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HomeMy WebLinkAboutORD 83-42 . S Ordinance No. ORDINANCE AUTHORIZING THE ISSUANCE OF $16, 110, 000 CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1983 z5E IT ORDAINED BY THE CITY OF BEAUMONT: ARTICLE I FINDINGS AND DETERMINATIONS Scztion 1 . 1: Findings and Determinations. It is hereby officially found and determined that: (a) The City of Beaumont, Texas (the "City" ) has heretofore issued, and there presently remain outstand- ing the City' s $15, 000, 000 Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982 (the "Refunded Bonds" ) . (b) The City desires to refund the Refunded Bonds, _n advance of their maturities in order to terminate and defease the pledges and liens securing payment of the Refunded Bonds,- thereby releasing the City from the c,,v=nants, provisions, terms and conditions contained in thct ordinance authorizing the issuance of the Refunded Bonds, and also to effect a savings in cost to the City. (c) The City is authorized by Article 717k, Vernon' s Texas Civil Statutes, as amended, to issue refunding revenue bonds for the purpose of refunding the Refunded Bonds in advance of their maturities, and to accomplish such refunding by depositing directly with any paying agent for the Refunded Bonds the proceeds of such refunding bonds, together with other available funds, which may be invested or reinvested only in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, which shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the Refunded Bonds, and such deposit shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Bonds. (d) Concurrently with the adoption of this ordi- nance the City has adopted another ordinance authorizing and directing the City to enter into an escrow agreement with Citibank, N.A.. , New York, New York, as authorized in said Article 717k, pursuant to which proceeds of the refunding bonds herein authorized, and other available funds, will be deposited, invested and applied in a manner independently certified to be sufficient to provide for the full and timely payment of all interest on and principal of the Refunded Bonds. (e) Upon the issuance of the refunding bonds herein authorized and the creation of the escrow referred to above, the Refunded Bonds shall no longer be regarded as being outstanding, except for the purpose of being paid pursuant to such escrow agreement, and the pledges, liens, trusts and all other covenants, provisions, terms and conditions of the ordinance authorizing the issuance of the Refunded Bonds shall be discharged, terminated and def eased. ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2 . 1: Definitions. In this Ordinance, the following terms shall have the following meanings, unless the context clearly indicates otherwise and except when used in the Form of Bond: "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 5 . 1 of this Ordinance. "Annual Principal and Interest Requirements" shall mean, with respect to Parity Bonds, Junior Lien Bonds, or any one or more series thereof, and with respect to any Fiscal Year, all payments of principal and interest scheduled to become due during such Fiscal Year by reason of an interest payment date or a maturity or mandatory redemption date occurring after the date of calculation. "Average Annual Principal and Interest Requirements" shall mean, with respect to any issue or issues of Parity Bonds and/or Junior Lien Bonds, an amount calculated by dividing the total Annual Principal and Interest Requirements -2- on such bonds by the number of Fiscal Years remaining until the last maturity date of such bonds. "City" shall mean the City of Beaumont, Texas, and, where appropriate, the City Council thereof and any successor to the City as owner of the System. "Fiscal Year" shall mean the City' s fiscal year, which currently runs from October 1 to September 30, but which may be changed from time to time by the City. "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System (but excluding any utility deposits) , the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, the Reserve Fund, the Junior Lien Bond Interest and Sinking Fund, the Junior Lien Bond Reserve Fund and any other revenues hereafter pledged to the payment of all Parity Bonds. "Holder" or "holders" shall mean the bearer or bearers or owner or owners, as the case may be, of one or more Bonds. "Junior Lien Bonds" shall mean the City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1981, issued in the original principal amount of $3, 740, 000 and all additional junior lien bonds which may be hereafter issued. "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and mainte- nance of the System, including all salaries, labor, mate- rials, repairs and extensions necessary to render efficient service (but only such repairs and extensions as, in the judgment of the governing body of the City, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or conditions which would otherwise impair the Parity Bonds or Junior Lien Bonds) , and all payments under contracts now or hereafter defined as operating expenses by the Legislature of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. -3- 4 "Parity Bonds" shall mean the Series 1983 Bonds and each series of Additional Parity Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain outstanding within the meaning of this Ordinance. "Reserve Fund Requirement" shall mean an amount equal to the Average Annual Principal and Interest Requirements on all Parity Bonds. "Series 1983 Bonds" shall mean the City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1983 . "Special Pr'oject" shall mean, to the extent permitted by law, any property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of the acquisition, construction and installation of which is paid from proceeds of a financing transaction other than the issuance of Parity Bonds or other bonds pay- able from ad valorem taxes or revenues of the System, and for which all maintenance and operation expenses are payable from sources other than ad valorem taxes or revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to sec-Are the payment or repayment of such costs of acquisition, construction and installation under such financ- ing transaction. "System" shall mean all properties, facilities, improve- ments, equipment, interests, rights and powers constituting the waterworks and sewer system of the City, including all future extensions, replacements, betterments, additions, improvements, enlargements, acquisitions, purchases and repairs to the System, but excluding all Special Projects. Section 2 .2 : Interpretations. All definitions,' of terms used herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sec- tions of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. ��_ /- -4- ARTICLE III SERIES 1983 BONDS Section 3 . 1: Name, Amount, Purpose, Authorization. The Series 1983 Bonds, to be known and designated as CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUND- ING BONDS, SERIES 1983, shall be issued in the aggregate principal amount of $16, 110, 000 for the purpose of refunding all of the City' s outstanding Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982 , under and pursuant to the authority of Article 717k and Articles 1111-1118, Vernon' s Texas Civil Statues, as amended, and all other applicab7C law. Section 3 .2 : Date, Denomination, Maturities and Interest Rates. The Series 1983 Bonds shall be coupon bonds without right of registration, shall be dated May 1, 1983, shall be in the denomination of $5, 000 each, shall be numbered consecutively in order of their maturities from 1 through 3,222 , shall mature on September 1 in each of the years and in the amounts shown below and shall bear interest per annum from their date until the principal thereof is paid at the rates show-i below: Years Amounts Interest Maturi :_q Maturing Rates 1981 $ 710, 000 5 .50% 1985 510, 000 6 . 00% 1986 650, 000 6 . 50% 1987 685, 000 7. 00% 1988 765, 000 7 .25% 1989 845, 000 7 . 50% 1990 865, 000 7 . 75% 1991 885, 000 7 . 90% 1992 950, 000 8. 00% 1993 1, 030, 000 8.20% 1994 1, 750,000 8. 40% 1995 1, 700, 000 8. 50% 1996 1, 645, 000 8. 60% 1997 1, 585, 000 8. 70% 1998 1, 535, 000 8. 80% Interest at such rates shall be evidenced by coupons apper- taining to each of the Series 1983 Bonds payable semiannually on each of the dates shown in the FORM OF BOND set forth in this Ordinance. Section 3 . 3 : Redemption Prior to Maturity. The Series 1983 Bonds may be redeemed, at the option of the City, prior to their scheduled maturities on the dates and in the manner provided in the FORM OF BOND set forth in this Ordinance. Section 3 . 4: Manner of Payment, Characteristics and Execution. The Series 1983 Bonds, and the interest coupons appertaining thereto, shall be payable, shall have the characteristics, and shall be signed and executed ( and the Series. 1983 Bonds shall be sealed) , all as provided and in the manner indicated in the FORM OF BOND set forth in this Orainance. Section 3 . 5: Form of Series 1983 Bonds, Coupons and Comptroller' s Registration Certificate. The Series 1983 Bonds, including the coupons appertaining thereto and the form of registration certificate of the Comptroller of Public Accounts of the State of Texas to be printed and endorsed on each of the Series 1983 Bonds, shall be in substantially the following form, with such additions, deletions and variations as may be necessary or desirable and consistent with the terms of this Ordinance: FORM OF BOND: UNITFD STATES STATE OF TEXAS OF rMERICA COUNTY OF JEFFERSON 110. $5, 000 CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BOND SERIES 1983 ON SEPTEMBER 1, the CITY OF BEAUMONT, TEXAS, a municipal corporation duly incorporated under the laws of the State of Texas (herein the "City" ) , for value received, hereby PROMISES TO PAY TO BEARER, but solely from certain Net Revenues as hereinafter provided, the prin&opal sum of FIVE THOUSAND DOLLARS and to pay interest thereon from the date hereof until the principal thereof is paid at the rate of % per annum, payable semiannually on each September 1, and March 1, commencing on September 1, 1983 . The principal of this bond and the interest coupons appertaining hereto shall be payable -6- 7--z to bearer, in lawful money of the United States of America, without exchange or collection charges to the bearer, upon presentation and surrender of this bond or proper interest coupon, at the principal corporate trust office of Citibank, N.A. , New York, New York. THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS of like tenor and effect except as to serial number, interest rate, right of prior redemption and maturity, numbered 1 through 3 ,222 in the denomination of $5, 000 each, in the aggregate principal amount of $16, 110, 000 issued pursuant to an ordinance adopted by the City Council of the City (herein the "Ordinance" ) for the purpose of refunding all of the City' s outstanding Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982, under and pursuant to the author- ity of Article 717k and Articles 1111-1118, Vernon' s Texas Civil Statutes, as amended, and all other applicable law. THE DATE OF THIS BOND, in conformity with the Ordinance, is May 1, 1983 . THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special obligations of the City that are equally and ratably payable from and secured by a- first lien on the "Net Reve- nues" collected and received by the City from the operation and ownership of those properties, facilities, improvements, equipment, interests, rights, and powers constituting the waterworks and sewer system of the City which are defined in the Ordinance as the "System" , which Net Revenues are required to be set aside for and pledged to the payment of this series of bonds, and all additional bonds issued on a parity there- with, in the interest and sinking fund and the reserve fund required to be maintained for the payment of all such bonds, all as more fully described and provided for in the Ordi- nance. This bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. ON SEPTEMBER 1, 1991, OR ON ANY INTEREST PAYMENT DATE THEREAFTER, the outstanding bonds of this series which mature in the years 1992 through 1998, both inclusive, may be redeemed prior to their scheduled maturities, at the option of the City, in whole or in part, in inverse numerical order, for the principal amount thereof and accrued interest to the date fixed for redemption. NOTICE OF ANY SUCH REDEMPTION shall be given in writing to the paying agent and published, at least once, in a finan- cial publication published in the City of New York, New York, or in the City of Austin, Texas, not less than thirty (30) days prior to the date fixed for such redemption. By the date fixed for redemption, due provision shall be made with the paying agent for the payment of the required redemption price of the bonds call ,;­1 for redemption. If such notice of redemption is published, and if due provision for such pay- ment is made, all as provided above, the bonds which are to be so redeemed thereby automatically shall be redeemed prior to their scheduled maturities, they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outst�ir-ding except for the purpose of being paid by the paying agent with the funds so provided for such payment. THE CITY HAS RESERVED THE RIGHT TO ISSUE ADDITIONAL PARITY REVENUE BONDS, subject to the restrictions contained in the Ordinance, which shall be equally and ratably payable from, and secured by a first lien on and pledge of, the aforesaid Net Revenues in the same manner and to the same extent as this bond and the series of which it is a part. THE BEARER HEREOF and of any interest coupon appertain- ing hereto shall never hate the right to demand payment of this obligation out of are,,, funds raised or to be raised by taxation. IT IS HEREBY DECLARED AND REPRESENTED that this bond has been duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the issuance and deliv- ery of this bond have been performed, existed, and been done in accordance with law; that the bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal of and interest on this bond and all of the bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. IN WITNESS WHEREOF, the City has caused this bond and the interest coupons appertaining hereto to be executed by the manual, imprinted or lithographed facsimile signatures of the Mayor and City Clerk, and the official seal of the City to be impressed, or placed in facsimile, on this bond. CITY OF BEAUMONT, TEXAS By xxxxxxxxxxxx COUNTERSIGNED: Mayor xxxxxxxxxxxx City Clerk [ SEAL] FORM OF INTEREST COUPON: No. $ ON 1, , unless the bond to which this coupon appertains has been called for prior redemption and due provision has been made to redeem same, the CITY OF BEAUMONT, TEXAS, promises to PAY TO BEARER_, but solely from the Net Revenues described in the bond to which this coupon appertains, the amount shown on this interest coupon, in lawful- money of the United States of America, without exchange or collection charges to bearer, upon the presentation and surrender of this interest coupon at the principal corporate trust office of Citibank, N.A. , New York, New York, such amount being interest due that day on the bond, bearing the number hereinafter designated, of that issue of CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1983, dated May 1, 1983 . The bearer hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. xxxxxxxxxxxx xxxxxxxxxxxx City Clerk Mayor FORM OF COMPTROLLER' S REGISTRATION CERTIFICATE: OFFICE OF THE COMPTROLLER § THE STATE OF TEXAS § REGISTER NO. I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this bond has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas and that it is a valid and binding special obligation of the City of Beaumont, Texas, payable from the revenues pledged to its payment by and in the proceedings authorizing the same, and I further certify that this bond has this day been registered by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this Comptroller of Public Accounts [SEAL] of the State of Texas ARTICLE IV SECURITY AND SOURCE OF PAYMENT FOR ALL PARITY BONDS Section 4. 1: Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds hereinbelow pro- vided, and shall be applied in the manner hereinafter set forth, in order to provide for the payment of all Maintenance and Operation Expenses and to provide for the payment of principal, interest and any redemption premiums on the Parity Bonds, and all expenses of paying same. The Parity Bonds shall. constitute special obligations of the City that shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net Revenues, as collected and received by the City from the operation and ownership of the System, which Net Revenues shall, in the manner hereinafter provided, be set aside for and pledged to the payment of the Parity Bonds in the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and the Parity Bonds shall be in all respects on a parity with and of equal dignity with one another. The holders of the Parity Bonds and the interest coupons appertaining thereto shall never have the right to demand payment of either the principal of or interest on the Parity Bonds out of any funds raised or to be raised by taxation. Section 4.2 : Rates and Charges. So long as any Parity Bonds remain outstanding, there shall be fixed, charged and collected rates and charges for the use and services of the System, which shall be fully sufficient at all times: (a) to pay all Maintenance and Operation Expenses; and (b) to produce Net Revenues in each fiscal year at least equal to 125 percent of the Average Annual Principal and Interest Requirements on all Parity Bonds and Junior Lien Bonds, but in no event less than the amount required to establish and maintain the Interest and Sinking Fund, and the Reserve Fund as hereinafter provided and the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund for the Junior Lien Bonds and to pay all outstanding obligations payable from the Net Revenues of the System other than Parity Bonds and Junior Lien Bonds as and when the same become due. The City covenants that it will not grant or permit any free service from the System except for public buildings and institutions operated by the City. Section 4. 3 : Special Funds. The following special funds shall be maintained and accounted for as hereinafter provided so long as any of the Parity Bonds remain out- standing: (a) Waterworks and Sewer System Revenue Fund (the "Revenue Fund" ) ; (b) Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Interest and Sinking Fund" ) ; and 0 -11- (c) Waterworks and Sewer System Revenue Bond Reserve Fund (the "Reserve Fund" ) . The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank of the City, separate and apart from all other funds and accounts of the City, and shall constitute trust funds which shall be held in trust for the benefit of the holders of the Parity Bonds, and the proceeds of which (except for interest income, which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above shall be used solely as provided in this Ordinance so long as any Parity Bonds remain 1t- standing. Section 4.4: Flow of Funds. All Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: (a) First, to pay Maintenance and Operation Expenses, and to provide by encumbrance for the payment of all obligations incurred by tY: ; City for Maintenance and Operation Expenses, which may include an operating reserve equal to one month' s estimated Maintenance and Operation Expenses. (b) Second, to make all deposits into the Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the issuance of Additional Parity Bonds. (c) Third, to make all deposits into the Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of Additional Parity Bonds. (d) Fourth, to make all deposits required by any ordinances authorizing the issuance of Junior Lien Bonds and subordinate lien obligations. (e) Fifth, for any lawful purpose. �f h -12- Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Parity Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund, and such Parity Bonds shall not be regarded as being outstanding except for the purpose of being paid with the moneys on deposit in such Funds. Section 4. 5: Interest and Sinking Fund. On or before the last business day of each month so long as any Parity Bonds remain outstanding, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund t. ­ following amounts: (i) Such amounts, in approximately equal monthly installments, as will be suffi- cient to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii ) such amounts, in approximately equal monthly installments, as will be -uffi- cient to pay the next maturing px-ncipal of the Parity Bonds, including the principal amounts of, and any redemp- '.ion premiums on, any Parity Bonds payabi_= as a result of the exercise or operatic,n of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Additional Parity Bonds. Moneys deposited to the credit of the Interest and Sinking Fund (except for interest income, which shall be transferred to the Revenue Fund) shall be used solely for the purpose of paying principal (either at maturity or prior redemption or to purchase Parity Bonds in the open market to be credited against mandatory redemption requirements) , interest and redemption premiums on the Parity Bonds, plus all bank charges and other costs and expenses relating to such pay- ment. On or before each principal and/or interest payment date for the Parity Bonds, the City shall transfer from the Interest and Sinking Fund to the paying agents for the Parity Bonds an amount equal to the principal, interest and redemp- tion premiums payable on the Parity Bonds on such date, -13- together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Parity Bonds shall totally destroy all paid Parity Bonds and coupons and shall provide the City with an appropriate certificate of destruction. Section 4. 6 : Reserve Fund and Restrictions on Invest- ments. There will be deposited into the Reserve Fund from the existing reserve fund for the Refunded Bonds the sum of $460 ,000 . After making the transfers into the Interest and Sinking Fund required in the preceding Se^tion, the City shall deposit or cause to be deposited into the Reserve Fund on September 1 in each of the years set forth below, but not earlier, an amount which, when added to other amounts on deposit in the Reserve Fund, will be sufficient to cause the balance in the Reserve Fund to be equal to the lesser of (1) the amounts set forth below opposite such date, or (2) the Reserve Fund Requirement: September 1 , 1985 $ 550 ,000 September 1 , 1986 1 ,000 ,000 September 1 , 1987 1 ,500 ,000 September 1 , 1988 2 , 100 ,000 September 1 , 1989 The P --serve Fund Requirement The City understands that the investment of money on deposit in the Reserve Fund must be restric"ted to the extent required by the provisions of Section 103 (c.) (2) of the Internal Revenue Code of 1954 , as amended (the "Code") and the regula- tions promulgated thereunder, (codified as 26 CFR 1 . 103-13 and 1 . 103-14 and referred to herein as the "Regulations") , so that no portion of the Series 1983 Bonds will be an "arbitrage bond" within the meaning of Section 103 (c) (2) of the Code. Accordingly, the City covenants that the yield 4as defined in the Regulations) on any investment of money on deposit in the Reserve Fund will be restricted so as not to exceed the yield permitted under the Regulations. After the Reserve Fund Requirement has accumulated in the Reserve Fund and so long thereafter as the Reserve Fund contains such amount, no further deposits shall be required to be made into the Reserve Fund; but if and whenever the balance in the Reserve Fund is reduced below such amount, monthly deposits into the Reserve Fund shall be resumed and continued in amounts at least equal to one-sixtieth (1/60th) of the Reserve Fund Requirement until the Reserve Fund has -14- been restored to such amount. Whenever the Reserve Fund contains more than such amount, the City may transfer any excess amount to the Interest and Sinking Fund. The Reserve Fund shall be used to pay the principal of and interest on the Parity Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. Section 4. 7 : Deficiencies in Funds. If there shall not be deposited into the Interest and Sinking Fund and the Reserve Fund the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the fir--t available and unallocated moneys in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. Section 4. 8: Investment of Funds; Transfer of Invest- ment Income. (a) Subject to the provisions of Section 4. 6, money in each Fund maintained pursuant to Article IV of this Ordinance may, at the option of the City be invested in time deposits or certificates of deposit se-ured in the manner required by law for public funds, or be irvested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or any of its agencies or ins{-r_tmentalities, or in any other obligations permitted by law; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any such Fund will be available at the proper time or times, and provided further that in no event shall such deposits or investments of moneys in the Reserve Fund mature later than the final maturity date of the Parity Bonds. All such investments shall be valued in terms of current market value no less frequently than the last business day of the Fiscal Year, except that any direct obligations of the United States of America-State and Local Government Series shall be continuously valued at their par value or principal face amount. Any obligation in which money is so invested shall be kept and held in the official depository bank of the City at which the Fund is maintained from which such investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. -15- (b) All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System. Section 4.9 : Security for Uninvested Funds. So long as any Parity Bonds remain outstanding, all uninvested moneys on deposit in, or credited to, F-ads maintained pursuant to Article IV of this Ordinance shall be secured by a pledge of security, as provided by law in the State of Texas, in a principal amount not less than the amount of such uninvested funds. ARTI_LE V ADDITIONAL BONDS Section 5. 1 : Additional Parity Bonds. The City reserves the right to issue, for any lawful purpose, including the refunding of any previously issued Parity Bonds or any other bonds or obligations of the City issued in connection with the System, one or more series of Additional Parity Bonds payable from, and secured by a first lien on and pledge of, the Net Revenues of the System on a parity with the Series 1983 Bonds and any other Addcional Parity Bonds then out- standing; provided, however, that no Additional Parity Bonds may be issued unless: (a) The Additional Pari�-Y' Bonds mature on Septem- ber 1, and interest is payable on March 1 and September 1; (b) The Interest and Sinking Fund and the Reserve Fund each contain the amount of money then required to be on deposit therein; (c) Except as provided in paragraph (e) below, for either the preceding Fiscal Year or any con- secutive 12-month period out of the 18-month period immediately preceding the month in which the ordinance authorizing such Addition- al Parity Bonds is adopted (the "Base Period" ) , either: ( 1) Net Earnings ( as defined below) are cer- tified by the Finance Officer of the City to have been equal to at least ( a) 140% of the Average Annual Principal and �/ -16- Interest Requirements on all Parity Bonds, and (b) 125% of the Average Annual Principal and Interest Requirements on all Parity Bonds and Junior Lien Bonds, in each case after giving effect to the issuance of the Additional Parity Bonds to be issued; or (2 ) Net Earnings, adjusted to give effect to any rate increase placed into effect at least 60 days prior to the adoption of the ordinance authorizing the Additional Parity Bonds, as if such rate increase had beer- placed into effect prior to the commencem(. nt of the Base Period, would have been equal to at least the amounts required in paragraph ( 1) above, as certified by an independent firm of consulting engineers or independent firm of certified public accountants; provided, however, that the requirements of this paragraph 5 . 1(c) shall not apply to the issuance of an-, series of refunding bonds that - will not ha� -" the result of increasing the Average Annual P'r'incipal and Interest Require- ments on the Par --y Bonds; and (d) Provision is made in the ordinance authorizing the Additionai Parity Bonds then proposed to be issued for additional payments into the Interest and Sinking Fund sufficient to provide for the payment of principal of and interest on such Additional Parity Bonds and additional payments into the Reserve Fund so that the Reserve Fund will in not later than five years from the date of such Additional Parity Bonds contain a balance of not less than the Reserve Fund Requirement. For purposes of Section 5 . 1(c) , the term "Net Earnings" shall mean all of the Net Revenues, except that in calculating Net Revenues there shall not be deducted as Maintenance and Operation Expenses any charge, disbursement or expenditure for repairs, extensions or otherwise which, under standard accounting practice, should be charged to capital expendi- tures. -17- Section 5 .2 : Subordinate Lien Obligations. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on and pledges of the Net Revenues that are junior and subordinate to the lien on and pledge of Net Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. Section 5 .3 : Special Project Bonds. The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Proj- ects. ARTICLE VI COVENANTS AND PROVISIONS RELATING TO ALL PARITY BONDS Section 6. 1 : Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, anv and all covenants, undertakings, stipula- tions and- provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. Section 6.2 : Maintenance of System. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or orders of any governmental, administrative or judicial body promulgating same. Section 6 .3 : Sale or Encumbrance of System. So long as any Parity Bonds remain outstanding, the City will not sell, dispose of or, except as permitted in this Ordinance, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which has been declared surplus or is no longer needed for the proper operation of the System. Any agreement -18- pursuant to which the City contracts with a person, corpor- ation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. Section 6. 4: Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance together with any additional _ ; nsurance, shall be a part of the Maintenance and Operation Expenses of the System. Section 6. 5 : Accounts, Records, and Audits. So long as any Parity Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Rev-hues thereof. The- City shall after the close of each of :' �s fiscal years cause an audit report of such records and accounts to be prepared by an independent certi- fied public LCcountant or independent firm of certified public acc; ur.tants. Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas, the major municipal rating agencies and any holders of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. Section 6. 6: Competition. To the extent it legally may, the City will not grant any franchise or permit for the acquisition, construction or operation of any competing facilities which might be used as a substitute fof*r the System and will prohibit the operation of any such competing facili- ties. Section 6. 7 : Pledge and Encumbrance of Net Revenues . The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Parity Bonds and has lawfully exercised such power under the Consti- tution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of -19- the Parity Bonds and the Junior Lien Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered unless such pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity Bonds and the Junior Lien Bonds. Fection 6. 8: Bondholders Remedies. This Ordinance shall constitute a contract between the City and the holders of the Parity Bonds from time to time outstanding and this Ordinance shall be and remain irrepealable until the Parity Bonds and the interest thereon shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or in";-erest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance, the holder or holders of any of the Parity Bonds or of any of the appurtenant interest coupons may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Parity Bonds or of any of said coupons may at law or in equity, by suit, act--on, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City i..utder this Ordinance, including the making and col7.ection of reasonable and sufficient rates and charges for the use and services of the System, the deposit of the Gross Revenues thereof into the special funds as herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. Section 6. 9 : Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the holders of any or all of the Parity Bonds and coupons appertaining thereto to pay principal, interest and redemption premium thereon in any manner permitted by law, including, without limitation, by depositing with any paying agent for such Parity Bonds or with the State Treasurer of the State of Texas either: (i ) cash in an amount equal to the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption, or (ii ) pursuant to an escrow or trust agreement, direct obligations of, or obligations the principal and interest of which are guaranteed by, the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Parity Bonds are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in the ordinance authorizing such Parity Bonds. Upon such deposit, such Parity Bonds and coupons appertaining thereto shall no longer be regarded to be outstanding or unpaid, and the lien on and pledge of Net Revenues securing such Parity Bonds shall thereupon cease and terminate. Section 6. 10: Legal Holidays. In any case where the date fixed for payment of interest on or principal of -' Li Parity Bonds or the date fixed for redemption of any Parity Bonds shall be a legal holiday or a day on which a paying agent for the Parity Bonds is authorized by law to close, then payment of interest or principal by such paying agent need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date fixed for such payment and no interest shall accrue for the period from such date to the date of actual payment. Section 6. 11 : Unavailability of Authorized PublicF--ion. If, because of the temporary or permanent suspension of any newspaper, journal or other publication, or, for any reason, publication of notice cannot be made meeting any requirer:=-nts herein established, any notice requi"red to be published by the provisions of this Ordinance shall be given in such otner manner and at such time or times as in the judgment of the City shall most effectively approximate such required publi- cation and the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. Section 6. 12 : No Recourse Against City Officials. No recourse shall be had for the payment of the principal of, premium, if any, or interest on any Parity Bonds or for any claim based thereon or on this Ordinance against any official or employee of the City or any person executing any Parity Bonds. Section 6. 13 : Paving Agent May Own Bonds. The paying agent for the Series 1983 Bonds, in its individual or any, other capacity, may become a holder or pledger of the Series 1983 Bonds with the same rights it would have if it were not paying agent. -21- ARTICLE VII PROVISIONS CONCERNING SALE AND DISPOSITION OF PROCEEDS OF SERIES 1983 BONDS Section 7 . 1 : Sale of Series 1983 Bonds. Sale of the Series 1983 Bonds is hereby awarded to Underwood, Neuhaus & Co. , Incorporated and Kirchner Moore & Co. , for the price of $15, 505, 875 plus accrued interest to the date of delivery, subject to the unqualified approving opinion as to the legality of the Series 1983 Bonds of the Attorney General of the State of Texas and of Vinson & Elkins, bond counsel for the City, in accordance with the terms of a bond purchase agreement of even date herewith between the City and such purchasers. It is hereby officially found, determined and declared that such price and the terms of sale contained in such bond purchase agreement are the most advantageous reasonably obtainable by the City, and the Mayor is hereby authorized and directed to execute and deliver such bond purchase agreement on behalf of the City. Section 7 .2 : Approval, Registration and Delivery. The Mayor is hereby authorized to have control and custody of the Series 1983 Bonds and all necessary records and proceedings pertaining thereto pending their delivery, and the Mayor and other officers and employees of the City are hereby authorized and instructed to make such certifications and to execute such instruments as may be necessary to accomplish the deliv- ery of the Series 1983 Bonds and to assure the investigation, examination, and approval thereof by the Attorney General of the State of Texas and their registration by the State Comptroller of Public Accounts. Upon registration of the Series 1983 Bonds, the Comptroller of Public Accounts (or a deputy designated in writing to act for him) shall be requested to sign manually the Comptroller' s Registration Certificate prescribed herein to be printed and endorsed on each Series 1983 Bond and the sea! of the Comptroller shall be impressed or printed or lithographed thereon. The Mayor shall be further authorized to make such agreements with the purchasers of the Series 1983 Bonds as may be necessary to assure that the same will be delivered to such purchasers in accordance with the terms of sale at the earliest practicable date after the adoption of this Ordinance. Section 7 . 3 : Offering Documents. The City Council hereby ratifies, authorizes and approves, in connection with the sale of the Series 1983 Bonds, the preparation and distribution of the Preliminary Official Statement dated -22- April 5 , 1983 , and a final Official Statement substantially in the same form containing such additional information as is contained in or authorized by this Ordinance. Section 7 . 4 : Application of Proceeds of Series 1983 Bonds. Proceeds from the sale of the Series 1983 Bonds shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest and any premium shall be deposited into the Interest and Sinking Fund. (b) The remaining proceeds from the sale of the Series 1983 Bonds shall be applied, together with other funds of the City, to establish an Escrow Fund to refund the Refunded Bonds, as more fully provided in an ordinance adopted concurrently herewith, and, to the extent not otherwise provided for, to pay all expenses arising in connection with the issuance of the Series 1983 Bonds, the establishment of such Escrow Fund and the refunding of the Refunded Bonds. Any proceeds of the Series 1983 Bonds remaining after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. Section 7 .5 : No Arbitrage. The City certifies that based upon all facts and estimates now known or reasonably expected to be in existence on the date the Series 1983 Bonds are delivered and paid for, the City reasonably expects that the proceeds of the Series 1983 Bonds will not be used in a manner that would cause the Series 1983 Bonds or any portion thereof to be an "arbitrage bond" under Section 103 (c) (2) of the Internal Revenue Code of 1954 , as amended, and the regulations prescribed thereunder. Furthermore, all officers, employees and agents of the City are authorized and directed to provide certifications of facts and estimates that are material to the reasonable expectations of the City as of the date the Series 1983 Bonds are delivered and paid for. In particular, all or any officers of the City are authorized to certify for the City the facts and circumstances and reason- able expectations of the City on the date the Series 1983 Bonds are delivered and paid for regarding the amount and use of the proceeds thereof. Moreover, the City specifically covenants that it shall make such use of the proceeds of the Series 1983 Bonds, regulate investments of proceeds thereof and the Funds set out herein, and take such other and further actions as may be required so that the Series 1983 Bonds shall not be "arbitrage bonds" under Section 103 (c) (2 ) of the Internal Revenue Code of 1954, as amended, and regulations prescribed from time to time thereunder. ARTICLE VIII MISCELLANEOUS Section 8. 1 : Further Proceedings. The Mayor, and the City Clerk and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the terms and purposes of this Ordinance. Section 8.2 : Severability. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unen- forceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. Section 8.3 : Open Meeting. It is hereby found, deter- mined and declared that a sufficient written notice of the date, hour, place and subject of the meeting of the City Council at which this Ordinance was adopted was posted at a place convenient and readily accessible at all times to the general public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, Article 6252-17, Vernon' s Texas Civil Statutes, as amended, and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 8 .4: Declaration of Emergency. It is hereby officially found and determined that a case of emergency and urgent public necessity exists which requires the holding of the meeting at which this Ordinance is passed and further requires that this Ordinance be passed finally and take effect immediately on the date of its introduction, such emergency and urgent public necessity being that the proceeds from the sale of the Series 1983 Bonds are required as soon as possible and without delay for the purposes set forth herein. Section 8. 5 : Repealer. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED THIS 19th day of April, 1983 . Mayor City of Beaumont, Texas ATTEST: City Clerk City of Beaumont, Texas [ SEAL]