Appendix A to this Official Statement are the financial statements of the System for the fiscal
years ended December 31, 2005 and 2006, which financial statements have been audited by Cobb & Suskie, Ltd.,
Little Rock, Arkansas, independent certified public accountants, as indicated in their report included in Appendix A.
The notes set forth in Appendix A are an integral part of the financial statements, and the statements and notes
should be read in their entirety.
37
MISCELLANEOUS
The City has furnished the information in this Official Statement relating to the operations of the System.
The Underwriters have furnished the information in this Official Statement with respect to the public offering prices
of the Series 2007A Bonds and the information under the caption "UNDERWRITING" herein.
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not
so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of
the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the
City and the purchasers or owners of any of the Series 2007A Bonds.
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT
The information contained in this Official Statement has been taken from sources considered to be reliable,
but is not guaranteed. To the best of the knowledge of the City, this Official Statement does not include any untrue
statement of a material fact, nor does it omit the statement of any material fact required to be stated herein, or
necessary to make the statements herein, in light of the circumstances under which they were made, not misleading.
fc
This execution and delivery of this Official Statement has been duly authorized by the City of Little Rock,
Arkansas.
CITY OF LITTLE ROCK, ARKANSAS
Mayor
39
[THIS PAGE LEFT BLANK INTENTIONALLY]
40
APPENDIX A
AUDITED FINANCIAL STATEMENTS
OF THE SYSTEM AS OF AND
FOR THE FISCAL YEARS ENDED
DECEMBER 31, 2005 AND DECEMBER 31, 2006
A -1
A -2
[THIS PAGE LEFT BLANK INTENTIONALLY]
A -3
A -4
APPENDIX B
Proposed Form of Bond Counsel Opinion
City of Little Rock
Little Rock, Arkansas
Regions Bank, as trustee.
Little Rock, Arkansas
Financial Security Assurance Inc.
New York, New York
Ladies and Gentlemen:
June , 2007
Morgan Keegan & Company, Inc.
Little Rock, Arkansas
Crews & Associates, Inc.
Little Rock, Arkansas
City of Little Rock, Arkansas
Sewer Construction Revenue Bonds
Series 2007A
We have acted as bond counsel in connection with the issuance and sale by the City of Little Rock,
Arkansas (the "City "), a political subdivision of the State of Arkansas, of its $ Sewer Construction
Revenue Bonds, Series 2007A (the "Bonds ").
The Bonds are being issued pursuant to and in full compliance with the provisions of the Constitution and
laws of the State of Arkansas, including, particularly, Amendment 65 and Title 14, Chapter 164, Subchapter 4, and
Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated (as from time to time amended, the
"Authorizing Legislation "), and pursuant to Ordinance No. of the City, duly adopted and approved on
May , 2007 (the "Authorizing Ordinance ").
The Bonds are issued under and secured and entitled to the protection given by the Authorizing Ordinance.
In the Authorizing Ordinance, Regions Bank, Little Rock, Arkansas, is named as trustee for the Bonds (the
"Trustee "). Reference is hereby made to the Authorizing Ordinance for the provisions, among others, with respect
to the conditions for the issuance of parity debt by the City, the nature and extent of the security for the Bonds, the
rights, duties and obligations of the City, the Trustee and the holders of the Bonds, and the terms upon which the
Bonds are issued and secured.
We have examined the law and such certified proceedings and other papers as we have deemed necessary
to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the
City contained in the Authorizing Ordinance and in the certified proceedings and other certifications of public
officials furnished to us, without undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing laws, regulations, rulings and judicial
decisions, as follows:
1. The City is duly created and validly existing as a municipal corporation and political subdivision
of the State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly,
Amendment 65 and the Authorizing Legislation, the City is empowered to adopt the Authorizing Ordinance, to
perform the agreements on its part contained therein, and to issue the Bonds.
2. The Authorizing Ordinance has been duly adopted by the City and constitutes a legal, valid and
binding obligation of the City enforceable upon the City in accordance with its terms.
3. The Bonds have been validly authorized, executed, issued and delivered by the City and represent
legal, valid and binding special obligations of the City. The principal, premium, if any, and interest on the Bonds
shall be payable from, and shall be secured by a valid assignment and pledge by the City to the Trustee of, and a lien
In
on, the Net Revenues (as defined in the Authorizing Ordinance) of the City's sewer system in the manner and to the
extent described in Section 10 of the Authorizing Ordinance. Such pledge is (i) subject to the existing parity pledge
of Net Revenues securing the City's Sewer Refunding and Construction Revenue Bonds, Series 2001, and the City's
Sewer Refunding and Construction Revenue Bonds, Series 2005, and (ii) senior to the pledge of Net Revenues
securing the City's Sewer Revenue Bond, Series 1990, the City's Sewer Revenue Bond, Series 1991, the City's
Sewer Revenue Bond, Series 1996, the City's Sewer Revenue Bond, Series 1999, the City's Sewer Revenue Bond,
Series 2004A, the City's Sewer Revenue Bond, Series 2004B, and the City's Sewer Revenue Bond, Series 2004C.
The City is duly authorized to pledge such Net Revenues, and no further action on the part of the City or any other
party is required to perfect the same or the interest of the owners of the Bonds therein.
4. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not a
specific preference item for purposes of the federal alternative minimum tax. The opinion described in the
preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants
designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended, that must be met subsequent
to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be
included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City
has covenanted to comply with such requirements. We express no opinion regarding other federal tax consequences
arising with respect to the Bonds.
5. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of
Arkansas.
6. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and
the Authorizing Ordinance is not required to be qualified under the Trust Indenture Act of 1939, as amended, in
connection with the offer and sale of the Bonds.
It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the
Bonds and the Authorizing Ordinance may be subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable
and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
Very truly yours,
I'
APPENDIX C
SPECIMEN OF
MUNICIPAL BOND INSURANCE POLICY
FINANCIAL MUNICIPAL BO
SECURITY INSURANCE I Y
ASSURANCE&
ISSUER: Po' o..: -
BONDS: :. ective Date:
FINANCIAL SECURITY ASSURANCE INC. ( "Fin
nci l
ecu y" ,
or
hereby UNCONDITIONALLY AND IRREVOCABLY ag
es' to
pay h
try
paying agent (the "Paying Agent ") (as set forth e d
u n
Lion r vi'
inc
securing the Bonds) , for the Bonds, for the en 't o
th
n r
t t
Security, directly to each Owner, subject my to th
ter iis
o t s P
'lic'.
endorsement'hereto)i that portion of the'pri ipal of r
int e
t o t B
'. d!
for Payment but shall be unpaid by re n o Nonpay er
b the
Is
On the later of the day o hick uc principal
i e
st' e
I
Business Day, next following a Busine s ay phi
ma ct
I u y ''
al
Nonpayment; Financial Sec' rity will di., se o r tie
n
fit f c
Oa
amount of principal d terest on h B id at is
tht
e r a
ei
reason of Nonpa nt t lssu ut nl upon rec
pt
in ial
r
satisfactory to i of (a) ev ace the fl er right to r
cei a
ay nt
e
Due for Payrn `t and (b) v Jeri e, inclu ncg ny appro
fat ' i
tr ent
a!
Owner' . hts' with resp to yme It f uch prince
al r
' to t t
is
aher .pon es in Financi I e ri Not ce of Non
ay, er
t it be t
err
Pre 'um: $
si it r cei d.,
(th ee' or
the ic of d
bi Payme ca th
ceiv oti o
of a n' a ace
t i en pal by
en
a form bly
ipal or in s en
meat, th of the
far P en t shall
ecei on a .given
Bu ess D y it i ei pn 1: p. (N Yor tin ) n u in U , otherwise, it will
be eemed re ei d n t e next Busies' y: No c of np e t eived by Financial
S unity is i s p1 to it I t dee not o h ve m e v y n at Security for purposes
of he ece in s t` ce a d Financi I ec ty all p m ly o is t rustee, Paying Agent or
s op t o may s it n me de tic went_ Upon disbursement in
r s t f B d, R an at Sec sha be o t Jn r t ond, any appurtenant Coupon to
t e on or ht o re i of paymen of cip o in st on the Band and shall be fully
s br ted to e rights t e er, inc dine the v r's', 'g to receive payments under the Bond,
t the e t any pa e t b Fir #once Security ere u r. Payment by Financial Security to the
ustee,or rig Ag t f C t it the O ne shall to the extent thereof, discharge the
o rgation o Fi an ecu a th 'P Iicy. `
Except o the xtent ex' ressly m ifie n endorsement hereto, the following terms shall have
th . eaning pec fied for a I purposes f this Policy. "Business Day" means any day other than (a) a
Sat or da f or (b) a ay on wh h banking institutions in the State of New York or the insurer's
Fiscal A exit ai at horized or requir by law or executive order to remain closed. "Due for Payment"
mea s { ) w re erring to he i cipal of a Bond, payable on the stated maturity date thereof or the
d n i e ame sh I ve been duly called for mandatory sinking fund redemption and does
t fe to n e tier date n which payment is due by reason of call for redemption (other, than by
an t ry in ing fund redemption), acceleration or other advancement of maturity unless Financial
ecu sh I ect in its sole discretion, to pay such principal due upon such acceleration together with
y accrue in t to the date of acceleration and (b) when referring to interest on a Bond, payable on
t stated at or payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the
I er to ave provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for
p men n full of all principal and interest that is Due for Payment on such Bond. ".Nonpayment" shall
al Jude, in respect of a'• Bond, any payment of principal or 'interest that is Due for Payment
F
C -1
Page 2 of 2
Policy No. -N
made to an Owner by or on behalf of the Issuer which has been recover fn im such Ow r ursu to
the United` States Bankruptcy Code by a trustee in bankruptcy in accor nce a fin , no 'appea le
order of a court having competent, jurisdiction. "Notice" me s leg n o eleco ed n i e
subsequently confirmed in a signed writing, or written notice by r s re' or c rti red ail fro ' an Ow r,
the Trustee or the Paying Agent to Financial Security which Lice h' I .spe i (a the 'pers )n ,or e #y
making the claim, (b) the Policy Number, (c) the claimed o nt a j th d to ch i ed mo nt
became. Due for, Payment.. "Owner" means, in respect a o 'd, th rson 'r nti o a th ime of
Nonpayment, is entitled` under the terms of such Bond p.:: ent t er o e t t t �" n r" ` all not
include the Issuer or any person or entity who dire or in irect b g io nstitutes he un rlying
security for the Bonds
Financial Security may appoint a fiscal nt (t,' "1 su r F c g rit" f r. purpo so thi olicy
by giving written notice to the Trustee d t Paying nt p ` i n e a ind ice ad IreE s the
Insurer's Fiscal Agent. From and e th date of r c pt f E Jc n e y E Tr tee and the P ing
Agent, (a) copies of all notices r fired o delivere t Fi n ial e ri PU SL ant o this Po icy ih I be
simultaneously delivered to Insure seal en d t F na i S curi nd' hall not e` ee ed'
received until received by bi and (b)` 11 y e is e ire t b e y n nci 1 Se i u er' his
Policy may be made directl by Finan al Se rit € b th In ;u 's i l g nt f f nan is
Security. The lnsur is l Agent i '' h a nt Fin nci I c y` n a e' l urer' ise [ "Ag
shall' in no event liabl .t any O ' er f r a y act of th a In u ` r` iscal ge it r any failu f nancial
Security to de it or ca e o b eposit d s fficient fu s t ak ay is u under thi I"
To full st extent e itt by a !ic le law, Fi an ial S rity e otto ass and hereby
v,aiv , o y f r the bene it f ch r, 11 rights ( het e b un la , setoff otherwise) and
def ses. (i ch in itha t imi n, ` de nse of fro , # acq i d y su gation, assignment
or therv�is, : t tIt to at such r s °add m y e it 1 t F vial Security to avoid
p ment of s bli ti ns er this P i in cco a wit t es o si ns of this Policy.
T Po se f rth n u[I. the u e aki g o Fi ial e ' ur y, an all not be ,modified, altered or
a ec toy n o r atre ent o st me , i lu n an od c nor amendment thereto. Except
t th e t e pr y ed' an en ors nt er to, a) an. premium paid in respect of this Policy
i n re unda e f r an on whatsoe er, udi ay e r provision being,made for payment, of
e s pri to ai nd bj this licy may of e n elect or revoked. THIS POLICY 1S NOT
OVER B THE PR T CASl� INSU N ECURITY FUND SPECIFIED IN ARTICLE 76
F THE N ORK I _ N E
In witne ANfh f, FINN L S U ITY SURANCE INC. has caused this Policy to be executed
o, its behalf its; uthorize C3fiicer.
tcoun sign at re] FINANCIAL SECURITY ASSURANCE INC.
y By
Authorized Officer
subsrdia
of Inancial Security Assurance Holdings Ltd. (212) 826 -0100
3 West d Street, New York, N-Y_ 10018
fo NY (5100)
C -2
KUTAK ROCK LLP
DRAFT 05/15/07
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement ") is executed and
delivered by the City of Little Rock, Arkansas, a duly constituted municipality under the laws of
the State of Arkansas (the "City "), and Regions Bank, Little Rock, Arkansas (the "Trustee "),
acting in its capacity as Dissemination Agent hereunder, for the benefit of the Beneficial Owners
of the City's $63,050,000 Sewer Construction Revenue Bonds, Series 2007A (the `Bonds ")
issued under Ordinance No. of the City adopted May 15, 2007 (the "Authorizing
Ordinance ") as follows:
Section 1. Purpose of the Disclosure Statement. This Disclosure Agreement is being
executed and delivered by the City and the Trustee for the benefit of the Beneficial Owners of
the Bonds and in order to assist the Participating Underwriters in complying with, and constitutes
the written undertaking for the benefit of the Beneficial Owners of the Bonds required by,
Section 265(b)(5)(i) of Securities and Exchange Commission Rule 15c2 -12 under the Securities
Exchange Act of 1934, as amended (17 C.F.R. § 240.15c2 -12) (the "Rule ").
The City, as an "obligated person" within the meaning of the Rule, undertakes to provide
the following information as defined in this Disclosure Agreement:
(a) Annual Financial Information;
(b) Audited Financial Statements, if any; and
(c) Material Event Notices.
Section 2. Definitions. In addition to the definitions set forth in the Authorizing
Ordinance, which apply to any capitalized term used in this Disclosure Agreement unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
[ "Annual Financial Information" means the financial information (which shall be
prepared in accordance with generally accepted accounting principles ( "GAAP ") for
governmental units as prescribed by the Governmental Accounting Standard Boards ( "GASB ")
which are applicable to information of the type being provided) with respect to the City,
provided at least annually, consisting of the information contained in the City's final Official
Statement with respect to the Bonds, dated May 15, 2007, under the section entitled "THE
SYSTEM" with respect to (i) the number of sewer users for the fiscal year then ended and the
four preceding fiscal years, and (ii) a statement as to which users, if any, accounted for 5% or
more of System revenues for the preceding fiscal year, which Annual Financial Information may,
but is not required to, include Audited Financial Statements_ Any or all of such information may
be included in the Annual Financial Information by specific reference to other documents,
including Final Official Statements of debt issues of the City or related public entities, which
have been previously provided to each of the National Repository and the State Repository, if
any. If the document included by reference is a Final Official Statement, it shall be available
from the Municipal Securities Rulemaking Board ( "MSRB "). The City shall clearly identify in
the Annual Financial Information each such other document so included by reference.]
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
4849 - 0542- 4897.1
described in, this Disclosure Agreement.
"Authorizing Ordinance" shall mean Ordinance No. of the ordinances of the
City approved May 15, 2007.
"Beneficial Owner" of a Bond shall mean any person who has or shares the power,
directly or indirectly, to make investment decisions concerning ownership of any Bonds
(including persons holding Bonds through nominees, depositories or other intermediaries).
"Bond Insurer" shall mean FSA Security Assurance Inc.
"Dissemination Agent" shall mean the Trustee, acting in its capacity as Dissemination
Agent, or any successor Dissemination Agent designated in writing by the City and which has
filed with the Trustee a written acceptance of such designation.
"Listed Events" shall mean any of the events listed hereunder.
"National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule.
[ "Rating Agency" shall mean Moody's Investor Services, Inc. and any other national
credit rating agency which has issued and outstanding a rating on the Bonds.]
"Repository" shall mean each National Repository and each State Repository.
"Rule" shall mean Rule 15c2- 12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time.
"State Repository" shall mean any public or private repository or entity designated by the
State of Arkansas as a state repository for the purpose of the Rule. As of the date hereof, there is
no State Repository.
Section 3. Provision of Annual Reports. (a) The City shall, or shall cause the
Dissemination Agent to, not later than one hundred fifty (150) days after the end of the System's
fiscal year (presently December 31), commencing with the report with respect to the 2007 fiscal
year, provide to each Repository and the Bond Insurer an Annual Report which is consistent with
the requirements of this Disclosure Agreement. The Annual Report may be submitted as a single
document or as separate documents comprising a package and may cross - reference other
information as provided in this Disclosure Agreement; provided that the audited financial
statements of the System may be submitted separately from the balance of the Annual Report
and later than the date required above for the filing of the Annual Report if they are not available
by that date, but, in such event, such audited financial statements shall be submitted not less than
thirty (30) days after receipt thereof by the City.
(b) No later than fifteen (15) days prior to the date specified in subsection (a)
for providing the Annual Report to Repositories, the City shall provide the Annual Report to the
Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such
date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the City
and the Dissemination Agent to determine if the City is in compliance with the first sentence of
this subsection (b).
(c) If the Trustee is unable to verify that an Annual Report has been provided
3
4849 - 05424897.1
to Repositories and the Bond Insurer by the date required in subsection (a), the Trustee shall send
a notice to each Repository, the Bond Insurer and the Municipal Securities Rulemaking Board.
Content of Annual Reports. The City's Annual Report shall contain or incorporate by
reference the following:
1. Information of the type set forth in this Official Statement under the
caption "THE SYSTEM" with respect to (i) the number of sewer users for the fiscal year
then ended and the four previous fiscal years; and (ii) a statement as to which users, if
any, accounted for 5% or more of System revenues for the preceding fiscal year.
2. The annual audit of the System prepared in accordance with generally
accepted government auditing standards.
Any or all of the items above may be incorporated by reference from other documents,
including official statements of debt issues of the City or related public entities, which have been
submitted to each of the Repositories, the Bond Insurer or the Securities and Exchange
Commission. If the document incorporated by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The City shall clearly identify each
such other document so incorporated by reference.
Reporting of Significant Events. (a) This caption describes the giving of notices of the
occurrence of any of the following events:
1. Principal and interest payment delinquencies.
2. Non - payment related defaults.
3. Unscheduled draws on debt service reserves reflecting financial difficulties.
4. Unscheduled draws on credit enhancements reflecting financial difficulties.
5. Substitution of credit or liquidity providers, or their failure to perform.
6. Adverse tax opinions or events affecting the tax - exempt status of the security.
7. Modification to rights of security holders.
8. Bond calls (excluding mandatory sinking fund redemption).
9. Defeasances. ,
S
10. Release, substitution or sale of property securing repayment of the securities.
11. Rating changes.
(b) When the City obtains knowledge of the occurrence of any of the Listed
Events, the City shall notify the Trustee in writing. Such notice shall instruct the Trustee to
report the occurrence.
(c) Whenever the Trustee obtains actual knowledge of the occurrence of any
of the Listed Events, whether from notice by the City or otherwise, the Trustee shall file a notice
of such occurrence with the Municipal Securities Rulemaking Board, each State Repository, the
Bond Insurer and the City. Notwithstanding the foregoing, notice of the Listed Event described
in subsection (a)(8) need not be given under this subsection any earlier than the notice for the
underlying event is given to registered owners of affected Bonds pursuant to the terms of the
4
4849 - 0542 - 4897.1
Bonds. Each notice of the occurrence of a Listed Event shall be captioned `Notice of Material
Event" and shall properly state the date, title and CUSIP number of the Bonds.
In the event of any amendment or waiver of a provision of the Continuing Disclosure
Agreement. the City shall describe such amendment in the next Annual Report, and shall
include, as applicable, a narrative explanation of the reason of the amendment or waiver and its
impact on the type (or in the case of a change of accounting principles, on the presentation) of
financial information or operating data being presented by the City. In addition, if the
amendment relates to the accounting principles to be followed in preparing financial statements,
(i) notice of such change shall be given in the same manner as for a Listed Event, and (ii) the
Annual Report for the year in which the change is made should present a comparison (in
narrative form and also, if feasible, in quantitative form) between the financial statements as
prepared on the basis of the new accounting principles and those prepared on the basis of the
fonner accounting principles.
Additional Information. Nothing in the Continuing Disclosure Agreement shall be deemed to
prevent the City from disseminating any other information, using the means of dissemination set
forth in the Continuing Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by the Continuing Disclosure Agreement. If the City chooses
to include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by the Continuing Disclosure Agreement, the City
shall have no obligation under the Continuing Disclosure Agreement to update such information
or include it in any future Annual Report or notice of occurrence of a Listed Event.
Default. At the direction of or with the consent of the Bond Insurer, in the event of a failure of
the City or the Trustee to comply with any provision of the Continuing Disclosure Agreement,
the Trustee, the City or any Beneficial Owner may (and the Trustee, at the request of the
Underwriter or the Beneficial Owners of at least 25% aggregate principal amount of outstanding
Bonds, shall) take such actions as may be necessary and appropriate, including seeking
mandamus or specific performance by court order, to cause the City or the Trustee, as the case
may be, to comply with its obligations under the Continuing Disclosure Agreement. A default
under the Continuing Disclosure Agreement shall not be deemed a default under the Authorizing
Ordinance, and the sole remedy under the Continuing Disclosure Agreement in the event of any
failure of the City or the Trustee to comply with the Continuing Disclosure Agreement shall be
an action to compel performance.
Duties of Trustee and Dissemination Agent and Right of Indemnity. The Dissemination Agent (if
other than the Trustee) and the Trustee in its capacity as Dissemination Agent shall have only
such duties as are specifically set forth in the Continuing Disclosure Agreement, and the City
agrees to indemnify and save the Dissemination Agent and the Trustee, their officers, directors,
employees and agents, harmless against any loss, expense and liabilities which they may incur
arising out of or in the exercise or performance of their powers and duties hereunder, including
the costs and expenses (including attorney's fees) of defending against any claim of liability, but
excluding liabilities due to the Dissemination Agent's or the Trustee's gross negligence or
willful misconduct.
Beneficiaries. The Continuing Disclosure Agreement shall inure solely to the benefit of the City,
the Trustee, the Dissemination Agent, the Underwriter, the Bond Insurer and the Beneficial
E
4849- 0542- 4897.1
Owners and shall create no rights in any other person or entity.
Section 4. Reporting of Significant Events. (a) If a Material Event occurs while any
of the Bonds are Outstanding, the City shall provide a Material Event Notice in a timely manner
to each then existing NRMSIR or the MSRB and the SID. if any. Each Material Event Notice
shall be so captioned and shall prominently state the date, title and CUSIP numbers of the Bonds.
(b) Whenever the City obtains knowledge of the occurrence of a Material
Event, the City agrees to report such occurrence to the Dissemination Agent as soon as
reasonably possible. The City shall as soon as reasonably possible determine if such
event would constitute material information for Beneficial Owners of the Bonds.
(c) The Dissemination Agent shall, as soon as reasonably possible, after
obtaining actual knowledge of the occurrence of any of the Material Events contact the
City, inform such person of the event, and request that the City promptly notify the
Dissemination Agent in writing whether or not to report the event pursuant to paragraph
(d) below.
(d) Whenever the City obtains knowledge of the occurrence of a Material
Event, because of a notice from the Dissemination Agent pursuant to paragraph (c) above
or otherwise, the City shall promptly notify the Dissemination Agent in writing and:
(i) if such event would constitute material information for Beneficial
Owners of the Bonds, the City shall instruct the Dissemination Agent to report the
occurrence pursuant to paragraph (e) below; and
(ii) if such event would not constitute material information for
Beneficial Owners of the Bonds, the City shall instruct the Dissemination Agent
not to report the occurrence pursuant to paragraph (e) below.
(e) If the Dissemination Agent has been instructed by the City to report the
occurrence of a Material Event, the Dissemination Agent shall file a notice of such
occurrence with the Municipal Securities Rulemaking Board, each then existing National
Repository, and the State Repository with a copy to the City. Each notice of such
occurrence shall be captioned as a "Notice of Material Event" and shall prominently state
the date, title, and CUSIP numbers of the Bonds. Notwithstanding the foregoing:
(i) notice of the occurrence of a Material Event described in clauses (i),
(viii), (ix) under the definition of "Material Event" above shall be given by the
Dissemination Agent unless the City gives the Dissemination Agent affirmative
instructions not to disclose such occurrence; and
(ii) notice of the occurrence of a Material Event described in clause
(viii) or (ix) under the definition of "Material Event" above need not be given
earlier than the notice (if any) of the underlying event is given to the Beneficial
Owners of affected Bonds pursuant to the Authorizing Ordinance.
Section 5. Termination of Reporting Obligation. The City's obligations under this
Disclosure Agreement shall automatically terminate once the Bonds are no longer outstanding.
Any provision of this Disclosure Agreement shall be null and void in the event the City delivers
an opinion of nationally recognized bond counsel to the effect that those portions of the Rule
0
4849 - 0542 - 4897.1
which require the provisions of such undertaking or portion thereof are invalid, have been
repealed retroactively or otherwise do not apply to the Bonds; provided that the City shall have
provided notice of such delivery and the cancellation of such undertaking or provision thereof to
each then existing NRMSII( and the SID, if any.
Section 6. Dissemination Agent. (a) The City may, from time to time, appoint or
engage a successor Dissemination Agent to assist it in carrying out its obligations under this
Disclosure Agreement, and may discharge any such Dissemination Agent, with or without
appointing a successor Dissemination Agent. If at any time there is not any other designated
Dissemination Agent, the City shall be the Dissemination Agent.
(b) Unless otherwise required by law and subject to technical and economic
feasibility, the City and the Dissemination Agent shall employ such methods of
information transmission as shall be requested or recommended by the designated
recipients of the City's information.
Section 7. Additional Information. (a) Nothing in the Disclosure Agreement shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in the Disclosure Agreement or any other means of communication, or
including any other information in any Annual Financial Information or notice of occurrence of a
Material Event, in addition to that which is required by the Disclosure Agreement.
(b) If the City chooses to include any information in any Annual Financial
Information or notice of occurrence of a Material Event, in addition to that which is specifically
required by the Disclosure Agreement, the City shall have no obligation under the Disclosure
Agreement to update such information or include it in any future Annual Financial Information
or notice of occurrence of a Material Event.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the City and Dissemination Agent may amend this Disclosure Agreement, and any
provision of this Disclosure Agreement may be waived by the parties hereto, if such amendment
or waiver is supported by an opinion of counsel expert in federal securities laws, acceptable to
the City, to the effect that such amendment or waiver would not, in and of itself, cause the
undertakings herein to violate the Rule if such amendment or waiver had been effective on the
date hereof but taking into account any subsequent change in or official interpretation of the
Rule, provided that the City shall have provided notice of such delivery and of the amendment to
each then existing National Repository or the MSRB and the State Repository, if any, and to any
Rating Agency which at that time has issued and outstanding, a rating on the Bonds.
Section 9. Default. (a) In the event of a failure of the City or the Dissemination Agent
to comply with any provision of this Disclosure Agreement, any Beneficial Owner may seek
mandate or specific performance by court order or any other such action as may be necessary and
appropriate, to cause the City to comply with its obligations under this Disclosure Agreement.
(b) Notwithstanding the provisions of (a) above, no Beneficial Owner shall
have any right to take any action to challenge the adequacy of the information provided
in accordance with the Disclosure Agreement unless the Beneficial Owners of at least 25
percent aggregate principal amount of Outstanding Bonds shall have made written
requests to the Dissemination Agent to take such action in its own name and shall have
7
4849 - 0542 - 4897.1
offered the Dissemination Agent reasonable indemnity, and the Dissemination Agent, for
60 days after its receipt of notice, request, and offer of indemnity, has failed to institute
any such action.
(c) A default under this Disclosure Agreement shall not be deemed a default
under the Authorizing Ordinance or the Indenture and the rights and remedies provided
by the Authorizing Ordinance and the Indenture upon the occurrence of a default shall
not apply to any such failure. The City shall not he liable for any breach of its obligations
under this Section unless such breach is the result of willful or reckless actions or
omissions. The sole remedy under this Disclosure Agreement in the event of any failure
of the City or the Dissemination Agent to comply with this Disclosure Agreement shall
be an action to compel performance and the City, its members, officers and employees
shall incur no liability under this Disclosure Agreement by reason of any act or failure to
act hereunder. Without limiting the generality of the foregoing, neither the
commencement nor the successful completion of an action to compel performance under
this Section shall entitle any person to attorney's fees, financial damages of any sort or
any other relief other than an order or injunction compelling performance.
Section 10. Duties, Compensation, Immunities and Liabilities of Dissemination Agent.
The Dissemination Agent shall have only such duties as are specifically set forth in this
Disclosure Agreement. The City agrees to pay the Dissemination Agent a fee of $ per year
for performing its duties under this Disclosure Agreement. The City further agrees to indemnify
and save the Dissemination Agent, its officers, directors, employees and agents harmless against
any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including
attorney's fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent's gross negligence or willful misconduct. The obligations of the City under
this Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds.
Section 11. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the City and the Beneficial Owners from time to time of the Bonds or any interest therein, and
shall create no rights in any other person or entity.
Section 12. Interpretation. It being the intention of the parties that there be full and
complete compliance with the Rule, this Disclosure Agreement shall be construed in accordance
with the written interpretative guidance and no- action letters published from time to time by the
Securities and Exchange Commission and its staff with respect to the Rule.
Section 13. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 14. Choice of Law. This Disclosure Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas, provided that to the extent this
Disclosure Agreement addresses matters of federal securities laws, including the Rule, this
Disclosure Agreement shall be construed in accordance with such federal laws and official
interpretations thereof.
8
4849 - 0542- 4897.1
Dated as of June , 2007.
CITY OF LITTLE ROCK. ARKANSAS
0
Mayor
REGIONS BANK, Trustee
By: _
Title:
[Continuing Disclosure Agreement Signature Page]
9
4849 - 0542- 4897.1
EXHIBIT A
Nationally Recognized Municipal Securities Information Repositories approved by the Securities
and Exchange Commission as of the date hereof:
Bloomberg Municipal Repository
100 Business Park Drive
Stillman, New Jersey 08558
Standard & Poor's Li. Kenny
Repository
55 Water Street
nrmsir_repository @sandp.com
45th floor
New York, New York 10041
FT Interactive Data
Arm: NRMSIR
100 William Street
New York, New York 10038
DPC Data Inc.
One Executive Drive
Fort Lee, New Jersey 07024
A -1
4849-0542-4897.1
Phone: 609 - 279 -3225
Fax: 609 - 279 -5962
E -Mail: Munis @Bloomberg.com
Phone: 212 - 438 -4595
Fax: 212 - 438 -3975
E -Mail:
Phone: 212 -771 -6999
Fax: 212 - 771 -7390
E -Mail: NRMSIR@FTID.com
Phone: 201- 346 -0701
Fax: 201-947-0107
E -Mail: nrmsir @dpcdata.com