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HomeMy WebLinkAboutOrdinances - O-84-350 - 11/29/1984 - AUTHORIZE ISSUE $.5M W/S REV BONDS SERIES 1984a 0-84-350 AN ORDINANCE authorizing an issue of �00,000 Waterworks and Sewerage Revenue Bonds, Series 1984, of the City of McHenry, McHenry County, Illinois, and providing for the pay- ment and delivery thereof. WHEREAS, the City of McHenry, McHenry County, Illinois (the "City"), has for many years long past owned and operated in its governmental capacity a waterworks system and a sanitary sewerage system serving the needs of said City and has combined said systems into a combined waterworks and sewerage system (said combined waterworks and sewerage system hereinafter, together with the extensions authorized by this ordinance, and all future improvements and extensions,thereof, or replacements thereto, herein called the "system");'and WHEREAS, the governing body of said City has heretofore approved a contract providing for the acquisition of the water distribution system of the Lakeland Park Water Company which it has heretofore found and does hereby find to be in the best interests of the public health and welfare of said City, and has determined that said City will need to borrow funds to pay the cost of said acquisition and the income and revenue to be derived from the operation of said system is determined adequate to provide for the payment of bonds herein proposed to be issued; and WHEREAS, the total estimated cost of such acquisition, including necessary legal and financial costs, is the sum of $500,000, and the City does not have sufficient funds on hand .r to pay the cost thereof and, in order to raise the funds to acquire said addition to the existing waterworks portion of the system, it will be necessary for the City to borrow money and issue revenue bonds in the principal amount of $500,000; and WHEREAS, the City Council did adopt an ordinance on March 19, 1956, authorizing and providing for the issue of $179,000 Waterworks and Sewerage Revenue Bonds, Series of 1956, of which bonds in the amount of $30,000 are now outstanding; and WHEREAS, the City Council did adopt an ordinance on August 20, 1979, authorizing and providing for the issue of $1,150,000 Waterworks and Sewerage Revenue Bonds, Series of 1979, dated September 1, 1979, of which bonds in the amount of $770,000 are now outstanding; and WHEREAS, the terms of said ordinances adopted on March 19, 1956 and August 20, 1979, provide that additional bonds on a parity with the outstanding revenue bonds may be issued if the gross cash operating revenues of the system earned for the last fiscal year ending April 30 immediately preceding the authorization of any such additional bonds, as shown by an audit of an independent certified public accountant, were sufficient to pay all costs of operation and maintenance of said system, to make the annual payments to the Depreciation Account and to the Bond Reserve Account, and to make up any and all deficiencies then existing and leave a balance equal to one and one -tenth (1-1/10) times the maximum amount of principal and interest that will become due in any fiscal year subsequent to the issuance of additional -2- bonds on the then outstanding revenue bonds and on the additional bonds then proposed to be issued; and WHEREAS, the revenues of the system for the last fiscal year computed in the manner provided in the above paragraph were sufficient for the issuance of the additional parity bonds here- inafter proposed to be issued; and WHEREAS, the revenues of the system have not been pledged or hypothecated in whole or in part in any manner or for any purpose except for the payment of the outstanding bonds authorized by said ordinances adopted on March 19, 1956 and on August 20, 1979, respectively; and WHEREAS, pursuant to the provisions of the Illinois Municipal Code, approved May 29, 1961, as amended, this City is authorized to issue Waterworks and Sewerage Revenue Bonds in an amount sufficient to pay the cost of acquiring such addition to the existing waterworks portion of the system, and the income and revenue derived and to be derived from the operation of said combined waterworks and sewerage system of said City will be fully adequate to provide for the payment of the outstanding bonds and the new bonds so proposed to be issued: NOW, THEREFORE, Be It Ordained by the City Council of the City of McHenry, McHenry County, Illinois, as follows: Section 1. That the existing combined waterworks and sewerage system of this City shall be expanded in accordance with the contract providing for the purchase of the distribution system of the Lakeland Park Water Company and approved by this -3- Council on Owie"nt- IL, , 1984, hereinabove referred to and now on file for public inspection in the office of the City Clerk, and the period of usefulness of said combined waterworks and sewerage system, including said described expansion is hereby determined by this City Council to be forty (40) years from the date of the bonds herein authorized to be issued. Section 2.' That for 'the 'purpose of accomplishing said needful expansion of said system as hereinabove described, there be issued and sold the bonds of said City to be designated "Waterworks and Sewerage Revenue Bonds, Series 198411, in the principal sum of•$500,000, the proceeds from the sale thereof being hereby determined adequate to pay the estimated costs of acquiring said addition to the waterworks portion of the system. The bonds shall be dated December 1, 1984, and shall also bear the date of authentication, shall be in fully registered form, shall be in denominations of $5,000 each and authorized integral multiples thereof (but no single bond shall represent installments of principal maturing on more than one date), shall be numbered 1 and upward, and the Bonds shall become due and payable serially (without option of prior redemption) on May 1 of each of the years and in the amounts and bearing interest at the rates per annum as follows: -4- A Year of Principal Interest Maturity Amount Rate 1986 $45,000 9.00% 1987 50,000 9.00% 1988 50,000 9.00% 1989 60,000 9.00% 1990 65,000 9.20% 1991 65,000 9.20% 1992 75,000 9.20% 1993 90,000 9.40% The bonds shall bear interest from their date or from the most recent interest payment date to which interest has been paid or duly provided for, until the principal amount of the bonds is paid, such interest (computed upon the basis of a 360-day year of twelve 30-day months) being payable on the first days of May and November of each year, commencing on November 1, 1985. Interest on each bond shall be paid by check or draft of the City Treasurer as bond registrar and paying agent (the "Bond Registrar"), payable,upon presentation in lawful money of the United States of America, to the person in whose name such bond is registered at the close of business on the 15th day next preceding the interest payment date. The principal of and premium (if any) on the bonds shall be payable in lawful money of the United States of America at the Bond Registrar. The bonds shall be signed by the manual or facsimile signature of the Mayor, and the corporate seal of the City shall be imprinted thereon or affixed thereto, attested by the manual or facsimile signature of the City Clerk, and in case any officer whose signature shall appear on any bond shall cease to be such -5- `r officer before the delivery of such bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. All bonds shall have thereon a certificate of authen- tication substantially in the form hereinafter set forth duly executed by the Bond Registrar as authenticating agent of the City and showing the date of authentication. No bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this ordinance unless and until such certificate of authentication shall have been duly executed by the Bond Registrar by manual signature, and such certificate of authentication upon any such bond shall be conclusive evidence that such bond has been authenticated and delivered under this resolution. The certificate of authentication on any bond shall be deemed to have been executed by the Bond Registrar if signed by an authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign the certificate of authentication on all of the bonds issued hereunder. Said bonds, together with interest thereon, shall be payable solely from the revenues derived from the waterworks and sewerage system of said City, and such bonds shall not in any event constitute an indebtedness of said City within the meaning of any constitutional provision'or'any'constitutional or statutory limitation. Section 3. The City shall cause books (the "Bond Register") for the registration and for the transfer of the Bonds �as provided in this ordinance to be kept at the office of the Bond Registrar, which is hereby constituted and appointed the registrar of the City. The City is authorized to prepare, and the Bond Registrar shall keep custody of, multiple Bond blanks executed by the City for use in the transfer and exchange of bonds. Upon surrender for transfer of any bond at the office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by, the registered owner or his attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the transferee or transferees a new fully registered bond or bonds of the same maturity of authorized denominations, for a like aggregate principal amount. Any fully registered bond or bonds may be exchanged at said office of the Bond Registrar for a like aggregate principal amount of bond or bonds of the same maturity of other authorized denominations. The execution by the City of any fully registered bond shall constitute full and due authorization of such bond and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such bond, provided, however, the principal amount of outstanding bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of bonds for such maturity less previous retirements. -7- The Bond Registrar shall not be required to transfer or exchange any bond during the period of fifteen (15) days next preceding any interest payment date on such bond, nor to transfer or exchange any bond after notice calling such bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any bonds. The person in whose name any bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of, premium (if any) or interest on any bond shall be made only to or upon the order of the registered owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and dis- charge the liability upon such bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of bonds except in the case of the issuance of a bond or bonds; for the unredeemed portion of a bond surrendered for redemption. Section 4. The bonds shall be prepared in compliance with the National Standard Specifications for Fully Registered Municipal Securities prepared by the American National Standards Institute (except that such bonds may be either typed or printed) and shall be in substantially the following form; provided, rhowever, that if the text of the bond is to be printed in its entirety on the front side of the Bond, then paragraph [2] and the legend, "See Reverse Side for Additional Provisions", shall be omitted and paragraphs [5] through [9] shall be inserted immediately after paragraph [1]. (Form of Bond - Front Side) REGISTERED REGISTERED No. $ UNITED STATES OF AMERICA STATE OF ILLINOIS COUNTY OF MC HENRY CITY OF MC HENRY WATERWORKS AND SEWERAGE REVENUE BOND, SERIES 1984 :See Reverse Side: :for Additional :Provisions Interest Maturity Rate: % Date: May 1, Registered Owner: Principal Amount: Dated Date: December 19 1984 [1] KNOW ALL MEN BY THESE PRESENTS, that the City of McHenry, in the County of McHenry and State of Illinois, for value received hereby promises to pay to the Registered Owner identified above, or registered assigns as hereinafter provided, solely from the Waterworks and Sewerage Fund of the City of McHenry, as hereinafter mentioned and not otherwise, the Principal Amount identified above on the Maturity Date identified above and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on such Principal Amount from the date of this bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum identified above, payable November 1, 1985, and semiannually thereafter on the first days of November and May in each year, until said Principal Amount is paid. Both principal of and premium (if any) on this bond are payable in lawful money of the United States of America at the office of the City Treasurer, in McHenry, Illinois, as bond registrar and paying agent (the "Bond Registrar"). Payment of the installments of interest shall be made to the Registered Owner hereof as shown on the registration books of the City of McHenry maintained by the Bond Registrar at the close of business on the 15th day next preceding each interest payment date and shall be paid by check or draft of the Bond Registrar, payable upon presentation in lawful money of the United States of America, mailed to the address of such Registered Owner as it appears on such registration books or at such other address furnished in writing by such Registered Owner to the Bond Registrar. [2] Reference is hereby made to the further provisions of this Bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as if set forth at this place. -10- ` [3] It is hereby certified and recited that all acts, conditions and things required by the Constitution and statutes of the State of Illinois to be done precedent to and in the issuance of this bond and in raising funds to promptly assure payment thereof, have been done and have happened and have been performed in regular and due form of law; that provision has been made for depositing in said Waterworks and Sewerage Fund the entire revenues received from the operation of said system, to be applied in the manner as hereinabove set forth; and it is hereby covenanted and agreed that rates will be charged for the use and service of such system sufficient at all times to create and maintain the several Accounts established by the ordinance authorizing the issue of bonds of which this bond is one. [4] IN WITNESS WHEREOF, said City of McHenry, McHenry County, Illinois, by its City Council, has caused this bond to be signed by the [manual/facsimile] signature of its Mayor, its corporate seal to be hereto affixed and attested by the [manual/ facsimile] signature of the City Clerk, and this bond to be dated as of the first day of December, 1984. Attest: City Clerk Mayor -11- Date of Authentication: , CERTIFICATE Bond Registrar and Paying Agent: OF AUTHENTICATION City Treasurer City of McHenry, Illinois This bond is one of the bonds described in the within mentioned ordinance and is one of the Waterworks and Sewerage Revenue Bonds, Series 1984 of the City of McHenry, McHenry County, Illinois. City Treasurer of the City of McHenry, Illinois, as Bond Registrar By City Treasurer [Form of Bond - Reverse Side] City of McHenry McHenry County, Illinois Waterworks and Sewerage Revenue Bond, Series 1984 [5] This bond is payable solely from revenues derived from the waterworks and sewerage system of said City and not other- wise, and is issued under authority of Division 139 of Article 11 of the Illinois Municipal Code, and all laws amendatory thereof and supplementary thereto, for the purpose of paying part of the cost, with other funds to be made available therefor, of necessary expansion of the waterworks portion of the combined waterworks and sewerage system of said City, and this bond does not constitute -12- an indebtedness of said City within the meaning of any constitutional provision or any constitutional or statutory limitation. [6] Under said Code and the ordinance adopted pursuant thereto, the entire revenue derived and to be derived from the operation of the waterworks and sewerage system of this City shall be deposited in a separate fund designated as the "Water- works and Sewerage Fund of the City of McHenry," which shall be used only for the purpose of paying the cost of operating and maintaining such system, providing an adequate depreciation fund, and paying the principal of and interest on the bonds of said City that are issued under authority of said Code and are payable by their terms only from the revenue of such system, and creating and maintaining the several accounts established by the ordinance authorizing the issue of bonds of which this bond is one. C7] This bond is transferable by the registered holder hereof in person or by his attorney duly authorized in writing at the office of the Bond Registrar in McHenry, Illinois, but only in the manner, subject to the limitations and upon payment of the charges provided in the authorizing ordinance, and upon surrender and cancellation of this bond. Upon such transfer a new bond or bonds of authorized denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor. [8] The bonds are issued in fully registered form in the denomination of $5,000 each or authorized integral multipl es thereof. This bond may be exchanged at the office of the Bond -13- Registrar for a like aggregate princicpal amount of bonds of the same maturity of other authorized denominations, upon the terms set forth in the ordinance pursuant to which this bond is issued. [9] The City and the Bond Registrar may deem and treat the registered holder hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof, premium, if any, hereon and interest due hereon and for all other purposes and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. (ASSIGNMENT) FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto Name and Address of Assignee the within Bond and does hereby irrevocably constitute and appoint or its successor as Bond Registrar to transfer the said Bond on the.books kept for registration thereof with full power of substitution in the premises. Dated: Signature guaranteed: NOTICE: The signature to this assignment must correspond with the n e of the registered owner as it appears upon the fact of the within Bond in every particular, without alt on or enlargement or any change whatever. -14- Section 5. That upon the issuance of any of the Waterworks and Sewerage Revenue Bonds herein provided for, the entire waterworks and sewerage system of said City, for the purpose of this ordinance, shall continue to be operated on a fiscal year basis, commencing the first day of May and ending the last day of April of each succeeding year, and so long as any of the bonds herein authorized to be issued are outstanding, the entire revenues derived from the operation of said system of said City shall be collected and shall be set aside as collected, and shall be deposited in accordance with the laws of the State of Illinois governing the deposit of public moneys, in a separate fund, which is hereby maintained and continued, to be designated as the "Waterworks and Sewerage Fund of the City of McHenry," which shall be kept apart and segregated from all other moneys of said City and shall be used only to maintain and continue the several accounts here- inafter specified for the purpose of paying the cost of the operation and maintenance of said system, providing an adequate depreciation reserve, and paying the principal of and interest upon the Waterworks and Sewerage Revenue Bonds issued under the terms of this ordinance, and such Waterworks and Sewerage Fund shall be used only for such purposes and is hereby pledged therefor. Section 6. For the accounting of all moneys and assets of said Waterworks and Sewerage Fund at any time and from time to time while any Waterworks and Sewerage Revenue Bonds herein authorized are outstanding and unpaid, there are hereby maintained and continued the five separate Accounts of said Fund designated 1 -15- (a) the Operation and Maintenance Account, (b) the Depreciation Account, (c) the Bond Account, (d) the Bond Reserve Account, (e) the Surplus Account, and all deposits made to and all funds held in each of said Accounts, respectively, shall be continuously secured as provided by the laws of the State of Illinois governing the deposit of public moneys and into which there shall be paid on the first business day of each month all moneys held in said Waterworks and Sewerage Fund in accordance with the following provisions and in the priority of said Accounts so created and established as follows: (a) Operation and Maintenance Account: There first shall be set apart and paid out of said Waterworks and Sewerage Fund into an Operation and Maintenance Account an amount con- sidered necessary and sufficient to pay the reasonable current expenses of operating, repairing and maintaining said system for the current month. (b) Depreciation Account: There next shall be de- posited in the Depreciation Account a sum sufficient (including and not in addition to the amount required to be deposited into said Account by the provisions of the Waterworks and Sewerage Revenue Bond ordinances adopted on March 19, 1956 and August 20, 1979) to aggregate $8,750 each year until a maximum sum of $46,000 is on deposit in said Account, which is hereby found and determined to be a reasonable amount necessary to accomplish the purpose for which said Depreciation Account is established, and at which figure said Account, notwithstanding any transfer -16- therefrom as herein permitted, shall thereafter be continuously maintained. The moneys in said Account shall be used to pay the cost of necessary replacements to the system, and shall not be used for extensions to said system, except that the funds held in said Depreciation Account to the extent necessary to prevent or remedy a default in the payment of the interest on or principal of the bonds herein authorized shall be used and held for use for that purpose, and shall be transferred to the Bond Account, and whenever such a transfer is made, the amount so transferred shall be added to the next deposit to be made, and thereafter until full reimbursement to said Depreciation Account has been made. The moneys in said Depreciation Account may be invested and reinvested in bonds or other obligations of the United States Government maturing within five (5) years" from the date of purchase as may be authorized from time to time by resolution of the City Council of said City . (c) Bond Account: There next shall be deposited in the Bond Account, which shall be maintained at a depositary to be designated from time to time by the City Council, for the purpose of paying the maturing principal of and the interest accruing on the Waterworks and Sewerage Revenue Bonds issued under the terms of this ordinance, an amount at least equal to one -sixth (1/6th) of the interest becoming due on all outstanding Waterworks and Sewerage Revenue Bonds on the next succeeding interest payment date and amount equal to one -twelfth (1/12th) -17- of the principal becoming due on the next succeeding principal payment date, such equal monthly installments for principal and interest to produce not less than the following minimum amounts in each fiscal year: Fiscal Year Ending April 30 1986 1987 1988 1989 1990 1991 1992 1993 Principal and Interest $275,240.83 259,820.00 242, 420. 00 250,120.00 251,320.00 86,340.00 90,360.00 98, 460. 00 It is the express intent and determination of this City Council that the amount of said income and revenue so to be set aside and deposited into said Bond Account shall be in any event always sufficient to pay the interest on said bonds as the same becomes due and the principal thereof as the same matures, and there shall be deposited out of such income and revenue received from the operation of said system from month to month during each such fiscal year, without further authorization from this City Council, sufficient moneys in said Bond Account to pay promptly such principal and interest. No further payments need to be made into said Bond Account when and so long as such amount of bonds shall have been retired that the amount then held in said account, together with the amount then on deposit in the Bond Reserve Account, is equal to the entire amount of all principal and interest that will be payable at the time of maturity on all of said bonds then remaining outstanding. If there are not sufficient funds in the Bond Account available to pay maturing principal of and interest on the bonds herein authorized, such deficiency shall be made up first by the transfer of funds from the Bond Reserve Account, next from the transfer of funds from the Depreciation Account, and next from the transfer of funds from the Surplus Account. (d) Bond Reserve Account: There shall next be deposited in the Bond Reserve Account a sum sufficient (including and not in addition to the amount required to be deposited into said account by the provisions of the Waterworks and Sewerage Revenue Bond ordinances adopted on March 19, 1956 and August 20, 1979) to aggregate $24,900 each year until a maximum of $127,000 is on deposit in said Account, and at which figure said Account, notwithstanding any transfer therefrom as herein permitted, shall thereafter be continuously maintained, and all moneys therein shall be only used by the Treasurer hereof as may be needed from time to time in the payment of the interest on or principal of the bonds herein authorized whenever there exists a deficiency in the Bond Account hereinabove established, and all withdrawals therefrom for that purpose shall be reimbursed from the next revenues available therefor as provided therein. The,moneys in said Bond Reserve Account shall be deposited with a depositary to be designated from time to time by the City Council, and may be invested and reinvested in bonds or other -19- obligations of the United States Government maturing within five (5) years from date of purchase as may be authorized from time to time by resolution of the Mayor and City Council of said City. (e) Surplus Account: Any surplus funds remaining at the end of any fiscal year after providing for all of the deposits hereinabove listed in subparagraphs (a) through (d), and after the reimbursement of any account that is depleted by withdrawals, shall be deposited in the Surplus Account. The moneys in said Surplus Account shall be used or held for use exclusively (a) for the purpose of making improvements and extensions to the system, or (b) for the prior redemption of the bonds herein authorized prior to their maturity in accordance with all the terms, provisions and conditions to accomplish such prior redemption, and any bonds so redeemed shall be cancelled, or (c) for any lawful purpose. Section 7. That the City of McHenry hereby agrees to carry insurance on said system of the kinds and in the amounts which are usually carried by private parties operating similar properties, including without limiting the generality of the foregoing, fire, windstorm insurance, public liability, and any additional insurance covering such risks as shall be recommended by a competent independent engineer employed for the purpose of making such recommendations, and all moneys received for losses under such insurance policies as insure against physical damage to or loss of the system shall be deposited in the -20- Depreciation Account and shall be used in making good the loss or damage in respect of which they were paid, either by repairing the property damaged or replacing the property destroyed, and provision for making,g9od such loss or damage shall be made within ninety (90) days from the date of the loss. The proceeds of any and all policies for public liability shall be paid into the Operation and Maintenance Account and used in paying the claims on account of which they were received. The payment of premiums for all insurance policies required under the provisions of this section shall be considered an operation and maintenance expense. Section 8. That while any of the Waterworks and Sewerage Revenue Bonds issued pursuant to this ordinance remain outstanding or unpaid, rates charged for water and sewerage service shall be sufficient at all times to pay all costs of operation and maintenance of the system, to make the payments and maintain the balance as required in the Depreciation Account, to pay the principal of and interest on all bonds authorized hereunder, and to make the payments and maintain the balance as required in the Bond Reserve Account, as is hereinabove provided for. There shall be charged against all users of the system including the City of McHenry, such rates and amounts for water and sewerage services as shall be adequate to meet the requirements of this section. Charges for services rendered the City shall be made against the said City, and payment for the same from the corporate funds shall be made monthly into the Waterworks and -21- Sewerage Fund created by this ordinance as other revenues derived from the operation of the system and in the same manner as other revenues are so required to be deposited. In addition to the foregoing said City covenants not to provide any free service of said system and to pay promptly for the use of all facilities connected, and to be connected, with said system. It is expressly herein covenanted that, to the extent permitted by law, said City will not grant a franchise for the operation of any competing waterworks system or sewer system within the City of McHenry, and that the bonds herein authorized to be executed shall constitute legally enforceable liens upon the earnings of the combined waterworks and sewerage system of said City, including all further extensions, additions, and improvements thereto, whether acquired through purchase, contract, or otherwise. Section 9. In the event said City defaults in complying with any covenant contained in this ordinance, any owner of any bond issued hereunder may apply for the appointment of a receiver, or may, either in',law or in equity, by proper suit, compel the officials of said City to perform all duties required by law and by this ordinance, including the making and collecting of sufficient rates for water and sewerage services for that purpose and the application and segregation of all income and revenue therefrom in accordance with the requirements of this ordinance. -22- Section 10. That it is hereby covenanted and agrees with the owners of the bonds herein authorized that said City will not issue any other or additional bonds or other evidences of obligations of said City payable from or in any way creating a charge upon the income and revenue to be derived from the operation of said system, except as herein provided: (A) Said City reserves the right to issue additional bonds for constructing further necessary improvements, extensions, repairs and rehabilitations to the properties comprising said system as shall be determined necessary for the continued efficient operation of said system by a certificate filed of an independent engineer in responsible charge of such further improvements, extensions, repairs and rehabilitations, (i) giving a reasonably detailed description of such work, an estimate of the cost thereof, and an estimate of the time of completion thereof; and (ii) showing the feasibility of such revenue financing with reference to then existing rates and anticipated earnings based thereon, which certificate shall be approved by and shall be made of public record in the proceedings of the governing body of said City before any such additional bonds are authorized, provided, however, that no such additional bonds for such purpose or purposes shall be issued unless and until the gross cash operating revenues of said system earned for the last fiscal year ending April 30 immediately preceding the authorization of any -23- such additional bonds, as shown by an audit of an independent certified public accountant, were sufficient to pay all costs of the operation and maintenance of said system, to make the annual payments to the Depreciation Account and to the Bond Reserve Account, respectively, as hereinabove required, and to make up any and all deficiencies then existing as hereinabove specified in Section 5 of this ordinance, and leave a balance equal to one and one -tenth (1-1/10th) times the maximum amount of interest and principal that will become due in any fiscal year subsequent to the issuance of such additional bonds on the bonds of all issues then outstanding and on a parity with this issue of bonds and on the additional bonds then proposed to be issued. Said City further covenants that if any additional bonds are so issued as permitted by this paragraph, the maximum amounts to be deposited in the Bond Reserve Account and the Depreciation Account shall be increased in the proportion to the principal amount of any additional bonds so issued. (B) Said City reserves the right to issue bonds to refund the Waterworks and Sewerage Revenue Bonds herein authorized, or any portion thereof, with the consent of the holders thereof, from time to time as may be determined necessary or expedient and for the best interests of this City, and all such refunding bonds so authorized and issued shall be payable from the income and revenue derived and to be derived from the operation of said system on a parity with any of the said principal amount Water- works and Sewerage Revenue Bonds herein authorized to be issued -2 4- as may not be refunded and as may be outstanding at the time of the issue and delivery of any of said refunding bonds, as afore- said. (C) When the conditions specified in either paragraphs A or B of this section for the issue of additional bonds for the construction of further necessary improvements, extensions, repairs and rehabilitations, or for the refunding of the bonds herein authorized, have been met, then upon the issue thereof any such additional bonds when issued shall be entitled to the equal and proportionate benefit and security of the pledge of the revenue and income derived and to be derived from the operation of said system with the bonds herein authorized without preference, priority or distinction as to participation of such pledge of revenue, or in the preference of one bond or coupon of each of said issues over or from any other issue, by reason of priority in execution, issue and delivery or negotiation thereof, or by reason of the date or dates of said bonds, or the date or dates of maturity thereof, or for any other reason whatsoever, the intent hereof being that each and all of said bonds, as aforesaid, and of coupons evidencing interest thereon, shall have the same right and pledge as to payment and security with the same legal effect as if each and all of said bonds and coupons had been executed, issued, delivered and negotiated simultaneously as one proceeding. Section 11. That the City of McHenry hereby covenants and agrees with the holder or holders of said bonds that it will -25- punctually perform all duties with reference to said system, in- cluding the making and collecting of sufficient rates for the use and service of said system, all as required by the Constitution and laws of the State of Illinois, and segregating the revenues of said system and maintaining the Waterworks and Sewerage Fund and the application of the respective Accounts created by this ordinance, and it hereby covenants and agrees not to sell, lease, loan, mortgage, or in any manner dispose of or encumber said system, including any and all extensions and improvements that may be made thereto, or the income and revenue derived therefrom, except as permitted in Section 10 hereof, until all of the bonds herein authorized to be issued shall have been paid in full, both principal and interest, or unless and until provision shall have been made for the payment thereof. And said City further covenants and agrees with the holders of said Waterworks and Sewerage Revenue Bonds authorized hereunder to maintain in good condition and continuously operate said system, and to make, enact and enforce all needful rules and regulations and ordinances for the efficient management and proper maintenance and protection of such system, and for the use and service thereof. Section 12. Said Waterworks and Sewerage Fund and the Accounts created under Section 6 hereof, shall be audited within sixty (60) days after the close of each fiscal year by an independent firm of certified public accountants, and such audit and Accounts shall be open for inspection at all proper -26- times to any holder of bonds issued under the provisions of this ordinance, or any one acting for or on behalf of such bondholder. Such audit report shall include the following items: (a) Balance Sheet, (b) Operating statement, (c) Comments of the auditor relative to the fulfillment of ordinance provisions and the manner in which the system has been operated and any recommendation for improving the operation of the system, (d) Insurance data, (e) Number of metered customers; number of unmetered customers; number of properties connected to the system; number of hydrants, and (f) Gallons of water passing through master meter and gallons of water billed, and copies of such audit report shall be furnished the original purchasers of the bonds herein authorized, and shall also be furnished to any bondholder upon request. Section 13. That the provisions of this ordinance shall constitute a contract between the City of McHenry and the holders of the bonds herein authorized to be issued, and after the issuance of said bonds no changes, additions or alterations of any kind shall be made hereto, except as hereinbefore pro- vided, until all of said bonds and the interest thereon shall have been paid in full, or unless and until provision shall have been made for the payment thereof. Section 14. That the proposal of the First National Bank of McHenry and the McHenry State Bank, both of McHenry, Illinois, to purchase the said bonds herein authorized in accordance with their contract for the purchase thereof be and the same is hereby in all respects ratified, approved and confirmed, -27- and said bonds when duly executed as provided herein shall be delivered to the Treasurer who shall receipt for the payment of said bonds against delivery thereof to said purchasers at a price of par plus accrued interest from the date of said bonds to the date of the delivery and payment thereof. All proceeds derived at the sale and delivery of the said bonds shall be accounted for by said Treasurer as follows: (i) Accrued interest received upon the sale of said bonds will be deposited into the Bond Account hereunder and applied to the payment of the first interest due on said bonds. (ii) The proceeds received as principal, shall be deposited in a separate and special account of said City to be known and designated as the "Waterworks and Sewerage System Bond Acquisition Fund Account, 1984" (the "Acquisition Account"), and such deposits shall be made in a depositary to,be hereafter, designated by the City Council, to be secured in the manner, form and time as by law required, and all proceeds held in said Construction Fund Account shall be used and held for use solely to pay or to reimburse the City for the cost of acquisition of the water distribution system of the Lakeland Park Water Company in accordance with the contract of purchase therefore approved by the City Council, as hereinabove described in this ordinance, and the beneficial interest to all moneys held in said Acquisition Account at the 590 time of the original deposit therein and from time to time thereafter shall be in the holder or holders of the bonds herein authorized, and all disbursements therefrom shall be made by the Treasurer from time to time but only upon submission to him and to said depositary of an order for payment upon said Treasurer signed by the Mayor of said City and the City Clerk, which order shall state specifically the purpose for which said order is issued. and the Mayor of said City, the City Clerk, and the City Treasurer are each hereby authorized and directed to execute and deliver to the designated'depositary such certificates, proceedings, and agreements as may be necessary or convenient to establish said Acquisition Account herein created and to properly secure all proceeds thereof, and to evidence compliance herewith in the making of any withdrawals therefrom. Section 15. The principal proceeds of the sale of the bonds shall be devoted to and used with due diligence for the acquisition of the water distribution system of the Lakeland Park Water Company. The Mayor and City Council certify and covenant with the purchasers and holders of the bonds from time to time outstanding that so long as any of the bonds remain unpaid, moneys on deposit in any fund or account in connection with the bonds,,whether,or not such moneys were derived from the proceeds or sale of the bonds or from any other source, will not be used in a manner which will cause the bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal -29- C Revenue Code of 1954, as amended, and any lawful regulations promulgated thereunder, including Treas. Reg. §§1.103-13, 1.103-14 and 1.103-15 (1979), as the same presently exist, or may from time to time hereafter be amended, supplemented, or revised. The City Council reserves the right, however, to make any investment of such moneys permitted by Illinois law and this ordinance if, when and to the extent that said Section 103(c) or regulations promulgated thereunder shall be repealed or relaxed or shall be held void by final decision of a court of competent jurisdiction, but only if any investment made by virtue of such repeal, relaxation, or decision in such matters, in the opinion of counsel of recognized competence in such matters, result in making the interest on the bonds subject to federal income taxation. Concerning the use of proceeds of the bonds, the officers of the City are hereby authorized and directed to make such further covenants, estimates, representations, or assurances as may be necessary or advisable to the end that the bonds not be "arbitrage bonds" as aforesaid. Section, 6. The City recognizes that Section 103(j) of the Code requires the bonds to be issued and to remain in fully registered form in order that interest thereon is exempt from federal income taxation under laws in force at the time the bonds are delivered. In this connection, the City, agrees that it will not take any action to permit the bonds to be issued in, or converted into, bearer or coupon form. -30- Section 17. List of Bondholders. The Bond Registrar shall maintain a list of the names and addresses of the holders of all bonds and upon any transfer shall add the name and address of the new bondholder and eliminate the name and address of the transferor bondholder. Section 18. If any section, paragraph, clause or provision of this ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this ordinance. Section 19. All ordinances, resolutions, or orders, or parts thereof, in conflict with the provisions of this ordinance are, to the extent of such conflict, hereby repealed. Section 20. This ordinance, together with a notice in the form set forth in Section 21 hereof shall be published, within ten (10) days of passage of the ordinance by the City Council, once in The Plaindealer-Herald, being a newspaper published in and having a general circulation in the City, and if no petition, signed by electors numbering 15% of the number of electors voting for Mayor at the last preceding municipal election at which a Mayor for the City;was elected (i.e., 391 electors) and asking that the question of improving the system, as provided in this ordinance, and the issuance of revenue bonds therefor, be submitted to the electors of the City, is filed with the City Clerk within twenty-one (21) days after the date of the publication of this ordinance, then this ordinance shall be in full force and effect. A petition form as set out in Section 21 hereof shall be provided by the City Clerk to any individual requesting one. -31- Section 21. The notice to be published pursuant to Section 18 hereof shall be in substantially the following form: (form of notice) NOTICE OF INTENT TO ISSUE BONDS AND RIGHT TO FILE PETITION Notice is hereby given that pursuant to Ordinance No. adopted , 1984, the City of McHenry, McHenry County, Illinois (the "City") intends to issue its Waterworks and Sewerage Revenue Bonds, Series 1984 (the "Bonds") in the amount of $500,000, and bearing interest at not to exceed the rate of for the purpose of defraying the cost of acquiring the water distribution system of the Lakeland Park Water Company. In addition, notice is hereby given that if a petition signed by 391 electors of the City requesting that the question of acquiring the water distribution system of the Lakeland Park Water Company and the issuance of the Bonds be submitted to the electors of the City is submitted to the City Clerk within 21 days of the date of publication hereof, the question of acquiring the water distribution system of the Lakeland Park Water Company as provided in Ordinance No. and the issuance of the Bonds shall be submitted to the electors of the City. If such a petition is filed with the City Clerk on or before December 10, 1984, the question will be submitted to said electors at the consolidated primary election to be held on February 26, 1985. If such a petition is filed with the City Clerk after December 10, 1984, the question will be submitted to said electors at the consolidated -32- election to be held on April 2, 1985. A form of petition for such purpose is available from the office of the City Clerk. /s/ [insert name] City Clerk, City of McHenry, McHenry County, Illinois The form of petition to be provided by the City Clerk to any individual requesting one shall be in substantially the following form: (form of petition) PETITION To the City Clerk of the City of McHenry, McHenry County, Illinois: We, the undersigned, being electors of the City of McHenry, McHenry County, Illinois, do hereby petition you to cause the question of acquiring the water distribution system of the Lakeland Park Water Company, as provided in Ordinance No. of said City, and the issuance of Waterworks and Sewerage Revenue Bonds, Series 1984 as provided in said Ordinance No. to be submitted to the electors of said City. Name Address McHenry, Illinois , McHenry, Illinois , McHenry, Illinois [additional signature lines shall be provided] -33- of insert residence address McHenry, Illinois, do hereby certify that I am a registered voter of the City of McHenry, McHenry County, Illinois and that the signatures on this petition were signed in my presence within the City of McHenry, McHenry County, Illinois and are genuine, and, to the best of my knowledge and belief, the persons so signing were at the time of signing this petition registered voters of said City of McHenry and that their addresses are correctly stated herein. /s/ Subscribed and sworn to before me this day of , 1984. (SEAL) Notary Public -34- PASSED this 29th day of November, 1984. AYES: Bolger, Datz, McClatchey, Nolan, Serritella, Smith, Snell NAYS: None ABSENT: None NOT VOTING: Busse (possible conflict of interest) ABSTAINED: None APPROVED this 29th day of November, 1984. ATTEST: City Clerk Ap i Published 12-5-84 -35-