0894
!h
ORDINANCE NO. 894
AN ORDINANCE AUTHORIZING THE CONSTRUCTION OF
EXTENSIONS, BETTERMENTS AND IMPROVEMENTS TO
THE WATER SYSTEM OF THE CITY OF
JACKSONVILLE, ARKANSAS; AUTHORIZING THE
ISSUANCE AND SALE OF WATER REVENUE REFUNDING
AND CONSTRUCTION BONDS; PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON
THE BONDS; PRESCRIBING OTHER MATTERS
RELATING THERETO; AND DECLARING AN
EMERGENCY.
WHEREAS, the City of Jacksonville, Arkansas (the
"Ci ty" ), a ci ty of the fi rst class, owns and operates a water
system (the "Water System" or the "System"); and
WHEREAS, the Water Commi ssion and the Ci ty Counci 1
have determined that extensions, betterments and improvements to
the Water System are necessary in order to make the services
thereof adequate for the needs of the City and have caused to be
prepared a preliminary report, plans and specifications and
estimates of cost for the proposed extensions, betterments and
improvements to the Water System, all as described in detail in
the plans and specifications (the "improvements"), which plans
and specifications have been examined and approved by the Water
Commission and the Ci ty Council and a copy of which plans and
specifications are on file in the office of the City Clerk where
they may be inspected by any interested person; and
WHEREAS, the City has outstanding an issue of
Waterworks and Sewer Revenue Bonds, Series A and B, dated
June I, 1964 (the "1964 Bonds") authorized by Ordinance No. 152,
adopted June II, 1964 (the "1964 Ordinance"), Water and Sewer
Revenue Bonds, dated April I, 1973 (the "1973 Bonds") authorized
by Ordinance No. 287, adopted March 8, 1973 and an implementing
resolution (the "1973 Ordinance") and Water and Sewer Revenue
Bonds, dated August I, 1979 (the "1979 Bonds") authorized by
Ordinance No. 544, adopted July 12, 1979 (the "1979 Ordinance");
and
WHEREAS, the City Council, the Water Commission and
the Wastewater Commission deem it in the best interest of the
City to refund the 1964 Bonds, the 1973 Bonds and the 1979 Bonds
(collectively the "Bonds Refunded") to which the City has
pledged combined revenues from the operation of the Water System
and the Ci ty' s sewer system (the "Sewer System"); and
WHEREAS I upon the issuance of the bonds authorized
hereby the revenues of the Water System. and the Sewer System
shall be segregated and the provisions of this Ordinance shall
apply to the revenues of the Wat,er System only; and
WHEREAS, the estimated cost of the improvements, the
refunding and authorizing and issuing bonds and of establishing
a debt service reserve is $3,175,377; and
WHEREAS, the City can obtain the necessary funds for
establishing a debt service reserve and paying the costs of
authorizing and issuing the bonds, costs of the refunding the
Bonds Refunded and costs of the improvements by the issuance of
Water Revenue Refunding and Construction Bonds, Series 1988, in
the principal amount of $2,245,000 (the "bonds") and from
available revenues of the Water System and the Sewer System; and
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WHEREAS, the City has made arrangements for the sale
of $2,245,000 in aggregate principal amount of bonds to Stephens
Inc., Li ttle Rock, Arkansas (the "Purchaser"), at a price of
97.5% of par plus accrued interest pursuant to a Bond Purchase
Agreement (the "Agreement") which has been presented to and is
before thi s meeting; and
WHEREAS, the Preliminary Official Statement, dated
October 24, 1988, offering the bonds for sale (the "Preliminary
Official Statement") has been presented to and is before this
meeting;
NOW, THEREFORE, BE IT ORDAINED by the City Council of
the City of Jacksonville, Arkansas:
Section 1. That the refunding of the Bonds Refunded
(the "refunding") and the improvements be accompli shed and the
Mayor and City Clerk are hereby authorized to take or cause to
be taken all action necessary to accomplish the refunding and to
execute all required contracts and documents.
Section 2. That the improvements shall be
accomplished under the control and supervision of, and all
details in connection therewith shall be handled by the Water
Commi ssion. The Water Commi ssion shall make all contracts and
agreements necessary or incidental to the performance of i ts
duties and execution of its powers. The Water Commission shall
let all construction contracts pursuant to and in accordance
with existing laws and shall require such performance bonds and
insurance for construction as will, in the judgment of the Water
Commission, fully insure completion of the improvements so as to
fully promote and protect the best interests of the City and the
owners of the bonds. The Ci ty Counci 1 hereby finds and declares
that the period of usefulness of the improvements will be more
than forty (40) years, which is longer than the term of the
bonds.
Section 3. That the offer of the Purchaser for the
purchase of $2,245,000 in principal amount of bonds from the
Ci ty at a price of 97.5% of par and accrued interest 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 confirmed and the bonds are hereby sold to the
Purchaser. 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 Preliminary Official Statement is hereby approved
and the previous use of the Preliminary Official Statement by
the Purchaser in connections wi th the sale of the bonds is
hereby in all respects authorized, approved and confirmed, and
the Mayor be and he hereby is authorized, empowered and
directed, for and on behalf of the City to execute the
Preliminary Official Statement and the final Official Statement
in the name of the City to be delivered to the Purchaser for use
in connection wi th the sale of the bonds as set forth in the
Agreement, and the Mayor is hereby authorized, empowered and
directed to do all such acts and things necessary to carry out
and comply with the provisions of the Official Statement.
Section 4.
Constitution and laws
That under the
of the State of
authority
Arkansas,
of the
including
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particularly Title 14, Chapter 234, Subchapter 2 of the Arkansas
Code of 1987 Annotated, and Title 14, Chapter 164, Subchapter 4
of the Arkansas Code of 1987 Annotated, Ci ty of Jacksonville,
Arkansas Water Revenue Refunding and Construction Bonds, Series
1988, are hereby authorized and ordered issued in the principal
amount of $2,245,000 for the purpose of accomplishing the
improvements and the refunding, paying necessary expenses
incidental thereto and to the authorization and issuance of the
bonds, and establishing a debt service reserve. The bonds shall
mature on August 1 in the years and in the amounts and shall
bear interest as follows:
Year Principal Interest
(August 1) Amount Rate
1989 $ 30,000 6.00%
1990 60,000 6.10
1991 65,000 6.20
1992 70,000 6.30
1993 75,000 6.40
1994 80,000 6.50
1995 85,000 6.60
1996 90,000 6.70
1997 95,000 6.80
1998 100,000 6.90
1999 105,000 7.00
2000 115,000 7.05
2001 125,000 7.10
2002 130,000 7.15
2003 140,000 7.25
2004 150,000 7.30
2005 165,000 7.35
2006 175,000 7.40
2007 190,000 7.45
2008 200,000 7.50
The bonds shall bear interest from their respective
dates and the bonds shall be issuable only as fully registered
Bonds wi thout coupons in the denomination of $5,000 or any
integral multiple thereof. Unless the City shall otherwise
direct, the bonds shall be numbered from 1 upward in order of
issuance. Each bond shall have a CUS IP number.
Each bond shall be dated as of the interest payment
date to which interest has been paid as of the date on which it
is authenticated or if it is authenticated prior to a date on
which interest has been paid, i t shall be dated November 15,
1988. Interest on the bonds shall be payable on August I, 198~,
and semiannually thereafter on February 1 and August 1 of each
year. Payment of each installment of interest shall be made to
the person in whose name the bJnd is registered on the
registration books of the City maintained by First National Bank
in Stuttgart, Stuttgart, 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"), i rrespecti ve of any
transfer or exchange of any such bond subsequent to such Record
Date and prior to such interest payment date.
Only such bonds as shall have endorsed thereon a
Certificate of Authentication substantially in the form set
forth in Section 6 hereof duly executed by the Trustee shall be
entitled to any right or benefit under this Ordinance. No bond
shall be valid and obligatory for any purpose unless and until
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such Certificate of Authentication shall have been duly executed
by the Trustee, and such certificate of the Trustee upon any
such bond shall be conclusive evidence that such bond has been
authenticated and delivered under this Ordinance. The Trustee's
Certificate of Authentication on any bond shall be deemed to
have been executed if signed by an authorized officer of the
Trustee, but it shall not be necessary that the same officer
sign the Certificate of Authentication on all of the bonds
issued hereunder.
In case any bond issued hereunder shall become
mutilated or be destroyed or lost, the City, shall, if ,not then
'prohibi ted by law, cause to be executed and the Trustee may
authenticate and deliver a new bond of like date, number,
maturi ty and tenor in exchange and substi tution for and upon
cancellation of such mutilated bond, or in lieu of and in
substitution for such bond destroyed or lost, upon the holder's
paying the reasonable expenses and charges of the Ci ty and
Trustee in connection therewi th, and, in the case of a bond
destroyed or lost, his filing with the Trustee evidence
satisfactory to it that such bonds were destroyed or lost, and
of hi s ownership thereof, and furni shing the Ci ty and Trustee
wi th indemni ty sati sfactory to them. The Trustee is hereby
authorized to authenticate any such new bond. In the event any
such bond shall have matured, instead of issuing a new bond, the
City may pay the same without the surrender thereof. Upon the
issuance of a new bond under thi s Section 4, the Ci ty 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 therewi th.
The Ci ty shall cause books for the regi stration and
for the transfer of the bonds as provided herein and in the
bonds. The Trustee shall act as the bond registrar. Each 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 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 bond for
the privilege of transfer or exchange, but any owner of any 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 bond upon
each exchange or transfer and any other expenses of the City or
the Trustee incurred in connection therewi th shall be paid by
the City. The City shall not be required (i) to issue, transfer
or exchange any bond during a period beginning at the opening of
business 15 days before any selection of bonds of that maturity
for redemption and ending at the close of business on the day of
the first mailing of the relevant notice of redemption, or (ii)
to transfer or exchange any bonds selected for redemption in
whole or in part.
The person in whose name any 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 of any 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
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effectual to satisfy and discharge the liability upon such bond
to the extent of the sum or sums so paid.
In any case where the d~te of maturity of interest on
or principal of the bonds or the date fixed for redemption of
any bonds shall be a Saturday or Sunday or shall be in the State
of Arkansas a legal holiday or a day on which banking
insti tutions are authorized by law to close, then payment of
interest or principal (and premium, if any) need not be made on
such date but may be made on the next succeeding business day
not a Saturday or Sunday or a legal holiday or a day upon which
banking insti tutions are authorized by law to close wi th 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 maturi ty or date fixed for redemption.
Section 5. That the bonds shall be executed on behalf
of the Ci ty 'by the manual or facsimi Ie signatures of the Mayor
and City Clerk and shall have impressed, imprinted, engraved or
lithographed thereon the seal of the City. The bonds, together
wi th interest thereon, are secured by and are payable solely
from the gross revenues derived from the Water System
("Revenues") which are hereby irrevocably pledged and mortgaged
for the equal and ratable payment of the bonds. The bonds and
interest thereon shall not consti tute an indebtedness of the
City within any constitutional or statutory limitation.
Section 6. That the bonds and the Trustee's
Certificate of Authentication 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:
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(Form of Bond)
REGISTERED
REGISTERED
No.
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF PULASKI
CITY OF JACKSONVILLE
WATER REVENUE REFUNDING AND CONSTRUCTION BOND,
SERIES 1988
Interest Rate:
Registered Owner:
Principal Amount:
CUSIP No.
% Maturi ty Date:
Dated Date:
Dollars ($
KNOW ALL MEN BY THESE PRESENTS:
That the City of Jacksonville, County of Pulaski,
State of Arkansas (the "Ci ty" ) , for value received, hereby
promi ses to pay, but solely from the source as hereinafter
provided and not otherwise, to the Registered Owner shown above,
or registered assigns, upon the presentation and surrender
hereof at the principal corporate office of First National Bank
in Stuttgart, Stuttgart, Arkansas, or i ts successor or
successors, as Trustee and Paying Agent (herein referred to as
the "Trustee"), on the Maturity Date shown above, the Principal
Amount shown above, in such coin or currency of the Uni ted
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 date hereof at the Interest Rate per annum shown above,
payable August 1, 1989 and semiannually thereafter on the 1st
days of February and August 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 Ci ty 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.
This bond is one of an issue of City of Jacksonville,
Arkansas Water Revenue Refunding and Construction Bonds, Series
1988, aggregating Two Million Two Hundred Forty-five Thousa.nd
Dollars ($2,245,000) in principal amount (the "bonds"), and is
issued for the purpose of financing the costs of the
acqui si tion, construction and equipment by the Ci ty of
exterlsions, betterments and improvements to the Ci ty' s water
system (the "System" ) , the refunding of certain outstanding
bonds payable from System revenues, paying necessary expenses
incidental thereto and to the authorization and issuance of the
bonds and establi shing a debt service reserve.
The bonds are issued pursuant to and in full
compliance with the Constitution and laws of the State of
Arkansas, including particularly Ti tie 14, Chapter 234,
Subchapter 2 of the Arkansas Code of 1987 Annotated, and Title
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14, Chapter 164, Subchapter 4 of the Arkansas Code of 1987
Annotated, and pursuant to Ordinance No. , duly adopted by
the City Council and approved on November 17, 1988 (the
"Authorizing Ordinance"), and do not consti tute an indebtedness
of the City within any constitutional or statutory limitation.
The bonds are not general obligations of the Ci ty, but are
special obligations payable solely from the revenues derived
from the operation of the System. An amount of System revenues
sufficient to pay the principal of and interest on the bonds has
been duly pledged and set aside into the 1988 Water 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 bonds are issued, of the
nature and extent of the security for the bonds, and the rights
and obligations of the Ci ty, the Trustee and the registered
owners of the 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
bonds, inc luding 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.
(REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF
THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT
AS IF SET FORTH IN, THIS PLACE. )
THE CITY HAS
TAX-EXEMPT OBLIGATION"
REVENUE CODE OF 1986.
DESIGNATED THIS BOND AS
WITHIN THE MEANING OF
A "QUALIFIED
THE INTERNAL
IN WITNESS WHEREOF, the City of Jacksonville, Arkansas
has caused this bond to be executed by its Mayor and City Clerk,
their facsimile signatures thereunto duly authorized and its
corporate seal to be impressed, Ii thographed or imprinted on
this bond, all as of the Dated Date shown above.
A~ST: ~.
~ile si ature)
Ci ty Clerk
C I T~ J ACKSONV I}LE I AR~NSAS
By('a~~
M"ayor
(SEAL)
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(Reverse Side of Bond)
CITY OF JACKSONVILLE, ARKANSAS
WATER REFUNDING AND CONSTRUCTION REVENUE BOND, SERIES 1988
The bonds shall be subject to extraordinary and
optional redemption as follows:
1. The bonds or portions thereof shall be redeemed
from proceeds of the bonds which are not needed for the purposes
intended, in whole or in part, on any interest payment date, in
inverse order of maturity (and by lot within a maturity in such
manner as the Trustee shall determine), at a price equal to the
principal amount being redeemed plus accrued interest to the
redemption date.
2. The bonds or portions thereof may be redeemed at
the option of the City, in whole or in part, from funds from any
other source, in inverse order of maturity (and by lot within a
maturity in such manner as the Trustee shall determine) on any
interest payment date on and after August I, 1995, at redemption
prices (expressed as percentages of the principal amount being
redeemed) plus accrued interest to the redemption date as
follows:
Redemption Dates
Redemption Prices
AUgl1st I, 1995 or February I, 1996
August I, 1996 or February I, 1997
August I, 1997 and thereafter
102%
101%
100%
Notice of redemption identifying the 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 bonds
to be redeemed. Failure to mail an appropriate notice or any
such notice to one or more registered owners of bonds to be
redeemed shall not affect the validi ty of the proceedings for
redemption of other bonds as to which notice of redemption is
duly given in proper and timely fashion. All such 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
wi 11 cease to bear interest on such redemption date.
Thi s bond is transferable by the regi stered 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, subj ect to the limi tations 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 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 of Arkansas shall govern its
construction.
The City and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof for the
purpose of receiving payment of or on account of principal
hereof and premium, if any, hereon and interest due hereon and
for all other purposes, and neither the City nor the Trustee nor
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any paying agent shall be affected by any notice to the
contrary.
The bonds are issuable only as fully registered bonds
in the denomination of $5,000, and any integral multiple
thereof. Subj ect to the limi tations and upon payment of the
charges provided in the Authorizing Ordinance, fully registered
bonds may be exchanged for a 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, condi tions and things required to exist, happen and be
performed precedent to and in the issuance of the 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 bonds, together with all obligations of the City, does
not exceed any constitutional or statutory limitation; and that
the above referred to revenues pledged to the payment of the
principal of and premium, if any, and interest on the 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.
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(Form of Trustee's Certi ficate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds designated Series 1988
in and issued under the provisions of the wi thin mentioned
Authorizing Ordinance.
FIRST NATIONAL BANK IN STUTTGART
Stuttgart, Arkansas
TRUSTEE
By
Authorized Signature
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(Form of Assignment)
ASSIGNMENT
VALUE RECEIVED,
hereby sells, assigns and transfers unto
, the within bond and all rights thereunder,
irrevocably constitutes and appoints
as attorney to transfer the within bond on
the books kept for registration thereof wi th full power of
substi tution in the premises.
FOR
( "Transferor" ) ,
and
hereby
DATE:
Transferor
GUARANTEED BY:
NOTICE: Signature (s) must be guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or a
trust company.
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Section 7. That the rates charged for services of the
Water System heretofore fixed by ordinances of the City and the
condi tions, rights' and obligations pertaining thereto, as set
out in those Ordinances, are hereby rati fied, confi rmed and
continued. None of the facilities or services afforded by the
Water System shall be furnished wi thout a charge being made
therefor.
The City hereby covenants and agrees that there will
be imposed and collected such charges for the use of the Water
System as will at all times produce sufficient Revenues to
provide for the operation, maintenance and repair of the Water
System, to provide for the payment of the principal of and
interest on all outstanding bonds to the payment of which
Revenues are pledged, including these bonds, as the same become
due, to provide for Trustee's fees, to make requi red deposi ts
for depreciation of the Water System and to maintain all funds
at requi red level s, all as provided in ordinances and
resolutions authorizing and securing such bonds. This covenant
shall include the agreement and obligation to increase the
charges from time to time as and to the extent necessary to
produce sufficient Revenues to meet the above requirements. The
City will continually monitor the Revenues, including
specifically the adequacy of its rates and delinquent billings.
Section 8. The City covenants that it will
continuously operate the Water System as a revenue-producing
undertaking and will not sell or lease the same, 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 Water System and such
replacements and substitutions for properties of the Water
System as shall be necessary or incidental to the efficient
operation of the Water System as a revenue-producing
undertaking; provided that all revenue derived from such
disposi tions shall be deposi ted into the Revenue Fund
(hereinafter identified) ·
Section 9. That the Treasurer of the Ci ty shall be
statutory custodian of the Revenues. However, Revenues shall be
collected, held and disbursed by the Water Commission. Each
employee of the City handling Revenues shall give bond for the
faithful discharge of his duties. Such bonds shall be approved
by the City Council. All Revenues shall be held in trust for
the registered owners of the bonds and shall at all times be
accounted for separately and distinctly from other moneys of the
City. All Revenues shall be used and applied only as provided
herein. All Revenues shall be deposited in such depository or
deposi tories for the Ci ty as may be lawfully designated from
time to time by resolution of the Water Commi ssion; subj ect,
however, to the giving of security as now or as hereafter may be
required by law and provided that such deposi tory or
depositories shall hold membership in the Federal Deposit
Insurance Corporation ("FDIC"). All deposi ts shall be in the
name of the City and shall be so designated as to indicate the
particul~r fund to which the Revenues belong. The Ci ty shall
notify the Trustee in wri ting of the ini tial deposi tories for
each fund into which Revenues have been deposited and any change
in deposi tories.
Section 10. That there is hereby created a special
fund in the name of the Ci ty designated "Water Revenue Fund"
(the "Revenue Fund") into which special fund there shall be paid
all Revenues as and when received. Moneys in the Revenue Fund
are hereby pledged and shall be applied to the payment of the
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reasonable and necessary expenses of operation and maintenance
of the System, to the payment of the principal of and interest
on the bonds and other bonds payable from Revenues, to the
maintenance of any debt service reserves at the required levels,
and to the providing of an adequate depreciation fund and
otherwise as described herein in the order of priority
hereinafter set forth.
Section 11. (a) That there shall be paid from the
Revenue Fund into a special fund in the name of the City which
is hereby created and designated "1988 Water R,evenue Bond Fund"
(the "Bond Fund") on the first business day of each month,
commencing January 3, 1989, unti 1 all outstanding bonds, wi th
interest thereon, have been paid in full or provision made for
such payment the following:
(a) on the first business day of January, 1989, to and
including the first business day of July, 1989 a sum equal to
1/7 of the next installment of the interest due on the bonds and
1/7 of the next installment of the principal due on the bonds;
and
(b) on the fi rst business day of August, 1989 and
thereafter a sum equal to 1/6 of the next installment of
interest due on the bonds and 1/12 of the next installment of
principal on the bonds.
The City shall also pay into the Bond Fund such
additional sums as necessary to provide for the Trustee's fees
and expense s .
There is hereby created, as a part of the Bond Fund, a
Debt Service Reserve which the Ci ty agrees to continuously
maintain in an amount equal to the maximum annual principal and
interest requirements on all bonds outstanding (the "Required
Level"). There shall be deposi ted from Bond proceeds the sum of
$218,887.50 for such purpose plus the City shall deposit therein
from Revenues each month the sum necessary to increase the Debt
Service Reserve to the Required Level over a twenty-four month
period. Should the Debt Service Reserve become impaired or be
reduced below the Required Level, the deficiency shall be cured
by making addi tional monthly payments equal to 1/24 of the
deficiency until the impairment or reduction is corrected. The
Required Level for the Debt Service Reserve shall be increased
in the event additional bonds are issued on a parity of security
wi th these bonds to the maximum annual principal and interest
requirements on these bonds a.nd the addi tional bonds being
issued.
If Revenues are insufficient to make the required
payment on the first business day of the following month into
the Bond Fund, the amount of any such deficiency in the payment
made shall be added to the amount otherwise required to be paid
into the Bond Fund on the first business day of the next month.
If for any reason there shall be a deficiency in the
payments made into the Bond Fund so that there are unavailable
sufficient moneys therein to pay the principal of and interest
on, the bonds as the same become due, any sums then held in the
Debt Service Reserve shall be used to the extent necessary to
pay such principal, interest and Trustee's fees, but the Debt
Service Reserve shall be reimbursed in the amount of any such
payment as described above. The Debt Service Reserve shall be
used solely as herein described, but the moneys therein may be
invested as set forth below.
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I f a surplus shall exi st in the Bond Fund over and
above the amount required for making all principal and interest
payments during the next succeeding twelve month period and in
excess of the Required Level of the Debt Service Reserve, such
surplus (1) may be applied by the City (a) to the payment of the
principal of and interest on bonds of this issue that may be
called for redemption prior to maturity or (b) for the
construction of extensions, betterments and improvements to the
System or (2 ) may be transferred by the Ci ty to the Revenue
Fund.
When the moneys held in the Bond Fund, including the
Debt Service Reserve, shall be and remain sufficient to pay the
principal of and interest on all of the bonds then outstanding
plus Trustee's fees, the City shall not be obligated to make any
further payments into the Bond Fund.
It shall be the duty of the Ci ty to cause to be
wi thdrawn from the Bond Fund at least two (2) days before the
due date of any principal and/or interest on any bond, at
maturity or redemption prior to maturity, and deposited with the
Trustee an amount equal to the amount of such bond and interest
due thereon for the sole purpose of paying the same, together
wi th the Trustee's fee. No wi thdrawal of funds from the Bond
Fund shall be made for any other purpose except as otherwise
authorized in thi s Ordinance.
The bonds of -this issue shall be specifically secured
by a pledge of all Revenues required to be placed into the Bond
Fund. This pledge in favor of the 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 conformi ty wi th the provi sions of
thi s Ordinance.
Section 12. That after making the required deposi t
into the Bond Fund, there shall be paid from the Revenue Fund
into a fund hereby created and designated "Water Depreciation
Fund" (the "Depreciation Fund"), on the first business day of
each month 3% of the Revenues for the preceding month. 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 Water System.
I f in any month for any reason there shall be a
failure to transfer and pay the required amount into the
Depreciation Fund, the amount of the deficiency shall be added
to the amount otherwise required to be paid therein during the
next succeeding month. If any surplus shall be accumulated in
the Depreciation Fund over and above the amount necessary to
defray the costs of the probable replacements during the then
fiscal year and the next ensuing fiscal year, such surplus shall
be transferred and paid into the Revenue Fund.
Section 13. That after making the required deposi t
into the Bond Fund and the Depreciation Fund, there shall be
paid from the Revenue Fund into a special fund in the name of
the City, which is hereby created and designated "Water
Operation and Maintenance Fund" (the "Operation and Maintenance
Fund"), on the first business day of each month, an amount
sufficient to pay the reasonable and necessary monthly expenses
of operation, repair and maintenance of the Water 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
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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.
I f 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 the Operation and Maintenance Fund in
the next succeeding month. I f in any fi scal 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 Water System during the remainder of the then
current fi scal year and the next ensuing fi scal year, such
surplus may be transferred and deposi ted in the Revenue Fund.
Section 14. That payments from the respecti ve funds
shall be made by check signed by the person or persons
designated by the Water Commission and drawn on the depository
with which the moneys in the fund shall have been deposited, and
each such check shall briefly specify the purpose of the
expenditure.
Section 15. 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 the payment of
debt service on bonds secured by a pledge of Revenues which are
subordinate to the pledge in favor of these bonds, or for any
lawful municipal purpose.
Section 16. (a) That so long as any of the bonds are
outstanding, the City shall not issue or attempt to issue any
bonds claimed to be enti tIed to a priori ty of lien on the
revenues of the System over the lien securing the bonds.
The Ci ty may issue addi tional bonds on a pari ty of
security with these bonds ("Additional Parity Bonds") to finance
the cost of constructing any future extensions, betterments and
improvements to the System, including reimbursement of
expenditures made by it, funding required reserves, and paying
indebtedness incurred by it for such purposes, but only upon the
sati sfaction of the following condi tions:
(1) The Ci ty, as evidenced by a certificate of the
Mayor and Chairman of the Water Commission is not in default as
to any covenant, condi tion or obligation prescribed by this
Ordinance or any ordinance authorizing Additional Parity Bonds,
or in the payment of any bonds secured by a lien on Revenues
subordinate to the lien in favor of the bonds ("S'ubordinate
Bonds"), and no such default will result from the issuance of
such l\ddi tional Pari ty Bonds.
(2) Each of the funds created for the payment and
security of the bonds contains the amount then required to be on
deposit therein.
(3) The City shall have obtained from an Accountant a
certificate showing that Net Revenues for the Fiscal Year next
preceding the date of issuance of the Additional Parity Bonds,
as adjusted pursuant to (A), (B) and (C) below, are equal to at
least 1.20 times the maximum annual Debt Service Requirements
(calculated on a Fiscal Year basis) for all bonds and Additional
Bonds outstanding after the issuance of the proposed Additional
Pari ty Bonds. In making the computation set forth above, the
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Accountant may, based upon the opinion or report of the
Consul ting Engineer,
(A) treat any increase in rates for the Water System
enacted subsequent to the first day of such preceding
Fiscal Year as having been in effect throughout such Fiscal
Year and may include in Revenues for such Fiscal Year the
amount that would have been received, based on such opinion
or report, had the increase been in effect throughout such
Fi sc al Year i
(B) add to the Net Revenues for such Fiscal Year the
increase in Net Revenues projected by the Consulting
Engineer if new customers of the Water System added
subsequent to the first day of such Fiscal Year had been
customers for the enti re Fi scal Year; and
(C) add to the Net Revenues for such Fiscal Year the
Net Revenues to be received in the first Fiscal Year after
completion of the extensions or improvements to the Water
System to be financed by the Additional Parity Bonds from
new customers served by such extensions or improvements, as
projected by the Consulting Engineer. In making the
projection for this subparagraph (C), the Consulting
Engineer shall consider as "new customers" only those
prospecti ve users that are currently in exi stence.
(4) The City shall have obtained from the Consulting
Engineer a certificate to the effect that:
(A) such extensions or improvements are desirable and
required for proper and efficient operation of the Water
System, or in the case of extensions of service, are
reasonable and practicable; and
(B) the proceeds to be derived from the Additional
Pari ty Bonds, together wi th other avai lable moneys are
necessary and will be sufficient to pay the costs of such
construction or acqui si tion.
(5) The City shall have obtained from nationally
recognized bond counsel an opinion to the effect that:
(A) the conditions of this Ordinance for the issuance
of the proposed Addi tional Pari ty Bonds have been
satisfied; and
(B) the issuance of the proposed Addi tional Pari ty
Bonds will not affect the exclusion from gross income for
federal income tax purposes of the interest on any then
outstanding bonds.
(6) There shall be on deposi t in the Debt Service
Reserve an amount equal to the Required Level for the Debt
Service Reserve for all outstanding bonds and Additional Parity
Bo~!ds, including the Addi tional Pari ty Bonds then being issued.
(7) If the terms of the Additional Parity Bonds then
being issued are such that the holders thereof have the option
to tender the bonds for payment prior to maturity, the
obligation of the City to pay the bonds upon such tender shall
be secured by an irrevocable letter of credi t issued by a
commercial bank which has a rating on its short term obligations
by ei ther Standard & Poor's Corporation or Moody's Investors
16
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Services, lnc. or any successors thereto, of at least SP-2 or
MIG-2, or the equivalent.
(b) The Ci ty may issue Addi tional Pari ty Bonds for
refunding all or any part of the bonds or any Additional Parity
Bonds then outstanding I if the above requirements (except for
paragraph 4 thereof) are meti except that paragraph (3) shall
not be applicable to the issuance of refunding bonds if the City
shall have obtained an Accountant's certificate to the effect
that debt service in each Fi scal Year after the refunding for
all then outstanding bonds or Additional Parity Bonds will be
less than the debt service scheduled thereon for such Fiscal
Years prior to the refunding.
(c) The City may from time to time issue Subordinate
Bonds for any purpose specified above.
As used in thi s Section 16,. the following terms are
defined as follows:
"Accountant" means an independent certified public
accountant or firm of independent certified public accountants
selected by the Water Commi ssion.
"Addi tional Bonds" means Addi tional Pari ty Bonds and
Subordinate Bonds.
"Consul ting Engineer" shall mean an independent
registered professional en.gineer or firm of independent
regi stered professional engineers, at the time engaged by tne
Water Commission to advise and assist in the efficient operation
of the Water System and the making of extensions and
improvements to the Water System, who shall be favorably
recognized and of sui table experience in such areas.
"Debt Service Requirements" means for any Fiscal Year
as applied to any outstanding bonds, Additional Bonds or to any
Additional Parity Bonds then proposed to be issued, the sum of
all amounts required to pay principal (at maturi ty or upon
mandatory redemption) and interest due in such Fiscal Year. For
purposes of calculating Debt Service Requirements on variable
rate bonds or any other bond issue where the interest rate is
not fixed for its full term, interest shall be calculated for
any period by assuming that the rate of interest applicable for
such period is equal to the higher of (i) the annual rate of
interest on the date of calculation, or (ii) the highest annual
rate of interest (calculated in the manner in which the rate of
interest for such period is to be or would have been calculated)
which would have been in effect at any time during the then next
preceding twelve-month period. Principal of non fixed-rate
bonds during any Fiscal Year shall be calculated by assuming a
level amortization o~"er the term of the relevant bond issue at
such annual interest rate.
"Fiscal Year" means the fiscal year of the System.
The initial Fiscal Year is the twelve months ending December 31,
but the Water Commission may change the Fiscal Year from time to
time.
"Net Revenues" means Revenues less Operation and
Maintenance Expenses.
"Operation and Maintenance Expenses" means all
expenses incurred in the operation and maintenance of the Water
System which are properly accounted for such purpose under
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generally accepted accounting principles. Such term does not
include depreciation or obsolescence charges or reserves
therefor or payment of principal of or interest on any
indebtedness of the Ci ty.
Section 17. The bonds authorized hereby and issued
hereunder shall be subj ect to redemption prior to maturi ty in
accordance wi th the terms set out in the bond form.
Section 18. The Ci ty shall cause proper books of
accounts and records to be kept (separate from all other records
and acco'unts) in which complete and correct entries shall be
made o~ all transactions relating to the operation of the Water
System and Revenues, and such books shall be avai lable for
inspection by the registered owners of any of the bonds at
reasonable times and under reasonable circumstances. The Ci ty
agrees to have these records audited by an independent certified
public accountant at least once each year, and a copy of the
audit shall be delivered to the Trustee and the Purchaser and
made available to interested registered owners of the bonds. In
the event that the City fails or refuses to make the audit, the
Trustee, or any regi stered owner of the bonds, may have the
audit made, and the cost thereof shall be charged against the
Operation and Maintenance Fund.
Section 19. That the bonds paid either at or before
maturi ty shall be canceled and shall not be reissued.
Section 20. That the Ci ty covenants and agrees that
it will maintain the Water System in good condition and operate
the same in an efficient manner and at reasonable cost. While
any of the bonds are outstanding, the City agrees that it will
insure and at all times keep insured, in the amount of the
actual value thereof, in a responsible insurance company or
companies authorized and qualified under the laws of the State
of Arkansas to assume the risk thereof, properties of the Water
System, to the extent that such properties would be covered by
insurance by private companies engaged in simi lar types of
businesses against loss or damage thereto from fire and other
perils included in extended coverage insurance in effect in
Arkansas. The insurance policies are to be taken with companies
approved by the Trustee and are to carry a clause making them
payable to the Trustee as its interest 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 Water 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 and 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 Ci ty to
expend any moneys for operation and maintenance of the \^later
System or for premiums on its insurance which are derived from
sources other than the operation of the Water System, but
nothing shall be construed as preventing the Ci ty from doing so.
Section 21. That any bond shall be deemed to be paid
within the meaning of this Ordinance when payment of the
principal of and interest on such bond (whether at maturity or
upon redemption as provided herein, or otherwi se), ei ther (i)
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shall have been made or caused to be made in accordance with the
terms thereof, or (ii) shall have been provided for by
irrevocably deposi ting wi th the Trustee, in trust and
irrevocably set aside exclusively for such payment (1) cash
fully insured by l:!1)IC 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 ("Investment Securities")
(provided that such deposi t will not affect the tax exempt
status of the interest on any of the bonds or cause any of the
bonds to be classified as "arbitrage bonds" within the meaning
of Section 148 of the Internal Revenue Code of 1986 (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 and Paying Agent pertaining to the 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 all the bonds within the meaning of
this Ordinance, the Trustee shall hold in trust, for the benefit
of the owners of such bonds, all such moneys and/or Investment
Securities.
When all the bonds shall have been paid wi thin the
meaning of this Ordinance, and if the Trustee has been paid its
fees and expenses, the Trustee shall take all appropriate action
to cause (i) the pledge and lien of thi s 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 bonds to be paid over or delivered to or at the
direction of the Ci ty. In determining the sufficiency of the
deposit of Investment Securities there shall be considered the
principal amount of such investment securities and interest to
be earned thereon until the maturity of such Investment
Securities.
Section 22. If there be any default in the payment of
the principal of or interest on any of the bonds, or if the City
defaults in any Bond Fund requirement or in the performance of
any of the other covenants contained in thi s Ordinance, the
Trustee may, and upon the wri tten request of the regi stered
owners of not less than 10% in principal amount of the then
outstanding bonds, shall, by proper suit, compel the performance
of the duties of the officials of the Ci ty and the Water
Commi ssion under the laws of Arkansas. And in the case of a
default in the payment of the principal of and interest on any
of the bonds, the Trustee may and upon written request of the
registered owners of not less than 10% in principal amount of
the then outstanding bonds, shall apply in a proper action to a
court of competent jurisdiction for the appointment of a
receiver to administer the Water System on behalf of the Ci ty
and the registered owners of the 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 bonds and interest outstanding and to apply the
Revenues in conformity with the laws of Arkansas and with this
Ordinance. When all defaults in principal and interest payments
have been cured, the custody and operation of the Water System
shall revert to the Ci ty and the Water Commission.
No regi stered owner of any of the outstanding bonds
shall have any right to institute any suit, action, mandamus or
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other proceeding in equi ty 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 bonds then outstanding shall
have made wri tten 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 insti tute such action, sui t 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, condi tions precedent to the execution of any
remedy. No one or more regi stered owners of the 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 thereunder except the manner herein
described. All proceedings at law or in equity shall be
insti tuted, had and maintained in the manner herein described
and for the benefit of all registered owners of the outstanding
bonds.
No remedy conferred upon or reserved to the Trustee or
to the registered owners of the bonds is intended to be
exclusive of any other remedy or remedies, and every such remedy
shall be cumulative and shall be in addi tion to every other
remedy given under thi s Ordinance or by law.
The Trustee may, and upon the written request of the
registered owners of not less than fifty percent (50%) in
principal amount of the bonds then outstanding shall, waive any
default which shall have been remedied before the entry of final
judgment or decree in any suit, action or proceeding instituted
under the provisions of this Ordinance or before the completion
of the enforcement of any other remedy, but no such waiver shall
extend to or affect any other existing or any subsequent default
or defaults or impair any rights or remedies consequent thereon.
All rights of action under this Ordinance or under any
of the bonds secured hereby, enforceable by the Trustee, may be
enforced by it without the possession of any of the bonds, and
any such suit, action or proceeding instituted by the Trustee
shall be brought in its name for the benefit of all the
regi stered owners of such bonds, subj ect to the provi sions of
thi s Ordinance.
No delay or omission of the T~ustee or of any
registered owners of the bonds to exercise any right or power
accrued upon any default shall impair any such right or power or
shall be construed to be a wai ver of any such defaul t or an
acquaintances therein; and every power and remedy given by this
Ordinance to the Trustee and to the registered owners of the
bonds, respectively, may be exercised from time to time and as
often as may be deemed expedient.
In any proceeding to enforce the provisions of this
Ordinance any plaintiff bondholder shall be entitled to recover
from the City all costs of such proceeding, including reasonable
attorneys' fees.
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Section 23. ( a) That the terms of thi s Ordinance
shall constitute a contract between the City and the registered
owners of the bonds and no variation or change in the
undertaking herein set forth shall be made whi Ie any of these
bonds are outstanding, except as hereinafter set forth in
subsections (b) and (c), and the owner of any bonds may at any
time for and on his own behalf or for and on behalf of all
bondholders enforce the obligations of the City by a proper suit
for that purpose. -
(b) The Trustee may consent to any variation or
change in this Ordinance to cure any ambiguity, defect or
omission in this Ordinance or any amendment hereto without the
consent of the owners of the outstanding bonds.
(c) The owners of not less than seventy-five percent
(75%) in aggregate principal amount of the bonds then
outstanding shall have the right, from time to time, 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 thi s Ordinance or in any supplemental ordinance i
provided, however, that nothing contained in this Section shall
permi t or be construed as permi tting (a) an extension of the
maturity of the principal of or the interest on any bond issued
hereunder, or (b) a red1.1ction in the principal amount of any
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 bond or bonds
over any other bond or bonds, or (e) a reduction in the
aggregate principal amount of the bonds required for consent to
such supplemental ordinance.
Section 24. (a) Moneys held for the credi t of the
Debt Service Reserve shall be continuously invested and
reinvested pursuant to the direction of the City in direct
obligations of, or obligations the principal of and interest on
which, are uncondi tionally guaranteed by the Uni ted States of
America ("Government Securities"), or in certificates of deposit
of banks to the extent insured by FDIC, 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 bonds, whichever is earlier.
(b) Moneys held for the credit of any other fund may,
at the option of the City, be invested and reinvested pursuant
to the direction of the City in Government Securities, in
certificates of deposit of banks which are members of FDIC, or
other investments as may, from time to time, be permi tted by
law, which shall mature, or which shall be subject to redemption
by the holder thereof, at the option of such holder, not later
than the date or dates when such money will be required for the
purposes intended.
(c) 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 profi t
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 in the Bond
Fund which increases the amount thereof above the Required Level
21
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shall to the extent of any such excess be transferred from time
to time out of the Debt Service Reserve into the Revenue Fund.
(d) 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 deposi tory bank or banks.
(e) All investments and deposi ts 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.
(f) Investments of moneys in all funds shall be
valued in terms of current market value as of the first 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.
Section 25. When the bonds have been executed, they
shall be authenticated by the Trustee and the Trustee shall
deliver the bonds to the Purchaser upon payment in cash of the
purchase price of 97.5% of the principal amount thereof plus
accrued interest ("total sale proceeds"). The accrued interest
shall be remi tted to the Ci ty for deposi t into the Bond Fund.
The sum of $218,'887.50 from the total sale proceeds shall be
deposi ted in the Debt Service Reserve. The Trustee's
authentication fee shall also be paid from the total sale
proceeds. There shall next be deposited with First Jacksonville
Bank, Jacksonville, Arkansas as escrow agent for the refunding
(the "Escrow Agent") from bond proceeds the sum necessary, along
wi th other avai lable moneys, to accompli sh the refunding. The
remainder of total sale proceeds shall be remitted to the City
for deposi t in trust into a special account in the name of the
Ci ty designated "Water Revenue Bond Construction Fund, Series
1988" ("Construction Fund") in a deposi tory designated by the
Water Commi ssion that is a member of FDIC. The moneys in the
Construction Fund in excess of the amount insured by FDIC shall
be continuously secured by Government Securities. The moneys in
the Construction Fund shall be disbursed solely in payment of
the costs of accompli shing the improvements, paying necessary
expenses incidental thereto, paying interest during construction
and paying expenses of issuing the bonds. In the case of all
construction costs each check written on the Construction Fund
shall be accompanied by a certificate signed by the Manager of
the Jacksonvi lIe Water Works (the "Manager" ) certi fying hi s
approval thereof.
When the improvements have been completed and all
required expenses paid and expendi tures made from the
Construction Fund for and in connection with the accomplishment
of the improvements and the financing thereof, tllis fact shall
be evidenced by a certificate signed by the Manager, which
certificate shall state, among other things, the date of the
completion and that all obligRtions payable from the
Construction Fund have been discharged. A copy of the
certificate shall be filed with the depository of the
Construction Fund, and a copy with the Trustee, and upon receipt
thereof the deposi tory of the Construction Fund shall transfer
any remaining balance to the Bond Fund.
Section 26. That all moneys in the bond funds and
reserves therein maintained under the 1964 Ordinance, the 1973
Ordinance and the 1979 Ordinance (the "Prior Ordinances") shall
22
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be deposi ted wi th the Escrow Agent upon the issuance of the
bonds. The moneys in the Waterworks and Sewer Revenue Fund (the
"Prior Revenue Fund"), the Waterworks and Sewer Operation and
Maintenance Fund (the "Prior Operation and Maintenance Fund")
and the Waterworks and Sewer Depreciation Fund (the "Prior
Depreciation Fund") maintained under the Prior Ordinances shall
be segregated based upon which revenues were deri ved from the
operation of the Water System ("Water Revenues") or the
operation of the Sewer System (" Sewer Revenues" ) .
Water Revenues in the Prior Revenue Fund shall be
transferred into the Revenue Fund. Water Revenues in the Prior
Operation and Maintenance Fund shall be transferred into the
Operation and Maintenance Fund. Water Revenues in the Prior
Depreciation Fund shall be transferred into the Depreciation
Fund.
Sewer Revenues in the Prior Revenue Fund in an amount
necessary to provide sufficient funds to accomplish the
refunding shall be deposi ted wi th the Escrow Agent and the
balance shall remain in the Prior Revenue Fund, which fund is
hereby re-designated as the "Sewer Revenue Fund." Sewer
Revenues in the Prior Operation and Maintenance Fund shall
remain therein. Sewer Revenues in the Prior Depreciation Fund
shall also remain therein. The Prior Operation and Maintenance
Fund is hereby re-designated as the "Sewer Operation and
Maintenance Fund." The Prior Depreciation Fund is hereby
re-designated as the "Sewer Depreciation Fund. "
Section 27. From time to time during the construction
of the improvements, the City shall deposit when necessary
surplus moneys in the Revenue Fund into the Construction Fund to
finance the costs of the improvements.
Section 28. That there shall be a statutory mortgage
lien upon the Water System (including all extensions I
improvements and betterments now or hereafter existing) which
shall exist in favor of the registered owners of the bonds, and
each of them and the Water System shall remain subject to such
statutory mortgage lien until payment in full of the interest on
and principal of the bonds.
Section 29. (a) That the City covenants that it shall
not take any action or suffer or permit any action to be taken
or condi tions to exist which causes or may cause the interest
payable on the bonds to be subj ect to federal income taxation
without limiting the generality of the foregoing, the City
covenants that the proceeds of the sale of the bonds and
Revenues will not be used directly or indirectly in such manner
as to cause the bonds to be treated as "arbitrage bonds" within
the meaning of Section 148 of the Code. The City further
covenants to pay the United States Treasury the amounts required
to be rebated under Section 148(f) of the Code at the times
required by Section 148(f) of the Code. The City shall give
notice to the Trustee annually of the calculation of the amount
due for the preceding bond year. Payment of any rebate amount
is hereby declared to be a proper exense of the System and shall
be payable from moneys in the Operation and Maintenance Fund.
(b) The City shall assure that (1) not in excess of
ten percent (10%) of the Net Proceeds of the bonds is used for
Private Business Use if, in addition, the payment of more than
ten percent (10%) of the principal or ten percent (10%) of the
interest due on the bonds during the term thereof is, under the
terms of the bonds or any underlying arrangement, directly or
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indirectly secured by any interest in property used or to be
used for a Private Business Use or in payments in respect of
property used or to be used for a Private Business Use or is to
be derived from payments, whether or not to the City, in respect
of property or borrowed moneys used or to be used for a Private
Business Use; and (ii) that, in the event that both (A) in
excess of five percent (5%) of the Net Proceeds of the bonds are
used for a Private Business Use, and (B) an amount in excess of
five percent (5%) of the principal or five percent (5%) of the
interest due on the bonds during the term thereof is, under the
terms of the bonds or any underlying arrangement, directly or
indirectly, secured by any interest in property used or to be
used for 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 deri ved from payments, whether or not to the Ci ty I in
respect of property or borrowed money used or to be used for
said Pri vate Business Use, then said excess over said five
percent (5%) of Net Proceeds of the bonds used for a Private
Business Use shall be used for a Private Business Use related to
the governmental use of the improvements. The Ci ty covenants
that none of the proceeds of the Bonds Refunded were used for
Private Business Use.
The Ci ty shall assure that not in excess of five
percent (5%) of the Net Proceeds of the bonds are used, directly
or indirectly, to make or finance a loan to persons other than
state or local governmental uni ts.
As used in this subsection (b) I the following terms
shall have the following meanings:
"Net Proceeds" means the face amount of the bonds plus
accrued interest and premium, if any, Iless original issue
discount, if any, less the amount deposited into the Debt
Service Reserve.
"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
uni t and use as a member of the general public.
(c) The bonds are hereby designated as "qualified
tax-exempt obligations" wi thin the meaning of the Code. The
City represents and covenants that the aggregate principal
amount of its qualified tax-exempt obligations (excluding
"pri vate acti vi ty bonds" wi thin the meaning of Section 141 of
the Code which are not "qualified 501(c)(3) bonds" within the
meaning of Sec1tion 145 of the Code), including those of i ts
subordinate entities, issued in calendar year 1988 does not and
wi 11 not exceed $10, 000, 000 .
(d) That the City covenants that it will take no
action which would cause the bonds to be "federally guaranteed"
within the meaning of Section 149(b) of the Code; specifically,
(A) the payment of any portion of principal or i_ntel:"'est wi th
respect to the bonds will not be guaranteed (directly or
indirectly) by the United States or any agency or
instrumentality thereof and (B) not more than 5% of the proceeds
of the bonds (exclusive of proceeds invested for an ini tial
temporary period unti I needed for the purpose for which the
bonds were issued and proceeds deposi ted into the Bond Fund)
will be invested (directly or indirectly) in federally insured
deposits or accounts. Nothing in this Section 29 shall prohibit
investments in bonds issued by the Uni ted States Treasury.
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t~i)
(e) The City covenants that it will submit to the
Secretary of the Treasury of the United States, not later than
the 15th day of the second calendar month after the close of the
calendar quarter in which the bonds are issued, a statement
required by Section 149(e) of the Code.
Section 30. That in the event the office of Mayor,
City Clerk, City Treasurer, Water Commission, City Council, or
Ci ty Attorney 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 I 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 Water System is under control of the
Water Commission, performance by the Water Commission of any
obligation of the City hereunder shall be deemed performance by
the City.
Section 31. That the Mayor is hereby di rected to
publi sh for one insertion in a newspaper which is publi shed in
the City and of general circulation therein, this Ordinance, to
which shall be attached a Notice signed by him in substantially
the following form:
NOTICE
Notice is hereby given that the City Council of the City of
Jacksonville, Arkansas, has adopted the ordinance hereinafter
set out; that the City contemplates the issuance of Water
Revenue Refunding and Construction Bonds, Series 1988, described
in the ordinance; that any person interested may appear before
the Council on the 1st day of December, 1988, at 8:00 p.m., at
the usual meeting place of the Council held in the Ci ty and
present protests. At such hearing all obj ections and
suggestions will be heard, and the Council will take such action
as is deemed proper in the premises..
DATED this 18th day of November, 1988. ~
/s/~~~~
Mayor
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Section 32. That the Trustee shall only be
responsible for the exercise of good faith and reasonable
prudence in the execution of its trust. The recitals in this
Ordinance and in the face of the bonds are the recitals of the
City and not of the Trustee. The Trustee shall not be required
to take any action as Trustee unless it shall have been
requested to do so in wri ting by the regi stered owners of not
less than ten percent (10%) in principal amount of the bonds
then outstanding and shall have been offered reasonable security
and indemnity against the costs, expenses and liabilities to be
incurred therein or thereby. The Trustee may resign at any time
by sixty (60) days notice in writing to the City Clerk and to
the registered owners of the bonds, and the majority in value of
the registered owners of the outstanding bonds at any time, with
or wi thout cause I may remove the Trustee. In the event of a
vacancy in the office of Trustee, either by resignation or by
removal, the majority in value of the registered owners of the
outstanding bonds of this issue may appoint a new Trustee, such
appointment to be evidenced by a written instrument or
instruments filed with the City Clerk. If the majority in value
of the registered owners of the outstanding bonds of this issue
shall fail to fill a vacancy within forty-five (45) days after
the same shall occur, then the City shall forthwith designate a
new Trustee by a written instrument filed in the office of the
Ci ty Clerk. The original Trustee and any successor Trustee
shall file a wri tten 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
respecti ve regi stered owners of the bonds agree. Such wri tten
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 33. That anything herein to the contrary
notwithstanding, all rights of any registered owner of any bond
hereunder to or with respect to any moneys or investments held
in any fund hereunder shall terminate at the expiration of five
years from the date of maturity of such bond, whether by
scheduled maturity or by call for redemption prior to maturity
in accordance wi th the terms hereof.
Section 34. That the provisions of this Ordinance are
hereby declared to be separable and if any provision shall for
any reason be held illegal or invalid, such holding shall not
affect the validity of the remainder of the Ordinance.
Section 35. That this Ordinance shall not create any
right of any kind and no right of any kind shall arise hereunder
pursuant to it until the bonds shall be issued and delivered.
Section 36. That all ordinances and resolutions or
parts thereof, in conflict herewith are hereby repealed to the
extent of such conflict.
Section 37. That i tis hereby ascertained and
declared that the improvements must be accomplished as soon as
possible in order to make the Water 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, dec lared that an emergency exi sts
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and this Ordinance being necessary for the immediate
preservation of the public peace, health and safety shall take
effect and be in force from and after its passage.
PASSED: November 17, 1988.
ATTEST:
;L~ L,_ 0 l
C:::X<A1-,~-.~t /JI.. c:::;;(~,?L-tt.A-~,(,.J
--- "'--_/ ,..,./
Isl Lula M. Leonard
City Clerk
APPROVED:
~~ '
/ s ~ ~waim-(...c)a....-...
Mayor
(SEAL)
CERTIFICATE
The undersigned, Ci ty Clerk of the Ci ty of
Jacksonville, Arkansas, hereby certifies that the foregoing
pages are a true and correct copy of Ordinance No. 894 (#18-88)
adopted at a regular session of the Counci 1 of the Ci ty of
Jacksonville, Arkansas, held at the regular meeting place of the
Council in the City at 7:30 p.m., on the 17th day of November,
1988, and that said Ordinance is of record in Ordinance Record
Book No. VIII, Page 16-27, now in my possession.
GIVEN under my hand and seal this 18th day of
November, 1988.
~L~r~
~la M. Leonard
City Clerk
(SEAL)
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