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HomeMy WebLinkAboutORD 71-51ORDINANCE AUTHORIZING THE ISSUANCE OF $3,000,000 CITY OF BEAUMONT, TEXAS, WATERWORKS SYSTEM'REVENUE BONDS','SERIES 1971-A THE STATE OF TEXAS § COUNTY OF JEFFERSON § CITY OF BEAUMONT § BE IT ORDAINED BY THE CITY OF BEAUMONT: ARTICLE I. STATUTORY AUTHORITY Recitals and Findings Section 1.01 - Creation of City. The City of Beaumont, Texas (the "City") was duly incorporated as a municipal corporation under the laws of the State of Texas, and on December 6, 1947, said City, pursuant to the Home Rule Amend- ment to the Constitution of the State.of Texas, duly adopted a Charter and has since that date operated as a Home -Rule City under'the laws of the State of Texas, and said Charter has in no way been altered, changed or amended since its adoption, except as amended at an election held on April 8; 1952. Section 1.02 - Authority for this Ordinance. The City is authorized by the Constitution and laws of the State of Texas, particularly Articles 1111 through 1118, Vernon's Texas Civil Statutes, as amended, and its Charter, to improve, en- large, extend and repair its waterworks system and to issue bonds for such purpose. Section 1.03 - Special Findings. It is hereby found, determined and declared that: f ®- '71- 51. 744 (a) At an election held within the City of Beaumont, Texas, on the 4th day of May, 1971, more than a majority of the duly qualified resident electors of said City, voting at said election, voted in favor of the proposition to authorize the issuance of $5,000,000 revenue bonds for the purpose of improving, enlarging, extending and repairing the City's. waterworks system; (b) Such election was called and notice thereof was given, and such election was held in accordance with and in conformity with the Constitution and laws of the State of Texas, the Constitution of the United States of America and the Home -Rule Charter of said City, and the City Council of the City has heretofore officially canvassed the returns of such election and has determined and declared the specific authority of the City to issue such bonds; (c) In the proceedings authorizing the issuance of the Outstanding Bonds hereafter defined, and in the Outstand- ing Bonds, the City reserved the right to issue additional bonds on a parity with said Outstanding Bonds; and (d) In the judgment of the City Council it would be for the best interests of the City to issue and sell at this time $3,000,000 in principal amount of said revenue bonds voted at such election, leaving the remaining $2,000,000 bonds to be issued, sold and delivered at a later date, and the City Council desires to proceed with the authorization, issuance, sale and delivery of.,such issue of suchrevenue bonds to be -2- q-' secured by a pledge of and lien on said net revenues of said waterworks system, said Bonds to be on a parity in all respects to the pledge of and lien on said revenues to the payment of said Outstanding Bonds. ARTICLE II. Definitions and Initerapretations Section 2.01 - Definitions. Unless otherwise expressly provided, or unless the context otherwise requires, the terms defined in this Section.shall have.the respective meanings specified for all purposes of this ordinance except in the form of:.the bonds and of the.interest coupons: Additional Bonds... The term "Additional Bonds" shall mean the additional parity revenue bonds which the City expressly reserves the right -to issue in the.Bonds and in this ordinance. Bond Fund The term."Bond Fund" shall mean the Bond Fund created by the ordinance adopted November 13, 1956, authorizing the issu- ance of the City's Waterworks System Revenue Bonds, Series 1956. Reserve Fund— The term "Reserve Fund" shall mean the Reserve Fund cre- ated by said ordinance adopted November 13, 1956. Bond or Bonds The term "Bond" or "Bonds" shall mean any bond or all bonds, as appropriate, of the issue of $3,000,000 City of Beaumont, Texas, Waterworks System Revenue Bonds, Series 1971-A, authorized and issued pursuant to this ordinance. -3- Outstanding Bonds . The term "Outstanding Bonds" shall mean the City's outstanding Waterworks System: (a) Revenue Bonds, Series 1958, (b) Revenue Refunding Bonds, Series 1959, and (c) Revenue Bonds, Series 1961, payable from the net revenues of the City's waterworks system. Series 1958., Series 1959 and Series 1961 Ordinances The term "Series 1958 Ordinance", "Series 1959 Ordinance", or "Series 1961 Ordinance" shall mean the ordinance or ordinances adopted by the City respectively authorizing the issuance of the Outstanding Bonds, as the case may be. C ity The term "City" shall mean the City of,Beaumont, Texas, and"its successors and; where appropriate, the City Council or governing body thereof. City Council-- The ouncil-The term "City.Council" shall mean the,governing body of the City. Fiscal Year. The term "Fiscal Year" shall mean the twelve-month period ending June 30, but which may be changed from time to time after the Outstanding Bonds are retired. Gross Revenues The term -"Gross Revenues" shall mean the gross revenues derived from the ownership and operation of the System. -4- Net Revenues The term "Net Revenues" shall mean the Gross Revenues derived from the operation of the System less the reasonable expenses of operation and maintenance of said System, including all salaries, labor, materials, interest andsuch repairs and extensions as in the judgment of the governing body of the City are necessary to keep the plant or utility in operation and render adequate service to such City and the inhabitants thereof, or such as.might be necessary to meet some physical accident or condition which would otherwise impair the original security. Paying Agent. The term "Paying Agent" shall,mean the bank or banks which are authorized to pay the principal of and interest on the Bonds on behalf -of -the City. System The term "System" shall mean the waterworks system of the City, including all present and future extensions, replace- ments and improvements to said waterworks system. Section 2.02 - Interpretations.. The titles and headings of the Articles and Sections of this Ordinance have been in- serted 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 and provisions hereof. This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth -5- • herein and to sustain the validity of,the Bonds herein autho- rized and the validity of the lien on and pledge of the revenues from which said Bonds are payable. ARTICLE III. Authorization,.Description and Execution of Bonds Section 3.01 - Name, Amount, Purpose and Authorization. The serial, coupon, revenue bonds of the City, to be known and designated as "CITY OF BEAUMONT., TEXAS, WATERWORKS SYSTEM REVENUE BONDS, SERIES 1971-A';.shall be issued in the aggregate principal amount of $3,000,000 for the.purpose of improving, enlarging, extending and repairing the City's waterworks system under.and in strict.conformity with the Constitution and laws of the State of Texas, including particularly Articles 1111 to 1118, Vernon's Texas Civil Statutes, as amended, and the,Home-Rule Charter of said City, and as authorized by a majority vote of the duly qualified resident electors of the City, voting at an election held within said City on May 4, 1971. Section. 3.02 - Date, Denomination.and..Maturities. The Bonds shall.be.dated September 1, 1971, shall be numbered con- secutively from l to 600, both inclusive, shall'be in the denomination of $5,000 each, and shall -mature serially on September 1 in each of the years, and in the amounts, respec- tively, as forth in the following schedule: W $30,000 - 1976 35;000 - 1977 45,000 - 1978 50,000 - 1979. 60,000 - 1980 70,000 - 1981 80,000 - 1982 90,000 - 1983 $255,000 - 1984 270,000 - 1985 285,000 - 1986 305,000 - 1987 325,000 - 1988 345,000 - 1989 3653000 - 1990 390,000 - 1991 Section 3.03 - Interest Rates and Interest Payment Dates. Said Bonds shall bear interest evidenced by interest coupons at the following rates per annum: i Bonds maturing 1976 through �9 7-,l S %� Bonds maturing 19 PC through 19 RC, Bonds maturing 19 ,Y(r through 19_fl_, F, I S %, Bonds maturing 19ge through 19 %, Bonds maturing 19 Sy through 19 -- a^ �.�� %, Bonds maturing 19iqO through 19 `571 5 c� interest payable March 1, 1972, and semiannually thereafter on --16-171 September l --and March l in each year until the principal sum is'paid. Section 3.04 - Option of Prior Redemption. Said Bonds may be redeemed prior to their scheduled maturities, at the option of the City, on the dates stated, at the price and in the manner provided in the FORM OF BONDS hereafter set forth in this ordinance. Section 3.05 - Payment of Principal of, Interest on, Characteristics -and -Execution of Bonds: That the Bonds, and the interest -coupons appertaining thereto, shall be payable, shall have the characteristics, and shall be signed and executed (and said Bonds shall be sealed), all as provided, and in the manner indicated, and in the FORM OF BONDS set forth in this ordinance. -7- -SJ • Section 3.06 — Ownership of Bonds -and Interest Coupons. That the City and the Paying Agent and any other person may treat the bearer of any Bond or the bearer of any interest coupon as the absolute owner of such Bond or.interest coupon, as the case may be, for the,purpose of making payments thereof and for all other purposes, and neither the City nor the Paying Agent shall be bound by any notice or knowledge to the contrary, whether such Bond shall be overdue or not. All payments of or on account of the interest to any bearer of any interest coupons and all payments of or on account of principal to any bearer of any Bonds'shall be valid and effectual andshall be a.dis- charge of the City and the Paying Agent, irrespective of the liability upon the Bonds or interest coupons or claims for interest, as.the case may be, to the extent of the sums paid. Section..3.07� Cancellation of Bonds or°Coupons. All Bonds and all interest coupons surrendered to the City or to the Paying Agent for the purpose of payment or redemption shall be canceled, and no Bonds or interest coupons shall be issued in lieu thereof except as expressly permitted.by any other provisions of this ordinance. Section 3.08. Mutilated, Lost, Destroyed -or Wrongfully Taken Bonds:or.Coupons. If`the bearer of any Bond or any inter- est coupon claims that such Bond or interest coupon has been mutilated, lost, destroyed, or wrongfully taken, the City may, under the applicable provisions of Section 8.405, Texas Business and Commercial Code, and Article 715a, V.T.C.S., as presently existing or as may hereafter_be amended, execute a new bond or interest coupon of like tenor and date in exchange and substitu- tion for the mutilated bond or interest coupon.or in lieu of and substitution for the bond or interest coupon so lost, destroyed or wrongfully taken. ARTICLE IV. Form of Bonds, Registration Certificate and Interest Coupons That the form of said Bonds; including the form of regis- tration certificate of the Comptroller of Public Accounts of the State of Texas to be printed and endorsed on each of said Bonds, and the form of each of the aforesaid interest coupons which shall appertain and be attached initially to.each of said Bonds, shall be, respectively, in substantially the following form: No. UNITED STATES OF AMERICA STATE OF.TEXAS COUNTY OF JEFFERSON CITY -OF BEAUMONT, TEXAS, WATERWORKS SYSTEM REVENUE BOND, SERIES 1971-A'-. $5,000 ON SEPTEMBER 1, 19 , the CITY -OF BEAUMONT, TEXAS, for value received, hereby acknowledges itself indebted to and PROMISES TO PAY TO BEARER the principal amount of FIVE THOUSAND DOLLARS and to pay interest thereon, from the date hereof, at the rate of % per annum, evidenced by interest coupons payable -9- • March 1, 1972, and semiannually thereafter on September 1 and March 1 of each year while this bond it outstanding. Both principal of and interest on this bond shall be payable in any coin or currency of the United States of America, which, on the respective dates of payment of such principal.and interest, is legal tender for the payment of debts due the United States of America, at The American National Bank of Beaumont, Texas, or, at the option of the holder, at The principalhereof shall be payable only upon presentation and surrender of this bond, and the interest hereon falling due on and prior to the maturity of this bond shall be payable only upon presentation and surrender of the interest coupons hereto attached as such coupons severally become due. THE DATE OF THIS BOND, in conformity with the ordinance hereinafter mentioned, IS SEPTEMBER 1, 1971. THIS BOND IS ONE OF A SERIES OF 600 BONDS of like tenor and effect, except as to serial number, interest rate,,maturity and option of prior redemption, being numbered consecutively from 1 to 600, both inclusive, in the denomination of $5,000 each, AGGREGATING $3,000,000, issued pursuant to an ordinance lawfully adopted by the City Council of said City and duly re- corded in its official minutes, for the purpose.of improving, enlarging, extending and repairing the City's waterworks system, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Articles 1111 to 1118, G -10- V.T.C.S., as amended, and the Home -Rule Charter of said City, and'by authority of a vote of the duly qualified resident electors of said City at an election held within said City on the Loth day of May, 1971. THIS BOND SHALL NOT BE DEEMED TO CONSTITUTE A DEBT'of the City of Beaumont or a pledge of its faith and credit, but shall be payable as to principal and interest, together with the City's outstanding Waterworks System (a) Revenue Bonds, Series 1958, (b) Revenue Refunding Bonds, Series 1959, and (c) Revenue.Bonds, Series 1961 ("Outstanding Bonds"), solely from the revenues derived from the.operation of the City's waterworks system. The holder hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. ON SEPTEMBER 1, 1986, AND ON ANY INTEREST PAYMENT. DATE THEREAFTER, the outstanding bonds of this series may be redeemed prior to their scheduled maturities, at t e option of said City,. AM 9/t G�oJ7i/ in whole or.in part,pfor the principal amount thereof and unpaid accrued interest thereon to the date fixed for redemption. If said City elects to redeem all or any part.of said bonds on any such redemption date, notice of the exercise of the option to redeem shall be given in writing to the Paying Agent, and said notice shall be published one (1) time in a financial journal or publication published in the English language in the City of New York, New York, or in the City of Austin, Texas, which notice shall be mailed to said Paying Agent and published in said journal -11- or.publication at least thirty (30) days prior to the date fixed for redemption. When said bonds, in whole or in part, have been called for redemption in the manner prescribed and due provision has been made to pay the redemption price of the bonds called for redemption to the date fixed for redemption, the right of the owners or holders to collect interest which would otherwise accrue after the redemption date on the bonds called for redemp- tion shall terminate on the date fixed for redemption. THE CITY EXPRESSLY RESERVES THE RIGHT TO ISSUE ADDITIONAL PARITY BONDS under the terms and conditions stated in said ordinance above mentioned, and said bonds may be payable from the same source, secured in the same manner and placed on a parity with the Outstanding Bonds, this bond and the series of which it is a part. IT IS FURTHER CERTIFIED AND RECITED that all acts, condi- tions and things required to be done precedent to and in the issuance of this bond and this series of bonds have happened and have been performed in regular and due time, form and manner as required by law; that this series of bonds does not exceed any Constitutional or statutory limitation; and that provision has been made for the payment of the principal.of and interest on this bond and the series of which it is a part by irrevocably, pledging the net revenues specified herein and that the issuance of this series of bonds does not exceed any Constitutional or statutory limitation. -12- IN TESTIMONY WHEREOF, the City Council of the City of Beaumont, Texas, has caused the official seal of said City to be duly impressed, or placed in facsimile, hereon, and has caused this bond to be signed by the Mayor of said City and countersigned by the City Clerk, by their facsimile signatures, and the interest coupons hereto annexed also to be executed by the facsimile signatures of said Mayor and City Clerk, all as of the date of this bond. Mayor, City of.Beaumont, Texas COUNTERSIGNED: City Clerk, City of, Beaumont, Texas (SEAL) FORM OF REGISTRATION''CERTIFICATE:- COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I HEREBY CERTIFY that this bond has been examined, certi- fied as to validity, and approved by the Attorney General of the State of Texas, and.that this bond has been registered by the Comptroller of Public Accounts of the State of Texas; WITNESS MY SIGNATURE AND SEAL this (SEAL) Comptroller of Public Accounts of the State of Texas -13- r No. • ON 1, 19 , the CITY OF BEAUMONT, in the County of Jefferson, State of Texas, PROMISES TO PAY TO BEARER, without exchange.or collection charges, at The '.American National Bank of Beaumont, Texas, or, at the option of the holder, at the amount shown on this interest coupon, in any coin or.currency•of the United States of America which on such date is legal tender for the,payment of debts due the United States of America, solely from the revenues specified in the bond to which this coupon appertains, being interest due that date on the bond, bearing the number hereinafter designated, of that issue of City of. Beaumont, Texas, Waterworks System Revenue Bonds, Series 1971-A, dated September 1, 1971. The holder hereof shall never have the right to demand payment of,this obligation out of any funds raised or to be raised by taxation. Bond No. Mayor, City of Beaumont, Texas City Clerk, City of. Beaumont, Texas *(Coupons maturing after September 1, 1986, shall contain the following additional clause: unless the bond to which this coupon appertains has been.called for previous redemption and due provision made to redeem same,) -14- 'L'EG'AL 'O'P'INI'ON: The approving opinion of Vinson, Elkins, Searls & Smith, Houston, Texas, may be printed on the backs of the Bonds. ARTICLE V. SECURITY 'O'F 'BONDS .. ...... ...... Section 5.0'1' Pledge.'of "Net 'Revenues. All of the Net Revenues from the operation of the System, with the exception of those Net Revenues in excess of the amounts required to establish and maintain the funds as hereinafter provided, are hereby irrevocably pledged to the payment of the principal of and inter- est on the Bonds. The lien on the Net Revenues hereby pledged shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding against all parties of any kind having a claim of any kind in tort, contract or otherwise, against the City irrespective of whether such parties have notice thereof. Section 5.02 S'ecurit'y 'of 'Bo'nds. The Bonds, the Out- standing Bonds, and any Additional Bonds shall be payable solely from and shall be equally and ratably secured by a first lien on and pledge of the Net Revenues, and the Bonds, Outstanding Bonds and any Additional Bonds, when and if issued, will be in all respects on a parity with and of equal dignity with one an- other. The holders of the Bonds and the interest coupons apper- taining thereto shall never have the right to demand payment out of any funds raised or to be raised by taxation. Sectiori 5.03 =. ,Maint,e'nance 'of Income. In order that the -15- Net Revenues of the City will be sufficient to pay the Bonds and the interest thereon, the City shall fix and maintain rates and collect charges for the facilities and services afforded by the System which will provide Net Revenues sufficient at all times: (a) to pay all operation, maintenance, depreciation, replacement and betterment charges of the System; (b) to produce Net Revenues each year in an amount not less than one and one-half (1-1/2) times the average annual principal and interest requirements of all bonds then outstanding payable from the revenues of the System; (c) to maintain the Bond Fund and the Reserve Fund; and (d) to pay all outstanding indebtedness against the System other than the Bonds as and when the same becomes 'due. ARTICLE VI. REVENUES 'AND 'APPLI'GATION 'THERE'OF Section 6.01 = Svst'em 'Fund:' Maintenance and Operation. The City will deposit, as collected, all revenues derived from the operation of the System into the System Fund created by the ordinance adopted November 13, 1956, authorizing the issu- ance of the City's Waterworks System Revenue Bonds, Series 1956. From the moneys in the System Fund, the City shall pay the ex- penses of operation and maintenance of the System, including all salaries, labor, materials, interest, and such repairs and exten- sions as, in the judgment of the governing body of the City, are necessary to keep the plant or utility in operation and render -16- adequate service to such City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the original security. Section '6'.'0'2' Addit'iorial' 'Paynient's' 'Irito Bond Fund and Reserve Fund. After payment of the expenses of operation and maintenance of the System as provided in Section 6.01, and simul- taneously with the making of the payments into the Bond Fund required under the Series -1958, Series 1959 and Series 1961 Ordinances, the City shall pay into said Bond Fund the following (in addition to the payments required under said Series 1958, Series 1959 and Series 1961 Ordinances): During each year, beginning in September, 1971, an amount equal to not less than one hundred percent (100%) of the amount required to meet the interest and principal payments falling due on and before the next maturity of the Bonds. The amount required to be paid into the Bond Fund in each year hereunder shall be in substantially equal monthly payments from moneys in the System Fund created by the ordinance adopted November 13, 1956, authorizing the issuance of the City's Water System Revenue Bonds, Series 1956. If in any month the City shall, for any reason, fail to pay into said Bond Fund the full amount above stipulated, amounts equivalent to such deficiencies shall be set apart and paid into said Bond Fund from the first. available unallocated revenues of the following month or months and shall be in addition to the amounts hereinabove provided to be otherwise paid into said Bond Fund each month. -17- Not later than February 15, 1972, and not later..than- August 15 and February 15 of each year thereafter, the City Treasurer shall cause to be transferred to the Paying Agent an amount which is not less than the interest and principal pay- ments falling due on the following March 1 and September 1. Section 6.03 'Addit'ional Payments Into Reserve Fund. In addition to the payments into the Reserve Fund required under the Series -1958, Series 1959 and Series 1961 Ordinances, the City shall pay from moneys in the System Fund into said Reserve Fund each month (in approximately equal monthly payments or deposits), beginning with September, 1971, not less than one -sixtieth (1/60) of the average annual principal and interest requirements of the Bonds, and such payments shall be continued until such time as a balance is reached (in addition to the balance in said Reserve Fund required by said Series 1958, Series 1959 and Series 1961 Ordinances) of not less than said average annual principal and interest requirements of the Bonds. If in any month the City shall, for any reason, fail to pay into the Reserve Fund the full amount above stipulated, amounts equivalent to such deficiencies shall be set apart and paid into said Reserve Fund from the first available and unallocated revenues of the following month or months and shall be in addition to the monthly deposits herein- above provided to be.otherwise paid into said Reserve Fund. When said balance of not less than the average annual principal and interest requirements of the Bonds is reached in the Reserve Fund, no further payments (insofar as the Bonds are concerned) need be made into said Fund; however, in the event that said balance is ever reduced to an amount less than the average annual principal and interest requirements of the Bonds, the monthly payments, as above provided, shall be resumed and continued until said balance of not less than the average annual principal and interest requirements of the Bonds is again reached. Section 6,.-04- -.-Date 'of Paymerits 'Into Borid 'Fund and Reserve Fund. The monthly payments into the Bond Fund and into the Reserve Fund,shall be made on or before the 15th day of each month. Section 6.05 Trust'F'unds: Moneys in the Bond Fund and in the Reserve Fund shall constitute trust funds, and shall be used solely to pay interest on and principal of the Outstanding Bonds, the Bonds and Additional Bonds if and when issued until all said Bonds have been retired. When there are moneys in the Bond Fund and the Reserve Fund sufficient to make all interest payments and principal payments due and to become due until the. final maturity of the Outstanding Bonds, the Bonds andisuch Additional Bonds, no further payments need be made into said Bond Fund and Reserve Fund. Section 6.06 --:.Surplus.: Any funds remaining in the System Fund after provision has-been made for the reasonable cost of operating and maintaining the System, and after paying the amounts required to be paid into the Bond Fund and into the Reserve Fund, as above provided, and after all payments that may be required by ordinances -pertaining to Additional Bonds have been made, may be used by the City for the redemption of the Outstanding Bonds, -19- t ' r the Bonds or Additional Bonds; or may be transferred to the City's general fund for use for any lawful general or special City purpose, as authorized by Article 1113a, V.T.C.S., as amended; or may be used for any other purpose permitted by law. Section 6.07 •Mairiteriarice' 'arid 'Operati'on. The City shall maintain the System in good condition and operate the same in an efficient manner and at a reasonable cost. Section *6.07 -Accounts,' 'Fi's'c'al Year, 'arid Accounting Reports, The City shall keep proper records and accounts (separate from all other records and accounts of the City) in which complete and correct entries shall be made of all trans- actions relating to the System. So long as the Outstanding Bonds are outstanding, the City will operate the System and will keep its books of records and accounts on the basis of a fiscal year ending June 30, but after said Outstanding Bonds are retired said fiscal year may, be changed from time to time by the City. Not later -than one hundred twenty.(120) days after the close of each fiscal year, the City will furnish (without cost) to the Municipal Advisory Council of Texas, Austin, Texas, and to the original purchasers of the Bonds and to any holder of ten per cent (10%) of the Bonds who may so request in writing, a signed or certified copy of a report by an independent firm of certified public accountants covering the next preceding fiscal year, showing the following information relating to the System: (a) Income and Expense Statement; (b) Balance sheet; (c) Accountant's comments regarding the manner in which the City has complied with the -20- • requirements of this ordinance, and his recommendation for any changes or improve- ments in the operation of the System; (d) List of insurance policies in force at the end of the fiscal year, showing, as,to each policy, the risk covered, the name.of the insurer, and the expiration date; (e) The number of properties connected with the System and the total income from the System for the year; (f) The number of unmetered customers of the System at the end of the said fiscal year, if any; and I. (g) The number of gallons of water pumped into or taken by the System and the number of gal- lons of water sold by the System,during said fiscal year. Section 6'.08 'Iris'pe'ct;ions . Any original purchaser of twenty-five.percent (25%) or more in principal amount of the Bonds, and any holder of -twenty-five percent (25%) or more in principal amount of the Bonds then outstanding.shall have the right at any reasonable time to inspect the System and all records, accounts and data of the City relating thereto. Section 6.09 - Investments. So long as the Outstanding Bonds are -outstanding, moneys in the Bond Fund and Reserve Fund shall be invested only as provided in the ordinance adopted November 13, 1956, authorizing the issuance of the City's -21- • Waterworks System Revenue Bonds, Series 1956. Thereafter moneys deposited into the Bond Fund and the Reserve Fund may be invested and reinvested in the manner authorized by law and shall be governed by the provisions of Sections 6.09 and 6.10 hereof. All investments shall belong to the fund from which the moneys for said investments were taken. If any moneys -are so invested, the City shall have the right to have sold in the open market a sufficient amount of such investments to meet its obligations in the event any fund does not have sufficient then -invested funds on hand to meet the obligations payable out of such fund. The moneys resulting therefrom shall belong to the fund from which the moneys for such investment were initially taken. The City shall not be responsible for any loss arising out of the sale of any investment. Section '6','1'0' Earnings' 'from 'IftVe's'tm:e'rits . The interest accruing on and any proceeds realized from invested moneys in the Bond Fund and the Reserve Fund shall be credited to such funds, respectively, and shall reduce by such amounts the sums otherwise required to be paid into said funds. ARTI'CLE' VII. APPLICATION '0'F 'B'OND' 'P'RO'CEEDS Section 7.01 'B'ond P'roc'e'e'ds. Proceeds from the sale of the Bonds will be disbursed in accordance with this Article. Section 7.02 = Accrued Interest' and Premium., if Any. Moneys received from the purchasers of the Bonds representing accrued interest on the Bonds from their date to the,date of actual delivery, plus any premium on the Bonds, shall be deposited into the Bond Fund. -22=. Section 7.03' Use 'of 'Procee'd's' 'of 'S'al'e 'o'f Bonds The (C VI,1111C 10-0 Sectio'ft 1 - proceeds from the sale of the Bonds, after making the deposit hereinbefore provided, shall be used solely for the purpose of improving, enlarging, extending and repairing -the City's waterworks system and for the payment of all incidental expenses in connection therewith, including fiscal, legal and engineering fees and expenses. Section 7.04 - Surplus Borid Proceeds. After completion of such improvements, enlargements, extensions and repairs, any moneys remaining of the Bond Proceeds shall be deposited into the Bond Fund. ARTICLE VIII. ADDITIONAL R'ONDS.; REFUNDING -BONDS; BONDS AND ADDITIONAL BONDS PAYABLE FROM WATERWORKS AND SANITARY SEWER SYSTEM REVENUES Section 8.01 Additional 8'onds. In addition to inferior lien bonds, the City reserves the right to issue from time to time additional parity bonds in one or more installments and in one or more issues, and such Additional Bonds, when issued, may be secured by and payable from a first lien on and pledge of the Net Revenues of the System in the same manner and to the same extent as are the Outstanding Bonds and.the Bonds. No Additional Bonds, however, shall be issued unless: (a) each of the funds created by the ordinance adopted November 13, 1956, authorizing the issuance of the City's Water- works System Revenue Bonds, Series 1956, contains the amount of money then required to be on deposit therein (as required by -23= the Series 1958, Series 1959 and Series.1961 Ordinances, by - this ordinance, and by the proceedings authorizing any Additional Bonds then outstanding); (b) the Net Revenues of the System for the last pre- ceding fiscal year, as certified by an independent certified pub- lic accountant or firm of certified public accountants, were equal to at least one and one-half (1-1/2) times the.average annual principal and interest requirements on all Bonds that will be outstanding -payable from the revenues of the System after the Additional Bonds then proposed to be issued are issued, sold and delivered; (c) provision is made in the ordinance or ordinances authorizing the Additional Bonds then proposed to be issued for approximately equal monthly payments or deposits into the Reserve Fund until a balance is reached (in addition to deposits into said Fund required by other ordinances or proceedings relating thereto and in addition to any balance or balances re- quired by said other ordinances or proceedings) of not less than the average annual principal and interest requirements of said Additional Bonds then proposed to be issued and which balance shall be reached within five (5) years from the date of such Additional Bonds; and (d) the Additional Bonds then proposed to be issued are made to mature on September 1 in each of the years in which they are scheduled to mature. The term "Net Revenues" as used.in .this Section 8.01 shall mean all of the Net Revenues of the System (excluding income -24- .1 received specifically for capital items) after deduction of the reasonable expenses of operation and maintenance of the System (excluding expenditures for capital items). While any of the Outstanding Bonds, the Bonds or any Additional Bonds are outstanding and unpaid, the City shall not issue further Additional Bonds, except as provided in this Article VIII, payable from the revenues of the System unless the lien of such Bonds payable from the revenues of the System is made junior and subordinate in all respects to the lien of the Outstanding Bonds, the Bonds then outstanding, and Additional Bonds then outstanding. Section 8,'02 'RefUnd'irig Bonds. The City further reserves the right to refund,any Bonds subject to redemption if they have been called for redemption, or any Bonds, the holders of which have consented to have refunded, as now or hereafter autho- rized by law, including but not limited to Article 717k-3, V.T.C.S, Any refunding bonds so issued shall enjoy complete equality of lien with the portion of the Bonds which are not refunded, if any there be, and the refunding bonds shall continue to enjoy the priority of lien that may -have been enjoyed by the Bonds refunded. Any refunding bonds may either be delivered to the holder ofa like principal amount of the Bonds refunded upon simultaneous cancellation and surrender of such Bonds refunded or may be sold and -delivered to a purchaser and the proceeds of sale be deposited as allowed by law for application to the full payment of the Bonds authorized to be refunded. Any refunding bonds so issued shall be deemed to be "Bonds" as the term is -25,= • defined in Article II hereof for all purposes of this ordinance. Section '8'.'0'3 Bonds 'arid 'Adds-t'ion'al' 'Bond's' 'Payable From City'sCombined WaterWo'rk's' 'and 'S'anitary 'S'eWer 'Sy'st'em Net Revenues . The City expressly reserves -the right also to pledge the Net Revenues of the City's sanitary sewer system to the payment of the Bonds when and after the Outstanding Bonds are retired. If the City exercises such right and is thereaf..ter..also authorized to issue, sell and deliver Additional Bonds which are payable from the combined revenues ("Combined Revenues") of the City's -waterworks and sanitary sewer system, such Additional Bonds may, as to the Combined Revenues, be issued on a parity in all respects with the Bonds. No such Additional Bonds shall be issued, how- ever, until and unless all the terms and conditions specified in Section 8.01 of this ordinance have been met, and -said terms and conditions shall apply with equal force with respect to the issuance of such Additional Bonds payable from the Combined Revenues; provided, however, in auch_case the definition of "System" shall include the City's sanitary sewer system, and the net revenues therefrom shall be included in the Net Revenues men- tioned in Section 8.01. The revenues of such sanitary sewer. system shall thereafter be subject to and be governed by the provisions of this ordinance relating to the City's waterworks system. ARTICLE IX. SPECIAL 'CO'VENANTS' 'O'F 'THE 'CITY Secti'o'n 9'.01 'C'o'venants . The City, by and through this ordinance, expressly covenants as hereinafter provided in this Article. -26- Section 9 .0'2 -' Punctual' 'Payment' b'f the Bonds. The City will punctually pay or cause to be paid the interest on and principal of the. Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained herein or in any Bond executed and delivered hereunder. Section 9.'0'3' Mairit'ena:nce' 'o'f Sy'st'em. So long as any of the Bonds remain outstanding, the City covenants that it will at all times maintain the System, or 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 busi- ness 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, direc- tions or orders of any governmental, administrative or judicial body promulgating the same. Section 9.04 - Power t'o F1'edg'e' 'Revenues . The City has the power to pledge the Net Revenues to the payment of the Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas, the Constitution of the United States of America and the City Charter. Section 9005 = S'ys't'erri and Revenues Not Encumbered. Neither the System nor the Revenues thereof will be in any way encumbered except as provided in this ordinance. Sectiori '9 00.6. Sale 'or-' E'ncumb'rance' 'of 'System. So long as any of the Bonds remain outstanding, either as to principal or -27- lip interest, the City will not sell, dispose of or encumber any of the .improvements, facilities or properties constituting the System; provided, however, that after the Outstanding Bonds are retired 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 moneys received from the sale of such surplus property may be used for the replacement of the property sold. Any agreement pursuant to which the City contracts with -a person, corporation, municipal corporation or political subdivision to operate the System or to lease and operate all or part of the System shall not be considered as an encumbrance of the System. Section .9...0.7 Insurance. So long as any of the Bonds or interest coupons remain outstanding, the City covenants that it will at all times keep insured such parts of the System as are usually insured by municipal corporations operating like proper- ties in similar locations under the same circumstances with a responsible insurance company or companies against risks, acci- dents or casualties against which and to the extent insurance is usually carried by such municipal corporations; provided, however, that at any time while any contractor engaged in construction work shall be fully responsible therefor, the City shall not be required to carry such insurance. All such policies shall be open to the inspection of the Bondholders or their representatives at all reasonable times. Section 9.08 - Insurance Proceeds. In the event of any loss or damage, the City covenants that it will reconstruct or repair the destroyed or damaged portion of the System and will apply the proceeds of the insurance policies covering such loss or damage solely for that purpose. The City covenants that it 11 will begin such work or reconstruction or repair promptly after such loss or damage shall.occur and will continueVand.properly complete the same as expeditiously as possible and will pay, or cause to be paid, all costs and expenses in connection there- with out of the insurance proceeds so that the same shall be com- pleted and the property be free and clear of all mechanic's and other liens or claims. Sec -tion '9'0'0'9' Exce's's''Iris'urance' 'P'roce'eds a Any insurance proceeds remaining after the completion of and payment for any such reconstruction or repairs shall be deposited to the credit of the Bond Fund. Sect ori '9 0'10' No 'Free' 'S'ervi'ce e No free service or ser- vices of the System shall be allowed, and should the City or any of its agencies or instrumentalities make use of the services and facilities of the System, payment of a reasonable value thereof shall be made by the City out of funds derived from sources other than the revenues and income of the System. Section 9011 - No Compet'irig'Systemo To the extent that the City legally may do so, the City further covenants that so long asanyof the Bonds or interest thereon are outstanding, no franchise shall be grant6d for the construction and operation of any competing system; and -the City will prohibit the construction and operation of any -system other than the System owned by the City. -29- R ARTICLE X. DEFAULT' 'P'ROVI'S'I'ON Section 10 .01 Re'rriedie's' in 'E'vent' 'of 'Default. In addi- tion to all of the rights and remedies provided by the laws of the State of Texas, the City further covenants and agrees that in the event of default in payment of principalof or interest on any -of the Bonds when due, or, in the event it fails to make. payments required to be made into the Bond Fund or defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this ordinance, the fol- lowing remedies shall be available: (a) The bearers of any of the Bonds shall be entitled to a writ of mandamus issued by a court of competent jurisdiction compelling and requiring the City and the officials thereof to observe and perform any covenant, obligation or condition pre- scribed in this ordinance; (b) No delay oromission to exercise any right or power accruing upon any delay shall impair any such right or power or shall be construed to be a waiver of any such default or acqui- escence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. Section 1'0'.'0'2 -Ord'inarice' 'is' 'C'ont'ract In consideration of the purchase and acceptance of the Bonds authorized to be issued hereunder by.those who shall hold the same from time to time, the provisions of -the ordinance shall be deemed to be and shall constitute contracts between the City and the holders from f time to time of the Bonds and interest coupons; and the cove- nants and agreements herein set forth to be performed on behalf of the City shall be for the equal benefit, protection and secu- rity of the holders of any and all of the Bonds and interest coupons, all of which; regardless of the time or times of their issue or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds or interest coupons over any other thereof, except as expressly provided herein. ARTICLE XI. SALE, APPROVAL, REGISTRATION 'AND DELIVERY 'OF BONDS Section 11.01 - Sa1e of B'oridso That said Bonds, having been advertised for public sale in accordance with the terms and pro- visions of Section 4, Article IX of the City's Charter, and bids having been received pursuant thereto, it is hereby found and determined that the bid of t✓n %'�1��� � ��1 �� ��� r 4C aid, &-5C C afe S, at a price equal to the principal amount thereof, plus accrued interest thereon from the date thereof to the date. of actual delivery plus a cash premium of $-----V.-- is the best bid received, and the.sale of said Bonds to the named bidder"at the stated price is hereby authorized, approved,_ ratified,and confirmed, subject to the unqualified approving opinions as to the legality of the Bonds by the Attorney General of the State of Texas and Vinson, Elkins; Searls & Smith, Houston, Texas; market attorneys; is hereby authorized, approved, ratified: and confirmed. ...... ...... .... Section 11.'02 '- A'pproval',' R'egis't'rat'iorf 'arid Delivery of c_ � /Zi Bonds. The Mayor and City are.hereby authorized and —31— directed to take and have charge of the records and proceedings of the Bonds, and the Bonds, pending their approval by the Attorney General of the State of Texas; and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of said Bonds, the Comptroller of Public Accounts (or a deputy designated in writing to act for the Comptroller) shall manually sign the Comptroller's certificate of registration described herein to be printed on the back of each Bond, and the seal of the Comptroller shall be impressed, or placed in facsimile, on each of said Bonds. When the Bonds have been approved by the Attorney General and registered by the Comptroller -o -f -Public Accounts, they shall be delivered to the purchaser named above upon receipt of the full purchase price. ARTICLE XII. ARBITRAGE AND DEBT 'S'E'RVICE' GRANTS The City hereby specially covenants and agrees with the original purchasers of said Bonds and with the owners or holders from time to time of said Bonds as follows: (1) That the City will promptly proceed to utilize the proceeds of the sale of said Bonds (other than -accrued interest to date of delivery and any premium) for the purposes set forth in Section 3.01 of this ordinance; and (2) That no portion of said Bonds is issued as a part of an issue, all or a major portion of the proceeds of which are reasonably expected to be used directly or indirectly (a) to acquire securities. -(within the meaning of Section 165 (g)(2)(A) or (B) of the Internal Revenue Code) or obligations (other than obligations described -32- 1 • 64-t t' r i? rl--s l :N. in Section 103(x)(1) of the Internal Revenue Code) except for a temporary period to the extent permitted .by Section 103 (d)(4)(A) of the Internal Revenue Code,) which may be reasonably expected at the time of the issuance of such issue to produce a yield over the term of the issue of Bonds which is materially higher (taking into account any discount or premium) than the yield on the issue of Bonds, or (b) to replace funds which were used directly or indirectly to acquire securities or obligations described in subparagraph (a) above. The City further specially covenants and agrees with the original purchasers of said Bonds and with the owners or holders from time to time of,said Bonds that it will take such action in accordance with regulations prescribed from time to time by the Secretary of the Treasury or his delegate to carry out the purposes of Section 103 (d) of the Internal Revenue Code so that no portion of said Bonds shall be classified as an "arbitrage bond" within the meaning of Section 103 (d) of the Internal Revenue Code. (3) The City covenants that it will not permit to be deposited to the credit of any of the Funds herein mentioned or applied to the payment of the principal of or interest on the Outstanding Bonds, the Bonds, and Additional Bonds, any proceeds from any grant, donation or income received from the United States Government, whether pursuant to agreement or otherwise, if such deposit or application would result in interest payable on the Outstanding Bonds, the Bonds or Additional Bonds being includable in whole or in part in Gross Income for Federal income taxes. -33= ARTICLE XIII, MI'S'CE'LLANEDUS' 'PROVI'STONS Section 13001 'Cit'y"s' 'S'uccessors' arid'Assi'ghs o Whenever in the ordinance the City is named and referred to, it shall be deemed to include its successors and assigns, and all covenants and agreements in the ordinance contained by and on behalf of the City shall bind and inure to the benefit of its successors and assigns whether or not so expressed. - Section 1'3.'02' No Re'cours'e 'A'gain'st 'City Officers . No recourse shall be had for the payment of the principal or the interest on the Bonds or for any claim based thereon or in the ordinance against any officer of the City or any person executing the Bonds. Sectio -ft 1'3003 '= 'Paying 'Age'n't' 'May Own Bonds. The Paying Agent, in its individual or any other capacity, may become the owner or pledgee of the Bonds with the same rights it would have if it were not Paying Agent. Section 13,04 - Legal 'Holdd'ays; In any case where the date of maturity of interest and principal of the Bonds or the date fixed for redemption of any Bonds shall be in the City of Beaumont a legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date but may be made on the next succeeding day not a legal holiday or a day on which banking institutions are authorized by law to close in the City of Beaumon- with the same force and effect as if made on the date -34- _ - ted/ �.�\ d 1 {fj� . •y`��/.. y of maturity or the date fixed for redemption and no interest shall accrue for the period from and after such date. Section .1.3.0.0.5. 'Beriefit' s' 'of '02 dinaftce' P'ro'vision. Nothing in this ordinance or in the Bonds or interest coupons, expressed or implied, shall give or be construed to give any person, firm or corporation, other than the City, the Paying Agent, and the holders of the Bonds or interest coupons, any legal or equitable right, remedy or claim under or in respect of this ordinance, or under any covenant, condition or provision herein contained, all the covenants, conditions and provisions contained in this ordi� nance or in the Bonds or interest coupons being for the sole bene- fit of the City, the Paying Agent and the holders of the Bonds or interest coupons. Section '13006 'Unavailability 'of Authorized Publication, If, because of the temporary or permanent suspension of any news- paper, journal or other publication, or for any reason, publication of notice cannot be made meeting any requirements herein estab- lished, any notice required to be published by the provisions of this ordinance shall be given in such other manner and at such time or times as in the judgment of the City shall most effectively approximate such required publication 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 130`07 Seye)rab'ility 'Clause. If any word, phrase, clause, sentence, paragraph, section, or other part of --this ordi- nance, or the application thereof to any person or circumstance, shall ever be held to be invalid or unconstitutional by any court -35- of competent jurisdiction, the remainder of this ordinance and the application of such word, phrase, clause, sentence, paragraph, section, or other part of this ordinance to any other persons or circumstances shall not be affected thereby. Section 13.08 - Further Procedures. The Mayor and City Clerk of the City and other appropriate officials.of the City are hereby authorized and directed to do any and all things neces- sary and/or convenient to carry out the terms of this ordinance. Section 13.09 - Effective Date of Ordiftaftce. This ordi- nance shall take effect from and after its passage. PASSED AND APPROVED this day of 1971. t Mayor City of_Beaumont, Texas ATTEST: d C t C erk, City of Beaumont, Texas (SEAL)