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94-1605 i' � � Y� � � c� -' t � ` ° i I `' Council File � q �-t ' C i� a < �, � , �. t � n Green shest � 0�3� �' 1 0RIGINAL RESOLUTION TY' F S I 1 T PAUL, MINNESOTA � . ` PreseMed By Referred To Comm�tee: Date NOV 14 1994 PROVID G FOR THE ISSUANCE OF �'1��Er�� i�t^F;��,!�: $10,000,000 VAR BLE RATE DEMAND WATER REVENUE BONDS, SE IES 1994D, AND AMENDING PRIOR WATER''REVENUE BOND RESOLUTIONS WHEREAS, there ar' currently outstanding bonds of the City of Saint Paul, Minneso' (the "City"), payable from Net Revenues of the City's Water',Utility, specifically the City's (a) $5,375,000 Water Revenue',Bonds, Series 1985A (the "1985 Bonds"), issued pursuant to solutions adopted by this Council on August 27, 1985, and Septe er 17, 1985, of which $1,925,000 remain outstanding; (b) $8,00 ,,000 Water Revenue Bonds, Series 1988A (the "1988 Bonds"), issu d pursuant to a resolution adopted by this Council on December 3,',1987, which have been fully refunded with the proceeds of e 1993 Bonds (defined below) and are therefore not treated as ou standing; (c) $5,545,000 Water Revenue Bonds, Series 1990C (th "1990 Bonds"), issued pursuant to a resolution adopted by this ouncil on March 13, 1990, which have been fully refunded with th proceeds of the 1993 Bonds (defined below) and are therefor not treated as outstanding; and (d) $11,175,000 Water Revenue Ref nding Bonds, Series 1993E (the "1993 Bonds"), issued pursuant to'a resolution adopted by this Council on June 15, 1993, of whic ,$10,280,000 remain outstand- ing; and WHEREAS, it is necessary 'nd desirable to provide for the issuance of $10,000,000 Variabl Rate Demand Water Revenue Bonds, Series 1994D (the "Bonds" or',°1994 Bonds"), on a parity of lien with the 1985 Bonds and 1993 Bo ds (except as to certain interest on the 1994 Bonds), to fina ce various improvements to the City's municipal water utility ( e"Water Utility"), which has since its acquisition in 1885 bee' under the jurisdiction of the Board of Water Commissioners (the'"Board"); and 274528.4 1 � �� I��...�� WHEREAS, th Board and this Council deem it necessary and expedient to impr' e the Water Utility by making improvements to water treatment wor s, including filtration basins, solids handling and disposal,,process hydraulics, and chemical handling, and replacing water ma" s, and utilizing any excess proceeds for any other purpose permi ted by law (the "Improvements" or "Project"); and WHEREAS, parag aph 17 of the resolution authorizing the issuance and sale of the'1985 Bonds provides for the issuance of parity lien bonds as foll'ws: "17. ar't o' s. The revenue bonds issued hereunder shall be a irst charge and lien upon the Net Revenues of the Water'Utility, and no part of such Net Revenues shall ever b',pledged to the payment of any general obligation bon s issued by the City while any bonds of this issue or'bonds issued on a parity there- with remain outstandin ',and undischarged. No additional revenue obli ations payable from the Revenue Bond Debt Service Accou't shall be hereafter issued unless the same are expr'ssly made a second and subsequent lien upon the'Net Revenues of the Water Utility, provided howeve', that additional obligations may be issued on a parity',of lien with the bonds herein authori2ed, provided that',the annual Net Revenues of said Water Utility for ea of the two completed fiscal years immediately precedin the issuance of such additional obligations sha'1 have been one and one-half times the maximum annual pr'ncipal and interest coming due thereafter on all outst nding revenue obligations payable from and having a p ity of lien upon the Net Revenues of the Water Utilit' Fund, including the additional obligations so to be issued; provided further however that if the a nual Net Revenues in either or both of the aforesa d two completed fiscal years shall be insufficient t' meet this test then any reasonably projected increase 'n Net Revenues for the fiscal year immediately follow ng such second completed fiscal year may be added to th'',Net Revenues for such completed fiscal years or eithe of them (but the total of such projected increase in N t Revenues may be added only once) in applying the fore 'ing test. Such facts shall be shown by the Certificat' of the General Manager of the Board of Water Co issioners and shall be a finding of and recited in th' resolution of the City authorizing any such additio al series. In addition, the following condition' shall be met: 274528.6 2 � '� �-�f J � ��.� "(a) he payments required to be made (at the time of'the issuance of such parity lien bonds) into he various funds and accounts provided for'in this resolution have been made. "(b) A1'� such parity lien bonds shall have a December 1 ma urity or maturities and shall have semiannual in erest payments on June 1 and December 1 in' ach year. "(c) The',proceeds of such parity lien bonds shall be used 'nly for the purpose of making improvements, a ditions, extensions, renewals or replacements to'the Water Utility, and capital- izing interest 'r establishing Reserves and paying the costs of su financing."; and WHEREAS, paragra h 18 of the resolution authorizing the issuance and sale of the 1 93 Bonds is substantively identical to said paragraph 17 relating ',o the 1985 Bonds; and WHEREAS, the Boar and this Council deem it necessary and expedient to undertake e Project; and WHEREAS, herein th' City amends certain of the conditions for parity bonds oted above and makes various findings demonstrating the p priety of the issuance of the Bonds on a parity with the 1985 Bon s and 1993 Bonds (excep.t as to certain interest); and WHEREAS, in accordan'e with advice received from the Board, this Council finds, det rmines and declares that it is necessary and expedient to pro ,ide moneys to finance the Project, continue a Reserve previously e tablished, and provide for the costs of the issuance of the Bo ds from the proceeds of bonds payable solely from the Net Rev nues of the Water Utility; and WHEREAS, the City wish s to issue the Bonds pursuant to an Indenture of Trust dated as o November 1, 1994 (the "Indenture"), by and between the ity and First Trust National Association (the "Trustee", which''term includes any successor trustee or co-trustee under the I denture) as variable rate demand bonds, and the Holders of e Bonds may on seven (7) days' notice cause the Bonds to be purch'sed by, or for the benefit of, the City pursuant to the Indenture and WHEREAS, the obligation purchase the Bonds will be secured by a Standby Bond Purchase greement (the "Standby Bond Purchase Aqreement"), by and betwee the City and Norwest Bank Minnesota, National Association (th "Bank", which term includes 274528.6 3 � � �� - i��ti� any successor liquidi y support provider for the Bonds), and the re-sale of the Bonds 'fter their purchase will be pursuant to a Remarketing Agreement ' ated as of November 1, 1994 (the "Remarketing Agreement,'), by and between the City and Miller & Schroeder Financial, I c. (the "Remarketing Agent", which term includes any successor'remarketing agent for the Bonds); and WHEREAS, the equirements as to public sale of Minnesota Statutes, Sec ion 475.60, shall not apply to the Bonds, because the City has re ained an independent financial advisor and this Council has de ermined to sell the Bonds by private negotiation: NOW, THEREFORE' BE IT RESOLVED by the Council of the City of Saint Paul, Minn'sota, as follows: 1. Acce ta c' Of e• Bond Purchase A re ment. The offer of Piper Jaffray In ., and Miller & Schroeder Financial, Inc. (jointly, the "Purch ser"), to purchase $10,000,000 Variable Rate Demand Water Revenue',Bonds, Series 1994D, of the City (the "Bonds" or "1994 Bonds", r individually a"Bond" or "1994 Bond"), in accordance wit'' the Bond Purchase Agreement to be dated the date this resolu ion is adopted (the "Bond Purchase Agreement"), at the rates f interest set forth in the Indenture, and to pay for the Bonds t e sum of $9,957,500, is hereby accepted. The Mayor and D rector, Department of Finance and Management Services, are a',horized and directed to execute and deliver the Bond Purchase A reement in substantially the form submitted to this Council, ith such changes, modifications, additions and deletions as hall be necessary and appropriate and approved by the City Attorn Execution by such officers of the Bond Purchase Agreement shal �be conclusive evidence as to the necessity and propriety of c anges and their approval by the City Attorney. 2. v e n xecut' • c s' Forms ARtiroved. Forms of the'Indenture, Standby Bond Purchase Agreement and Remarketing Agr ement have been submitted to this Council for approval. Subjec to the approval of the City Attorney, the Indenture, Stan y Bond Purchase Agreement and Remarketing Agreement and exh' its thereto are approved in substantially the fornas submit ed, and shall be executed in the name of, and on behalf of, the City by the Mayor and Director, Department of Finance and Mana ement Services. Any other documents and certificates nec ssary to the issuance of the Bonds shall be executed by the appro 'iate City officers. The approval hereby g ven to the various documents referred to above includes appr val of such additional details therein as may be necessary and' ppropriate and such 274528.6 �� - �� modifications thereof, deletions therefrom and additions thereto as may be necessary a appropriate and approved by the City Attorney prior to the xecution of the documents. The execution of any instrument by t e appropriate officer or officers of the City herein authorized'shall be conclusive evidence of the approval of such docum nts in accordance with the terms hereof. In the absen e of the Mayor or Director, Department of Finance and Management'Services, any of the documents authorized by this resolution to executed may be executed by the Acting Mayor or acting Direct , Department of Finance and Management Services, respectively, or by any other officer of the City deemed appropriate by t e City Attorney. 3. 't e• ' i a su te• e m'n io s• Maturities. The Bonds hall be titled "Variable Rate Demand Water Revenue Bonds, Se'ies 1994D", shall be dated as provided in the Indenture, and shal be issued forthwith as fully registered bonds. The Bonds shall e numbered, shall be in denominations, and shall mature on the ates and in the amounts set forth in the Indenture. 4. �pose. '�The Bonds (together with other available funds appropriated) shal' provide funds for the construction of various improvements to e Water Utility of the City, specifically making impr ements to water treatment works, including filtration basi s, solids handling and disposal, process hydraulics, and c emical handling, and replacing water mains, with excess moneys�'�,devoted to any other purpose permitted by law (the "Improvements or "Project"), and the funding of the Reserve Account with resp ct to the Bonds. The proceeds of the Bonds shall be deposited nd used as provided in paragraph 12. The total cost of the Pro ect, which shall include all costs enumerated in Minnesota S'tutes, Section 475.65, is estimated to be at least equal to the a ount of the Bonds. Work on the Project shall proceed with'due diligence to completion. 5. Interest. he Bonds shall bear interest which varies and is paid on the ates provided in the Indenture. The City has fixed and determi ed the interest rates borne by the Bonds by setting the stand'rds for the interest rates in the Indenture, and by appointi the Remarketing Agent and selecting the Bank. Interest on a Ba k Bond (as defined in the Indenture) which is in excess of the M�ximum Rate (as defined in the Indenture) on other Bonds, ncluding, to the extent permitted by law, interest on overdue Su ordinate Interest, is referred to herein as "Subordinate Inte est". 274528.6 5 � '�� - ��rt�� 6. e • Bo s. The Bonds shall be subject to redemption nd prepayment prior to their maturity as provided in the Indent re. When under Section 3-4 of the Indenture the City is irectly responsible for the payment of the Purchase Price of Bond , funds of the Water Utility are hereby pledged for such purpo e, but only funds of the Water Utility are pledged for such purch'se and then only to the extent consistent with other provisions f this resolution. 7. Trustee. The Trustee is appointed to act as bond registrar and transfer gent, paying agent and tender agent with respect to the Bonds, a provided in the Indenture. 8. o s f' o d. The Bonds shall be in the form set forth as Exhibit A to t e Indenture. 9. Exe ut'o '�. The Bonds shall be executed on behalf of the City as provided 'n the Indenture. 10. Authentic tion. The Bonds shall be authenticated as provided in the Inden ure. 11. De 'v • A licat'on of P oceeds. The Bonds when so prepared and executed�,shall be delivered by the Trustee to the Purchaser upon receipt o the purchase price, and the Purchaser shall not be obliged to e to the proper application thereof. 12. Fund and A counts. For the convenience and proper administration of the pro eeds from the sale of the 1994 Bonds and for the payment of pr,ncipal of and interest on the 1994 Bonds, the Board of Water',Commissioners Water Utility Enterprise Fund (the "Water Utility und", heretofore in resolutions relating to the 1985 Bond and 1993 Bonds also referred to as the "Water Utility Fund") her ofore created shall continue in force and effect as a separate f nd of the City and of the Board until all of the 1994 Bonds are �ully paid and retired. In the Water Utility Fund there are, an there shall continue to be, the following accounts: (a) A" a't 1'cco nt", into which there shall be paid the proceeds fro the sale of the 1994 Bonds. From the Capital Account shall e paid all costs of the Improvements to be financed by the 994 Bonds, including legal, engineer- ing, financinq and oth r such expenses incidental thereto as are enumerated in Minn sota Statutes, Section 475.65. Fees due to the Bank, Remar'eting Agent and Trustee during the construction of the Im rovements may be paid from the Capital Account. Any �alance remaining in said account after the payment of s' h costs, or after the payment of the costs of any other imp �vements to the extent permitted by 274528.6 6 � � �� -��5 law or use for a,y other purpose permitted by law, shall be transferred to t e Revenue Bond Debt Service Account herein established. No ing in this resolution shall reverse or detract from any eposits made into said account, or payments made fr said account, with respect to the 1985 Bonds, 1988 Bonds,and 1990 Bonds. (b) An "O e a' e a ce Account", into which shall be paid all',gross revenues and earnings derived from the operation of e Water Utility system including any assessments which' ay from time to time be levied with respect to the Wa 'r Utility. From this account there shall be paid all, but o ly, current expenses of said system. Current expenses s all include the reasonable and necessary costs of administe ing, operating, maintaining and insuring the system, salari s, wages, costs of materials and supplies, costs of'water production and distribution, necessary legal, e'gineering and auditing services, and all other items which, y sound accounting practices, constitute normal, reasonable 'nd current costs of operation and maintenance, but ex'luding any allowance for depreciation, extraordinary repai s and payments into the Revenue Bond Debt Service Accoun , Subordinate Interest Account and Reserve Account. T ere shall at all times be maintained in said account a rese e in an amount sufficient to cover the operation and maint ance costs of the Water Utility system for the ensuing fif �en (15) day period; neither said reserve nor any annu l addition thereto shall constitute "Net Revenues" as de ined below. The balance from time to time remaining in th Operation and Maintenance Account, including interest o' other earnings received from the investment of any mo eys in the Water Utility Fund, after paying or providing or the foregoing items, shall constitute, and are ferred to in this resolution as, "Net Revenues.�� Payments �f fees to the Trustee, Bank and Remarketing Agent arelcurrent expenses. (c) A" ve o d bt ervi e A u t", into which there shall be credit d and to which there is hereby irrevocably pledged f�om the Net Revenues of the operation of the Water Utility stem monthly commencing in December, 1994, a sum equal to (') interest accrued on, or payable on, the 1994 Bonds that mo th (provided that Subordinate Interest shall be depo ited in the Subordinate Interest Account), (ii) at leas' 1/12 of the total principal on the 1994 Bonds payable (by'�maturity or mandatory sinking fund redemption) during the'ensuing twelve (12) months, and (iii) at least 1/12 of the t� al principal and interest on any other bonds issued on alparity therewith during the ensuing twelve (12) months;`pro ided, however, that no further 274528.6 7 , � qy- i��5 payments need be ade to said account when the moneys held therein are suffi ient for the payment of all principal and interest due on s id bonds on and prior to the next maturity date. No money s all be paid out of said account except to pay principal, pr mium, if any, and interest (exclusive of Subordinate Inter'st) on the 1994 Bonds and any other bonds which are issued a parity with the 1994 Bonds. (d) A"Res e Accoun ", which was heretofore created, and is hereby cont'nued, to be used only when and if moneys in the Revenue Bon Debt Service Account or other moneys available therefor (including moneys in the Subordinate Interest Account) re insufficient to pay principal, premiwn, if any, a d interest (exclusive of Subordinate Interest) on the b' ds payable from the Revenue Bond Debt Service Account; p vided, however, that the moneys in the Reserve Account ma Ibe used to prepay said bonds, when such prepayment will ret're all of the bonds then outstanding. There shall be depo ited in the Reserve Account on the date the 1994 Bonds are ssued $1,499,988, all of which shall be from funds of the B ard on hand. Amounts already in the Reserve Account, pu suant to the resolutions authorizing the issuance of the 198 Bonds and 1993 Bonds, shall be maintained therein on the issuance of the 1994 Bonds to the extent necessa �to equal the maximum principal and interest (exclusive f Subordinate Interest) due in any year on the bonds payable��from the Revenue Bond Debt Service Account, being initi lly the 1985 Bonds, 1993 Bonds and 1994 Bonds. Whenever the�',moneys in the Reserve Account exceed an amount equal to the aximum annual principal and interest (exclusive of Subord'' ate Interest) coming due thereafter on all outstanding reve e obligations payable from the Net Revenues of the Wate '��Utility Fund on a parity of lien with the 1985 Bonds, such �xcess may be transferred to the Revenue Bond Debt Se ice Account; and whenever the moneys in the Reserve Accoun shall be less than said amount, the Reserve Account shall'�,be restored to said amount from the next available Net Re enues. Notwithstanding the foregoing, after the payment and' ischarge of the 1985 Bonds the amount required to be mainta' ed in the Reserve Account shall be an amount equal to the le ser of: (1) ten percent (10�) of the original principal amo nt of the 1993 Bonds and other bonds payable from the Reven e Bond Debt Service Account issued after the 1993 Bonds o a parity of lien therewith, or (2) the maximum principal nd interest (exclusive of Subordinate Interest) due in any y'ar on the bonds payable from the 274528.6 8 , � y ^ ��,�� Revenue Bond Deb IService Account; and whenever the moneys in the Reserve Ac ount exceed such amount required to be maintained therei , such excess may be transferred to the Rev�nue Bond Debt Service Account. When only the 1994 Bonds and.bonds issued iter the 1994 Bonds are outstanding, the "maximum principa� and interest due in any year" on variable rate bonds shall e calculated at such time (for the 1994 Bonds and any oth r variable rate bonds issued prior to such time) or in conne ion with their issuance (for variable rate bonds issued iter such time) assuming the variable rate bonds bear fi'ed interest for the remainder of their terms or for their'terms, as appropriate, at the rates prevailing at such'time (for the 1994 Bonds and any other variable rate bond issued prior to such time) or at the time of their issu'nce (for variable rate bonds issued after such time) for uti'�ity revenue bonds of comparable quality, maturity and taxab or tax-exempt status, provided that other or different 'ssumptions may be used if necessary to obtain an investmen grade credit rating for the variable rate bonds or to ma ntain the credit rating(s) then in effect for the bond then outstanding. (e) A"Subo 'n e n e es ccou ", into which there shall be credited a d to which there is hereby irrevocably (except as provided elow) pledged from the Net Revenues of the operation of the'Water Utility system monthly commencing in December, 1994, a,sum equal to Subordinate Interest accrued on, or payab e on, Bank Bonds of the 1994 Bonds that month, and other amo nts relating to bonds issued on a parity of lien with he Subordinate Interest. No money shall be paid out of,said account except to (1) transfer such amounts instead to the Revenue Bond Debt Service Account if in the pe 'od ending June 1 or December 1, as applicable, Net Reven es are insufficient without such transfer to fully fun the Revenue Bond Debt Service Account, which transf r shall have priority over all other uses of the Subordina e Interest Account, or (2) to pay Subordinate Interest n the Bank Bonds of the 1994 Bonds and to pay principal, pre ium, if any, and interest on any other bonds which are issue on a parity of lien with the Subordinate Interest. (f) Net Revenues'��in excess of those required for the foreqoing purposes may��be used for any proper purpose. (g) The money in'�the Water Utility Fund shall be allotted and paid to t e various accounts herein established in the order in which id accounts are listed on a cumulative basis, and ' in any month the money in said accounts is insufficien to place the required amount in any 274528.6 9 � � q�- CC��S accounts, the de ''ciency shall be made up in the following month or months a'ter payment into all other accounts having a prior claim on aid Net Revenues have been made in full. (h) All mon,y held in the Revenue Bond Debt Service Account, Reserve ccount and Subordinate Interest Account created by this r solution shall be kept separate and apart from all other mu icipal funds and accounts. (i) Notwiths anding anything to the contrary herein, moneys in the Wate Utility Fund and any account thereof may be used to pay any'rebate of excess arbitrage earnings on gross proceeds of he 1988 Bonds, 1990 Bonds, 1993 Bonds and 1994 Bonds to be p'id to the United States in order to maintain the exclu ion from gross income under Section 103 of the Code (as he'einafter defined) of the interest on the 1988 Bonds, 1990 B ds, 1993 Bonds and 1994 Bonds. (j) No portio of the proceeds of the 1994 Bonds shall be used directly or,indirectly to acquire higher yielding investments or to r place funds which were used directly or indirectly to acqui e higher yielding investments, except (1) for a reasonabl' temporary period until such proceeds are needed for the urpose for which the 1994 Bonds were issued, (2) as part'of a reasonably required reserve or replacement fund no '�in excess of ten percent (10�) of the proceeds of the 1994,Bonds (or in a higher amount which the City establishes is ecessary to the satisfaction of the Secretary of the Tre�sury of the United States), and (3) in addition to the abov in an amount not greater than the lesser of five perce t(5�) of the proceeds of the 1994 Bonds or $100,000. o this effect, any proceeds of the 1994 Bonds and any sums f om time to time held in the Capital Account, Operation a� Maintenance Account, Reserve Account, Revenue Bond Debt Se ice Account or Subordinate Interest Account (or any other',City or Board account which will be used to pay principal'��,or interest to become due on the bonds payable therefrom) in'�,excess of amounts which under the federal arbitrage reg lations may be invested without regard to yield shall not be'�invested at a yield in excess of the applicable yield rest'ictions imposed by said arbitrage regulations on such i estments after taking into account any applicable "tempo ry periods", minor portion or reserve made available under t e federal arbitrage regulations. Money in the Water Uti ity Fund shall not be invested in obliqations or deposit� issued by, guaranteed by or insured by the United States o any agency or instrumentality thereof if and to the xtent that such investment would cause the 1994 Bonds t be "federally guaranteed" within the 274528.6 1 0 � � �y-�� meaning of Secti 149(b) of the federal Internal Revenue Code of 1986, as mended (the "Code"). 13. Pa ' o s. The 1994 Bonds shall be a first charge and lien upon t e Net Revenues of the Water Utility, but only as to principal a d as to interest which at the time accrued is not in excess of th' Maximum Rate of twelve percent (12g) (the "First Lien"j; interes'��which accrues on Bank Bonds in excess of the Maximum Rate is S rdinate Interest and shall be a second, junior, subordinate and'subsequent lien upon the Net Revenues of the Water Utility (the Second Lien"). For purposes of parity of lien with the 1985 Bond' and 1993 Bonds, the 1994 Bonds consist of their principal and he component of the interest thereon which at the time accru d is not in excess of the Maximum Rate of twelve percent (12�) (b ing the First Lien interest component), and Subordinate Interes��,is not a part thereof (being the Second Lien component). No pa of such Net Revenues shall be pledged to the payment of any ge eral obligation bonds issued by the City while any 1994 Bonds or onds issued on a parity therewith remain outstandinq and undischa ged, unless the pledge of Net Revenues to such general obligati n bonds is expressly made a second and subsequent lien to the F'rst Lien and the City and Board covenant to make the rates and ch rges of the Water Utility sufficient to timely pay such general ligation bonds. No additional revenu obligations payable from the Revenue Bond Debt Service Account��shall be hereafter issued unless the same are expressly made a'��second and subsequent lien to the First Lien upon the Net Revenue of the Water Utility; provided, however, that additional �bligations may be issued on a parity of lien with the First Lien the 1994 Bonds, provided that the annual Net Revenues of sa' Water Utility for each of the two (2) completed fiscal years imm'diately preceding the issuance of such additional obligations sha 1 have been one and one-half (1.5) times the maximum annual p incipal and interest coming due thereafter on all outstand ng revenue obligations payable from and having a parity of lie with the First Lien upon the Net Revenues of the Water Util ty Fund, including the additional obligations so to be issue ,; provided further, however, that if the annual Net Revenues in ither or both of the aforesaid two (2) completed fiscal years hall be insufficient to meet this test then any reasonably pr jected increase in Net Revenues for the fiscal year immediately�following such second completed fiscal year may be added to�',the Net Revenues for such completed fiscal years or either of t'em (but the total of such projected increase in Net Revenues ma � be added only once) in applying the foregoing test. For purpos of the foregoing limitations, when only the 1994 Bonds and bond� issued after the 1994 Bonds are outstanding, the "maximum an ual principal and interest coming due thereafter" on variable ate bonds shall be calculated 274528.6 1 1 � � q� � I��'�� assuminq the variable ate bonds bear interest at the rates prevailing at the time',of the calculation for utility revenue bonds of comparable qu'lity, maturity (or remaining maturity) and taxable or tax-exempt tatus, provided that other or different assumptions may be use if necessary to obtain an investment grade credit rating fo, the variable rate bonds or to maintain the credit rating(s) t' n in effect for the bonds then outstanding. Such fac shall be shown by the Certificate of the General Manager of the oard of Water Commissioners and shall be a finding of and recite in the resolution of the City authorizing any such ad itional series. In addition, the f llowing conditions shall be met: (a) The payme s required to be made (at the time of the issuance of su parity lien bonds) into the various funds and accounts rovided for in this resolution have been made. (b) All such p rity lien bonds shall have a December 1 maturity or maturit es and shall have semiannual interest payments on June 1 nd December 1 in each year; provided that interest payme ts may be more frequent than semiannually or on tes other than June 1 and December 1 if such interest is pai� in full only if at the time of payment the interest deposit into the Revenue Bond Debt Service Account for interest��,payments on June 1 or December 1, as appropriate, on othe bonds are current, and any insufficiency in int rest on all parity bonds is allocated proportionately in e ch six-month period ending June 1 or December 1, as appro riate. (c) The proceed ',of such parity lien bonds shall be used only for the pu ose of (1) making improvements, additions, extensions renewals or replacements to the Water Utility, and capitali ing interest or establishing Reserves and paying the costs f such financing, or (2) refunding parity lien bonds (pr�vided that bonds which refund parity lien bonds may instea derive their parity lien status from paragraphs 14 or 20 a,applied in paragraph 15). Any bonds, whether pay ble solely from Net Revenues or payable from other resource of the City (including general obligation bonds), or porti ns or components thereof, such as interest or portions of int rest, may be issued on a parity of lien with the Second Lien o made payable from the Subordinate Interest Account. 14. R un 'n a r' onds. The City also reserves the riqht and privilege of i suing additional revenue bonds if 274528.6 1 2 � � ��-I��S and to the extent need d to refund maturing bonds payable from the moneys in the Wate Utility Fund in case the moneys in the Revenue Bond Debt Serv�ce Account are insufficient to pay the same at maturity, whic' refunding revenue bonds may be on a parity with this issue' s to interest payments even if such interest is in excess the Maximum Rate, but shall mature subsequent to all the r venue obligations which are payable from the Net Revenues of the��Water Utility Fund and which are still outstanding upon comple ion of such refunding. 15. t e O t'ons. Except as authorized in paraqraphs 13, 14 an 20 of this resolution, the City covenants and agrees th t it will issue or incur no obligations payable from the Net Re nues of all or a part of said Water Utility or constituting "n any manner a lien thereon, unless such obligations are expressl made junior and subordinate to the First Lien of the lien a d charge of the 1994 Bonds on said Net Revenues. If bonds whic refund the 1994 Bonds are parity lien bonds to the First Lien,'�they shall enjoy complete equality of lien with the First Lien'for any portion of the 1994 Bonds not refunded and any other t'en-outstanding bonds payable from the Revenue Bond Debt Servic ,Account, if any there be, and such refunding bonds shall co inue to have whatever priority of lien over subsequent issues an Subordinate Interest that the refunded bonds may have had. If o ly a portion of the outstanding 1994 Bonds shall be refunded a d if such 1994 Bonds shall be refunded in such manner that the i terest rate of any refunding bond shall be greater than the Maxim m Rate of twelve percent (12�) of the corresponding refunded 19 4 Bond (or the average net interest rate of the refunding bon s shall be, or shall be reasonably estimated to be, higher t' n the Maximum Rate of twelve percent (12�) of the refunded 1994��Bonds), or that the maturity date of any refunding bond shall b earlier than the maturity date or scheduled mandatory sinkin' fund redemption date of the corresponding refunded 199 Bond (or the average maturity of the refundinq bonds shall be e rlier than the average maturity of the refunded 1994 Bonds, takin' into account scheduled mandatory sinkinq fund redemptions),�,then such 1994 Bonds may not be refunded without the conse t of the holders of the unrefunded portion of the 1994 Bonds d any other bonds then outstanding payable from the Revenue Bo d Debt Service Account. 16. u 'e ts. In the event that the moneys in the Revenue Bond ebt Service Account shall be insufficient at any particu ar time to pay the principal then due and interest (excluding Sub�rdinate Interest) then accrued on all bonds payable therefrom, sa"d moneys shall first be applied to the payment pro rata of the�� ccrued interest on all such bonds, payable over a period endin ',on June 1 or December 1, as appropriate, and any baiance��shall be applied in payment pro rata 274528.6 1 3 �� 4 of the principal on al such bonds, provided further that if it shall ev�r be deternain d by a court of competent jurisdiction while any such bonds r main outstanding that the sums available and to become availabl for the payment of the principal thereof and interest thereon a e insufficient whether or not then due, then the moneys in the'�,Revenue Bond Debt Service Account shall be applied in payment of ll principal then outstanding whether or not then due and the i erest accrued thereon to the date of payment ratably accordi g to the aggregate amount thereof without any preference or prior'ty. In the event hat the moneys in the Subordinate Interest Account shall e insufficient at any particular time to pay the Subordinate Int rest then due or principal then due and interest then accrued o' all bonds payable therefrom, said moneys shall first be applied the payment pro rata of the Subordinate Interest and the accrue '�,interest on all such bonds, and any balance shall be applied��in payment pro rata of the principal of all such bonds, provided'�,further that if it shall ever be determined by a court oflcompetent jurisdiction while such Subordinate Interest rem ins unpaid or any such bonds remain outstanding that the sum' available and to become available for the payment of the princ'pal thereof and interest thereon are insufficient whether or ot then due, then the moneys in the Subordinate Interest Acc nt shall be applied in payment of the Subordinate Interest and 'll principal then outstanding whether or not then due and the i terest accrued thereon to the date of payment ratably according'��to the aggregate amount thereof without any preference or priorit . 17. Sui o d de s. The Trustee or Holders of twenty percent (20�) or m re in aggregate principal amount of bonds issued under this r olution and at any time outstanding may, either at law or in ity, by suit, action, or other proceedings, protect and e'force the rights of all Holders of the 1994 Bonds then outstandin or enforce or compel the performance of any and all of the cove ants and duties specified in this resolution to be performed',by the City or Board or their officers and agents, including the ixing and maintaining of rates and charges and the collection'�,and proper segregation of revenues and the application and use th reof. 18. Covenants. or the protection of the Fiolders of the 1994 Bonds, the City he ein covenants and agrees to and with the holders thereof from ti e to time as follows: (a) It will at a 1 times through its Board adequately maintain and efficient��y operate the Water Utility as a City utility. It will from'�time to time make all needful and proper repairs, replac ents, additions and betterments to 274525.6 1 4 � �I�-f - I(�C�� the equipment and'facilities of said Water Utility so that they may at all t mes be operated properly and advanta- geously, and when�ver any equipment of said system shall have been worn ou , destroyed or otherwise become insufficient for roper use, it shall be promptly replaced or repaired so th t the value and efficiency of the facilities shall e at all times fully maintained and its revenues unencumb ed by reason thereof. (b) The rate for all water service and the charges for all water supp,ied by the Water Utility to the City and its residents and o all other consumers shall be reasonable and just, taking i to account the cost and value of the Water Utility, the',cost of maintaining and operating the Water Utility and e proper and necessary allowances for depreciation, the ounts required for the payment of principal and inte 'st on the bonds payable from the Net Revenues of the Wat�r Utility, and all other sums customarily paid fr m the revenues of the Water Utility. (c) It will a required by Section 10.11.2 of the City Charter (and it wil�� continue to do so whether or not required by said Ch rter) establish, maintain and collect such charges and ra' s as will produce revenues sufficient to pay the reasonabl cost of operation, repair and maintenance of the ter Utility and to pay the interest on and principal of the'1994 Bonds as and when they become due as well as to provid sufficient money to make the required appropriations to th various funds and accounts established herein. The City wi l review the schedule of rates and charges for the Wate Utility at least annually when the Board budget is revi ed. (d) It will not'sell, lease, mortgage, or in any manner dispose of thelWater Utility or any part thereof (including any and al extensions and additions that may be made thereto) until a 1 revenue bonds payable from the Net Revenues of the Water,Utility or any part thereof have been paid in full; provide , however, that the City may sell the Water Utility or any art thereof if simultaneously with or prior to said sale al �of the outstanding bonds are discharqed in accordan�e with paragraph 20 of this resolution. This cove�ant shall not be construed to prevent the sale by the City a fair market value of real estate, equipment or other non�revenue-producing properties which in the judgment of the Ci y have become unnecessary, uneconomi- cal or inexpedient to se in connection with the Water Utility provided that uitable facilities are obtained in place thereof and prov" ed further that nothing herein is intended to prevent the'�,City or Board from terminating or 274528.6 1 5 . �� otherwise prevent'ng the termination of contracts for the furnishing of wat r. (e) It shal cause to be kept proper books, records and accounts adap ed to the Water Utility separate from other accounts to'�be audited at the end of each fiscal year. A copy of said au it shall be furnished, without cost, to the Purchaser of e 1994 Bonds and to the Trustee and Bank. If the City fails o provide such audit within a reasonable time after the endlof said fiscal year, the Trustee, Bank or holders of twenty ercent (20�) or more of the outstanding bonds may cause su'h audit to be made at the expense of the City. The expense�'of preparing such audit shall be paid as current operating xpenses of the Water Utility. The Purchaser of the 1 94 Bonds and the Holders thereof, and the Trustee and Bank, their duly appointed representatives, from time to time s all have the right, at all reasonable times, to inspect t e Water Utility system and to inspect and copy the books,lrecords, accounts and data relating thereto. The City grees to furnish copies of such audit, without cost, to an Holder or Holders of the 1994 Bonds at their request withi a reasonable time after the end of each fiscal year. (f) It will fa'thfully and punctually perform all duties with referenc to the Water Utility required by the City Charter, the Co stitution and laws of the State of Minnesota and this r�solution. (g) It will gr nt no franchise to any competing utility. 19. Amendments. No change, amendment, modification or alteration shall be made i the covenants made with Holders of the 1994 Bonds in this res�lution without the consent of the Holders of not less than s xty percent (60�) in principal amount of such 1994 Bonds then ou standing except for changes, amendments, modifications nd alterations (a) made to cure any ambiguity or formal defect',or omission, or (b) which would not materially prejudice the H' ders of such outstanding 1994 Bonds; provided, however, that no �ing herein contained shall permit or be construed as permitting 1) an extension of the maturity of the principal of or the int rest on any such 1994 Bonds, or (2) a reduction in the principal mount of any such 1994 Bond or the rate of interest thereon, o' (3) a privilege or priority of any such 1994 Bond or 1994 Bond over any other bond or bonds except as otherwise provided herei , or (4) a reduction in the aggregate principal amount of such 19 Bonds required for consent to any change, amendment, modificat�'on or alteration, or (5) the creation of any lien ranking'�prior to or on a parity with the 274528.6 1 6 � `''I�`��'i�� lien of such 1994 Bond , except as hereinbefore expressly permitted, or (6) a mo ification of any of the provisions of this paragraph without the onsent of the Holders of one hundred percent (100$) of the rincipal amount of such 1994 Bonds outstanding. 20. i c . When all 1994 Bonds have been discharged as provided 'n this paraqraph, all pledges, covenants and other rights grante� by this resolution to the Holders of the 1994 Bonds shall cease.' The City may discharge all 1994 Bonds which are due on any da e by depositing with the Trustee, the paying aqent (but not i a City officer is the paying agent) or an escrow agent for suc' 1994 Bonds on or before that date a sum sufficient for the paym nt thereof in full; or if any 1994 Bond should not be paid when';due, it may nevertheless be discharged by depositing with the Tru ee, the paying agent (but not if a City officer is the paying a nt) or an escrow agent a sum sufficient for the payment thereof 'n full. The City may also discharge any prepayable 1994 Bonds wh'ch are called for redemption on any date when they are prepayable',according to their terms, by depositing with the Trustee, the pa'ing agent (but not if a City officer is the paying agent) or an scrow agent on or before that date an amount equal to the prin ipal, interest and redemption premium, if any, which are then d e, provided that notice of such redemption has been duly' iven as provided in this resolution or the Indenture. The City ay also at any time discharge the issue of the 1994 Bonds in whol' or in part by complying with the applicable provisions of innesota Statutes, Section 475.67, and any amendments thereto, e cept that the funds deposited in escrow in accordance with said p ovisions may but need not be in whole or part proceeds of advan e refunding bonds. The City may discharge 1994 Bonds as p ovided herein or in the Indenture without the consent of an Bondholders. 21. 'sc As used in this resolution the words "fiscal year" shall mean t�e twelve (12) month period beginning on January 1 of each year nd endinq on December 31 of the same year. Should it be deemed'�,advisable at some later date to change the fiscal yearly basis, t'e same may be done by proper actions to that effect, which chan�e shall not constitute an amendment or modification of this resol tion. 22. t 'st t'on. The Director, Department of Finance and nagement Services, is hereby directed to file a certified copy of'this resolution with the officer of Ramsey County, Minnesota, p rforming the functions of the county auditor (the "County Audito "), together with such other information as the County A'ditor shall require, and to obtain the County Auditor's certif cate that the Bonds have been entered in the County Auditor's Bon Register. 274528.6 1 7 � � q�-i�� 23. o te . The officers of the City are hereby author zed and directed to prepare and furnish to the Purchaser, and to he attorneys approving the legality of the issuance of the Bonds,,certified copies of all proceedings and r records of the City re'ating to the Bonds and to the financial condition and affairs f the City, and such other affidavits, certificates and info � tion as are required to show the facts relating to the legali and marketability of the Bonds as the same appear from the bo ks and records under their custody and control or as otherwise'�known to them, and all such certified copies, certificates an affidavits, including any heretofore furnished, shall be dee ed representations of the City as to the facts recited therein. 24. e t'v nant to Use cee Improvements. The City ereby covenants not to use the proceeds of the Bonds or to use e Improvements, or to cause or permit them to be used, or to e�ter into any deferred payment arrange- ments for the cost of th Improvements, in such a manner as to cause the Bonds to be "p ivate activity bonds" within the meaning of Sections 103 and 141 'hrough 150 of the Code. The City hereby covenants not to use the'�proceeds of the Bonds in such a manner as to cause the Bonds to'�,be "hedge bonds" within the meaning of Section 149(g) of the Co e. 25. Tax-Exem Status of the Bonds• Rebate• lections. The City shall comply wit requirements necessary under the Code to establish and maintain the exclusion from gross income under Section 103 of the Code o the interest on the Bonds, including without limitation requir ments relating to temporary periods for investments, limitations n amounts invested at a yield greater than the yield on the Bon s, and the rebate of excess investment earnings to the United St�tes. The City expect '�the two-year expenditure exception to the rebate requirements to��,apply to the construction proceeds of the Bonds. If any elections�are available now or hereafter with respect to arbitrage or re�ate matters relating to the Bonds, the Mayor, Clerk, Treasurer an Director, Department of Finance and Management Services, or an, of them, are hereby authorized and directed to make such elec �''ons as they deem necessary, appropriate or desirable in',connection with the Bonds, and all such elections shall be, an shall be deemed and treated as, elections of the City. 26. No es' na i n o ua 'fie Tax-Exem t b' t'ons. The Bonds, together�with other obligations issued by the City in 1994, exceed in amo nt those which may be qualified as 274528.6 1 8 � � a�- �� "qualified tax-exempt bligations" within the meaning of Section 265(b)(3) of the Code, and hence are not designated for such purpose. 27. P It is hereby found, determined and declared that: (a) Neither he City nor the Board has any outstanding bonds, warrants, c rtificates, or other obligations or evidences of indeb edness, or money borrowed for or on account of the Wat r Utility or indebtedness for which any of the Net Revenue of all or a part of the Water Utility have been pledged �r which are a prior lien on such Net Revenues, except t e 1985 Bonds and 1993 Bonds. (b) All paym' ts required to be made prior to the date hereof into the va 'ous funds and accounts of the "Water Utility Fund" estab ished pursuant to the resolutions of this City Council w ich authorized the issuance of the 1985 Bonds and 1993 Bond have been made. (c) For purpo es of these parity findings, the 1994 Bonds consist of th principal thereof and interest accrued in any period which�is not in excess of the Maximum Rate of twelve percent (12�)'�,, and not Subordinate Interest. (d) The annual'�Net Revenues for each of the two (2) completed fiscal yea�s immediately preceding the issuance of the 1994 Bonds have een more than one and one-half (1.5) times, specifically .91 and 1.60 times, respectively, the maximum annual princ pal and interest coming due hereafter on all outstanding r venue obligations payable from and havinq a parity of 1'en upon the Net Revenues, being the 1985 Bonds, 1993 Bon and 1994 Bonds (exclusive of Subordinate Interest)� to wit: Net Revenues 199 $6,661,196 Net Revenues 199 $5,584,525 Maximum Annual P incipal and Interest on the '985 Bonds $ 965,000 Maximum Principal'�,and Interest on the 1993 Bonds'�, $1,989,432 Maximum Annual Pr ncipal and Interest on the 1 94 Bonds (assuming the Maximum Rate f twelve percent, 12�, and'��exclusive of Subordinate Inter�st) $1,788,000 274528.6 1 9 � � - I��`�� Maximum Annu 1 Principal and Interest on he 1985 Bonds, 1993 Bonds, nd 1994 Bonds (COMBINED) $3,489,420 One and One- alf (1.5) Times Total Maxim Annual Principal and Interest equirements $5,234 130 This City Council as been furnished with the Certificate of the General Manage' of the Water Utility attesting to the foreqoinq facts. (e) This Cit Council pursuant to advice from the Board hereby finds, determines and declares that the estimated revenues o be derived from the operation of the Water Utility durin the term of the 1994 Bonds will be more than sufficient to rovide Net Revenues adequate to pay principal and inter st when due on the 1994 Bonds (including Subordinate Interes ) and on those other bonds which are now outstanding and to aintain the Reserves required therefor. (f) The 1994 onds have a December 1 maturity or maturities and have 'nterest payments on dates other than June 1 and December , but are in compliance with the requirements for par'ty bonds as amended by paragraph 29 of this resolution. (g) The procee s of the 1994 Bonds shall only be used for the purpose of m king improvements, additions, extensions, renewals'�or replacements to the Water Utility, and capitalizing int rest or establishing Reserves and paying the costs of ch financing. Interest payment (excluding payments of Subordinate Interest, which are subord nated to the payments addressed in this paragraph) on the 199 Bonds shall be paid in full only if at the time of payment the'interest deposits into the Revenue Bond Debt Service Account or interest payments on the 1985 Bonds and 1993 Bonds on June 1 o December 1, as appropriate, are current, and any insuffici cy in interest on all parity bonds shall be allocated proport' nately in each six-month period ending June 1 or December 1'� as appropriate. 28. C v s. Each and all of the terms and provisions of this reso ution shall be and constitute a covenant on the part of the'��City to and with each and every Holder from time to time of��the Bonds. 274528.6 2 0 � � q� -� ��5 29. e s s. (a) The first sentence of paragraph 7 of the resolution authorizing the issuance and sale of t e 1985 Bonds, and the first sentence of paragraph 18 of the re olution authorizing the issuance and sale of the 1993 Bonds, are each amended to read as the following two (2) sentences, interpr ted in accordance with definitions set forth in this resoluti . "The 1985 Bonds an' 1993 Bonds shall be a first charge and lien upon the et Revenues of the Water Utility. No part of such Ne Revenues shall be pledged to the payment of any qen ral obligation bonds issued by the City while any 198 Bonds or 1993 Bonds or bonds issued on a parity therew th remain outstandinq and undischarged, unle s the pledge of Net Revenues to such general obligation onds is expressly made a second and subsequent lien an '�,the City and Board covenant to make the rates and char s of the Water Utility sufficient to timely pay such eneral obligation bonds." (b) Paragraph 7, clause (b), of the resolution authorizing the issuance'�and sale of the 1985 Bonds, and paragraph 18, clause (b)'� of the resolution authorizing the issuance and sale of the'�,1993 Bonds, are each amended to read as follows: "(b) All such arity lien bonds shall have a December 1 maturity r maturities and shall have semiannual interest payments on'�June 1 and December 1 in each year; provided that intere t payments may be more frequent than semiannually or on d tes other than June 1 and December 1 if such interest is pai in full only if at the time of payment the interest deposit' into the Revenue Bond Debt Service Account for interest,�payments on June 1 or December 1, as appropriate, on othe bonds are current, and any insufficiency in int est on all parity bonds is allocated proportionately in ea h six-month period ending June 1 or December 1, as approp iate." (c) The City her by finds, determines and declares that the above amendments may b made without the consent of the Holders of the 1985 Bonds 'nd 1993 Bonds because they do not materially prejudice the H�lders of outstanding 1985 Bonds and 1993 Bonds, all within the� eaning of paragraph 23 of the resolution authorizing the ''ssuance and sale of the 1985 Bonds and paragraph 24 of the res lution authorizing the issuance and sale of the 1993 Bonds. 274528.6 2 1 q �4 -1 ��5 30. t' . The City has retained Springsted Incorporated as an ind,pendent financial advisor, and this Council has heretofore�determined, and does hereby determine, to sell the Bonds by priv te negotiation to the Purchaser, all as provided by Minnesota tatutes, Section 475.60, Subdivision 2(9). 31. Sev 't . If any section, paragraph or provision of this reso tion shall be held to be invalid or unenforceable for any �ason, the invalidity or unenforceability of such section, paragr ph or provision shall not affect any of the remaining provision� of this resolution. 32. Headinas Headings in this resolution are included for convenienc� of reference only and are not a part hereof, and shall not 1 mit or define the meaning of any provision hereof. Yeas Na s Abse � Requested by DepartmeM of: Blak Grimm Guerin Finance Management Services Harris � Me ard � �2� Rettman BY� Thune :� I.; Adopted by Councii: Date C Form Appr ed by Ciry Atto Adoption Certified Council Secreta B � bY ►Y y• By � I ' G�'�/ / .`� � Approved by M or: Dat t� r T Ap�6ved� Mayor r Submiss' il ;: � .� - By: gy; _ ._ � � �� x:.� .'� kr : b r i a.�C..�-;: .. . - . �Lj, y� � , ..* { DEPARTM IC . DA INITIA D � � Finance. and Mairaqemerit Services 10'-31 CiREEN �HEE � N � �� 3 7�/ {', � ;,� ;.�, . �1 c�w.urr�rrr a� �� cm couiaci� ', INITIAUDATE Ma�tha _Kantoroxlc�''�' 26b�8836 � � � Cmr,�rr�NEr � Cmr c�RK: ' i I ��p BUDOET OIRECTOR � FIN. 8 MAT. SERVK:E8 � November 9, .1994 _ , onoEn � �►voR (op �ss�� ❑ � T.OTAL � OF �QNATURE.PAC�€S .. (CLIP ALL LOCATION$ FOR $IGNATURE) REQUESTED: . To agprove the issuance of $10,000,0U0 V able Rate Demand Water Revcmue Bonds negotiated rith the undexxiitinq ,' #�� firms of Miller and Schroeder Fiaan�lal, c. and Piper Jaffray, Inc. , " t , ° . REC�ENG►T10N8: Approvr (A10► iMl� (R) . PERSONAI 8ERVICE CONTRACTS MU�T AN8WER TNE FOLLOWINti WlESTIONS: �: _ PLANNarO COMMISSION ` ` CIVII. sERV�CE 1. Has thla pe►SOnAkm ever vrorked undsr a 0011haCt fa tllis depertment7 _ � �� _ YES NO _ 8TAFF _ 2. Has this person/tUm ever besn a c�ty employss? YES NO _ DI8TRiCT COURr � 3. Doea thla persoNfirm poue�s a akill �ot nonn�tlY P� bY �Y �+� �Y emPbYe�? gUpPppTg WHICH COUNCIL �,IECrIVE9 YES NO EzplNn all y�s answen on ap�nls �hNt a�d I�ttach to Onaf shNt n�m�rux� �M, �. orPOaTUNm lwno. vn�n. wn.�. vw,me, ): These bonds are for the purpose of fundinq i rovemei►ts to McCarrons Water Treatment Plant , 810,000,000 water Revernie Bonds Rt �`"' �� k FOR COUNCIL AGF�NDA OF NOVII�ER 9, 1994 �QV Q � �94 , m ; . MAYAR'S OFFICE ; � ADVANTi�E81F APPROVED: � '� Funds Wil] be on hand for Phase I of the impro at plan for the Water"Treatment Plant. �� `� � � � � � � I 't ; , DISAOVANTA(iE81F APPROVED: l NONE � _ � � � � � � 't DIBADVANTAOEB IF NOR APPROVED: Fuads rrill not be av�ilable for needed improvement ' TOTAL AMOUNT OF TRANSACTION a COST/RCVENU@ BUDO@TED {CIRCLE ONE) YES NO ,: FtlNO(N�i SOURCE ACTIVITY NUINBEA FINANCIAL INFOHMATION: (EXPUIIN) �� r! � � i ,,' NE,y'�'E: COMPLETE DIRECTIONS ARE iNCLUbED IN TW� CiREEN,:$HEET INSTRUCTIONAL MANUAL AVAI�ABIE IN THE PURCHASINO OFFICE (PFi�NE NO. 298-4225). ` q}�JTINC3 ORDER: �b�Ow are correct rouUnps for the five most frequent types of documeMs: i° �NTRACTS (assumsa euthorized budget exists) COUNCIL RESOLUTION (Amend Budgets/Axept. (irants) �a � t Outside Agency 1. Department Director � Department Director 2. City Attorney �� CRy Attorney 3. Budget Director � Mayor (for eoMracts over $15,000) 4. Mayor/Asslstant fi�c Human Rights (for c�nntracta over $50,000) 5. City Council ;�. Ffnance and Manegement Services Dfroctor 8. Chief Acxountant, Finance and Managsment 3ervices + ' �7. Finance Acxounting ; :.� � ��►DMINISTRATIVE ORDERS (Budget Revisbn) GOUNCIL RE30WTION (sll othera, and Ordinances) � ''1. Activity Manaper 1. Department Director "�2. Department Accountant 2. City Attorney � �' 3. Department Director 3. Mayor Assistant ; 4. Budget Directbr 4. City Council . ` 5. Gty Clerk � 6. Chief /lccounta�t, Ffnance and Management Services � ADMINISTRATIVE ORDERS (all others) _' � 1. Department Director ; � 2. City Attorne�r ;' 3. Finance and Management Services Director , . 4. City Clerk ` TOTAL NUMBER OF SIC�NATURE PAQES ?� Indicate the �of pages on which signatures are required and p�p�rclip or flsg <' ; �ech of thss� pay�s. ACTION REQUESTED Deacribe what the project/request seeks to accomplish in either chronologi- "' cal order or order of importence, whichever is most appropriate fw the �> issue. Do not wrfte complete sentences. Begin each item in your list with �; f a verb. :;> � g � RECOMMENDATIONS Complete if the issue in question has been presented before any body, public �? or prfvete. €� � SUPPORTS WHICH COUNCIL OBJECTIVE? Indicate wh�h Council objective(s) your projecUrequest supports by listing � the key word(s) (HOUSIPI(3, RECREATiON, NEIQHBORHOODS, ECONOMIC DEVELOPMENT, � BUDGET, SEWER SEPARATION). (3EE COMPLETE LIST IN INSTRUCTIONAL MANUAL.) PERSONAL SERVICE CONTRACTS: � This information will be used to determine the city's liability for workers compensation cialms, taxes and proper civil ssrv�e hiring rules. INITIATINO PROBLEM, ISSUE, OPPORTUNITY Explain the situetion or condiNons that created a need for your project , or request. ADVANTACiES IF APPROVED indicate whether this is simply an annual budget procedure required by lawl charter or whether there ere specHic ways in which the Ciry of Saint Paul and its citizens will benefit from thfs projecVaction. DISADVANTAC3ES IF APPROVED ' � What negative effects or major changes W existing or past processes might ? thfs projecUrequest produce ff it is passed (e.g., traffic delays, noise, _ tax (ncreases or assessmenta)? To Whom? When? For how long? � DISADVANTAGES IF NOT APPROVED What wfil be the negative consequences if the promised action is not �� approved? Inability to deliver service? Continued high traffic, noise, ' a r ' accident rate? Loss of revenue? '�:`� i` a: , FINANCIAL IMPACT Aithough you must taibr the information you provide here to the issue you r� , are,addressi�g, in general you must answar two questions: How much is R ��` going to cost? Who is going to pey? �� '° �;; ; �` �� ;� � �? INTERDEPARTM TAL MEMORANDUM q �I - ��o� CITY OF SAIN7' PAUL � November 9, 1994 TO: Mayor Nor Coleman Council Pres dent Dave Thune Council Vice'�,President Janice Rettman Councilmem er Jerry Blakey Councilmem r Marie Grimm Councilmemb r Dino Guerin Councilmemb r Michael Harris Councilmemb ' �oberta Megard FROM: Shirley Da , ivision RE: 1994 Water Bo d Resolution Replacement Pages The 1994 Water Bond Pricin took place this morning. The initial rate is 3.44% which is excellent news. Attached are replacement pa s for the body of the 1994 Water Bond Sale Resolution that will come bef e you this afternoon. The first and last pages of the resolution remain the same, e changes include last minute information such as final numbers for the reserve a' count and parity issues. If you have any questions pleas do not hesitate to call me or Martha Kantorowicz at 266-8836. attach. cc: Bernie Bullert Bill Carroll Peter Hames Martha Kantorowicz Jerry Segal Jim Snyder �.. �� ' � q� -��v� WHEREAS, t Board and this Council deem it necessary and expedient to imp ve the Water Utility by making improvements to water treatment wo ks, including filtration basins, sol'ds handling and disposal process hydraulics, and chemical h dling, and replacing water m ins, and utilizing any excess proc eds for any other purpose pe itted by law (the "Improvements" r "Project"); and WHEREAS, pa qraph 17 of the resolution a horizing the issuance and sale of t e 1985 Bonds provides for t e issuance of parity lien bonds as f llows: "17. Pari Bonds. The revenue bon issued hereunder shall b a first charge and li upon the Net Revenues of the W ter Utility, and no p t of such Net Revenues shall ev � be pledged to the yment of any general obligation',bonds issued by th City while any bonds of this issu or bonds issued a parity there- with remain outsta ding and undisch ged. No additional revenue',obligations pay le from the Revenue Bond Debt Service ccount shall b hereafter issued unless the same ar expressly ma a second and subsequent lien up the Net Re nues of the Water Utility, provided wever, tha additional obligations may be issued on a arity of en with the bonds herein authorized, provide that th annual Net Revenues of said Water Utility or each f the two completed fiscal years immediately p ecedin the issuance of such additional obligati ns sh 1 have been one and one-half times the maximum a ual rincipal and interest coming due thereafter on al' o standing revenue obligations payable from and ha 'n a parity of lien upon the Net Revenues of the Wate tility Fund, including the additional obligatio so to be issued; provided further however tha �if the annual Net Revenues in either or both of t aforesaid two completed fiscal years shall be ins f icient to meet this test then any reasonably projec ed ''ncrease in Net Revenues for the fiscal year imme iate y following such second completed fiscal year may e ad ed to the Net Revenues for such completed fisc 1 year� or either of them (but the total of such proje ed inc ease in Net Revenues may be added only once) i applyin the foregoing test. Such facts shall be sh n by the,Certificate of the General Manager of he Board �f Water Commissioners and shall be a findi q of and r ited in the resolution of the City auth rizing any s ch additional series. In addition the followin� conditions shall be met: 274528.4 2 /' q�1-�c�o5 "( a) he payments requ i red to be made ( at �` the time of the issuance of such parity lien bonds) into�the various funds and accounts provided fo in this resolution have been ma�e. ; "(b) 11 such parity lien bonds shal have a December 1 aturity or maturities and sha 1 have semiannual "nterest payments on June 1 d December 1 ' each year. "(c) T e proceeds of such pari lien bonds shall be use only for the purpose making improvements additions, extension , renewals or replacements to the Water Utility and capital- izing intere t or establishing R serves and paying the costs oflsuch financing."; nd WHEREAS, par raph 18 of the esolution authorizing the issuance and sale of t 1993 Bonds is substantively identical to said paragraph 17 relat'ng to the 198 Bonds; and WHEREAS, the oard and th s Council deem it necessary and expedient to undert ke the Pro ect; and WHEREAS, here'n the Ci y amends certain of the conditions for parity b ds quo ed above and makes various findings demonstratinq e pro riety of the issuance of the Bonds on a parity with the 198 Bon s and 1993 Bonds (except as to certain interest); and WHEREAS, in ac o dance with advice received from the Board, this Council find determines and declares that it is necessary and expedient provide moneys to finance the Project, continue a Reserve prev' usly established, and provide for the costs of the issuance o he Bonds from the proceeds of bonds payable solely from th� t Revenues of the Water Utility; and WHEREAS, the Ci�y wishes to issue the Bonds pursuant to an Indenture of Trust dat d as of November 1, 1994 (the "Indenture"), by arrd betw en the City and First Trust National Association (the "Trustee , which term includes any successor trustee or co-tru�tee und r the Indenture) as variable rate demand bonds, and the Hol rs of the Bonds may on seven (7) days' notice cause the Bonds to e purchased by, or for the benefit of, the City pursuant to the I denture; and WHEREAS, the obl gation to purchase the Bonds will be secured by S Standby Bond rehase Agreement dated as of November 1, 1994 (t e"Standby Bond Purchase Agreement"), by and between the City nd Norwest Bank innesota, National Association (the , 274528.4 3 A�4-�� "Bank", which term in ludes any successor liquidity support, provider for the Bond ), and the re-sale of the Bonds afte� their purchase will be purs ant to a Remarketing Agreement date� as of November 1, 1994 (the�"Remarketing Agreement") by and be�ween the City and Miller & Sch eder Financial, Inc. (the "Remarketing Agent", which term in �udes any successor remarketing;aqent for the Bonds); and WHEREAS, the requirements as to public s�fle of Minnesota Statutes, Se tion 475.60, shall not appYy to the Bonds, because the City has r tained an independent fin�ncial advisor and this Council has d termined to sell the Bon�s by private negotiation: , NOW, THEREFO , BE IT RESOLVED by��he Council of the City of Saint Paul, Mi esota, as follows:�' / 1. a e O e• nd re se e The offer of Piper Jaffray,'Inc., and Miller & Schroeder Financial, Inc. (jointly, the "Pur haser"), to pur hase $10,000,000 Variable Rate Demand Water Reven e Bonds, Serie 1994D, of the City (the "Bonds" or "1994 Bonds"'� or individua ly a"Bond" or "1994 Bond"), in accordance w'� h the Bond rehase Agreement to be dated the date this res ution is a opted (the "Bond Purchase Agreement"), at the rate of inter st set forth in the Indenture, and to pay for the Bonds'�,the sum q`f $9,957,500, is hereby accepted. The Mayor and'�Directo�, Department of Finance and Management Services, areiauthor zed and directed to execute and deliver the Bond Purchas Agre ent in substantially the fona submitted to this Counci , wi such changes, modifications, additions and deletions 's s 11 be necessary and appropriate and approved by the City Att�rne . Execution by such officers of the Bond Purchase Agreement a 1 be conclusive evidence as to the necessity and propriety changes and their approval by the City Attorney. 2. o nt • ec s' Forms Approved. Forms of'�the Indenture, Standby Bond Purchase Agreement and Remarke ng�,Agreement have been submitted to this Council for approval. Su ject to the approval of the City Attorney, the Inden re, tandby Bond Purchase Agreement and Remarketing Agreeme t and � xhibits thereto are approved in substantially the orms s mitted, and shall be executed in the name of, and on b half of,'��the City by the Mayor and Director, Department of Fi ance and anagement Services. Any other documents and c rtificates'�,necessary to the issuance of the Bonds shall be execu ed by the a propriate City officers. Th approval her�by given to the various documents referred to bove includes� pproval of such additional details 274528.4 4 Q�4 -1�5 therein as may be ne essary and appropriate and such ' modifications thereo , deletions therefrom and additions thereto as may be necessary nd appropriate and approved by the Ci�y Attorney prior to th execution of the documents. The execution of any instrument byjthe appropriate officer or officers of the City herein authoriz ' shall be conclusive evidence o�.�'the approval of such doc ents in accordance with the ter�as hereof. In the abse ce of the Mayor or Director, Department of Finance and Manaqemen Services, any of the documents authorized by this resolution to'be executed may be executed by the Acting Mayor or acting Direc or, Department of Finance and Management Services, respectivel ',, or by any other officQr of the City deemed appropriate by he City Attorney. 3. 't • • Maturities. The Bonds shall be titled "V,�riable Rate Demand Water Revenue Bonds, S ries 1994D", shalt be dated as provided in the Indenture, and sha'1 be issued fort,�with as fully registered bonds. The Bonds shal l be numbered, s�t`iall be in denominations, and shall mature on th dates and in �he amounts set forth in the Indenture. �� . 4. ��ose. The Bond��(together with other available funds appropriated) sha l provid funds for the construction of various improvements tolthe Wat Utility of the City, specifically making imp ovemen to water treatment works, includinq filtration ba 'ns, lids handling and disposal, process hydraulics, and hem' al handling, and replacing water mains, with excess money d oted to any other purpose permitted by law (the "Improvement " r"Project"), and the funding of the Reserve Account with res t to the Bonds. The proceeds of the Bonds shall be deposited' nd used as provided in paragraph 12. The total cost of the Pr ject, which shall include all costs enumerated in Minnesot atutes, Section 475.65, is estimated to be at least equal to e mount of the Bonds. Work on the Project shall procee wit due diligence to completion. 5. n e '�The Bonds shall bear interest which varies and is pai on the�dates provided in the Indenture. The City has fixed a determ ned the interest rates borne by the Bonds by settin the stan rds for the interest rates in the Indenture, and y appointi g the Remarketing Agent and selecting the Bank. Int rest on a B nk Bond (as defined in the Zndenture) which is in e cess of the aximum Rate (as defined in the Indenture) o other Bonds s referred to herein as "Subordinate Interest". 274528.4 5 �I� -1 tvv5 6. e t' The Bonds shall be subject to redemp- tion and prepayment rior�to their maturity as provided in th� Indenture. 7. The Trustee is appointed to act bond registrar and transfe �agent, payinq agent and tender agent with respect to the Bonds, as provided in the Indenture. �''� 8. F on . The Bonds shall be iri�the forms set forth as Exhibits A and B to the Indenture. 9. cu '. The Bonds shall be e�ecuted on behalf of the City as provid in the Indenture. ;' 10. '� n. The Bonds skr`all be authenticated as provided in the Ind nture. ,�'� � 11. 'v � . The Bonds when so prepared and execut d shall be deliv red by the Trustee to the Purchaser upon receipt'of the purchas price, and the Purchaser shall not be obliged t'see to the p per application thereof. 12. F and'�Accounts. or the convenience and proper administration of the p oceeds fr m the sale of the 1994 Bonds and for the payment of rincipal�of and interest on the 1994 Bonds, the Board of Wat'r Commi sioners Water Utility Enterprise Fund (the "Water Utilit� Fund", heretofore in resolutions relating to the 1985 Bo s a 1993 Bonds also referred to as the "Water Utility Fund") h eto ore created shall continue in force and effect as a separate'�f d of the City and of the Board until all of the 1994 Bonds ar ully paid and retired. In the Water Utility Fund there are, d there shall continue to be, the following accounts: (a) A" cou ", into which there shall be paid the procee f om the sale of the 1994 Bonds, less the amount capital' ed r the "Reserve Account" herein established. rom t e Capital Account shall be paid all costs of the mprove ents to be financed by the 1994 Bonds, including l�al, eng neering, financing and other such expenses i idental hereto as are enumerated in Minnesota Statutes, ection 47 .65. Fees due to the Bank, Remarketing Agent an Trustee du�ing the construction of the Improve nts may be id from the Capital Account. Any balanc remaining in aid account after the payment of such costs or after the p�yment of the costs of any other impr ements to the e'tent permitted by law or use for any oth purpose permitt d by law, shall be transferred to the Re nue Bond Debt Se ice Account herein established. N hing in this resol tion shall reverse or detract from any 2745 .4 6 q� — Ic.o�S deposits made i o said account, or payments made f�bm said account, with re pect to the 1985 Bonds, 1988 Bond�'and 1990 Bonds. ,. (b) An " a ou ", into which shall be paid al gross revenues and earnings derived from the operation of the Water Utility system i luding any asse�sments whic may from time to time be evied with respect to the W er Utility. From this ccount there shall be paid all, but nly, current expenses f said system. Current expenses hall include the rea nable and necessary costs of administ ring, operating, ma' taining and insuring the system, salar es, wages, costs o materials and supplies, costs o water production nd distribution, necessary legal, ngineerinq and a ditinq services, and all other items which by sound accou inq practices, constitute normal, reasonabl and current c sts of operation and maintenance, but cludinq any lowance for depreciation, extraordinary repa'rs and paym ts into the Revenue Bond Debt Service Accou t and Rese e Account. There shall at all times be maint ined in s id account a reserve in an amount sufficient o cover e operation and maintenance costs of the Water'�,Utility ystem for the ensuing fifteen (15) day period; n ither id reserve nor any annual addition thereto s all c stitute "Net Revenues" as defined below. The balanc fro time to time remaining in the Operation and Main � na e Account, including interest or other earnings rec 've from the investment of any moneys in the Water Utility , after paying or providing for the foreqoing items, sh 1 constitute, and are referred to in this resolution as,,"Net Revenues." Payments of fees to the Trustee, Bank and marketing Agent are current expenses. (c) A" v e'ce c u t", into which there shall be ed' ed and to which there is hereby irrevocably pl qed rom the Net Revenues of the operation of the Water U ilit �'�,system monthly commencing in December, 1994, a sum e al to'�,(i) interest accrued on, or payable on, the 1994 Bon s that onth (provided that Subordinate Interest sh 11 be de osited in the Subordinate Interest Account), ii) at le st 1/12 of the total principal on the 1994 Bond payable ( y maturity or mandatory sinking fund redempti ) during t e ensuing twelve (12j months, and (iii) at leas 1/12 of the otal principal and interest on any other b nds issued o'�a parity therewith during the ensuing twelve (12) months; p ovided, however, that no further payme ts need be made��to said account when the moneys held ther in are sufficien� for the payment of all principal and int est due on said onds on and prior to the next maturity da . No money shall'��be paid out of said account except to 274528. 7 q�! -11vo5 pay principal, emium, if any, and interest (exclusive of Subordinate Int est) on the 1994 Bonds and any other bonds which are issued'�on a parity with the 1994 Bonds. (d) A" ", which was heretofore created, and is hereby co tinued, to be used only when and if moneys in the Revenue nd Debt Service Account or other moneys available theref r(including moneys in the Subordinate Interest Account),are insufficient to pay principal, premium, if any, nd interest (exclusive of Subordinate Interest) on the onds payable from the Revenue-Bond Debt Service Account; rovided, however, that the moneys in the Reserve Account m y be used to prepay said bonds, when such prepayment will r tire all of the bonds then outstanding. There shall be de osited in the Reserve Account on the date the 1994 Bonds ar issued $ , of which $ shall be from fun ' of the Board on hand and $ shall be from the �roceeds of the 1994 Bonds. Amounts already in the Res rve Account, pursuant to the resolutions authorizing the is uance of the �."985 Bonds and 1993 Bonds, shall be maintaine therein upo the issuance of the 1994 Bonds to the exten necessary o equal the maximum principal and interest (excl sive of Su ordinate Interest) due in any year on the bonds � yable fr m the Revenue Bond Debt Service Account, beinq ini 'ally th 1985 Bonds, 1993 Bonds and 1994 Bonds. Whenever th money in the Reserve Account exceed an amount equal to the'�maxim m annual principal and interest (exclusive of Subor inat Interest) coming due thereafter on all outstanding rev nue obligations payable from the Net Revenues of the Wat'r tility Fund on a parity of lien with the 1985 Bonds, suc xcess may be transferred to the Revenue Bond Debt S ice Account; and whenever the moneys in the Reserve Acco t shall be less than said amount, the Reserve Account sh 1 be restored to said amount from the next available Ne R venues. Notwithstanding the foregoing, after the paymen an discharge of the 1985 Bonds the amount required to be aint ined in the Reserve Account shall be an amount equal t the esser of: (1) ten percent (10�) of the original prin ipal a�ount of the 1993 Bonds and other bonds payable from the Rev ue Bond Debt Service Account issued after the 1 93 Bonds n a parity of lien therewith, or (2) the maximu principal�,and interest (exclusive of Subordinate Interest) due in any ear on the bonds payable from the 274528. 8 q� - ��05 Revenue Bond De Service Account; and whenever the �o'neys in the Reserve A count exceed such amount required �o be maintained there n, such excess may be transferrec� to the Revenue Bond Deb Service Account. When only thg'1994 Bonds and bonds issued'�,after the 1994 Bonds are outsta�nding, the "maximum princip'1 and interest due in any yea�" on variable rate bonds shall'�,be calculated at such time (for the 1994 Bonds and any ot' r variable rate bonds issu�d prior to such time) or in conn tion with their issuance�{for variable rate bonds issued��,after such time) assumir�g the variable rate bonds bear f xed interest for their �erms at the rates prevailinq at the'time of their issuance,�for utility revenue bond� of comparab e quality, maturity d taxable or tax- exempt status, pr vided that other or ifferent assumptions may be used if ne essary to obtain a investment qrade credit rating forithe variable rate onds or to maintain the credit rating(s) en in effect fo the bonds then outstanding. (e) A" e nt re Acc u", into which there shall be credited nd to which there is hereby irrevocably (except as provide below) pl dged from the Net Revenues of the operation of t e Water U ility system monthly commencing in December, 1994,'a sum e al to Subordinate Interest accrued on, or pay le on, ank Bonds of the 1994 Bonds that month, and other a unts elating to bonds issued on a parity of lien with'the bordinate Interest. No money shall be paid out s id ccount except to (1) transfer such amounts instead to he evenue Bond Debt Service Account if in the period endin ne 1 or December 1, as applicable, Net Revenues are in ficient without such transfer to fully fund the Revenue Bo Debt.Service Account, which transfer shall have priorit 'ver all other uses of the Subordinate Interest Account, �(2) to pay Subordinate Interest on the Bank Bonds of th 19 4 Bonds and to pay principal, premium, if any, and int est��on any other bonds which are issued on a parity of li wit� the Subordinate Interest. (f) Ne Revenu s in excess of those required for the foregoing p oses m be used for any proper purpose. (g) he money i the Water Utility Fund shall be allotted nd paid to he various accounts herein established in the o der in which�said accounts are listed on a cumulat ve basis, and�,if in any month the money in said accoun s is insuffici�nt to place the required amount in any accou ts, the deficie'cy shall be made up in the following mont or months after' ayment into all other accounts having a p ior claim on said et Revenues have been made in full. / � r '" 274528,�`4 9 ,' %/ q�1- t l005 (h) All m ey held in the Revenue Bond Debt Service Account, Reserve'Account and Subordinate Interest Account created by this esolution shall be kept separate and apart from all other m nicipal funds and accounts. (i) Notwit standing anything to the contrary herein, moneys in the Wa er Utility Fund and any account thereof may be used-to pay a y rebate of excess arbitrage earnings on groes proceeds o the 1988 Bonds, 1990 Bands, 1993 Bonds and 1994 Bonds to be aid to the United States in order to maintain the excl sion from gross income under Section 103 of the Code (as h reinafter defined) of the interest on the 1988 Bonds, 1990 nds, 1993 Bonds ar�Ei 1994 Bonds. (j) No port on of the procee s of the 1994 Bonds shall be used directly 'r indirectly to acquire higher yielding investments or to',replace funds ich were used directly or ir�directly to ac �ire higher yi ding investments, except (1) for a reasona e temporary eriod until such proceeds are needed for the',purpose fo which the 1994 Bonds were issued, (2) as par of a rea onably required reserve or replacement fund n t in exc s of ten percent (10�) of the proceeds of the 19 4 Bonds (or in a higher amount which the City e�tablishes i neces ry to the satisfaction of the Secretary of the T'easur of the United States), and (3) in addition to the ab� e i an amount not greater than the lesser of five per nt 5�) of the proceeds of the 1994 Bonds or $100,000. �'To this effect, any proceeds of the 1994 Bonds and any sums r m time to time held in the Capital Account, Operation � d Maintenance Account, Reserve Account or Revenue Bond Deb Service Account (or any other City or Board account whic ��will be used to pay principal or interest to becom ue on the bonds payable therefrom) in excess of amount w�ich under the federal arbitrage regulations may e' vested without regard to yield shall not be investe at �'�,yield in excess of the applicable yield restrictions ' posed'by said arbitrage regulations on such investments ter ta ing into account any applicable "temporary p riods",�minor portion or reserve made available under the f deral ar itrage regulations. Money in the Water Utility Fu d shall n t be invested in obligations or deposits 'ssued by, 'uaranteed by or insured by the United States o ahy agency',or instrumentality thereof if and to the ext t that such'��investment would cause the 1994 Bonds to be " ederally gua �nteed" within the meaning of Section 149(b) of the federal��Internal Revenue Code of 1986, as amend d (the "Code").' 274528,:4 10 � / i s q�. - I�oo� .n 13. . The 1994 Bonds shall be a f}�st charge and lien upon he Net Revenues of the Water Utili�<`y, but only as to principal nd as to interest which at the ti�e accrued is not in excess of t�e Maximum Rate of twelve percent (the "First Lien"); intere t which accrues on Bank Bonds i,ri excess of the Maximum Rate is S ordinate Interest and shall b� a second, junior, subordinate a subsequent lien upon the N�� Revenues of the Water Utility (th '"Second Lien"). For purpos�es of parity of lien with the 1985 Bo s and 1993 Bonds, the 199�'Bonds consist of their principal and the component of the int�est thereon which at the time acc ed is not in excess of ��e Maximum Rate of twelve percent (12�) ( eing the First Lien in rest component), and Subordinate Intere t is not a part there�(being the Second Lien component). No p rt of such Net Reven�s shall be pledged to the payment of any eneral obligation b ds issued by the City while any 199� Bonds o �bonds issued on a arity therewith remain outstandinq and undisc rged, unless the ledge of Net Revenues to such general obligat'on bonds is expr ssly made a second and subsequent lien and the'�City and Board ovenant to make the rates and charges of the Wate Utility suff' ient to timely pay such general obligation bond�. ! �' No additional reve ue obligati�ns payable from the Revenue Bond Debt Service Accou t shall be�hereafter issued unless the same are expressly made second�nd subsequent lien to the First Lien upon the Net Reven s of th Water Utility; provided, however, that additional'obliga ions may be issued on a parity of lien with the First Lien'�,on th 1994 Bonds, provided that the annual Net Revenues of s id W ter Utility for each of the two (2) completed fiscal years i ed��ately preceding the issuance of such additional obligations s al have been one and one-half (1.5) times the m�ximum annual p�ncipal and interest coming due thereafter on all outsta ing revenue obligations payable from and having a parity of 1' n with the First Lien upon the Net Revenues of the Water U�i ity Fund, including the additional obligations so to be i u�d; provided further, however, that if the annual Net Revenu i either or both of the aforesaid two (2) completed fiscal ear shall be insufficient to meet this test then any reaso bly rojected increase in Net Revenues for the fiscal year i diate y following such second completed fiscal year may b added o�the Net Revenues for such completed fiscal�years or ther of hem (but the total of such projected increase in Net evenues y be added only once) in applying the foregoing test. For purpo es of the foregoing limitations, when only the 1994 onds and bo ds.issued after the 1994 Bonds are outstanding, he "maximum nnual principal and interest coming due thereaft r" on variabl rate bonds shall be calculated assuming th variable rate�bonds bear interest at the rates prevailing at the time of �heir issuance for utility revenue bonds of omparable qualit �, maturity and taxable or tax-exempt 274528.4 1 1 ��-��o� ., status, p"rovided that other or different asswaptions may be used if necessary to obtai an investment qrade credit rati#�q for the variable rate bonds o to maintain the credit rating(s) then in effect for the bonds hen outstanding. Such facts sl�iall be shown by the Certificate of the General Manager of the Bo,ard of Water Commissioners and sha�l be a finding of and recited in the resolution of the Cit, authorizing any such additional series. In addition, the ollowing conditions shal� be met: (a) The paym nts required to be made (at the time of the issuance of s ch parity lien bondsj'` into the various funds and account provided for in th�s resolution have been made. (b) All such' arity lien bond� shall have a December 1 maturity or matur' ies and shall �ave semiannual interest payments on June i��and December � in each year; provided that interest paym nts may be ms�re frequent than semiannually or on,dates other;'than June 1 and December 1 if such interest is p id in full,only if at the time of payment the interest depos ts into tl�e Revenue Bond Debt Service Account for intere't paymen�s on June 1 or December 1, as appropriate, on ot� r bond� are current, and any insufficiency in i erest,%on all parity bonds is allocated proportionately in 'ach �ix-month period ending June 1 or December 1, as appr pri�rte. (c) The procee s;�of such parity lien bonds shall be used only for the p�'pose of (1) making improvements, additions, extensio s, renewals or replacements to the Water Utility, and capit� izing interest or establishing Reserves and payinq the co�t '�of such financing, or (2) refunding parity lien bond�'( �ovided that bonds which refund parity lien bonds may �.�ste d derive their parity lien status from paragraphs 14 q"r 20 s applied in paragraph 15). ;' Any bonds, wl�ether p yable solely from net revenues or payable from oth�r resour es of the City (including general obliqation bonds�'�, or por ions or components thereof, such as interest or po ions of i erest, may be issued on a parit of lien with the, econd Lien � made payable from the Subordinate Interest, Accq�int . �t4. efun ' ur' o ds. The City also reserves the right��`and privilege of',issuing additional revenue bonds if and to tY�e extent needed t refund maturing bonds payable from the mon�ys in the Water Ut'lity Fund in case the moneys in the Revenu�'Bond Debt Service count are insufficient to pay the same a,� maturity, which re nding revenue bonds may be on a i ;� 27i828.4 � 1 2 �' , / q� -1 too5 parity with this iss ' as to interest payments even if such interest is in excess,of the Maximum Rate, but shall mat re subsequent to all the'revenue obligations which are pay ble from the Net Revenues of t e Water Utility Fund and which e still outstandinq upon comp etion of such refunding. 15. O e v Except s authorized in paragraphs 13, 14 d 20 of this resolution, t e City covenants and agrees at it will issue or incur no obligations payable from the Net venues of all or a part f said Water Utility or constitutin in any manner a lien ereon, unless such obligations are expres ly made junior and s rdinate to the First Lien of the lien'and charge of the 19 4 Bonds on said Net Revenues: If bonds wh ch refund the 1994 onds are parity lien bonds to the First Lie , they shall enjoy complete equality of lien with the First Li'n for any portion of the 1994 Bonds not refunded and any other ,hen outstandin bonds payable from the Revenue Bond Debt Servi'e Account, if ny there be, and such refunding bonds s�all c ntinue to hav whatever priority of lien over subsequent issues nd Subordin e Interest that the refunded bonds may have had. If only a por on of the outstandinq 1994 Bonds shall be refunded and if su 1994 Bonds shall be refunded in such manner that thelinterest ate of any refunding bond shall be greater than the Max�mum Rat of twelve percent (12�) of the corresponding refunded '994 Bo (or.the average net interest rate of the refunding b ds s 11 be, or shall be reasonably estimated to be, higher han he Maximum Rate of twelve percent (12�) of the refunded 19 4 nds), or that the maturity date of any refunding bond shall��b earlier than the maturity date or scheduled mandatory sink fund redemption date of the correspondinq refunded 1 4 Bond (or the average maturity of the refunding bonds shall b earlier than the average maturity of the refunded 1994 Bonds, t'ng into account scheduled mandatory sinking fund redempti s),; then such 1994 Bonds may not be refunded without the on nt of the holders of the unrefunded portion of the 1994 onds�and any other bonds then outstanding payable from the R enue ond Debt Service Account. 16. 'c'e ou s. In the event that the moneys in the R enue Bon Debt Service Account shall be insufficient a any parti ular time to pay the principal then due and interest xcluding S� ordinate Interest) then accrued on all bonds payabl therefrom, id moneys shall first be applied to the payment ro rata of th accrued interest on all such bonds, payable ov a period endi g on June 1 or December 1, as appropriat , and any balan e shall be applied in payment pro rata of the pr ncipal on all su h bonds, provided further that if it shall ev r be determined b' a court of competent jurisdiction while a y such bonds remai outstanding that the sums available and to become available fo the payment of the principal thereof 274 8.4 13 � � � °��4 _ �cvo5 ; ,. and interest thereon�' insufficient whether or not th¢n due, then the moneys in t' Revenue Bond Debt Service Acco�t shall be applied in payment o'�,all principal then outstanding, hether or not then due and the "nterest accrued thereon to th��date of payment ratably accor ing to the aggregate amount #�fiereof without any preference or pri rity. � In the even that the moneys in the S�ordinate Interest Account shal' be insufficient at any particular time to pay the Subordinate I erest then due or principal then due and interest then accrued 'n all bonds payable therefrom, said moneys shall first be applied',to the payment pro rata of the Subordinate Interest and the accru'd interest on all such bonds, and any balance shall be appli d in payment pro r�ta of the principal of all such bonds, provid�d further that if �it shall ever be determined by a court f competent juri�diction while such Subordinate Interest r�mains unpaid or such bonds remain outstanding that the s' s available ar��d to become available for the payment of the pri ipal thereof interest thereon are insufficient whether o'�not then du�, then the moneys in the Subordinate Interest Ac ount shall;-be applied in payment of the Subordinate Interest an all prinaipal then outstanding whether or not then due and the,interest,�accrued thereon to the date of payment ratably accordi q to be,�aggregate amount thereof without any preference or prior ty. ! r i� 17. Suit d ders. The Trustee or Holders of twenty percent (20�) or or in aggregate principal amount of bonds issued under this e�blution and at any time outstanding may, either at law or in�e�quity, by suit, action, or other proceedinqs, protect and,�nforce the rights of all Holders of the 1994 Bonds then outstan ng or enforce or compel the performance of any and all of the enants and duties specified in this resolution to be perf d by the City or Board or their officers and agents, includin th fixing and maintaining of rates and charges and the col cti and proper segregation of revenues and the application an use t ereof. �� 18. .�o enants.'� For the protection of the Holders of the 1994 Bonds,,�he City erein covenants and agrees to and with the holders the�eof from ime to time as follows: ;�' (a),.� It will at�all times through its Board adequatel Y maintai� and efficie ly operate the Water Utility as a City utilit'. It will fr time to time make all needful and prope�repairs, repla ements, additions and betterments to the �quipment and fac lities of said Water Utility so that the� at all times be operated properly and advanta- ge�sly, and whenever any equipment of said system s2iall ha�ve been worn out, d'stroyed or otherwise become 274528.4 � 1 4 q�4 —��oo+� insufficient fo proper use, it shall be promptly rep�.�aced or repaired so at the value and efficiency of the � facilities shall,be at all times fully maintained and its revenues unenc ered by reason thereof. (b) The ra es for all water service and tl�e charges for all water su plied by the Water Utility to �the City and its residents an to all other consumers shal� be reasonable and just, takinq snto account the cost and v�r ue of the Water Utility, t cost of maintaining and c�perating the Water Utility and,the proper and necessary�allowances for depreciation, the'amounts required for t� payment of principal and int rest on the bonds paya e from the Net Revenues of the W ter Utility, and all�ther sums customarily paid rom the revenues of e Water Utility. (c) It will'�as required by Sec�ion 10.11.2 of the City Charter (and it wi�l continue to do/so whether or not required by said C arter) establis , maintain and collect such charges and r tes as will pr duce revenues sufficient to pay the reasona le cost of op ation, repair and maintenance of thelWater Utilit and to pay the interest on and principal of t e 1994 Bond as and when they become due as well as to prov'de suffici t money to make the required appropriations to e variou funds and accounts established herein. The City 'll revi � the schedule of rates and charges for the Wat r Util' y at least annually when the Board budget is rev ewed. (d) It will n t se l, lease, mortgage, or in any manner dispose of t�e W ter Utility or any part thereof (including any and 'll extensions and additions that may be made thereto) until' 1 revenue bonds payable from the Net Revenues of the Wat � Utility or any part thereof have been paid in full; provi d, however, that the City may sell the Water�Utility or a y',part thereof if simultaneously with or prior to said sal a 1 of the outstanding bonds are discharqed in ac ord nce with paragraph 20 of this resolution. Th s co enant shall not be construed to prevent the sale by th Citylat fair market value of real estate, equipment or ther n-revenue-producing properties which in the judgment of the ''ty have become unnecessary, uneconomi- cal or inex edient toluse in connection with the Water Utility pr vided that',suitable facilities are obtained in place the eof and pro'ided further that nothing herein is intended to prevent t e City or Board from terminating or otherwi e preventing �he termination of contracts for the furnis ing of water. . � i � �" 274528.4 � 1 5 - q�—��o� (e) It sha 1 cause to be kept proper books, records and accounts ada ted to the Water Utility separa�e from other accounts t be audited at the end of each fiscal year. A�copy of said a dit shall be furnished, withoy�t cost, to the Purchaser of'the 1994 Bonds and to the Trua�tee and Bank. If the City fail to provide such audit within a reasonable time after the e of said fiscal year, the Trustee, Bank or holders of twent ,percent (20�) or more of the outstanding bonds may cause ch audit to be made at the expense of the C.ity. The expens of preparing such audit shall be paid as current operating',expenses of the Water Utility. The Purchaser of the 994 Bonds and the Holders thereof, and the Trustee and Bank, or their duly appointed representatives, from time to time'��shall have the riglit, at all reasonable times, to inspect'�the Water Utility s�stem and to inspect and copy the book', records, account� and data relating thereto. The Cit ,agrees to furnisY�`copies of such audit, without cost, to a y Holder or Holc�ers of the 1994 Bonds at their request with n a reasonable>time after the end of each fiscal year. ;' (f) It will aithfully an�! punctually perform all duties with refere ce to the W�ter Utility required by the City Charter, the onstitutior,� and laws of the State of Minnesota and this esolutiorY'. (g) It will g ant no-��ranchise to any competing utility. 19. N� change, amendment, modification or alteration shall be made'�,in ��e covenants made with Holders of the 1994 Bonds without t e gonsent of the Holders of not less than sixty percent (60�) 'ir�`principal amount of such 1994 Bonds then outstanding except changes, amendments, modifications and alterations (a) made �o cure any ambiquity or formal defect or omission, or (b) whicYi��would not materially prejudice the Holders of such outstanali g 1994 Bonds; provided, however, that nothing herein contain�d hall permit or be construed as permittinq (1) an ext�nsi n of the maturity of the principal of or the interest on amy su h 1994 Bonds, or (2) a reduction in the principal amount of:any s ch 1994 Bond or the rate of interest thereon, or (3) a privile or priority of any such 1994 Bond or 1994 Bond� over ar�y other ond or bonds except as otherwise provided herein,,�or (4) a eduction in the aggregate principal amount of such �94 Bonds equired for consent to any change, amendment, mod�ication or'alteration, or (5) the creation of any lien ranking p�ior to or o� a parity with the lien of such 1994 Bonds, except�as hereinbef re expressly permitted, or (6) a modification any of the� of this paragraph without ,- . � i � / 274528.4 � 1 6 / , q� -Ic�oS the consent of the Ho ders of one hundred percent (100�)'of the principal amount of s ch 1994 Bonds outstanding. • 20. ' h . When all 1994 Bonds have een discharqed as provide in this paraqraph, all pledg�, covenants and other rights gran ed by this resolution to the�Holders of the 1994 Bonds shall ceas'. The City may discharge a 1 1994 Bonds which are due on any te by depositing with the Trustee, the paying agent (but not 'f a City officer is the aying agent) or an escrow agent for su h 1994 Bonds on or befo e that date a sum sufficient for the pa ent thereof in full; o if any 1994 Bond should not be paid whe� due, it may neverth ess be discharged by depositing with the T stee, the paying ag t(but not if a City officer is the paying gent) or an escrow gent a sum sufficient for the payment thereo in full. The Ci may also discharge any prepayable 1994 Bonds ich are called r redemption on any date when they are prepayab according to eir terms, by depositing with the Trustee, the ying agent (b not if a City officer is the paying agent) or an'escrow agent on or before that date an amount equal to the pri cipal, inte est and redemption premium, if any, which are then ue, provid d that notice of such redemption has been dul given as �provided in this resolution or the Indenture. The Cit may als at any time discharge the issue of the 1994 Bonds in wh le or i part by complying with the applicable provisions o �Minne ota Statutes, Section 475.67, and any amendments thereto, xcep that the funds deposited in escrow in accordance with said rov'�sions may but need not be in whole or part proceeds of adva ce efunding bonds. The City may discharge 1994 Bonds as e ein provided without the consent of any Bondholders. �� 21. 's r. As used in this resolution the words "fiscal year" shall me� ,the twelve (12) month period beginning on January 1 of each�a �and ending on December 31 of the same year. Should it be eme advisable at some later date to change the fiscal yearly b is, he same may be done by proper actions to that effect, wh' h cha ge shall not constitute an amendment or modification of t s reso ution. 22. 'f'ca of Re 'st t'o . The Director, Department of F nance and anagement Services, is hereby directed to file a cert fied copy this resolution with the officer of Ramsey County Minnesota, erforming the functions of the county auditor (the "County Audit r"), together with such other information as the County uditor shall require, and to obtain the County Auditor's certi icate that the Bonds have been entered in the Co nty Auditor's Bo d Register. 23. tif'c es. The officers of the City a hereby authorized nd directed to prepare and furnish to 27452 .� 17 � i i q�-It�oS the Purchaser, and to'�the attorneys approving the legality of the issuance of the Bonds certified copies of all proceedi�s and records of the City r latinq to the Bonds and to the f} ancial condition ar�d affairs�of the City, and such other aff�davits, certificates and info ation as are required to show;�he facts relating to the legal'ty and marketability of the Bvnds as the same appear from the oks and records under their�custody and control or as otherwi ' known to them, and all su�Zh certified copies, certificates a d affidavits, including a y heretofore furnished, shall be de med representations of t e City as to the facts recited therein. 24. Ne v' C v nd Improvements._ The Cit hereby covenants no to use the proceeds of the Bonds or to use'�the Improvements, o to cause or permit them to be used, or to'ienter into any def,erred payment arrange- ments for the cost of e Improvements, �n such a manner as to cause the Bonds to be " rivate activityj�bonds" within the meaning of Sections 103 and 141'through 150 0'the Code. The City hereby covenants not to use th proceeds of he Bonds in such a manner as to cause the Bonds t be "hedge nds" within the meaning of Section 149(g) of the C de. 25. T s< o s• a e 'o The City shall comply w th requi��ements necessary under the Code� to establish and mainta' the �tclusion from gross income under Section 103 of the Code 'f th��interest on the Bonds, including without limitation requi emer�ts relating to temporary periods for investments, limitations on�amounts invested at a yield qreater than the yield on the Bo d�; and the rebate of excess investment earninqs to the United S ates. The City expec s the two-year expenditure exception to the rebate requirements o apply to the construction proceeds of the Bonds. If any ele,Ctio are available now or hereafter with respect to arbitrac�,e or r bate matters relating to the Bonds, the Mayor, Clerk, Treasurer a d Director, Department of Finance and Manaqement Servic�es, or a y of them, are hereby authorized and directed to makersuch ele tions as they deem necessary, appropriate or �lesirable n connection with the Bonds, and all such elections:�shall be, nd shall be deemed and treated as, elections of �he City. � 2 �%. N ' u ' ' e 'o s. The Bonds, togethe with other obligations issued by the City in 19�4, exceed in am unt those which may be qualified as "qualif�e�$_tax-exempt obli�ations" within the meaning of Section / ,% � 274528 � 18 � - i .� q� -1�05 265(b)(3) of the Cod �, and hence are not desiqnated for such purpose. , 27. . It is hereby found, determined and declared that: (a) Neithe the City nor the Board has any o�atstanding bonds, warrants,,certificates; or other obligatio�s or evidences of ind'btedness, or money borrowed for'or on account of the W'� er Utility or indebtedness f9'�' which any of the Net Reven s of all or a part of the W�ter Utility have been pledge 'or which are a prior lien �'n such Net Revenues, except he 1985 Bonds and 1993 Bo�ds. , b All a ents re �/ () p quired to be mad;� prior to the date hereof into the v'rious funds and accounts of the "Water Utility Fund" est'blished pursuant to t,he resolutions of this City Council which authorized thqr'issuance of the 1985 Bonds and 1993 Bo s have been made.�� (c) For pu ses of these pa ity findings, the 1994 Bonds consist of t e principal th�reof and interest accrued in any period whic is not in�exCess of the Maximum Rate of twelve percent (12 ), and not S�rbordinate Interest. (d) The annu l Net Reve�iues for each of the two (2) completed fiscal y ars immed�ately preceding the issuance of the 1994 Bonds hav been more than one and one-half (1.5) times, specificall� and times, respectively, the maximum annual pri � ipal �ind interest coming due hereafter on all outstanding even�e obligations payable from and having a parity of ien�upon the Net Revenues, being the 1985 Bonds, 1993 Bo ds�`and 1994 Bonds (exclusive of Subordinate Interes ) wit: r� , ,F Net Revenues 1 92 $ Net Revenues �93 $ Maximum An al rincipal and Interest o�th 1985 Bonds $ ,� Maximum rincip l and Interest on the 993 Bon s_ $ Maxi m Annual �rincipal and Inte est on the'�,1994 Bonds (assuming th Maximum Rat' of twelve p cent, 12�, a' exclusive of ordinate Int est) $ / 274528.4 1 9 qy - t t�� Maximum An ual Principal and ; Interest o ',the 1985 Bonds, � 1993 Bonds,' and 1994 Bonds ,, (COMBINED) $ ' One and One,half (1.5) Times � Total Maxim Annual Principal / and Interes Requirements $ � ;, This City Counci has been furnished with th Certificate of the General Irlana r of the Water Utility at sting to the foreqoing facts. . � �(e�) This Ci y Council pursuant to dvice from the Board hereby find , determines and decl res that the estimated revenue to be derived from e operation of the Water Utility dur'�ng the term of the 994 Bonds will be more than su€ficient t,provide Net Reven es adequate to pay principal and int 'est when due on he 1994 Bonds (including Subordinate Zntere t) and on those other bonds which are now outstanding and to'maintain the R serves required therefor. (f) The 1994 Bonds have a December 1 maturity or maturities and hav interest p yments on dates other than June 1 and Decembe 1, but ar in compliance with the requirements for p rity bond as amended by paragraph 29 of this resolution. (g) The proce ds of the 1994 Bonds shall only be used for the purpose of akin improvements, additions, extensions, renewal or replacements to the Water Utility, and capitalizing in er st or establishing Reserves and paying the.costs of,s ch financing. Interest payme s(excluding payments of Subordinate Interest, which are sub inated to the payments addressed in this paragraph) on the 19 4 Bonds shall be paid in full only if at the time of payme th interest deposits into the Revenue Bond Debt Service Ac�ount'for interest payments on the 1985 Bonds and 1993 Bonds on J ne 1 r DeceYaber 1, as appropriate, are current, and any i suffic ency in interest on all parity bonds shall be allocate propor ionately in each six-month period ending June 1 or December��l, as appropriate. 28. Ho ers. Each and all of the terms and provision of this res lution shall be and constitute a covenant on e part of th City to and with each and every Holder from time to time o the Bonds. i 274528.4 / 2 0 / % / / � � q� _ � t�o5 29. e o P' s lut'o s. (a) T first sentence of paragrap 17 of the resolution authorizin the issuance and sale of '�he 1985 Bonds, and the first s tence of paragraph 18 of the �solution authorizinq the issua� ce and sale of the 1993 Bonds, a each amended to read as the efollowing two (2) sentences, interp eted in accordance with definitions set forth in this resolut on: "The 1985 Bonds nd 1993 Bonds shall be a irst charge and lien upon th Net Revenues of the Wa r Utility. No part of such et Revenues shall be p dged to the payment of any g neral obligation bonds issued by.the City while any 1 5 Bonds or 1993 Bond or bonds issued on a parity ther ith remain outstand ng and undischarged, unl ss the pledge of N t Revenues to such general obligatio bonds is express y made a second and subsequent lien a d the City and B ard covenant to make the rates and cha ges of the Wate Utility sufficient to timely pay suc general oblig ion bonds." �(b) paragrap 17, clause ), of the resolution authorizing the issuan and sale the 1985 Bonds, and paraqraph 18, clause (', of the r solution authorizing the issuance and sale of th 1993 Bo s, are each amended to read as follow�: "(b) All suc parit lien bonds shall have a December 1 maturit� or m turities and shall have semiannual interest payments n Ju e 1 and December 1 in each year; provided that inte est ayments may be more frequent than semiannually or on� a es other than June 1 and December 1 if such interest is p�' in full only if at the time of payment the interest deposi into the Revenue Bond Debt Service Account for intere payments on June 1 or December l, as appropriate, on o r bonds are current, and any insufficiency in n erest bn all parity bonds is allocated proportionately n ach six-month period ending June l�or December 1, as ppr priate." (c) The ity h reby finds, determines and declares that the above amendme s may e made without the consent of the Holders of the 1 5 Bond '��and�1993 Bonds because they do not materially prej ice the olders of outstanding 1985 Bonds and 1993 Bonds, al within th meaning of paragraph 23 of the resolution au orizing th issuance and sale of the 1985 Bonds and paragraph�`24 of the r solution authorizing the issuance and sale of the �993 Bonds. < � � / 274528.4 ' 2 1 .