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HomeMy WebLinkAboutOrdinances - O-88-475 - 08/29/1988 - DETERMINE DETAILS OF $2.7M W/S REVENUE BONDS SERIEORDINANCE NO. 0-88-475 ORDINANCE DETERMINING THE DETAILS OF $2,700,000 WATERWORKS AND SEWERAGE REVENUE BONDS, SERIES 1988, OF THE CITY OF McHENRY, ILLINOIS BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF McHENRY, ILLINOIS, AS FOLLOWS: Section 1. Authority, Purpose and Findings. This ordinance is adopted pursuant to the Municipal Bond Reform Act, constituting Division 4.1 of Article 8 of the Illinois Municipal Code, and Division 139 of Article 11 of the Illinois Municipal Code for the purpose of financing the improvement of the combined waterworks and sewerage system (the "System") owned and operated by the City of McHenry by the construction of a sewerage collec- tion system in the McHenry Shores (Units 1 through 5) and the Idyl Dell subdivisions and property adjacent thereto, including sewer mains, lift stations, manholes and service connections, all as more fully described in the plans and specifications prepared by Baxter and Woodman, Inc., Environmental Engineers (the "Project"). This ordinance supplements an ordinance adopted by the City Council of the City on June 1, 1988 and entitled: "Ordinance Authorizing the Issuance of $2,700,000 Waterworks and Sewerage Revenue Bonds of the City of McHenry, Illinois" (the "Initial Ordinance"). Unless otherwise defined in this ordinance, all defined terms used in this ordinance shall have the meaning ascribed thereto in Ordinance No. 0-86-390, adopted by the City Council of the City on July 30, 1986, as amended (the "1986 Ordinance"). The City Council hereby finds and determines that it is necessary and in the best interests of the City and the users of the System to acquire and construct the Project; that the System shall continue to be operated as a combined utility; and that the period of usefulness of the System and the Project is 40 years from the date of the bonds herein authorized to be sold. Section 2. Terms of Bonds. All of the $2,700,000 prin- cipal amount of bonds authorized by the Initial Ordinance shall be issued. The bonds shall be designated "Waterworks and Sewerage Revenue Bonds, Series 198811, and shall be issuable in the denomi- nations of $5,000 or any integral multiple thereof. Bonds shall be numbered consecutively from 1 upwards in order of their issu- ance and may bear such identifying numbers or letters as shall be useful to facilitate the registration, transfer and exchange of bonds. Unless otherwise determined in the order to authenticate the bonds, each bond shall be dated as of the interest payment date next preceding the date of issuance thereof, except that (a) if such date of issuance shall be prior to the first interest payment date, said bond shall be dated as of September 1, 1988, (b) if such date of issuance shall be an interest payment date, said bond shall be dated as of such interest payment date, or (c) if interest due on said bond shall not have been paid in full, then notwithstanding any of the foregoing provisions, said bond shall be dated as of the date to which interest has been paid in full on said bond. The bonds shall mature on May 1 in each year shown in the following table in the respective principal amount set forth opposite each such year and the bonds maturing in each -2- such year shall bear interest at the respective rate per annum set forth opposite such year: Principal Rate of Principal Rate of Year Amount Interest Year Amount Interest 1990 $150,000 7.75% 1998 $200,000 6.90% 1991 150,000 7.75 1999 200,000 7.00 1992 150,000 6.75 2000 200,000 7.10 1993 150,000 6.75 2001 200,000 7.25 1994 175,000 6.75 2002 200,000 7.30 1995 175,000 6.75 2003 200,000 7.40 1996 175,000 6.75 2004 200,000 7.25 1997 175,000 6.80 Each bond shall bear interest from its date, computed on the basis of a 360 day year consisting of twelve 30 day months and payable in lawful money of the United States of America on May 1, 1989 and semiannually thereafter on each May 1 and November 1 at the rates per annum herein determined. The principal of the bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof at the principal corporate trust office of LaSalle National Bank, in the City of Chicago, Illinois, which is hereby appointed as bond registrar and paying agent for the bonds. Interest on the bonds shall be payable on each interest payment date to the registered owners of record thereof appearing on the registration books maintained by the City for such purpose at the principal corporate trust office of the bond registrar, as of the close of business on the 15th day of the calendar month next preceding the applicable interest payment date. Interest on the bonds shall be paid by check or draft mailed to such registered owners at their addresses appearing on the registration books. -3- The bonds maturing on or after May 1, 1999 shall be subject to redemption prior to maturity at the option of the City and upon notice as herein provided, in inverse order of maturity and by lot within a single maturity, on May 1, 1998 and on any interest payment date thereafter, at a redemption price equal to the principal amount thereof to be redeemed. In the event of the redemption of less than all the bonds of like maturity, the aggregate principal amount thereof to be redeemed shall be $5,000 or an integral multiple thereof and the bond registrar shall assign to each bond of such maturity a distinctive number for each $5,000 principal amount of such bond and shall select by lot from the numbers so assigned as many numbers as, at $5,000 for each number, shall equal the principal amount of such bonds to be redeemed. The bonds to be redeemed shall be the bonds to which were assigned numbers so selected; provided that only so much of the principal amount of each bond shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. Notice of the redemption of bonds shall be mailed not less than 30 days nor more than 60 days prior to the date fixed for such redemption to the registered owners of bonds to be redeemed at their last addresses appearing on said registration books. The bonds or portions thereof specified in said notice shall become due and payable at the applicable redemption price on the redemption date therein designated, and if, on the redemption date, moneys for payment of the redemption price of all the bonds or portions thereof to be redeemed, together with interest to the -4- redemption date, shall be available for such payment on said date, and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by any registered owner) then from and after the redemption date interest on such bonds or portions thereof shall cease to accrue and become payable. If there shall be drawn for redemption less than all of a bond, the City shall execute and the bond registrar shall authenticate and deliver, upon the surrender of such bond, without charge to the owner thereof, for the un- redeemed balance of the bond so surrendered, bonds of like matur- ity and of the denomination of $5,000 or any integral multiple thereof. The bond registrar shall not be required to transfer or exchange any bond after notice of the redemption of all or a por- tion thereof has been mailed. The bond registrar shall not be required to transfer or exchange any bond during a period of 15 days next preceding the mailing of a notice of redemption which could designate for redemption all or a portion of such bond. Section 3. Sale and Delivery. The bonds are hereby awarded and sold to Prudential-Bache Capital Funding, as pur- chaser, at a price of $2,647,304.50 and accrued interest from their date to the date of their delivery and payment. The offi- cial statement prepared with respect to the bonds is hereby approved. The Mayor, City Clerk and other officials of the City are hereby authorized and directed to do and perform, or cause to be done or performed for or on behalf of the City each and every -5- thing necessary for the issuance of the bonds, including the proper execution and delivery of the bonds and the official state- ment upon payment of the full purchase price of the bonds. Section 4. Execution and Authentication. Each bond shall be executed in the name of the City by the manual or autho- rized facsimile signature of its Mayor and the corporate seal of the City, or a facsimile thereof, shall be thereunto affixed or otherwise reproduced thereon and attested by the manual or autho- rized facsimile signature of its City Clerk. In case any officer whose signature, or a facsimile of whose signature, shall appear on any bond shall cease to hold such office before the issuance of the bond, such bond shall neverthe- less be valid and sufficient for all purposes, the same as if the person whose signature, or a facsimile thereof, appears on such bond had not ceased to hold such office. Any bond may be signed, sealed or attested on behalf of the City by any person who, on the date of such act, shall hold the proper office, notwithstanding that at the date of such bond such person may not have held such office. No recourse shall be had for the payment of any bonds against any officer who executes the bonds. Each bond shall bear thereon a certificate of authenti- cation executed manually by the bond registrar. No bond shall be entitled to any right or benefit under this ordinance or shall be valid or obligatory of any purpose until such certificate of au- thentication shall have been duly executed by the bond registrar. Section S. Transfer, Exchange and Registry. The bonds shall be negotiable, subject to the provisions for registration of transfer contained herein. Each bond shall be transferable only upon the registration books maintained by the City for that pur- pose at the principal corporate trust office of the bond regis- trar, by the registered owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to the bond registrar and duly executed by the registered owner or his duly authorized attorney. Upon the surrender for transfer of any such bond, the City shall execute and the bond registrar shall authenticate and deliver a new bond or bonds registered in the name of the trans- feree, of the same aggregate principal amount, maturity and inter- est rate as the surrendered bond. Bonds, upon surrender thereof at the principal corporate trust office of the bond registrar, with a written instrument satisfactory to the bond registrar, duly executed by the registered owner or his attorney duly authorized in writing, may be exchanged for an equal aggregate principal amount of bonds of the same maturity and interest rate and of the denominations of $5,000 or any integral multiple thereof. For every such exchange or registration of transfer of bonds, the City or the bond registrar may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. No other charge shall be made for the privilege of making such transfer or -7- exchange. The provisions of the Illinois Bond Replacement Act shall govern the replacement of lost, destroyed or defaced bonds. The City and the bond registrar may deem and treat the person in whose name any bond shall be registered upon the regis- tration books as the absolute owner of such bond, whether such bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of or interest thereon and for all other purposes whatsoever, and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or sums so paid, and neither the City nor the bond registrar shall be affected by any notice to the contrary. Section 6. Bond Registrar. The City covenants that it shall at all times retain a bond registrar with respect to the bonds, that it will maintain at the designated office of such bond registrar a place where bonds may be presented for payment and registration of transfer or exchange and that it shall require that the bond registrar maintain proper registration books and perform the other duties and obligations imposed upon it by this ordinance in a manner consistent with the standards, customs and practices of the municipal securities business. The bond registrar shall signify its acceptance of the duties and obligations imposed upon it by this ordinance by exe- cuting the certificate of authentication on any bond, and by such execution the bond registrar shall be deemed to have certified to the City that it has all requisite power to accept, and has -8- accepted such duties and obligations not only with respect to the bond so authenticated but with respect to all the bonds. The bond registrar is the agent of the City and shall not be liable in connection with the performance of its duties except for its own negligence or default. The bond registrar shall, however, be responsible for any representation in its certificate of authenti- cation on the bonds. The City may remove the bond registrar at any time. In case at any time the bond registrar shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator or conserva- tor of the bond registrar, or of its property, shall be appointed, or if any public officer shall take charge or control of the bond registrar or of its property or affairs, the City covenants and agrees that it will thereupon appoint a successor bond registrar. The City shall mail notice of any such appointment made by it to each registered owner of bonds within twenty days after such appointment. Any bond registrar appointed under the provisions of this Section shall be a bank, trust company or national banking association maintaining its principal corporate trust office in the State of Illinois, the City of St. Louis, Missouri or the Borough of Manhattan, City and State of New York. Section 7. Limited Obligations. The bonds shall be limited obligations of the City payable solely from the Net Revenues derived from the operation of the System and the proceeds derived by the City from the collection of special assessments levied against property specially benefited by the Project. The cm bonds shall not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. Section 8. Pledge of Revenues. The bonds are Parity Bonds and shall be issued only upon satisfaction of the conditions precedent to the issue of a series of Parity Bonds specified in Section 15 of the 1986 Ordinance. The bonds are secured by a pledge of the Revenues of the System, subject to the application thereof in accordance with the provisions of Section 13 of the 1986 Ordinance. Section 9. Pledge of Special Assessments. As addit- ional security for the payment of the bonds, the City shall cause to be levied and collected in the manner provided by law, special assessments against property specifically benefited by the Project. The proceeds derived by the City from the imposition and collection of the special assessments (whether principal or inter- est and including all prepayments of future installments) shall be deposited immediately in the 1988 Project Assessment Fund (the "Assessment Fund"), which is hereby established as a special fund of the City. Such special assessments are hereby pledged for the payment of the principal of and interest on the bonds. Moneys held in the Assessment Fund are also so pledged, subject to their application in accordance with the provisions of this Section. If at any time, the amount available in the Waterworks and Sewerage Fund shall not be sufficient to provide for the payment of any principal of or interest on the bonds then due and payable, then the City Treasurer shall withdraw from the Assessment Fund and -10- deposit into the Bond and Interest Account in the Waterworks and Sewerage Fund, an amount sufficient to cure such deficiency. Moneys in the Assessment Fund may also be used for the following purposes: 1. to make required monthly deposits to the Bond and Interest Account with respect to the payment of the principal of or interest on the bonds; 2. to cure any deficiency in the Bond Reserve Account; 3. to make deposits to the 1988 Bond Proceeds Fund herein established to the extent that the moneys therein are not sufficient to pay costs of the Project; 4. to pay the redemption price of bonds called for redemption; 5. to purchase bonds at such prices as shall be deter- mined by the City; and 6. to make provision for the payment of bonds. Section 10. Form of Bonds. The bonds shall be issued as fully registered bonds and shall be in substantially the following form, the blanks to be appropriately completed when the bonds are printed: -11- United States of America State of Illinois County of McHenry CITY OF McHENRY WATERWORKS AND SEWERAGE REVENUE BOND, SERIES 1988 INTEREST RATE MATURITY DATE DATED DATE September 1, 1988 The CITY OF McHENRY, a municipal corporation of the State of Illinois situate in the County of McHenry, acknowledges itself indebted and for value received hereby promises to pay to the registered owner hereof, or regis- tered assigns, solely from the sources hereinafter referred to, the principal sum of Dollars on the matur- ity date specified above, and to pay interest on such principal sum from the date hereof at the interest rate per annum specified above, computed on the basis of a 360 day year consisting of twelve 30 day months and payable in lawful money of the United States of America on May 1, 1989 and semiannually thereafter on May 1 and November 1 in each year until the principal sum shall have been paid, by check or draft mailed to the registered owner of record hereof as of the 15th day of the calendar month next preceding such interest payment date, at the address of such owner appearing on the registration books maintained by the City for such purpose at the principal corporate trust office of LaSalle National Bank, in the City of Chicago, Illinois, as bond registrar or its successor (the "Bond Registrar"). This bond, as to principal when due, will be payable in lawful money of the United -12- States of America upon presentation and surrender of this bond at the principal corporate trust office of the Bond Registrar. This bond is one of a series of bonds (the "Series 1988 Bonds") issued in the aggregate principal amount of $2,700,000, which are all of like tenor except as to date, maturity, option of redemption and rate of interest and which are authorized and issued pursuant to the Municipal Bond Reform Act, constituting Division 4.1 of Article 8 of the Illinois Municipal Code, and Division 139 of Article 11 of the Illinois Municipal Code (collec- tively, the "Act") and by virtue of an ordinance adopted by the City Council of the City on June 1, 1988 and entitled: "Ordinance Authorizing the Issuance of $2,700,000 Waterworks and Sewerage Revenue Bonds of the City of McHenry, Illinois", as supplemented by an ordinance adopted by said City Council on August 29, 1988 and entitled: "Ordinance Determining the Details of $2,700,000 Waterworks and Sewerage Revenue Bonds, Series 1988, of the City of McHenry, Illinois" (the 111988 Ordinance"). The Series 1988 Bonds are limited obligations of the City payable solely from the revenues derived from the operation of the waterworks and sewerage system of the City (the "System") and the proceeds derived by the City from the collection of special assessments levied against property specially benefited by the project financed with the proceeds of sale of the Series 1988 Bonds. This bond does not constitute an indebtedness of the City within the meaning of any constitutional or statutory provision or limitation. Neither the full faith and credit nor the general -13- taxing power of the City is pledged or available to pay the principal of or interest on the Series 1988 Bonds. The Series 1988 Bonds are equally and ratably secured by a pledge of the revenues of the System on a parity with the Waterworks and Sewerage Revenue Bonds, Series 1986A, of the City (the 111986 Bonds") issued pursuant to the provisions of Ordinance No. 0-86-390, adopted by the City Council of the City on July 30, 1986, as amended (the 111986 Ordinance"). Pursuant to the 1986 Ordinance, the City may hereafter issue additional bonds (herein- after called "Additional Bonds") payable from the revenues of the System, which may be secured by a pledge of such revenues on a parity with the outstanding 1986 Bonds and Series 1988 Bonds. The 1986 Bonds, the Series 1988 Bonds and any Additional Bonds are herein collectively called the "Bonds." Reference to the Act, the 1986 Ordinance and the 1988 Ordinance is made for a description of the nature and extent of the security for the Series 1988 Bonds, the revenues and moneys pledged, the nature and extent and manner of enforcement of the pledge and the rights and remedies of the registered owners of the Series 1988 Bonds with respect thereto. The rights and obliga- tions of the City and the registered owners of the Bonds under the 1986 Ordinance may from time to time be modified or amended by a supplemental ordinance adopted by the City Council of the City with the written consent of the owners of two-thirds of the principal amount of all outstanding Bonds, subject to the terms, conditions and limitations set forth in the 1986 Ordinance. -14- The Series 1988 Bonds maturing on or after May 1, 1999 are subject to redemption prior to maturity at the option of the City and upon notice as herein provided, in inverse order of maturity and by lot within a single maturity, on May 1, 1998 and on any interest payment date thereafter, at a redemption price equal to the principal amount thereof to be redeemed. Notice of the redemption of Series 1988 Bonds will be mailed not less than 30 days nor more than 60 days prior to the date fixed for such re- demption to the registered owners of Series 1988 Bonds to be redeemed at their last addresses appearing on such registration books. The Series 1988 Bonds or portions thereof specified in said notice shall become due and payable at the applicable redemp- tion price on the redemption date therein designated, and if, on the redemption date, moneys for payment of the redemption price of all the Series 1988 Bonds or portions thereof to be redeemed, together with interest to the redemption date, shall be available for such payment on said date, and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by any registered owner) then from and after the redemption date interest on such Series 1988 Bonds or portions thereof shall cease to accrue and become payable. This bond is transferable only upon such registration books by the registered owner hereof in person, or by his attorney duly authorized in writing, upon surrender hereof at the principal corporate trust office of the Bond Registrar together with a written instrument of transfer satisfactory to the Bond Registrar -15- duly executed by the registered owner or by his duly authorized attorney, and thereupon a new registered Series 1988 Bond or Bonds, in the authorized denominations of $5,000 or any integral multiple thereof and of the same aggregate principal amount, maturity and interest rate as this bond shall be issued to the transferee in exchange therefor. In like manner, this bond may be exchanged for an equal aggregate principal amount of Series 1988 Bonds of the same maturity and interest rate and of any of such authorized denominations. The City or the Bond Registrar may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to the trans- fer or exchange of this bond. No other charge shall be made for the privilege of making such transfer or exchange. The City and the Bond Registrar may treat and consider the person in whose name this bond is registered as the absolute owner hereof for the pur- pose of receiving payment of, or on account of, the principal and interest due hereon and for all other purposes whatsoever. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been duly executed by the Bond Registrar. It is hereby certified, recited and declared that all acts, conditions and things required to be done, exist and be performed precedent to and in the issuance of this bond in order to make it a legal, valid and binding obligation of the City have been done, exist and have been performed in regular and due time, form and manner as required by law, and that the series of bonds -16- of which this bond is one, together with all other indebtedness of the City is within every debt or other limit prescribed by law. IN WITNESS WHEREOF, the City of McHenry has caused this bond to be executed in its name and on its behalf by the manual or facsimile signature of its Mayor, and its corporate seal, or a facsimile thereof, to be hereunto affixed or otherwise reproduced hereon and attested by the manual or facsimile signature of its City Clerk. Dated: CERTIFICATE OF AUTHENTICATION This bond is one of the Waterworks and Sewerage Revenue Bonds, Series 1988, described in the within mentioned 1988 Ordinance. LASALLE NATIONAL BANK, as Bond Registrar By Authorized Officer CITY OF McHENRY Mayor Attest: City Clerk -17- ASSIGNMENT For value received the undersigned sells, assigns and transfers unto the within bond and hereby irrevocably constitutes and appoints attorney to transfer the said bond on the books kept for registration thereof, with full power of substitution in the premises. Dated Signature Guarantee: -18- Section 11. Bond Proceeds. All of the proceeds of sale of the bonds (exclusive of accrued interest) shall be deposited in the 111988 Bond Proceeds Fund" which is hereby established as a special fund of the City. All accrued interest received upon the issuance of the bonds shall be deposited in the Bond and Interest Account. Moneys in the 1988 Bond Proceeds Fund shall be used to pay costs of the Project and for the payment of costs of issuance of the bonds. Each withdrawal of moneys from the 1988 Bond Proceeds Fund to pay costs of the Project shall be made by the City Treasurer only upon filing with the City Clerk of the follow- ing certifications: (i) if such withdrawal of funds by the City Treasurer is for payment to a supplier, materialman, or contractor for work done in connection with the Project, a certificate exe- cuted by the engineer in charge of the construction of the Project stating the amount of materials supplied or the nature of the work completed, that such materials have been properly accepted or such work approved by him, the amount due and payable thereon, and the amount remaining to be paid in connection with the Project; and (ii) a duplicate copy of the order signed by the Mayor and City Clerk, or such other officer(s) as may from time to time be by law authorized to sign and countersign orders of the City Treasurer, stating specifically the purpose for which the order is issued and indicating that the payment for which the order is issued has been approved by the City Council. -19- Within 60 days after full depletion of the 1988 Bond Proceeds Fund or payment of all costs of the Project, as herein referred to, and as heretofore approved by the City Council, the City Treasurer shall certify to the City Council the fact of such depletion or the engineer in responsible charge of the Project shall certify to the City Council the fact that the work has been completed according to approved plans and specifications, as applicable, and upon approval of such certification by the City Council, funds (if any) remaining in the 1988 Bond Proceeds Fund shall be credited to the Bond Reserve Account, or, if such account is fully funded, to the Depreciation Account; and the 1988 Bond Proceeds Fund shall be closed. Section 12. Rebate Fund. The City hereby establishes a special fund, designated as the 111988 Rebate Fund." In the event that the City shall invest moneys in the 1988 Bond Proceeds Fund, the Assessment Fund, or the Waterworks and Sewerage Fund in any investments which generate income that must be rebated or paid to the United States of America pursuant to Section 148(f) of the Internal Revenue Code of 1986, such income shall be deposited annually, within 10 days after the anniversary date of the date of issuance and delivery of the bonds, in the 1988 Rebate Fund. Moneys in the 1988 Rebate Fund shall be applied to pay such sums as are required to be paid to the United States of America pur- suant to Section 148(f) of the Internal Revenue Code of 1986 and are hereby appropriated and set aside for such purpose. Moneys in the 1988 Rebate Fund may be reappropriated and used for other purposes. No such reappropriation and use shall relieve the City -20- of its obligation to make payments to the United States of America as required by Section 148(f) of the Internal Revenue Code of 1986. Section 13. Investment Regulations. No investment shall be made of any moneys in the Waterworks and Sewerage Fund, the Assessment Fund, the 1988 Bond Proceeds Fund or the 1988 Rebate Fund except in accordance with the tax covenants set forth in Section 14 of this ordinance. Funds on deposit in the 1988 Bond Proceeds Fund and the Assessment Fund may be invested at the direction of the City Treasurer in the same manner as provided in Section 13(f) of the 1986 Ordinance for money in the Depreciation Account. Any moneys in any Fund that are subject to investment yield restrictions may be invested in United States Treasury Securities, State and Local Government Series, pursuant to the regulations of the United States Treasury Department, Bureau of Public Debt. The City Treasurer and agents designated by him are hereby authorized to submit, on behalf of the City, subscriptions for such United States Treasury Securities and to request redemp- tion of such United States Treasury Securities. Section 14. Tax Covenants. The City shall not take, or omit to take, any action lawful and within its power to take, which action or omission would cause interest on any bond to become subject to federal income taxes in addition to federal income taxes to which interest on such bond is subject on the date of original issuance thereof. -21- The City shall not permit any of the proceeds of the bonds, or any facilities financed with such proceeds, to be used in any manner that would cause any bond to constitute a "private activity bond" within the meaning of Section 141 of the Internal Revenue Code of 1986. The City shall not permit any of the proceeds of the bonds or other moneys to be invested in any manner that would cause any bond to constitute an "arbitrage bond" within the mean- ing of Section 148 of the Internal Revenue Code of 1986. The City shall comply with the provisions of Section 148(f) of the Internal Revenue Code of 1986 relating to the rebate of certain investment earnings at periodic intervals to the United States of America; provided, however, that compliance with such provisions shall not be required to the extent that there shall have been filed with the City Clerk an opinion of nationally recognized bond counsel to the effect that such compliance is not necessary to preserve the exemption from federal income taxes of interest on the bonds. Section 15. Bank Qualified Bonds. Pursuant to Section 265(b)(3)(B)(ii) of the Internal Revenue Code of 1986, the City hereby designates the bonds as "qualified tax-exempt obligations" as defined in Section 265(b)(3) of the Internal Revenue Code of 1986. The City represents that the reasonably anticipated amount of tax-exempt obligations that will be issued by the City and all subordinate entities of the City during 1988 does not exceed $10,000,000. The City covenants that it will not designate and issue more than $10,000,000 aggregate principal amount of tax- -22- exempt obligations in 1988. For purposes of the two preceding sentences, the term "tax-exempt obligations" includes "qualified 501(c)(3) bonds" (as defined in the Section 145 of the Internal Revenue Code of 1986) but does not include other "private activity bonds" (as defined in Section 141 of the Internal Revenue Code of 1986). Section 16. Deposit Requirements. After the issuance of the bonds, the monthly deposit to the Depreciation Account shall be increased to $3,000 and the maximum credit balance in the Depreciation Account shall be increased to $300,000. After the issuance of the bonds, the monthly deposit to the Bond Reserve Account shall be increased to $7,500 and, in the event of a withdrawal from the Bond Reserve Account, the amount to be replenished shall be at the rate of 1/12 of the amount with- drawn per month, or $7,500 per month, whichever is greater. Section 17. Ordinance to Constitute a Contract. The provisions of this ordinance and the 1986 Ordinance shall consti- tute a contract between the City and the registered owners of the bonds. Any pledge made in this ordinance or the 1986 Ordinance and the provisions, covenants and agreements herein and in the 1986 Ordinance set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the owners of any and all of the bonds. All of the bonds, regard- less of the time or times of their issuance, shall be of equal rank without preference, priority or distinction of any of the bonds over any other thereof except as expressly provided in or pursuant to this ordinance. This ordinance shall constitute full -23- authority for the issuance of the bonds and to the extent that the provisions of this ordinance conflict with the provisions of any other ordinance or resolution of the City, the provisions of this ordinance shall control. If any section, paragraph or provision of this ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this ordinance. Section 18. Publication. The City Clerk is hereby authorized and directed to publish this ordinance in pamphlet form and to file copies thereof for public inspection in her office. Section 19. Effective Date. This ordinance shall become effective in the manner provided by law. Adopted this 29th day of August, 1988 by roll call vote as follows: Ayes: William Bolger, Gary Lieder, Elizabeth Nolan, Randy Patterson Cecilia Serritella, Raymond Smith, Michael Teta Nays: None Absent: Frank McClatchey ( SEAL) Attest: Ci y Clerk Approved: Mayor -24-