1428 ORDINANCE NO. 1428 (#16-2011)
AN ORDINANCE AUTHORIZING THE CONSTRUCTION OF
EXTENSIONS, BETTERMENTS AND IMPROVEMENTS TO
THE WATER TREATMENT, STORAGE AND
DISTRIBUTION FACILITIES OF THE WATER SYSTEM
FOR THE CITY OF JACKSONVILLE, ARKANSAS;
AUTHORIZING THE ISSUANCE OF WATER CAPITAL
IMPROVEMENT REVENUE BONDS FOR THE PURPOSE OF
FINANCING THE COSTS OF THE PLANNING, DESIGN
AND CONSTRUCTION OF IMPROVEMENTS; PROVIDING
FOR THE PAYMENT OF THE PRINCIPAL, INTEREST, AND
SERVICING FEES ON THE BONDS; PRESCRIBING OTHER
MATTERS RELATING THERETO; AND, DECLARING AN
EMERGENCY.
WHEREAS, the City of Jacksonville, Arkansas (the "City") owns and operates
water treatment, storage and distribution facilities as part of the City's water system
(the "System ");
WHEREAS, the Jacksonville Water Commission, in conjunction with the
Jacksonville City Council, has determined that extensions, betterments and
improvements to the water facilities of the System (the "Improvements ") are necessary
in order to make the services of the System available to more of its citizens and
adequate for the needs of the City;
WHEREAS, the City does not have available funds to pay the entire estimated
costs of the Improvements and issuing bonds, but can obtain a portion of the necessary
funds by the issuance of water capital improvement revenue bonds in one or more
series from time -to -time, in the aggregate principal amount of not to exceed Twenty-
five Million Dollars ($25,000,000.00);
WHEREAS, the City is making arrangements for the sale of Twenty -five Million
Dollars ($25,000,000.00) aggregate principal amount of water capital improvement
revenue bonds to the Arkansas Development Finance Authority, as purchaser (the
"Bondholder "), at a price of par for a bond bearing interest at the rate of Two and
25/100 Percent (2.25 %) per annum pursuant to a Bond Purchase Agreement (the
"Agreement ") among the City, the Bondholder, and the Arkansas Natural Resources
Commission (the "ANRC'), which has been presented to and is before this meeting;
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Two
WHEREAS, the City is authorized, under the provisions of Amendment No. 65 to
the Arkansas Constitution and ACA §14- 234 -201 et, seq. and ACA §14 -164 -401 et. seq.
(the "Authorizing Legislation "), to issue and sell the bond;
WHEREAS, the Bondholder intends to pledge the bond as collateral for the
payment of its water revolving loan fund bonds (the "ADFA Bonds'), which may be
issued from time to time, to the bank or trust company to be named as trustee for the
ADFA Bonds (the "ADFA Trustee "); and,
WHEREAS, the City is required to pay to the Arkansas Development Finance
Authority, as servicer (the "Authority"), a servicing fee equal to One Percent (1 %) per
annum of the outstanding principal amount of the Bond (the "Servicing Fee ").
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF JACKSONVILLE, ARKANSAS, THAT:
SECTION ONE: The Improvements shall be accomplished and
shall be a part of the System. The Mayor and City Clerk are hereby authorized to enter
into all contracts and other agreements necessary to accomplish the Improvements and
assure the Improvements comply with the associated rules and regulations.
SECTION TWO: The sale to the Bondholder of up to Twenty-
five Million Dollars ($25,000,000.00) in principal amount of water capital improvement
revenue bonds from the City at a price of par for bonds bearing interest at the rate of
Two and 25/100 Percent (2.25 %) per annum, and otherwise subject to the terms and
provisions hereafter in this Ordinance set forth in detail and payment of the Servicing
Fee be and hereby is approved, and the bonds are hereby sold to the Bondholder. The
Mayor is hereby authorized and directed to execute and 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. The Agreement is hereby approved in substantially
the form submitted to this meeting with such changes as may be approved by the
Mayor, his execution to constitute complete evidence of such approval.
SECTION THREE: The City Council hereby finds and declares that
the period of usefulness of the System after completion of the Improvements will be
more than Thirty (30) years, which is longer than the term of the bonds.
SECTION FOUR: Under the authority of the Constitution and
laws of the State of Arkansas (the "State "), including particularly the Authorizing
938144 -v1
ORDINANCE NO. 1422 ( #16 -2011)
Page Three
Legislation, City of Jacksonville, Arkansas Water Capital Improvement Revenue Bonds
[Series 2011] (the "Bond ") is hereby authorized and ordered issued in the principal
amount of Twenty-five Million Dollars ($25,000,000.00), the proceeds of the sale of
which are necessary to provide sufficient funds for accomplishing the Improvements,
paying expenses incidental thereto, and paying expenses of issuing the Bond.
The Bond shall bear interest at the rate of Two and 25/100 Percent (2.25 %) per
annum based upon a Three Hundred Sixty (360) day year of Twelve (12) consecutive
Thirty (30) day months. A Servicing Fee equal to One Percent (1 %) per annum of the
outstanding principal amount of the Bond (the "Servicing Fee ") shall be payable to the
Arkansas Development Finance Authority, as Servicer (the "Authority"). The Bond shall
be dated the date of delivery to the Bondholder. Interest and the Servicing Fee shall be
payable on each April 15 and October 15 after the Bond is issued. Principal shall be
payable in installments commencing on April 15, 2015 and each April 15 and October
15 thereafter until the unpaid principal is paid in full as follows:
Principal Principal
Date Amount Date Amount
4/15/2015 $ 448,618.00 4/15/2025 $ 619,281.00
10/15/2015 455,908.00 10/15/2025 629,344.00
4/15/2016 463,317.00 4/15/2026 639,571.00
10/15/2016 470,845.00 10/15/2026 649,965.00
4/15/2017 478,496.00 4/15/2027 660,527.00
10/15/2017 486,272.00 10/15/2027 671,260.00
4/15/2018 494,174.00 4/15/2028 682,167.00
10/15/2018 502,204.00 10/15/2028 693,253.00
4/15/2019 510,365.00 4/15/2029 704,519.00
10/15/2019 518,659.00 10/15/2029 715,967.00
4/15/2020 527,087.00 4/15/2030 727,601.00
10/15/2020 535,652.00 10/15/2030 739,425.00
4/15/2021 544,356.00 4/15/2031 751,440.00
10/15/2021 553,202.00 10/15/2031 763,651.00
4/15/2022 562,192.00 4/15/2032 776,061.00
10/15/2022 571,328.00 10/15/2032 788,672.00
4/15/2023 580,611.00 4/15/2033 801,487.00
10/15/2023 590,046.00 10/15/2033 814,512.00
4/15/2024 599,635.00 4/15/2034 827,747.00
10/15/2024 609,379.00 10/15/2034 841,204.00
The Bond will be registered as to both principal and interest, payable to the
Bondholder, or registered assigns, as set forth hereinafter in the bond form, and shall
be numbered R -1 and upward.
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Four
Payment of principal and interest shall be by electronic wire transfer to the
Bondholder as shown on the bond registration books of the City which shall be
maintained by the City Clerk of the City as Bond Registrar, without presentation or
surrender of the Bond (except upon final payment), and such payments shall discharge
the obligation of the City to the extent thereof. The City Clerk of the City or her
authorized representative shall keep a payment record and make proper notations
thereon of all payments of principal and interest.
Payment of principal and interest shall be in any coin or currency of the United
States of America which, as at the time of payment, shall be legal tender for the
payment of debts due the United States of America. When the principal of and interest
on the Bond have been fully paid, they shall be canceled and delivered to the City Clerk.
SECTION FIVE: The Bond shall be executed on behalf of the
City by the Mayor and City Clerk and shall have impressed thereon the Seal of the City.
The Bond is not general obligation of the City but is special obligations, the principal of,
interest on which, and Servicing Fee in connection therewith are secured solely by a
pledge of revenues derived from the System (the "Revenues'). The Bond, interest
thereon, and the Servicing Fee shall not constitute an indebtedness of the City within
any constitutional or statutory limitation.
SECTION SIX :: The Bond shall be in substantially the following
form and the Mayor and City Clerk are hereby authorized and directed to make all the
recitals contained therein:
938144-v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Five
(form of single registered bond)
(To be typewritten)
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF JACKSONVILLE, ARKANSAS
2.25% WATER CAPITAL IMPROVEMENT REVENUE BOND,
SERIES 2011
KNOW ALL MEN BY THESE PRESENTS:
That the City of Jacksonville, Arkansas (the "City"), for value received, hereby
acknowledges itself to owe and promises to pay to the Arkansas Development Finance
Authority, or registered assigns, solely from the special fund provided as hereinafter set
forth, the principal sum of
TWENTY -FIVE MILLION DOLLARS
$ 25,000,000.00
(or the total principal amount outstanding as reflected
by the Record of Payment of Advances attached hereto)
with interest on the unpaid balance of the total principal amount at the rate of Two and
25/100 Percent (2.25 %) per annum from the date of each advance. The principal and
interest shall be payable 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 debts due the United
States of America.
Interest on the unpaid balance of the total principal amount shall be payable on April
15, 2012 and on each April 15 and October 15 thereafter. Principal shall be payable in
installments commencing on April 15, 2015 and each April 15 and October 15 thereafter
until the unpaid principal is paid in full as follows:
938144 -vl
ORDINANCE NO. 1428 ( #16 -2011)
Page Six
Principal Principal
Date Amount Date Amount
4/15/2015 $ 448,618.00 4/15/2025 $ 619,281.00
10/15/2015 455,908.00 10/15/2025 629,344.00
4/15/2016 463,317.00 4/15/2026 639,571.00
10/15/2016 470,845.00 10/15/2026 649,965.00
4/15/2017 478,496.00 4/15/2027 660,527.00
10/15/2017 486,272.00 10/15/2027 671,260.00
4/15/2018 494,174.00 4/15/2028 682,167.00
10/15/2018 502,204.00 10/15/2028 693,253.00
4/15/2019 510,365.00 4/15/2029 704,519.00
10/15/2019 518,659.00 10/15/2029 715,967.00
4/15/2020 527,087.00 4/15/2030 727,601.00
10/15/2020 535,652.00 10/15/2030 739,425.00
4/15/2021 544,356.00 4/15/2031 751,440.00
10/15/2021 553,202.00 10/15/2031 763,651.00
4/15/2022 562,192.00 4/15/2032 776,061.00
10/15/2022 571,328.00 10/15/2032 788,672.00
4/15/2023 580,611.00 4/15/2033 801,487.00
10/15/2023 590,046.00 10/15/2033 814,512.00
4/15/2024 599,635.00 4/15/2034 827,747.00
10/15/2024 609,379.00 10/15/2034 841,204.00
Payments of the principal and interest installments due hereon shall be made,
except for final payment, without presentation and surrender of this Bond, directly to
the registered owner at his address shown on the bond registration book of the City
maintained by the City Clerk as Bond Registrar, and such payments shall fully discharge
the obligation of the City to the extent of the payments so made.
A Servicing Fee equal to One Percent (1 %) per annum of the outstanding
principal amount of this Bond (the "Servicing Fee ") shall be payable to the Arkansas
Development Finance Authority as Servicer ( "the Authority").
This Bond is issued for the purpose of financing the costs of constructing
extensions, betterments and improvements to the water facilities of the City's water
system (the "System "), funding interest during construction and financing costs of
authorizing and issuing this bond, and is issued pursuant to and in full compliance with
the Constitution and laws of the State of Arkansas (the "State "), including particularly
ACA§ 14- 234 -201 et. seq. and ACA§ 14 -164 -401 et. seq. (the "Authorizing Legislation ")
and pursuant to Ordinance No. 1428 ( #16 -2011) of the City, duly adopted and
approved on the 6th day of October, 2011 (the "Authorizing Ordinance ").
938144-vi
ORDINANCE NO. 1428 ( #16 -2011)
Page Seven
Reference is hereby made to the Authorizing Ordinance for the details of the
nature and extent of the security and of the rights and obligations of the City and the
registered owner of this Bond.
This Bond may be assigned with the written approval of the Arkansas Natural
Resources Commission (the "Commission "), and in order to effect such assignment the
assignor shall promptly notify the City Clerk by registered mail, and the assignee shall
surrender this Bond along with a written approval of the Commission to the City Clerk
for transfer on the registration records. Every assignee shall take this Bond subject to
all payments and prepayments of principal and interest (as reflected by the Payment
Record maintained by the City Clerk), prior to such surrender for transfer.
This Bond may be prepaid at the option of the City from funds from any source,
in whole but not in part, at any time on and after October 15, 2022, at a prepayment
price equal to the principal amount outstanding, plus accrued interest to the
prepayment date. Notice shall be given of such prepayment to the owner of this bond
or registered assigns at least Ninety (90) days prior to the prepayment date. Such
notice shall be in writing mailed to the address of the owner of this Bond or registered
assigns at the address as reflected on the Bond registration books of the City Clerk.
This Bond does not constitute an indebtedness of the City within any
constitutional or statutory limitation or provision. This Bond is a special obligation
secured solely from the revenues derived from the operation of the System. A
sufficient amount of System revenues to pay principal and interest has been duly set
aside and pledged as a special fund for that purpose, identified as the "ADFA Water
Bond Fund," in the Authorizing Ordinance. The City has fixed and has covenanted and
agreed to maintain rates for use of the System which shall be sufficient at all times,
along with other available funds lawfully appropriated for such purpose, to at least
provide for the payment of the reasonable expenses of operation and maintenance of
the System and provide for the payment of the principal of and interest on all the
outstanding obligations to which System revenues are pledged as the same become
due, all as set forth in the Authorizing Ordinance.
IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all acts, conditions and
things required by the Constitution and statutes of the State to exist, happen and be
performed precedent to and in the issuance of this Bond do exist, have happened and
have been performed in regular and due time, form and manner as required by law;
that this bond does not exceed any constitutional or statutory limitation of
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Eight
indebtedness; and, that provision has been made for the payment of the principal of
and interest on this Bond, as provided in the Authorizing Ordinance.
IN WITNESS WHEREOF, the City of Jacksonville, Arkansas has caused this bond
to be executed in its name by its Mayor and City Clerk, thereunto duly authorized, and
its corporate seal to be affixed, all as of the ( day of
( < )<< ,2011.
CITY • , CKSONVILLE, ARKANSAS
Mayo G :ry Fl- c er
ATTEST:
Susacybavitt, City Clerk
-
1 r,
1
. c,
938141 -v1
ORDINANCE NO. 1428 (#16-2011)
Page Nine
REGISTRATION CERTIFICATE
Date of Registration Name of Registered Owner Signature of Citv Clerk
938144 -v1
ORDINANCE NO. 1428 (#16 -2011)
Page Ten
RECORD OF PAYMENT OF ADVANCES
Signature of Vice President
Total Principal of Arkansas Development
Date of Advance Amount Advanced Outstanding Finance Authority
$ $
$ $
$ $
*The date of each advance shall be the interest commencement date from which the principal amount of
such advance bears interest.
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Eleven
SECTION SEVEN:
(a) The City has heretofore fixed water rates by Ordinance No. 1368 ( #11-
09), adopted April 16, 2009. Reference is hereby made to such Ordinance for the
details thereof and other provisions pertaining thereto, which water rates are hereby
confirmed and continued as provided therein;
(b) The City covenants and agrees that the rates established will produce
amounts at least sufficient to pay monthly operation, maintenance and funded
depreciation expenses of the System, and interest on all outstanding obligations to
which Revenues are pledged ("System Obligations "), as the same become due, pay the
Servicing Fees as the same become due, and create and maintain any required debt
service reserves or depreciation reserves ("Required Payments "). The City covenants
always to maintain rates (including increases as necessary) which will provide for the
Required Payments. The rates in effect for water service at this time shall not be
reduced without the prior written consent of ANRC and the Bondholder; and,
(c) That none of the facilities or services afforded by the System shall be
furnished without a charge being made therefor. In the event that the City or any
department, agency, or instrumentality thereof shall avail itself of the facilities and
services afforded by the System, the reasonable value of the service or facilities so
afforded shall be charged against the City or such department, agency or
instrumentality and shall be paid for as the charges accrue. The revenues so received
shall be deemed to be revenues derived from the operation of the System and shall be
used and accounted for in the same manner as the other revenues derived from the
operation of the System.
SECTION EIGHT: The City covenants that it will continuously
operate the System as a revenue - producing undertaking and will not sell or lease the
same, or any substantial portion thereof, without prior written approval of the
Bondholder and ANRC, provided, however, that nothing 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.
SECTION NINE: The City covenants that the System shall be
continuously operated as a revenue - producing undertaking, and all revenues derived
from the operation of the System shall be paid into a special fund which is hereby
established and designated the "Water Revenue Fund" (the "Revenue Fund "). The
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
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Twelve
maintenance of the System, to the payment of the principal of and interest on the Bond
and to the providing of a Depreciation Fund, as hereafter set forth.
The Revenue Fund, and the other special funds hereafter in this Authorizing
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 Jacksonville Water Commission,
with all such depositories to hold membership in the Federal Deposit Insurance
Corporation (the "FDIC"), to be located in the State of Arkansas, and to have a capital
and surplus of not less than Ten Million Dollars ($10,000,000.00), and with all deposits
in any depository in excess of the amount insured by the FDIC to be secured by bonds
or other direct or fully guaranteed obligations of the United States of America unless
otherwise invested in accordance with the provisions of Arkansas law.
SECTION TEN: There shall be paid from the Revenue Fund
into a fund which is hereby established and designated "Operation and Maintenance
Fund," on or before the first business day of each month while any Bond is 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 costs of major repair and maintenance may be computed and
set on an annual basis, and One - twelfth (1/12) of the amount thereof may be paid into
the Operation and Maintenance Fund monthly.
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
into said 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 cost of operation, repair, and
maintenance of the System during the remainder of the then current fiscal year and the
next ensuing fiscal year, such surplus may be transferred and deposited in the ADFA
Water Bond Fund (hereinafter created or referred to) or to the Depreciation Fund
(hereinafter created or referred to) as the Water Commission may designate; provided,
however, that any such transfer into the ADFA Water Bond Fund shall be in addition to
all other payments required to be made into such Fund, if any.
SECTION ELEVEN:
(a) After making the monthly deposit into the Operation and Maintenance
Fund, there shall be transferred and paid from the Revenue Fund (i) into a special fund,
which is hereby established and designated "ADFA 2011 Water Improvement Revenue
Bond Fund" (the "ADFA Water Bond Fund ") the sums in the amounts and at the times
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Thirteen
hereafter stated in subsection (b) for the purpose of providing funds for the payment of
the principal of and interest on the Bond and the Servicing Fees in connection therewith
as the same become due; and, (H) into any water revenue bond fund established in
connection with the additional bonds issued pursuant to Section Fifteen hereof on a
parity of security with the Bond, sums in the amounts and at the times sufficient for the
payment of the principal of, premium, if any, and interest on such additional water
revenue bonds and the fees in connection therewith as the same become due. The
ADFA Water Bond Fund, and any water revenue bond funds established in connection
with additional bonds issued on a parity of security therewith, shall hereafter be
collectively referred to as "Water Revenue Bond Funds;"
(b) In order to pay interest on the Bond, there shall be deposited from
moneys in the Revenue Fund, into the ADFA Water Bond Fund on each April 15 and
October 15 after the Bond is issued and delivered until and including October 15, 2014,
the interest due on the Bond on such dates. Commencing on the first business day of
each month thereafter, there shall be deposited from moneys in the Revenue Fund into
the ADFA Water Bond Fund an amount equal to One -sixth (1/6) of the amount of
interest on and principal of the Bond next due;
(c) If moneys in the Revenue Fund are insufficient to make the required
payment on or before the first business day of the following month into the ADFA Water
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 ADFA Water Bond Fund on
the first business day of the next month;
(d) When the moneys held in the ADFA Water Bond Fund which represent
payments by the City and interest earnings thereon or proceeds of investments
therefrom (collectively, "City Funds ") shall be and remain sufficient to pay in full the
principal of and interest on the Bond, the City shall not be obligated to make any
further payments into the ADFA Water Bond Fund;
(e) All moneys in the ADFA Water Bond Fund representing City Funds shall be
used solely for the purpose of paying the principal of and interest on the Bond and the
City shall automatically receive a credit for the amount of such City Funds on hand in
the ADFA Water Bond Fund and available for the payment of any principal and interest
currently due on an interest or principal payment date irrespective of whether the
Bondholder has applied or caused to be applied such funds on that date for such
purpose. The City shall receive a credit for all earnings and income derived from the
investment of City Funds each April 15 and October 15 and such earnings and income
shall be credited against the next Six (6) monthly payments in substantially equal
amounts; and,
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Fourteen
(f) The Bond shall be specifically secured by a pledge of all Revenues
required to be placed into the ADFA Water Bond Fund. This pledge in favor of the Bond
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 TWELVE: After making the payments and deposits
described in Section Eleven hereof, there shall be paid from the Revenue Fund, the
Servicing Fee to the Authority. The Servicing Fee shall be payable on each date interest
on the Bond is due and shall be calculated on the same basis as interest on the Bond.
The payment of the Servicing Fee is expressly made subordinate to the payment of the
principal of and interest on the Bond.
SECTION THIRTEEN: The City shall assure that: (i) not in excess of
Ten Percent (10%) of the proceeds of the Bond is used for Private Business Use if, in
addition, the payment of more than Ten Percent (10 %) of the principal or Ten Percent
(10 %) of the interest due on the Bond during the term thereof is, under the terms of
the Bond or any underlying arrangement, directly or indirectly secured by any interest
in property used or to be used for a Private Business Use or in payments in respect of
property used or to be used for a Private Business Use or is to be derived from
payments, whether or not to the City, in respect of property or borrowed moneys used
or to be used for a Private Business Use; and, (ii) that, in the event that both (A) in
excess of Five Percent (5 %) of the proceeds of the Bond are used for a Private Business
Use, and (B) an amount in excess of Five Percent (5 %) of the principal or Five Percent
(5 %) of the interest due on the Bond during the term thereof is, under the terms of the
Bond 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 be used for said Private Business Use, then said excess over said Five Percent
(5 %) of proceeds of the Bond used for a Private Business Use shall be used for a
Private Business Use related to the governmental use of the Improvements.
The City shall assure that not in excess of Five Percent (5 %) of the proceeds of
the Bond are used, directly or indirectly, to make or finance a loan to persons other
than state or local governmental units.
As used in this Section, "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.
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Fifteen
The City covenants that it will not enter into any wholesale water contracts with
non- governmental entities or modify existing wholesale water contracts with non-
governmental entities if such contracts or modifications of existing contracts will cause
a violation of this Section.
SECTION FOURTEEN: The P rincipal and interest installments shall be
prepayable prior to maturity as provided in the Bond form in Section Six hereof.
SECTION FIFTEEN: As long as the Bond is outstanding, the City
shall not issue or attempt to issue any bonds having or claimed to be entitled to a
priority of lien on Revenues over the lien securing the Bond, including any and all future
extensions, betterments and improvements to the System except as provided in this
Section.
The City may issue additional revenue bonds to finance or pay the cost of
constructing extensions, betterments and improvements to the System or to refund
outstanding System Obligations having a priority on or on a parity with the lien on
Revenues in favor of the Bond if there shall have been procured and filed with the City
Clerk and the Bondholder a statement by a certified public accountant not in the regular
employ of the City ( "Accountant ") reciting the opinion that: (i) the Available Revenues
(Available Revenues being gross Revenues less operation and maintenance expenses)
for the fiscal year preceding the year in which such additional bonds are to be issued
were not less than One Hundred Ten Percent (110 %) of the average annual debt
service requirements (including principal, interest, and servicing and administrative
fees) on all outstanding debt of the System to which revenues are pledged and the
bonds then proposed to be issued plus the average annual Servicing Fee; or, (ii) the
Available Revenues for the fiscal year succeeding the year in which such additional
bonds are to be issued are projected to be sufficient in amount, taking in consideration
any enacted increase in Revenues, to be not less than One Hundred Ten Percent
(110 %) of the Total Annual Debt Service requirements (including principal, interest and
servicing and administrative fees) on all outstanding debt of the System to which
Revenues are pledged, and the bonds then proposed to be issued plus the average
annual Servicing Fee.
The additional bonds, the issuance of which is restricted and conditioned by this
Section, shall not be deemed to mean bonds the security and source of payment of
which are subordinate and subject to the priority of the Bond and such additional bonds
may be issued without complying with the terms and conditions of this Section. The
provisions of this Section may be waived by the holders of Seventy-five Percent (75 %)
in principal amount of the Bond at any time outstanding.
938144 -v1
ORDINANCE NO. 1428 ( #16 -2011)
Page Sixteen
SECTION SIXTEEN: It is covenanted and agreed by the City with
the Bondholder, the Authority, and ANRC that it will faithfully and punctually perform all
duties with reference to the System required by the Constitution and laws of the State
and by this Ordinance, including, without limitation, the making and collecting of
reasonable and sufficient rates lawfully established for services rendered by the System,
segregating Revenues and applying them to the respective funds maintained pursuant
to this Ordinance.
The City covenants and agrees that the Bondholder shall have the protection of
all the provisions of the Authorizing Legislation, and that the City will diligently proceed
to enforce those provisions to the end of the Bondholder realizing fully upon its
security. And, if the City shall fail to proceed within Thirty (30) days after written
request shall have been filed by the Bondholder, the Bondholder may proceed to
enforce all such provisions.
If there be any default in the payment of the principal of or interest on the Bond,
or if the City defaults in any ADFA Water Bond Fund requirement or in the performance
of any of the other covenants contained in this Ordinance, the Bondholder may, by
proper suit, compel the performance of the duties of the officials of the City under the
laws of the State. In the case of a default in the payment of the principal of and
interest on the Bond, the Bondholder may 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 Bondholder with power to charge and collect (or by
mandatory injunction or otherwise to cause to be charged and collected) rates sufficient
to provide for the payment of the expenses of operation, repair and maintenance and
to pay the Bond and interest outstanding and to apply Revenues in conformity with this
Ordinance. When all defaults in principal and interest payments have been cured, the
custody and operation of the System shall revert to the City. No remedy herein
conferred upon or reserved to the Bondholder is intended to be exclusive of any other
remedy or remedies herein provided or provided by law, and every such remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or given
by law. No delay or omission of the Bondholder 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 default or an acquiescence therein; and every power and remedy given
by this Ordinance to the Bondholder may be exercised from time to time and as often
as may be deemed expedient.
No waiver of any default shall extend to or affect any other existing or any
subsequent default or defaults or impair any rights or remedies consequent thereon.
Any costs of enforcement of the Bond or of any provision of this Ordinance, including
reasonable attorney's fees, shall be paid by the City. The Authority may enforce all
rights and exercise all remedies available to the Bondholder in the event the Servicing
Fee is not paid when due.
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SECTION SEVENTEEN: When the Bond has been executed by the
Mayor and City Clerk and the seal of the City impressed as herein provided, it shall be
delivered to the Bondholder upon payment of all or a portion of the purchase price in
accordance with the Agreement. The sale proceeds shall be deposited, as and when
received, in a special account of the City hereby created in a bank selected by the City
that is a member of the Federal Deposit Insurance Corporation and designated the
"2011 Water Construction Fund" (the "Construction Fund'). The moneys in the
Construction Fund shall be used for reimbursing the City for the costs paid in
accomplishing the Improvements and other improvements to the water facilities of the
System approved by ANRC, expenses incidental thereto and the expenses of issuing the
Bond approved in accordance with the Agreement. Payments from the Construction
Fund shall be by check or voucher signed by the City Clerk and such other person or
persons designated by the City Council, and drawn on the depository. Each such check
or voucher shall briefly specify the purpose of the expenditure.
When the Improvements have been completed and all required expenses paid
and expenditures made from the Construction Fund for and in connection with the
accomplishment of the Improvements and the financing thereof, this fact shall be
evidenced by a certificate signed by the Mayor and by the consulting engineer, which
certificate shall state, among other things, the date of the completion and that all
obligations payable from the Construction Fund have been discharged. A copy of the
certificate shall be filed with the depository bank, the Bondholder, and ANRC.
SECTION EIGHTEEN: The terms of this Ordinance shall constitute a
contract among the City, the Bondholder, and ANRC and no variation or change in the
undertaking herein set forth shall be made while the Bond is outstanding unless
consented to in writing by the Bondholder and ANRC.
SECTION NINETEEN: The City agrees that it will keep proper
records, books and accounts relating to the operation of the System, which shall be
kept 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
in accordance with generally accepted government accounting standards. Such books
shall be available for inspection by the Bondholder and ANRC, or the agent or the
representative of either, at reasonable times and under reasonable circumstances. The
City agrees to have these records audited by an Accountant selected by the City at least
once each year. The City agrees that it shall also furnish to the Bondholder and ANRC:
(1) on or before Thirty (30) days after the close of each fiscal year a statement of the
operations of the System for the past fiscal year in form and content in the manner
hereinafter specified; and, (2) on or before One Hundred Twenty (120) days after the
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ORDINANCE NO. 1428 (#16 -2011)
Page Eighteen
close of each fiscal year a copy of the audit report of the Accountant. The first report
required by the last preceding sentence shall contain at least the following information:
(a) Statement of income and expense for the System;
(b) Balance sheet for the System;
(c) Schedule of insurance policies and fidelity bonds showing, with respect to
each policy and bond, the amount and nature of risk covered, the expiration date, and
the name of the insurer; and,
(d) Schedule of the number of customers (connected and unconnected to the
System) and showing the rate schedule currently in effect.
The reports referred to above shall cover the operations of the System for all of
the last ensuing fiscal year. In the event the City fails or refuses to furnish or cause
such reports to be furnished, the Bondholder may have the reports made, and the cost
thereof shall be charged against the Operation and Maintenance Fund.
SECTION TWENTY: The City covenants and agrees that it will
maintain the System in good condition and operate it in an efficient manner and at
reasonable cost. While the Bond is outstanding, the City agrees that to the extent
comparable protection is not otherwise provided to the satisfaction of ANRC and the
Bondholder, it will insure, and at all times keep insured in a responsible insurance
company or companies selected by the City and authorized and qualified under the laws
of the State to assume the risk thereof, all above - ground structures of the System
against loss or damage thereto in amounts and against such risks as are customarily
insured against in connection with similar facilities and undertakings as the System. 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, if any, second,
from moneys in the Operation and Maintenance Fund, and third, from available moneys
in the Revenue Fund. Nothing herein shall be construed as requiring the City to expend
any funds for reconstruction, replacement or repair of the System or for operation and
maintenance of the System or for premiums on its insurance which are derived from
sources other than insurance proceeds or Revenues, but nothing herein shall be
construed as preventing the City from doing so.
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ORDINANCE NO. 1428 ( #16 -2011)
Page Nineteen
SECTION TWENTY-ONE: There shall be a statutory mortgage lien upon
the water facilities of the System (including all extensions, improvements and
betterments now or hereafter existing) which shall exist in favor of the Bondholder, and
such water facilities shall remain subject to such statutory mortgage lien until payment
in full of the interest on and principal of the Bond.
SECTION TWENTY -TWO: The City agrees that the Bondholder may
pledge the Bond as security for the ADFA Bond, and the ADFA Trustee and /or the
municipal bond insurer for the ADFA Bond may exercise any rights and remedies
available to the Bondholder under this Ordinance or the Agreement while the Bond is
pledged and /or the ADFA Bond is insured. In addition, the City agrees that while the
Bond is pledged and /or the ADFA Bond is insured, copies of all financial information
shall be furnished to the ADFA Trustee and /or the municipal bond insurer.
SECTION TWENTY-THREE: Continuing Disclosure. In addition to the City's
responsibility to provide financial information and operating data to ANRC under the
regulations of ANRC, the City agrees that if ADFA notifies the City that it is deemed to
be an `obligated person" with respect to the ADFA Bond (which is the Bond issued or
which may be issued to ADFA to provide all or a portion of the funds for the Bond), as
defined in Securities and Exchange Commission Rule 15c2 -12 of the Securities
Exchange Act of 1934, as amended (17 CFR Part 240 § 240.15c2 -12) ("Rule 15c2 -12 ")
it will: (i) provide to ADFA complete audited financial statements for the System within
One Hundred Twenty (120) days of the close of its fiscal year for each year while the
Bond is outstanding; and, 00 provide certain additional financial and operating data
(including financial information of the City) as requested by ADFA to the requirements
of Rule 15c2 -12.
SECTION TWENTY -FOUR: The provisions of this Ordinance are hereby
declared to be separable, and if any provision shall for any reason be held illegal or
invalid, it shall not affect the validity of the remainder of this Ordinance.
SECTION TWENTY-FIVE: Reference in this Ordinance to "Bondholder"
shall include the original Bondholder or any registered assign thereof.
SECTION TWENTY-SIX: All Ordinances and parts thereof in conflict
herewith are hereby repealed to the extent of such conflict.
SECTION TWENTY-SEVEN: It is hereby ascertained and declared that the
planning, design and construction of betterments and improvements must be
accomplished as soon as possible in order to provide debt service revenues for the
938144 -01
ORDINANCE NO. 1428 ( #16 -2011)
Page Twenty
System adequate for the needs of the City and its inhabitants, without which the life,
health, safety and welfare thereof are jeopardized, and that the issuance of the bonds
and the taking of the other action authorized by this ordinance is necessary for the
accomplishment thereof. It is, therefore, declared that an emergency exists and this
Ordinance, being necessary for the immediate preservation of the public peace, health
and safety, shall take effect and be in force from and after its passage.
APPROVED AND ADOPTED THIS SIXTH DAY OF OCTOBER, 2011.
C : ' KSONVILLE, ARKANSAS
.r
ATTEST.
Susan Davitt,'City Clerk
APP•• ED ASTOFO' :
Rob:rt E. Baa:urg, City A •
(SEAL)
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