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HomeMy WebLinkAboutORD 82-48 Ordinance No. ORDINANCE AUTHORIZING THE ISSUANCE OF $15, 000, 000 CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM PRIOR LIEN REVENUE BONDS, SERIES 1982 BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: ARTICLE I FINDINGS AND DETERMINATIONS Section 1 .1: Findings and Determinations. It is hereby officially found and determined that: (a) The City of Beaumont, Texas (the "City" ) has heretofore issued, sold and delivered its Waterworks and Sewer System Revenue Refunding Bonds, Series 1981, (the "Refunding Bonds" ) to advance refund all its outstanding Waterworks System Revenue Bonds. (b) The ordinance authorizing the issuance of the Refunding Bonds provides that the Refunding Bonds shall be secured by a lien on and pledge of the net revenues of the City' s waterworks and sewer system (the "System" ) which is and shall be junior and subordinate to the lien on and pledge of such net revenues securing certain Prior Lien Bonds which the City expressly reserves the right to issue for the purpose of improving, enlarging and extending the System. (c) The City is authorized pursuant to Arti- cle 1111 et se , Vernon' s Texas Civil Statutes, as amended, to issue Prior Lien Bonds payable from the net revenues of its waterworks and sewer system, and pursuant to Article 1112 thereof, is authorized to issue such Prior Lien Bonds without an election, for money for acquisitions, extensions, construction, improvement or repair of such System. (d) The City Council of the City, by Ordinance adopted March 30, 1982, authorized the giving of notice as required by Article 2368a, Vernon' s Texas Civil Statutes, as amended, of its intention to issue the Prior Lien Bonds hereinafter authorized. (e) On April 20, 1982, the Council was unable to act due to circumstances beyond the City' s control and postponed action until this date. (f) The City Clerk has not received any petitions for a referendum concerning the issuance of such Prior Lien Bonds. 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 Prior Lien 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 Prior Lien 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 Prior Lien .Bonds and/or Junior Lien Bonds, an amount calculated by dividing the total Annual Principal and Interest Requirements on such bonds by the number of Fiscal Years remaining until the last maturity date of such bonds. -2- "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 Prior Lien Bond Interest and Sinking Fund, the Prior Lien Bond 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 Prior Lien 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, materials, 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 Prior Lien 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. "Prior Lien Bonds" shall mean the Series 1982 Bonds and each series of Additional Prior Lien Bonds from time to time hereafter issued, but only to the extent such Prior Lien Bonds remain outstanding within the meaning of this Ordinance. -3- "Prior Lien Bond Reserve Fund Requirement" shall mean an amount equal to the Average Annual Principal and Interest Requirements on all Prior Lien Bonds'. "Refunding Bond Ordinance" shall mean the Ordinance Authorizing the Issuance of the City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1981, adopted by the City on November 24, 1981 . "Series 1982 Bonds" shall mean the City of Beaumont, Texas, Waterworks and Sewer System Prior Lien Revenue Bonds, Series 1982 . "Series 1982 Construction Fund" shall mean the fund so designated which is created and established in Section 7 .4 of this Ordinance. "Special Project" 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 secure the payment or repayment of such costs of acquisition, construction and installation under such financing 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 -4- provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Prior Lien Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Prior Lien Bonds . ARTICLE III SERIES 1982 BONDS Section 3 .1: Name, Amount, Purpose, Authorization. The Series 1982 Bonds, to be known and designated as CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM PRIOR LIEN REVENUE BONDS, SERIES 1982, shall be issued in the aggregate principal amount of $15, 000, 000 for the purpose of providing money for aquisitions, extensions, construction, improvement, or repair of the System, pursuant to Articles 1111 et sec. . Vernon's Texas Civil Statutes and all other applicable law. Section 3 .2 : Date, Denomination, Maturities and Interest Rates. The Series 1982 Bonds shall be coupon bonds without rig th of registration, shall be dated March 1, 1982, shall be in the denomination of $5, 000 each, shall be numbered con- secutively in order of their maturities from 1 through 3 , 000, 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 shown below: Years Amounts Interest Maturing Maturing Rates 1984 $250, 000 13.00 1985 300, 000 13.00 1986 450, 000 /&°1D 1987 500, 000 13- 00 1988 600, 000 13, °O 1989 700, 000 13.00 1990 750, 000 /3, 00 1991 800, 000 13.00 1992 900, 000 /1, 00 1993 1, 000, 000 /1- 2-5 1994 1,750, 000 //.t0 1995 1, 750, 000 //, yo 1996 1, 750, 000 .40 1997 1,750, 000 //.'/o 1998 1, 750, 000 -5- Interest at such rates shall be evidenced by coupons apper- taining to each of the Series 1982 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 1982 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 1982 Bonds, and the interest coupons appertaining thereto, shall be payable, shall have the characteristics, and shall be signed and executed (and the Series 1982 Bonds shall be sealed) , all as provided and in the manner indicated in the FORM OF BOND set forth in this Ordinance. Section 3 . 5 : Form of Series 1982 Bonds, Coupons and Comptroller' s Registration Certificate. The Series 1982 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 1982 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: UNITED STATES STATE OF TEXAS OF AMERICA COUNTY OF JEFFERSON NO. $5, 000 CITY OF BEAUMONT, TEXAS WATERWORKS AND SEWER SYSTEM PRIOR LIEN REVENUE BOND SERIES 1982 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 principal sum of FIVE THOUSAND DOLLARS -6- 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, 1982. The principal of this bond and the interest coupons appertaining hereto shall be payable 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 TEXAS COMMERCE BANK-BEAUMONT N.A. BEAUMONT, TEXAS 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, 000 in the denomination of $5, 000 each, in the aggregate principal amount of $15, 000, 000 issued pursuant to Articles 1111 et seq. , Vernon' s Texas Civil Statutes , and all other applicable law, and pursuant to an ordinance adopted by the City Council of the City (herein the "Ordinance" ) for the purpose of providing money for acquisitions, extensions, construction, improvement, or repair of City' s waterworks and sewer system (the "System" ) . THE DATE OF THIS BOND, in conformity with the Ordinance, is March 1, 1982 . THIS BOND AND ALL OF THE BONDS OF 'PHIS 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 therewith, 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 Ordinance. 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. -7- 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 called 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 outstanding 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 PRIOR LIEN REVENUE BONDS, subject to the restrictions con- tained 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 have the right to demand payment of this obligation out of any 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 -8- 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 xxxxxxxxxxxxxxx Mayor COUNTERSIGNED: xxxxxxxxxxxx City Clerk [SEAL] -9- 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 TEXAS COMMERCE BANK-BEAUMONT N.A. BEAUMONT, TEXAS 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 PRIOR LIEN REVENUE BONDS, SERIES 1982, dated March 1, 1982. 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 and the proceedings for the issuance hereof have 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 -10- payment by and in the proceedings authorizing the same, and I do further certify that this bond has this day been regis- tered 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 PRIOR LIEN 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 Prior Lien Bonds, and all expenses of paying same. The Prior Lien 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 herein after provided, be set aside for and pledged to the payment of the Prior Lien Bonds in the Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond Reserve Fund as hereinafter provided, and the Prior Lien Bonds shall be in all respects on a parity with and of equal dignity with one another. The holders of the Prior Lien Bonds and the interest coupons appertaining thereto shall never have the right to demand payment of either the principal of or inter- est on the Prior Lien Bonds out of any funds raised or to be rais.ed by taxation. Section 4.2 : Rates and Charges . So long as any Prior Lien 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: -11- (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 Prinicipal and Interest Requirements on all Prior Lien Bonds and Junior Lien Bonds, but in no event less than the amount required to establish and maintain the Prior Lien Bond Interest and Sinking Fund, and the Prior Lien Bond 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 Prior Lien 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 Prior Lien Bonds remain out- standing: (a) Waterworks and Sewer System Revenue Fund (the "Revenue Fund" ) ; (b) Prior Lien Waterworks and Sewer System Revenue Bond Interest and Sinking Fund (the "Prior Lien Bond Interest and Sinking Fund" ) ; and (c) Prior Lien Waterworks and Sewer System Revenue Bond Reserve Fund (the "Prior Lien Bond Reserve Fund" ) . The Revenue Fund shall be maintained as a separate account on the books of the City. The Prior Lien Bond_ Interest and Sinking Fund and the Prior Lien Bond 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 Prior Lien Bonds, and the proceeds of which (except for interest income, which -12- shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Prior Lien Bonds. All of the Funds named above shall be used solely as provided in this Ordinance so long as any Prior Lien Bonds remain out- 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 the 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 Prior Lien Bond Interest and Sinking Fund required by this Ordinance and any ordinance autho- rizing the issuance of Additional Prior Lien Bonds . (c) Third, to make all deposits into the Prior Lien Bond Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of Additional Prior Lien 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. Whenever the total amounts on deposit to the credit of the Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Prior Lien Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Prior Lien Bond Interest and Sinking Fund or the Prior Lien Bond- Reserve Fund, and such Prior Lien Bonds shall not be regarded as being outstanding except for the purpose of being paid with the moneys on deposit in such Funds . -13- Section 4.5: Prior Lien Bond Interest and Sinking Fund. On or before the last business day of each month so long as any Prior Lien Bonds remain outstanding, there shall be transferred into the Prior Lien Bond Interest and Sinking Fund from the Revenue Fund the 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 Prior Lien Bonds on the next interest payment date; and (ii ) such amounts, in approximately equal monthly installments, as will be suffi- cient to pay the next maturing principal of the Prior Lien Bonds, including the principal amounts of, and any redemption premiums on, any Prior Lien Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Additional Prior Lien Bonds . Moneys deposited to the credit of the Prior Lien Bond Inter- est 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 Prior Lien Bonds in the open market to be credited against mandatory redemption requirements ) , interest and redemption premiums on the Prior Lien Bonds, plus all bank charges and other costs and expenses relating to such payment. On or before each principal and/or interest payment date for the Prior Lien Bonds, the City shall trans- fer from the Prior Lien Bond Interest and Sinking Fund to the paying agents for the Prior Lien Bonds an amount equal to the principal, interest and redemption premiums payable on the Prior Lien Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Prior Lien Bonds shall totally destroy all paid Prior Lien Bonds and coupons and shall provide the City with an appropriate certificate of destruction. Section 4.6: Prior Lien Bond Reserve Fund. On or before the last business day of each month so long as any Prior Lien Bonds remain outstanding, after making the transfers into the Prior Lien Bond Interest and Sinking Fund required in the -14- preceding Section, there shall be transferred into the Prior Lien Bond Reserve Fund from the Revenue Fund (after taking into account all other funds from any other sources trans- ferred into the Prior Lien Bond Reserve Fund by the City) such amounts, in approximately equal monthly installments, as will be sufficient to accumulate therein, by no later than five (5) years from the date of each series of Prior Lien Bonds, money and investments in an aggregate amount at least equal to the Prior Lien Bond Reserve Fund Requirement. After such amount has accumulated in the Prior Lien Bond Reserve Fund and so long thereafter as the Prior Lien Bond Reserve Fund contains such amount, no further deposits shall be required to be made into the Prior Lien Bond Reserve Fund; but if and whenever the balance in the Prior Lien Bond Reserve Fund is reduced below such amount, monthly deposits into the Prior Lien Bond Reserve Fund shall be resumed and continued in amounts at least equal to one-sixtieth (1/60th) of the Prior Lien Bond Reserve Fund Requirement until the Prior Lien Bond Reserve Fund has been restored to such amount. Whenever the Prior Lien Bond Reserve Fund contains more than such amount, the City may transfer any excess amount to the Prior Lien Bond Interest and Sinking Fund. The Prior Lien Bond Reserve Fund shall be used to pay the principal of and interest on the Prior Lien Bonds at any time when there is not sufficient money available in the Prior Lien Bond Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Prior -Lien Bonds to mature or be redeemed. Section 4. 7: Deficiencies in Funds . If in any month there shall not be deposited into the Prior Lien Bond Inter- est and Sinking Fund and the Prior Lien Bond 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 first 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 during any succeeding month or months . 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) 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 secured in the manner required by law for public funds, or be invested in direct obligations of, or obligations the prin- cipal of and interest on which are unconditionally guaranteed -15- by, the United States of America or any of its agencies or instrumentalities, 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 Prior Lien Bond Reserve Fund mature later than the final maturity date of the Prior Lien 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 Prior Lien Bonds. (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 the Gross Revenues of the System. Section 4.9: Security for Uninvested Funds. So long as any Prior Lien Bonds remain outstanding, all uninvested moneys on deposit in, or credited to, Funds 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. ARTICLE V ADDITIONAL BONDS Section 5 .1: Additional Prior Lien Bonds. The City reserves the right to issue, for any lawful purpose, includ- ing the refunding of any previously issued Prior Lien Bonds or any other bonds or obligations of the City issued in connection with the System, one or more series of Additional Prior Lien 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 1982 Bonds and any other Additional Prior Lien Bonds then outstanding; provided, however, that no Additional Prior Lien Bonds may be issued unless: -16- (a) The Additional Prior Lien Bonds mature on September 1, and interest is payable on March 1 and September 1; (b) The Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond 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 Additional Prior Lien 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 Interest Requirements on all Prior Lien Bonds, and (b) 125% of the Average Annual Principal and Interest Requirements on all Prior Lien Bonds and Junior Lien Bonds, in each case after giving effect to the issuance of the Additional Prior Lien 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 Prior Lien Bonds, as if such rate increase had been placed into effect prior to the commencement 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 any series of refunding bonds that will not have the result of increasing the Average Annual Principal and Interest Require- ments on the Prior Lien Bonds; and -17- (d) Provision is made in the ordinance authorizing the Additional Prior Lien Bonds then proposed to be issued for additional payments into the Prior Lien Bond Interest and Sinking Fund sufficient to provide for the payment of prin- cipal of and interest on such Additional Prior Lien Bonds and additional payments into the Prior Lien Bond Reserve Fund so that the Prior Lien Bond Reserve Fund will in not later than five years from the date of such Additional Prior Lien Bonds contain a balance of not less than the Prior Lien Bond Reserve Fund Require- ment. (e) The City expressly reserves the right to issue $2, 500, 000 principal amount of Additional Prior Lien Bonds for the purpose of improving, enlarging, extending and repairing the System without demonstrating compliance with the requirements of Section 5 .1(c) hereof, and to issue, sell and deliver such Additional Prior Lien Bonds upon such terms and conditions as shall be conclusively determined by the City Council to be in the best interests of the City. 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. 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 secur- ing payment of the Prior Lien 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 right ight to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Proj- ects. -18- ARTICLE VI COVENANTS AND PROVISIONS RELATING TO ALL PRIOR LIEN BONDS Section 6. 1: Punctual Payment of Prior Lien Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Prior Lien Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipula- tions and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Prior Lien Bonds. Section 6.2: Maintenance of System. So long as any Prior Lien 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 eco- nomical 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 order of any governmental, admin- istrative or judicial body promulgating same. Section 6 .3 : Sale or Encumbrance of- System. So long as any Prior Lien 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 pursuant to which the City contracts with a person, corporation, 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 insurance, shall be a part of the Maintenance and Operation -19- Expenses, and such insurance shall be carried for the benefit of the holders of the Prior Lien Bonds and the City, as their interests may appear. Section 6.5 : Accounts, Records, and Audits. So long as any Prior Lien 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 Revenues thereof. The City shall after the close of each of its fiscal years cause an audit report of such records and accounts to be prepared by an independent certi- fied public accountant or independent firm of certified public accountants . 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 munici- pal rating agencies and any holders of Prior Lien 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 for 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 Prior Lien Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City fur- ther covenants and represents that, other than to the payment of the Prior Lien 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 Prior Lien Bonds and the Junior Lien Bonds. Section 6.8 : Bondholders Remedies . This Ordinance shall constitute a contract between the City and the holders of the Prior Lien Bonds from time to time outstanding and this Ordinance shall be and remain irrepealable until the Prior Lien Bonds and the interest thereon shall be fully paid -20- 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 interest on any of the Prior Lien Bonds or a default in the performance of any duty or covenant pro- vided by law or in this Ordinance, the holder or holders of any of the Prior Lien 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 Prior Lien Bonds or of any of said coupons may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection 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 Prior Lien Bonds and coupons appertaining thereto to pay principal, interest and redemp- tion premium (if any) thereon in any manner permitted by law, including, without limitation, by depositing with any paying agent for such Prior Lien 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 Prior Lien 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 Prior Lien Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Prior Lien 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 Prior Lien Bonds. Upon such deposit, such Prior Lien 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 Prior Lien Bonds shall thereupon cease and terminate. -21- Section 6.10: Legal Holidays . In any case where the date fixed for payment of interest on or principal of the Prior Lien Bonds or the date fixed for redemption of any Prior Lien Bonds shall be a legal holiday or a day on which a paying agent for the Prior Lien 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 Publication. 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 requirements herein established, 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 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 Prior Lien Bonds or for any claim based thereon or on this Ordinance against any official or employee of the City or any person executing any Prior Lien Bonds. Section 6.13 : Paying Agent May Own Bonds. 'he paying agent for the Series 1982 Bonds, in its individual or any other capacity, may become a holder or pledger of the Series 1982 Bonds with the same rights it would have if it were not paying agent. ARTICLE VII PROVISIONS CONCERNING SALE AND DISPOSITION OF PROCEEDS OF SERIES 1982 BONDS Section 7. 1 : Sale of Series 1982 Bonds . Sale of the Series 1982 Bonds is hereb awarded to o m&N S&G1,S (�►ASs�c�.kS for the price of $ (5, 00 1) 61.s0plus accrued interest on the Series 1982 Bonds to date of delivery, subject to the unqualified approving opinion as to the legality of the Series 1982 Bonds of the Attorney General of the State of -22- Texas and of Vinson & Elkins, bond counsel for the City; and it is hereby officially found, determined and declared that such purchaser is the highest bidder for the Series 1982 Bonds as a result of invitations for competitive bids. Section 7.2 : Approval, Registration and Delivery. The Mayor is hereby authorized to have control and custody of the Series 1982 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 delivery of the Series 1982 Bonds and to assure the investigation, exam- ination, 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 1982 Bonds, the Comptroller of Public Accounts (or a deputy desig- nated 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 1982 Bond and the seal 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 1982 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 1982 Bonds, the preparation and distribution of the Preliminary Official Statement dated March 30, 1982, 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 1982 Bonds . Proceeds from the sale of the Series 1982 Bonds shall, promptly upon receipt by the City, be applied as follows : (a) Accrued interest and any premium shall be deposited into the Prior Lien Bond Interest and Sinking Fund. (b) There is hereby created and established a special fund of the City, to be known as the Series 1982 Waterworks and Sewer System Construction Fund (the "Series 1982 Con- struction Fund" ) , which shall be kept at a depository bank of -23- the City, separate and apart from all other funds of the City. After making the deposit set forth in paragraph (a) above, the remaining proceeds from the sale of the Series 1982 Bonds shall be deposited into the Series 1982 Construction Fund. Money on deposit in the Series 1982 Construction Fund shall be used only (i) to pay all expenses incurred in connection with the issuance of the Series 1982 Bonds, and (ii) for the purposes set forth in Section 3 .1 of this Ordinance. 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 1982 Bonds are delivered and paid for, the City reasonably expects that the proceeds of the Series 1982 Bonds will not be used in a manner that would cause the Series 1982 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 regu- lations 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 1982 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 1982 Bonds are delivered and paid for regarding the amount and use of the proceeds thereof. Moreover, the City covenants that it shall make such use of the proceeds of the Series 1982 Bonds, regulate investments of proceeds thereof and .take such other and further actions as may be required so that the Series 1982 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 there- under. 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 nec- essary 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- -24- 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 1982 Bonds are required as soon as possible and without delay for the purposes set forth herein. Secton 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 11th day of 1982. , a -yor City of Beaumont, Texas ATTEST: city Jerk City of Beaumont, T as [SEAL] -25- ��-77