ORD NO 18-1989 ORDINANCE NO./O-/ j,Q 7
AN ORDINANCE AUTHORIZING THE CONSTRUCTION OF
EXTENSIONS, BETTERMENTS AND IMPROVEMENTS TO
THE WATER SYSTEM OF THE CITY OF VAN BUREN,
ARKANSAS; AUTHORIZING THE ISSUANCE AND SALE
OF WATER AND SEWER REVENUE REFUNDING AND
CONSTRUCTION BONDS; PROVIDING FOR THE
PAYMENT OF THE PRINCIPAL OF AND INTEREST ON
THE BONDS; PRESCRIBING OTHER MATTERS
RELATING THERETO; AND DECLARING AN
EMERGENCY.
WHEREAS, the City of Van Buren, Arkansas (the "City
owns and operates a Waterworks System and a Sewer System, which
are operated as a single, integrated municipal undertaking (the
"System and
WHEREAS, the System is operated on behalf of the City
by the Van Buren Water and Sewer Commission (the "Commission
and
WHEREAS, the City Council and the Commission have
determined that extensions, betterments and improvements to the
water facilities of the System (the "improvements are
necessary in order to make the services thereof adequate for the
needs of the City and have caused to be prepared by a qualified
consulting engineer, general plans for the improvements, which
plans have been examined and approved by the City Council and
the Commission and a copy of which plans are on file in the
office of the City Clerk where they may be inspected by any
interested person; and
WHEREAS, the City Council and the Commission have also
determined that in order to receive debt service savings it is
in the best interest of the City to refund the City's
outstanding Water and Sewer Revenue Refunding and Improvement
Bonds, dated September 1, 1978 (the "1978 Bonds authorized by
Ordinance No. 31 -1978, adopted and approved on August 31, 1978
(the "1978 Ordinance and
WHEREAS, the estimated cost of accomplishing the
improvements and the refunding of the 1978 Bonds (the
"refunding funding a debt service reserve and paying expenses
of authorizing and issuing bonds is $3,447,000; and
WHEREAS, the City can obtain the necessary funds for
paying the costs of the improvements, the refunding and
authorizing and issuing the bonds and for funding a debt service
reserve by the issuance of Water and Sewer Revenue Refunding and
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Construction Bonds, Series 1989, in the principal amount of
$3,070,000 (the "bonds and from available funds of the City;
and
WHEREAS, the City has made arrangements for the sale
of $3,070,000 in aggregate principal amount of bonds to T.J.
Raney Sons, a division of Morgan Keegan Company, Inc. (the
"Purchaser at a price of 97.5% of par plus accrued interest
pursuant to a Bond Purchase Agreement (the "Agreement which
has been presented to and is before this meeting; and
WHEREAS, the Preliminary Official Statement, dated
August 3, 1989 offering the Bonds for sale (the "Preliminary
Official Statement has been presented to and is before this
meeting;
NOW, THEREFORE, BE IT ORDAINED by the City Council of
the City of Van Buren, Arkansas:
Section 1. That the improvements and the refunding
shall be accomplished. The improvements shall be accomplished
under the control and supervision of, and all details in
connection therewith shall be handled by, the Commission. The
Commission shall make all contracts and agreements necessary or
incidental to the performance of its duties and execution of its
powers. The Commission shall let all contracts pursuant to and
in accordance with existing laws and shall require such
performance bonds and insurance as will, in the judgment of the
Commission, fully insure completion of the improvements so as to
fully promote and protect the best interests of the City and the
owners of the bonds. The Mayor and City Clerk are hereby
authorized to take or cause to be taken, all action necessary to
accomplish the refunding and to execute all required contracts
and documents.
Section 2. That the City Council hereby finds and
declares that the period of usefulness of the improvements will
be more than forty (40) years, which is longer than the term of
the bonds.
Section 3. That the offer of the Purchaser for the
purchase of $3,070,000 in principal amount of bonds from the
City at a price of 97.5% of par and accrued interest for bonds
bearing interest at the rates per annum, maturing and otherwise
subject to the terms and provisions hereafter in this Ordinance
set forth in detail be, and is hereby accepted and the
Agreement, in substantially the form submitted to this meeting,
is approved and confirmed and the bonds are hereby sold to the
Purchaser. The Mayor is hereby authorized and directed to
execute and deliver the Agreement on behalf of the City and to
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take all action required on the part of the City to fulfill its
obligations under the Agreement.
Section 4. The Preliminary Official Statement is
hereby approved and the previous use of the Preliminary Official
Statement by the Purchaser in connection with the sale of the
bonds is hereby in all respects authorized, approved and
confirmed, and the Mayor be and he is hereby authorized,
empowered and directed to execute the Preliminary Official
Statement and the final Official Statement on behalf of the City
for use in connection with the sale of the bonds as set forth in
the Agreement, and the Mayor is hereby authorized, empowered and
directed to do all such acts and things necessary to carry out
and comply with the provisions of the Official Statement.
Section 5. That under the authority of the
Constitution and laws of the State of Arkansas, including
particularly Title 14, Chapter 234, Subchapter 2 of the Arkansas
Code of 1987 Annotated, Title 14, Chapter 235, Subchapter 2 of
the Arkansas Code of 1987 Annotated, Title 14, Chapter 164,
Subchapter 4 of the Arkansas Code of 1987 Annotated and
applicable decisions of the Supreme Court of the State of
Arkansas, including particularly City of Harrison v. Braswell,
209 Ark. 1094, 194 S.W. 2d 12 (1946), City of Van Buren,
Arkansas Water and Sewer Revenue Refunding and Construction
Bonds, Series 1989, are hereby authorized and ordered issued in
the principal amount of $3,070,000 for the purpose of
accomplishing the improvements and the refunding, paying
necessary expenses incidental thereto and to the authorization
and issuance of the bonds, and funding a debt service reserve.
The bonds shall mature on September 1 in the years and in the
amounts and shall bear interest as follows:
3
Year Principal Interest
(September 1) Amount Rate
1990 80,000 6.00%
1991 85,000 6.10
1992 90,000 6.15
1993 95,000 6.20
1994 100,000 6.25
1995 105,000 6.30
1996 115,000 6.40
1997 120,000 6.50
1998 130,000 6.55
1999 140,000 6.60
2000 145,000 6.65
2001 155,000 6.70
2002 165,000 6.75
2003 180,000 6.80
2004 190,000 6.85
2005 205,000 6.90
2006 220,000 6.95
2007 235,000 7.00
2008 250,000 7.00
2009 265,000 7.00
The bonds shall bear interest from their respective
dates and the bonds shall be issuable only as fully registered
Bonds without coupons in the denomination of $5,000 or any
integral multiple thereof. Unless the City shall otherwise
direct, the bonds shall be numbered from 1 upward in order of
issuance. Each bond shall have a CUSIP number.
Each bond shall be dated as of the interest payment
date to which interest has been paid as of the date on which it
is authenticated or if it is authenticated prior to a date on
which interest has been paid, it shall be dated September 1,
1989. Interest on the bonds shall be payable on March 1, 1990,
and semiannually thereafter on March 1 and September 1 of each
year. Payment of each installment of interest shall be made to
the person in whose name the bond is registered on the
registration books of the City maintained by First National Bank
of Crawford County, Van Buren, Arkansas, as Trustee and Paying
Agent (the "Trustee at the close of business on the fifteenth
day of the month (whether or not a business day) next preceding
each interest payment date (the "Record Date irrespective of
any transfer or exchange of any such bond subsequent to such
Record Date and prior to such interest payment date.
Only such bonds as shall have endorsed thereon a
Certificate of Authentication substantially in the form set
forth in Section 7 hereof duly executed by the Trustee shall be
entitled to any right or benefit under this Ordinance. No bond
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shall be valid and obligatory for any purpose unless and until
such Certificate of Authentication shall have been duly executed
by the Trustee, and such certificate of the Trustee upon any
such bond shall be conclusive evidence that such bond has been
authenticated and delivered under this Ordinance. The Trustee's
Certificate of Authentication on any bond shall be deemed to
have been executed if signed by an authorized officer of the
Trustee, but it shall not be necessary that the same officer
sign the Certificate of Authentication on all of the bonds.
In case any bond shall become mutilated or be
destroyed or lost, the City shall, if not then prohibited by
law, cause to be executed and the Trustee may authenticate and
deliver a new bond of like date, number, maturity and tenor in
exchange and substitution for and upon cancellation of such
mutilated bond, or in lieu of and in substitution for such bond
destroyed or lost, upon the owner's paying the reasonable
expenses and charges of the City and Trustee in connection
therewith, and, in the case of a bond destroyed or lost, his
filing with the Trustee evidence satisfactory to it that such
bonds were destroyed or lost, and of his ownership thereof, and
furnishing the City and Trustee with indemnity satisfactory to
them. The Trustee is hereby authorized to authenticate any such
new bond. In the event any such bond shall have matured,
instead of issuing a new bond, the City may pay the same without
the surrender thereof. Upon the issuance of a new bond under
this Section 5, the City may require the payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith.
The City shall cause books for the registration and
for the transfer of the bonds as provided herein and in the
bonds. The Trustee shall act as the bond registrar. Each bond
is transferable by the registered owner thereof or by his
attorney duly authorized in writing at the principal office of
the Trustee. Upon such transfer a new fully registered bond or
bonds of the same maturity, of authorized denomination or
denominations, for the same aggregate principal amount will be
issued to the transferee in exchange therefor.
No charge shall be made to any owner of any bond for
the privilege of transfer or exchange, but any owner of any bond
requesting any such transfer or exchange shall pay any tax or
other governmental charge required to be paid with respect
thereto. Except as otherwise provided in the immediately
preceding sentence, the cost of preparing each new bond upon
each exclange or transfer and any other expenses of the City or
the Trustee incurred in connection therewith shall be paid by
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the City. The City shall not be required (i) to issue, transfer
or exchange any bond during a period beginning at the opening of
business 15 days before any selection of bonds of that maturity
for redemption and ending at the close of business on the day of
the first mailing of the relevant notice of redemption, or (ii)
to transfer or exchange any bonds selected for redemption in
whole or in part.
The person in whose name any bond shall be registered
shall be deemed and regarded as the absolute owner thereof for
all purposes, and payment of or on account of the principal or
premium, if any, or interest of any bond shall be made only to
or upon the order of the registered owner thereof or his legal
representative, but such registration may be changed as
hereinabove provided. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such bond
to the extent of the sum or sums so paid.
In any case where the date of maturity of interest on
or principal of the bonds or the date fixed for redemption of
any bonds shall be a Saturday or Sunday or shall be in the State
of Arkansas a legal holiday or a day on which banking
institutions are authorized by law to close (a "Non- Banking
Day then payment of interest or principal (and premium, if
any) need not be made on such date but may be made on the next
succeeding business day not a Non- Banking Day with the same
force and effect as if made on the date of maturity or the date
fixed for redemption, and no interest shall accrue for the
period after the date of maturity or date fixed for redemption.
Section 6. That the bonds shall be executed on behalf
of the City by the manual or facsimile signatures of the Mayor
and City Clerk and shall have impressed, imprinted, engraved or
lithographed thereon the seal of the City. The bonds, together
with interest thereon, are secured by and are payable solely
from revenues derived from the System "Revenues Revenues
are hereby irrevocably pledged and mortgaged for the equal and
ratable payment of the bonds. The bonds and interest thereon
shall not constitute an indebtedness of the City within any
constitutional or statutory limitation.
Section 7. That the bonds and the Trustee's
Certificate of Authentication shall be in substantially the
following form and the Mayor and City Clerk are hereby expressly
authorized and directed to make all recitals contained therein:
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(Form of Bond)
REGISTERED REGISTERED
No.
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF CRAWFORD
CITY OF VAN BUREN
WATER AND SEWER REVENUE
REFUNDING AND CONSTRUCTION BOND,
SERIES 1989
Interest Rate: Maturity Date: Dated Date:
Registered Owner:
Principal Amount: Dollars
CUSIP No.
KNOW ALL MEN BY THESE PRESENTS:
That the City of Van Buren, County of Crawford, State
of Arkansas (the "City for value received, hereby promises to
pay, but solely from the source as hereinafter provided and not
otherwise, to the Registered Owner shown above, or registered
assigns, upon the presentation and surrender hereof at the
principal corporate office of First National Bank of Crawford
County, Van Buren, Arkansas, or its successor or successors, as
Trustee and as Paying Agent (herein referred to as the
"Trustee on the Maturity Date shown above, the Principal
Amount shown above, in such coin or currency of the United
States of America as at the time of payment shall be legal
tender for the payment of public and private debts and to pay by
check or draft interest thereon, but solely from the source as
hereinafter provided and not otherwise, in like coin or currency
from the Dated Date shown above at the Interest Rate per annum
shown above, payable March 1, 1990 and semiannually thereafter
on the 1st days of March and September of each year, until
payment of such Principal Amount or, if this bond or a portion
thereof shall be duly called for redemption, until the date
fixed for redemption, and to pay interest on overdue principal
and interest (to the extent legally enforceable) at the rate
borne by this bond. Payment of each installment of interest
shall be made to the person in whose name this bond is
registered on the registration books of the City maintained by
the Trustee at the close of business on the fifteenth day of the
month (whether or not a business day) next preceding each
interest payment date (the "Record Date irrespective of any
transfer or exchange of this bond subsequent to such Record Date
and prior,to such interest payment date.
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This bond is one of an issue of City of Van Buren,
Arkansas Water and Sewer Revenue Refunding and Construction
Bonds, Series 1989, aggregating Three Million Seventy Thousand
Dollars ($3,070,000), in principal amount (the "bonds and is
issued for the purpose of financing the costs of the
acquisition, construction and equipment by the City of
extensions, betterments and improvements to its water system,
which is operated by the City as a part of the City's water and
sewer (combined) system (the "System funding a debt service
reserve, refunding certain outstanding bonds of the City to
which System revenues are pledged and paying necessary expenses
incidental thereto and to the authorization and issuance of the
bonds.
The bonds are issued pursuant to and in full
compliance with the Constitution and laws of the State of
Arkansas, including particularly Title 14, Chapter 234,
Subchapter 2 of the Arkansas Code of 1987 Annotated, Title 14,
Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated
and Title 14, Chapter 164, Subchapter 4 of the Arkansas Code of
1987 Annotated, and applicable decisions of the Supreme Court of
Arkansas, including particularly City of Harrison v. Braswell,
209 Ark. 1094, 194 S.W. 2d 12 (1946), and pursuant to Ordinance
No. duly adopted and approved on 1989 (the
"Authorizing Ordinance and do not constitute an indebtedness
of the City within any constitutional or statutory limitation.
The bonds are not general obligations of the City, but are
special obligations payable solely from the revenues derived
from the operation of the System. An amount of System revenues
sufficient to pay the principal of and interest on the bonds has
been duly pledged and set aside into the 1989 Water and Sewer
Revenue Bond Fund created by the Authorizing Ordinance.
Reference is hereby made to the Authorizing Ordinance for a
detailed statement of the terms and conditions upon which the
bonds are issued, of the nature and extent of the security for
the bonds, and the rights and obligations of the City, the
Trustee and the bondholders. The City has fixed and has
covenanted and agreed to maintain rates for the services of the
System which shall be sufficient at all times at least to
provide for the reasonable expenses of operation and maintenance
of the System and for the payment of the principal of and
interest on all bonds to which System revenues are pledged,
including Trustee's fees, if any, as the same become due and
payable, to maintain required reserves and to make the required
deposits for the depreciation of the System.
(REFERENCE IS HEREBY MADE TO FURTHER PROVISIONS OF
THIS BOND ON THE REVERSE SIDE HEREOF WHICH HAVE THE SAME EFFECT
AS IF SET, FORTH IN THIS PLACE.)
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THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED
TAX EXEMPT OBLIGATION" WITHIN THE MEANING OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.
IN WITNESS WHEREOF, the City of Van Buren, Arkansas
has caused this bond to be executed by its Mayor and City Clerk,
their facsimile signatures thereunto duly authorized and its
corporate seal to be impressed, lithographed or imprinted on
this bond, all as of the Dated Date shown above.
CITY OF VAN BUREN, ARKANSAS
ATTEST:
By (facsimile signature)
(facsimile signature) Mayor
City Clerk
(SEAL)
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(Reverse Side of Bond)
CITY OF VAN BUREN, ARKANSAS
WATER AND SEWER REVENUE REFUNDING AND
CONSTRUCTION BOND, SERIES 1989
FURTHER PROVISIONS
The bonds shall be subject to extraordinary and
optional redemption as follows:
1. The bonds or portions thereof shall be redeemed
from proceeds of the bonds which are not needed for the purposes
intended, in whole or in part, on any interest payment date, in
inverse order of maturity (and by lot within a maturity in such
manner as the Trustee shall determine), at a redemption price
equal to the principal amount being redeemed plus accrued
interest to the redemption date.
2. The bonds or portions thereof may be redeemed at
the option of the City, in whole or in part, from funds from any
other source, in inverse order of maturity (and by lot within a
maturity in such manner as the Trustee shall determine) on any
interest payment date on and after September 1, 1994, at
redemption prices (expressed as percentages of the principal
amount being redeemed) plus accrued interest to the redemption
date as follows:
Redemption Dates Redemption Prices
September 1, 1994 or March 1, 1995 102%
September 1, 1995 or March 1, 1996 101
September 1, 1996 or March 1, 1997 101%
September 1, 1997 or March 1, 1998 1001/2%
September 1, 1998 and thereafter 100%
In the case any outstanding bond is in a denomination
greater than $5,000, each $5,000 of face value of such bond
shall be treated as a separate bond of the denomination of
$5,000.
Notice of redemption identifying the bonds or portions
thereof (which shall be $5,000 or a multiple thereof) to be
redeemed shall be given by the Trustee, not less than thirty
(30) nor more than sixty (60) days prior to the date fixed for
redemption, by mailing a copy of the redemption notice by first
class mail, postage prepaid, to all registered owners of bonds
to be redeemed. Failure to mail an appropriate notice or any
such no4ce to one or more registered owners of bonds to be
redeemed shall not affect the validity of the proceedings for
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redemption of other bonds as to which notice of redemption is
duly given in proper and timely fashion. All such bonds or
portions thereof thus called for redemption and for the
retirement of which funds are duly provided in accordance with
the Authorizing Ordinance prior to the date fixed for redemption
will cease to bear interest on such redemption date.
This bond is transferable by the registered owner
hereof in person or by his attorney -in -fact duly authorized in
writing at the principal corporate office of the Trustee, but
only in the manner, subject to the limitations and upon payment
of the charges provided in the Authorizing Ordinance, and upon
surrender and cancellation of this bond. Upon such transfer a
new fully registered bond or bonds of the same maturity, of
authorized denomination or denominations, for the same aggregate
principal amount, will be issued to the transferee in exchange
therefor. This bond is issued with the intent that the laws of
the State of Arkansas shall govern its construction.
The City and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof for the
purpose of receiving payment of or on account of principal
hereof and premium, if any, hereon and interest due hereon and
for all other purposes, and neither the City nor the Trustee
shall be affected by any notice to the contrary.
The bonds are issuable only as fully registered bonds
in the denomination of $5,000, and any integral multiple
thereof. Subject to the limitations and upon payment of the
charges provided in the Authorizing Ordinance, fully registered
bonds may be exchanged for a like aggregate principal amount of
fully registered bonds of the same maturity of other authorized
denominations.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all
acts, conditions and things required to exist, happen and be
performed precedent to and in the issuance of the bonds do
exist, have happened and have been performed in due time, form
and manner as required by law; that the indebtedness represented
by the bonds, together with all obligations of the City, does
not exceed any constitutional or statutory limitation; and that
the above referred to revenues pledged to the payment of the
principal of and premium, if any, and interest on the bonds as
the same become due and payable will be sufficient in amount for
that purpose.
This bond shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the
Authorizing Ordinance until the Certificate of Authentication
hereon shall have been signed by the Trustee.
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(Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds designated Water and
Sewer Revenue Refunding and Construction Bonds, Series 1989 in
and issued under the provisions of the within mentioned
Authorizing Ordinance.
FIRST NATIONAL_ BANK OF CRAWFORD
COUNTY
Van Buren, Arkansas
TRUSTEE
By
Authorized Signature
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(Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED,
"Transferor hereby sells, assigns and transfers unto
the within bond and all rights thereunder,
and hereby irrevocably constitutes and appoints
as attorney to transfer the within bond on
the books kept for registration thereof with full power of
substitution in the premises.
DATE:
Transferor
GUARANTEED BY:
NOTICE: Signature(s) must be guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or a
trust company.
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Section S. That the rates charged for services of the
System heretofore fixed by ordinances of the City and the
conditions, rights and obligations pertaining thereto, as set
out in those ordinances, are hereby ratified, confirmed and
continued.
The City covenants and agrees that the rates shall
never be reduced while any of the bonds are outstanding unless
there is obtained from an independent certified public
accountant a certificate that the Net Revenues of the System
(Net Revenues being defined as gross revenues less the expenses
of operation and maintenance of the System, including all
expense items properly attributable to the operation and
maintenance of the System under generally accepted accounting
principles applicable to municipal water and sewer facilities,
other than depreciation, interest and amortization of deferred
bond discount expenses), with the reduced rates, will always be
equal to the amount required to be set aside for the
Depreciation Fund (hereinafter identifed), and leave a balance
equal to at least 130% of the aggregate average annual principal
and interest requirements on all outstanding bonds payable from
Revenues "System Bonds The City further covenants and
agrees that the rates shall, if and when necessary, from time to
time, be increased in such manner as will produce Net Revenues
at least equal to 130% of the aggregate average annual principal
and interest requirements on all System Bonds. The City also
agrees that Net Revenues shall always be sufficient to make the
required deposits into the Depreciation Fund and otherwise
comply with the provisions of this Ordinance and all other
ordinances authorizing System Bonds.
Section 9. That the Treasurer of the City shall be
the custodian of Revenues. However, Revenues shall be
collected, held and disbursed by the Commission. Each employee
of the City handling Revenues shall give bond for the faithful
discharge of his duties. Such bonds shall be approved by the
City Council. All Revenues shall be held in trust for the
registered owners of the bonds and shall at all times be
accounted for separately and distinctly from other moneys of the
City. All Revenues shall be used and applied only as provided
herein. All Revenues shall be deposited in such depository or
depositories for the City as may be lawfully designated from
time to time by resolution of the Commission; subject, however,
to the giving of security as now or as hereafter may be required
by law and provided that such depository or depositories shall
hold membership in the Federal Deposit Insurance Corporation
"FDIC All deposits shall be in the name of the City and
shall be so designated as to indicate the particular fund to
which Reyenues belong. The City shall notify the Trustee in
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writing of the initial depositories for each fund into which
Revenues have been deposited and any change in depositories.
Section 10. That none of the facilities or services
afforded by the System shall be furnished without a charge being
made therefor. In the event that the City or any department,
agency or instrumentality thereof shall avail itself of the
facilities and services afforded by the System, the reasonable
value of the services or facilities so afforded shall be charged
against the City or such department, agency or instrumentality
and shall be paid for as the charges therefor accrue. The
revenues so received shall be deemed to be Revenues and shall be
used and accounted for in the same manner as any other Revenues.
Nothing herein shall be construed as requiring the City or any
department, agency or instrumentality thereof to avail itself of
the facilities or services afforded by the System.
Section 11. That the City covenants that it will
continuously operate the System as a revenue producing
undertaking and will not sell or lease the same, or any
substantial portion thereof; provided, however, that nothing
herein shall be construed to prohibit the City from making such
dispositions of properties of the System and such replacements
and substitutions for properties of the System as shall be
necessary or incidental to the efficient operation of the System
as a revenue producing undertaking. All revenues derived from
such dispositions shall be deposited into the Water and Sewer
Fund (hereinafter identified).
Section 12. That there shall be paid monthly into the
special fund created by the 1978 Ordinance and designated as the
"Water and Sewer Fund" all Revenues. Moneys in the Water and
Sewer Fund are hereby pledged and shall be applied to the
payment of the reasonable and necessary expenses of operation
and maintenance of the System, to the payment of the principal
of and interest on System Bonds, to the maintenance of the debt
service reserve at the required level, and to the providing of
an adequate depreciation fund and otherwise as described herein.
Section 13. That there shall be paid from the Water
and Sewer Fund into the special fund created by the 1978
Ordinance and designated as the "Water and Sewer Operation and
Maintenance Fund" (the "Operation and Maintenance Fund on the
first business day of each month, an amount sufficient to pay
the reasonable and necessary monthly expenses of operation,
repair and maintenance of the System "operation expenses for
such month and from which disbursements shall be made only for
those purposes. Fixed annual charges, such as insurance
premiums, and the cost of major repair and maintenance expenses
may be computed and set up on an annual basis and one twelfth
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(1/12) of the amount thereof may be paid into the Operation and
Maintenance Fund each month.
If in any month for any reason there shall be a
failure to transfer and pay the required amount into the
Operation and Maintenance Fund, the amount of any deficiency
shall be added to the amount otherwise required to be
transferred and paid into the Operation and Maintenance Fund in
the next succeeding month. If in any fiscal year a surplus
shall be accumulated in the Operation and Maintenance Fund over
and above the amount which shall be necessary to defray the
reasonable and necessary operation expenses during the remainder
of the then current fiscal year and the next ensuing fiscal
year, such surplus may be transferred and deposited in the Water
and Sewer Fund.
Section 14. (a) That after making the deposit into
the Operation and Maintenance Fund, there shall be transferred
from the Water and Sewer Fund into a special fund to be
established with the Trustee in the name of the City which is
hereby created and designated "1989 Water and Sewer Revenue Bond
Fund" (the "Bond Fund the sums in the amounts and at the
times hereinafter stated in Subsection (b) of this Section 14
for the purpose of providing funds for the payment of the
principal of and interest on the bonds as they mature.
(b) There shall be paid from the Water and Sewer Fund
into the Bond Fund on the first business day of each month,
commencing November 1, 1989, until all outstanding bonds, with
interest thereon, have been paid in full or provision made for
such payment, the following:
(i) on the first business day of November, 1989, to
and including the first business day of February, 1990 a sum
equal to 1/4 of the next installment of interest due on the
bonds; and
(ii) on the first business day of March, 1990, to and
including the first business day of August, 1990, a sum equal to
1/6 of the next installment of interest due on the bonds and
1 /10 of the next installment of principal due on the bonds; and
(iii) on the first business day of September, 1990
and thereafter a sum equal to 1/6 of the next installment of
interest due on the bonds and 1/12 of the next installment of
principal on the bonds.
The City shall also pay into the Bond Fund such
additional sums as necessary to provide for the Trustee's fees
and expenses. The City shall receive a credit against monthly
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deposits into the Bond Fund for all interest earnings on moneys
in the Bond Fund and for transfers into the Bond Fund derived
from earnings on the Debt Service Reserve during the preceding
month.
There is hereby created as a part of the Bond Fund, a
Debt Service Reserve which shall be maintained in an amount
equal to the average annual principal and interest requirements
on the bonds and outstanding System Bonds ranking on a parity of
security with the bonds or 10% of the aggregate proceeds of such
bonds as originally issued, whichever is lesser (the "required
level There shall be deposited into the Debt Service Reserve
from bond proceeds the sum of $281,998. Should the Debt Service
Reserve become impaired or be reduced below the required level,
there shall be transferred from the Water and Sewer Fund and
deposited into the Debt Service Reserve additional monthly
payments until the reduction is corrected over a twenty -four
month period; provided, however, no such payments need to be
made until September 1, 1990.
If Revenues are insufficient to make the required
payment on the first business day of the following month into
the Bond Fund, the amount of any such deficiency in the payment
made shall be added to the amount otherwise required to be paid
into the Bond Fund on the first business day of the next month.
If for any reason there shall be a deficiency in the
payments made into the Bond Fund so that there are unavailable
sufficient moneys therein to pay the principal of and interest
on, the bonds as the same become due, any sums then held in the
Debt Service Reserve shall be used to the extent necessary to
pay such principal, interest and Trustee's fees, but the Debt
Service Reserve shall be reimbursed in the amount of any such
payment as described above. The Debt Service Reserve shall be
used solely as herein described, but the moneys therein may be
invested as set forth below.
If a surplus shall exist in the Bond Fund over and
above the amount required for making all principal and interest
payments during the next succeeding twelve month period and over
and above the required level for the Debt Service Reserve, such
surplus shall at the option of the Commission either be (1)
applied to the payment of the principal of and interest on bonds
that may be called for redemption prior to maturity on the next
available redemption date within such twelve month period, (2)
transferred to the Water and Sewer Fund or (3) transferred to
the Rebate Fund (hereinafter identified) in accordance with
Section 32 of this Ordinance.
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When the moneys held in the Bond Fund, including the
Debt Service Reserve, shall be and remain sufficient to pay the
principal of and interest on all of the bonds then outstanding
plus Trustee's fees, the City shall not be obligated to make any
further payments into the Bond Fund.
It shall be the duty of the Trustee to withdraw from
the Bond Fund on the due date of any principal and /or interest
on any bond, at maturity or redemption prior to maturity, an
amount equal to the amount of such bond and interest due thereon
for the sole purpose of paying the same, together with the
Trustee's fee. No withdrawal of funds from the Bond Fund shall
be made for any other purpose except as otherwise authorized in
this Ordinance.
The bonds shall be specifically secured by a pledge of
all Revenues required to be placed into the Bond Fund. This
pledge in favor of the bonds is hereby irrevocably made
according to the terms of this Ordinance, and the City and its
officers and employees shall execute, perform and carry out the
terms thereof in strict conformity with the provisions of this
Ordinance.
Section 15. That after making the required monthly
deposits into the Operation and Maintenance Fund and the Bond
Fund, there shall be paid from the Water and Sewer Fund into the
special fund created by the 1978 Ordinance and designated as the
"Water and Sewer Depreciation Fund" (the "Depreciation Fund
on the first business day of each month 5% of the gross Revenues
for the preceding month. The moneys in the Depreciation Fund
shall be used solely for the purpose of paying the cost of
replacements made necessary by the depreciation of the System.
If in any fiscal year a surplus shall be accumulated
in the Depreciation Fund over and above the amount necessary to
defray the cost of the probable replacements during the next
twelve months, such surplus may be transferred and paid into the
Water and Sewer Fund.
Section 16. That payments from the Water and Sewer
Fund, the Operation and Maintenance Fund and the Depreciation
Fund shall be made by check signed by the person or persons
designated by the Commission and drawn on the depository with
which the moneys in the fund shall have been deposited, and each
such check shall briefly specify the purpose of the expenditure.
Section 17. That any surplus in the Water and Sewer
Fund after making all disbursements and providing for all funds
described herein may be used, at the option of the Commission,
for any lawful municipal purpose authorized by the City.
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Section 18. That so long as any of the bonds are
outstanding, the City shall not issue or attempt to issue any
bonds claimed to be entitled to a priority of lien on the
revenues of the System over the lien securing the bonds. The
City reserves the right to issue additional bonds to finance or
pay the cost of constructing any future extensions, betterments
or improvements to the System, but the City shall not authorize
or issue any such additional bonds ranking on a parity with the
outstanding bonds of this issue unless and until there shall
have been procured and filed with the Trustee a statement by an
independent certified public accountant not in the regular
employ of the City reciting the opinion based upon necessary
investigation that Net Revenues for the fiscal year immediately
preceding the fiscal year in which it is proposed to issue such
additional bonds shall equal not less than 140% of the average
annual principal and interest requirements on all then
outstanding System Bonds and the bonds of the new issue. In
making the computation set forth above, additional amounts may
be added to the Net Revenues of the completed fiscal year
immediately preceding the issuance of additional bonds, as
follows: If, prior to the issuance of the additional bonds and
subsequent to the first day of such preceding fiscal year, the
City shall have increased its rates or charges imposed for
services of the System there may be added to Net Revenues of
such fiscal year the additional Net Revenues which would have
been received from the operation of the System during such
fiscal year had such increase been in effect throughout such
fiscal year, as reflected by a certificate of a duly qualified
consulting engineer not in the regular employ of the City and
approved by the Trustee.
Section 19. That the bonds shall be subject to
redemption prior to maturity in accordance with the terms set
out in the bond form.
Section 20. That the City shall cause proper books of
accounts and records to be kept (separate from all other records
and accounts) in which complete and correct entries shall be
made of all transactions relating to the operation of the
System, and such books shall be available for inspection by the
registered owner of any of the bonds at reasonable times and
under reasonable circumstances. The City agrees to have these
records audited by an independent certified public accountant at
least once each year, and a copy of the audit shall be delivered
to the Trustee and made available to the registered owners of
the bonds requesting the same in writing. In the event that the
City fails or refuses to make the audit, the Trustee, or any
registered owner of the bonds, may have the audit made, and the
cost thgreof shall be charged against the Operation and
Maintenance Fund. The Trustee shall provide monthly to the City
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a statement of all transactions involving the funds held by the
Trustee under this Ordinance for the previous month and a
statement of all fees and expenses of the Trustee to be paid by
the City under this Ordinance for such month.
Section 21. That the bonds paid either at or before
maturity shall be canceled and shall not be reissued.
Section 22. That the City covenants and agrees that
it will maintain the System in good condition and operate the
same in an efficient manner and at reasonable cost. While any
of the bonds are outstanding, the City agrees that it will
insure and at all times keep insured, in the amount of the full
insurable value thereof, in a responsible insurance company or
companies selected by the Commission and authorized and
qualified under the laws of the State of Arkansas to assume the
risk thereof, properties of the System, to the extent that such
properties would be covered by insurance by private companies
engaged in similar types of businesses against loss or damage
thereto from fire, lightning, tornado, winds, riot, strike,
civil commotion, malicious damage, explosion, extended coverage
and against any other loss or damage from any other causes
customarily insured against by private companies engaged in
similar types of business. The insurance policies are to be
taken with companies approved by the Trustee and are to carry a
clause making them payable to the Trustee as its interest may
appear, and are either to be placed in the custody of the
Trustee or satisfactory evidence of said insurance shall be
filed with the Trustee. In the event of loss, the proceeds of
such insurance shall be applied solely toward the
reconstruction, replacement or repair of the System, and in such
event the City will, with reasonable promptness, cause to be
commenced and completed the reconstruction, replacement and
repair work. If such proceeds are more than sufficient for such
purposes, the balance remaining shall be deposited to the credit
of the Water and Sewer Fund, and if such proceeds shall be
insufficient for such purposes the deficiency shall be supplied
first from moneys in the Depreciation Fund and second from
moneys in the Operation and Maintenance Fund and third from
surplus moneys in the Water and Sewer Fund. Nothing shall be
construed as requiring the City to expend any moneys for
operation and maintenance of the System or for premiums on its
insurance which are derived from sources other than the
operation of the System, but nothing shall be construed as
preventing the City from doing so.
Section 23. That any bond shall be deemed to be paid
within the meaning of this Ordinance when payment of the
principal of and interest on such bond (whether at maturity or
0 upon redemption as provided herein, or otherwise), either (i)
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shall have been made or caused to be made in accordance with the
terms thereof, or (ii) shall have been provided for by
irrevocably depositing with the Trustee, in trust and
irrevocably set aside exclusively for such payment, (1) cash
fully insured by FDIC sufficient to make such payment and /or (2)
direct obligations of (including obligations issued or held in
book entry form on the books of) the Department of the Treasury
of the United States of America "Investment Securities
(provided that such deposit will not affect the tax exempt
status of the interest on any of the bonds or cause any of the
bonds to be classified as "arbitrage bonds" within the meaning
of Section 148 of the Internal Revenue Code of 1986, as amended
(the "Code maturing as to principal and interest in such
amounts and at such times as will provide sufficient moneys to
make such payment, and all necessary and proper fees,
compensation and expenses of the Trustee pertaining to the bonds
with respect to which such deposit is made shall have been paid
or the payment thereof provided for to the satisfaction of the
Trustee.
On the payment of all the bonds within the meaning of
this Ordinance, the Trustee shall hold in trust, for the benefit
of the owners of such bonds, all such moneys and /or Investment
Securities.
When all the bonds shall have been paid within the
meaning of this Ordinance, and if the Trustee has been paid its
fees and expenses, the Trustee shall take all appropriate action
to cause (i) the pledge and lien of this Ordinance to be
discharged and cancelled, and (ii) all moneys held by it
pursuant to this Ordinance and which are not required for the
payment of such bonds to be paid over or delivered to or at the
direction of the City. In determining the sufficiency of the
deposit of Investment Securities there shall be considered the
principal amount of such investment securities and interest to
be earned thereon until the maturity of such Investment
Securities.
Section 24. That if there be any default in the
payment of the principal of or interest on any of the bonds, or
if the City defaults in any Bond Fund requirement or in the
performance of any of the other covenants contained in this
Ordinance, the Trustee may, and upon the written request of the
registered owners of not less than 10% in principal amount of
the then outstanding bonds, shall, by proper suit, compel the
performance of the duties of the officials of the City under the
laws of Arkansas. And in the case of a default in the payment
of the principal of and interest on any of the bonds, the
Trustee may and upon written request of the registered owners of
not less than 10% in principal amount of the then outstanding
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bonds, shall apply in a proper action to a court of competent
jurisdiction for the appointment of a receiver to administer the
System on behalf of the City and the registered owners of the
bonds with power to charge and collect (or by mandatory
injunction or otherwise to cause to be charged and collected)
rates sufficient to provide for the payment of the expenses of
operation, maintenance and repair and to pay any bonds and
interest outstanding and to apply the revenues in conformity
with the laws of Arkansas and with this Ordinance. When all
defaults in principal and interest payments have been cured, the
custody and operation of the System shall revert to the City.
No registered owner of any of the outstanding bonds
shall have any right to institute any suit, action, mandamus or
other proceeding in equity or at law for the protection or
enforcement of any power or right unless such owner previously
shall have given to the Trustee written notice of the default on
account of which such suit, action or proceeding is to be taken,
and unless the registered owners of not less than ten percent
(10 in principal amount of the bonds then outstanding shall
have made written request of the Trustee after the right to
exercise such power or right of action, as the case may be,
shall have accrued, and shall have afforded the Trustee a
reasonable opportunity either to proceed to exercise the powers
granted to the Trustee, or to institute such action, suit or
proceeding in its name, and unless, also, there shall have been
offered to the Trustee reasonable security and indemnity against
the costs, expenses and liabilities to be incurred therein or
thereby and the Trustee shall have refused or neglected to
comply with such request within a reasonable time. Such
notification, request and offer of indemnity are, at the option
of the Trustee, conditions precedent to the execution of any
remedy. No one or more registered owners of the bonds shall
have any right in any manner whatever by his or their action to
affect, disturb or prejudice the security of this Ordinance, or
to enforce any right thereunder except the manner herein
described. All proceedings at law or in equity shall be
instituted, had and maintained in the manner herein described
and for the benefit of all registered owners of the outstanding
bonds.
No remedy conferred upon or reserved to the Trustee or
to the registered owners of the bonds is intended to be
exclusive of any other remedy or remedies, and every such remedy
shall be cumulative and shall be in addition to every other
remedy given under this Ordinance or by law.
The Trustee may, and upon the written request of the
registered owners of not less than fifty percent (50 in
0 principal amount of the bonds then outstanding shall, waive any
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default which shall have been remedied before the entry of final
judgment or decree in any suit, action or proceeding instituted
under the provisions of this Ordinance or before the completion
of the enforcement of any other remedy, but no such waiver shall
extend to or affect any other existing or any subsequent default
or defaults or impair any rights or remedies consequent thereon.
All rights of action under this Ordinance or under any
of the bonds enforceable by the Trustee, may be enforced by it
without the possession of any of the bonds, and any such suit,
action or proceeding instituted by the Trustee shall be brought
in its name for the benefit of all the registered owners of such
bonds, subject to the provisions of this Ordinance.
No delay or omission of the Trustee or of any
registered owners of the bonds to exercise any right or power
accrued upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an
acquiescence therein; and every power and remedy given by this
Ordinance to the Trustee and to the registered owners of the
bonds, respectively, may be exercised from time to time and as
often as may be deemed expedient.
In any proceeding to enforce the provisions of this
Ordinance any plaintiff bondholder shall be entitled to recover
from the City all costs of such proceeding, including reasonable
attorneys' fees.
Section 25. (a) That the terms of this Ordinance
shall constitute a contract between the City and the registered
owners of the bonds and no variation or change in the
undertaking herein set forth shall be made while any of the
bonds are outstanding, except as hereinafter set forth in
subsections (b) and (c), and the owner of any bonds may at any
time for and on his own behalf or for and on behalf of all
bondholders enforce the obligations of the City by a proper suit
for that purpose.
(b) The Trustee may consent to any variation or
change in this Ordinance to cure any ambiguity, defect or
omission in this Ordinance or any amendment hereto without the
consent of the owners of the outstanding bonds.
(c) The owners of not less than seventy -five percent
(75%) in aggregate principal amount of the bonds then
outstanding shall have the right, from time to time, anything
contained in this Ordinance to the contrary notwithstanding, to
consent to and approve the adoption by the City of such
ordinance supplemental hereto as shall be necessary or desirable
for the purpose of modifying, altering, amending, adding to or
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rescinding, in any particular, any of the terms or provisions
contained in this Ordinance or in any supplemental ordinance;
provided, however, that nothing contained in this Section shall
permit or be construed as permitting (a) an extension of the
maturity of the principal of or the interest on any bond, or (b)
a reduction in the principal amount of any bond or the rate of
interest thereon, or (c) the creation of a lien or pledge
superior to the lien and pledge created by this Ordinance, or
(d) a privilege or priority of any bond or bonds over any other
bond or bonds, or (e) a reduction in the aggregate principal
amount of the bonds required for consent to such supplemental
ordinance.
Section 26. (a) That moneys held for the credit of
the Bond Fund shall be continuously invested and reinvested
pursuant to the direction of the Commission in Permitted
Investments (as hereinafter defined in (i)) all of which shall
mature, or which shall be subject to redemption by the holder
thereof, at the option of such holder, not later than the
payment date for interest or principal and interest.
(b) Moneys held for the credit of the Construction
Fund may, at the option of the Commission, be invested and
reinvested pursuant to the direction of the Commission in
Permitted Investments or other investments as may from time to
time be authorized by law, which shall mature, or which shall be
subject to redemption by the holder thereof, at the option of
such holder, not later than the date or dates when such money
will be required for the purposes intended.
(c) Moneys held for the credit of the Debt Service
Reserve shall be invested and reinvested at the direction of the
Commission in Permitted Investments all of which shall mature,
or which shall be subject to redemption by the holder thereof,
at the option of such holder, not later than ten (10) years
after the date of investment.
(d) Moneys held for the credit of any other fund,
excluding the Rebate Fund, shall be continuously invested and
reinvested pursuant to the direction of the Commission in
Permitted Investments, or other investments as may, from time to
time, be permitted by law, which shall mature, or which shall be
subject to redemption by the holder thereof, at the option of
such holder, not later than the date or dates when the moneys
held for the credit of the particular fund will be required for
purposes intended.
(e) Obligations so purchased as an investment of
moneys ill any fund shall be deemed at all times to be a part of
such fund and the interest accruing thereon and any profit
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realized from such investments shall be credited to such fund,
and any loss resulting from such investment shall be charged to
such fund, except that interest earnings and profits on
investments of moneys in the Debt Service Reserve which increase
the amount thereof above the required level shall to the extent
of any such excess be transferred from time to time by the
Trustee into the Bond Fund or, at the option of the Commission,
shall be transferred to,the Rebate Fund as provided in Section
32 of this Ordinance.
(f) Moneys so invested in Government Securities
(hereinafter defined) or in certificates of deposit of banks to
the extent insured by FDIC need not be secured by the Trustee or
the depository bank or banks.
(g) All investments and deposits shall have a par
value (or market value when less than par), exclusive of accrued
interest at all times at least equal to the amount of money
credited to such funds.
(h) Investments of moneys in all funds shall be
valued in terms of current market value as of the first day of
each year, except that direct obligations of the United States
(State and Local Government Series) in book -entry form shall be
continuously valued at par or face principal amount.
(i) "Permitted Investments" are defined as direct or
fully guaranteed obligations of the United States of America
"Government Securities or certificates of deposit or time
deposits of banks, including the Trustee, to the extent insured
by FDIC or if in excess of insurance coverage, collateralized
with Government Securities.
(j) All investments and reinvestments made under this
Section shall be subject to the provisions of Section 148 of the
Code pertaining to "arbitrage bonds" and Section 32 (d) of this
Ordinance.
Section 27. That when the bonds have been executed,
they shall be delivered to the Purchaser upon payment in cash of
the purchase price of 97.5% of the principal amount thereof plus
accrued interest "total sale proceeds The accrued interest
shall be deposited into the Bond Fund. The Trustee shall be paid
a fee for authenticating the bonds. An amount of total sale
proceeds that is sufficient, along with other moneys set aside
and appropriated hereby for such purposes, to accomplish the
refunding shall be deposited into an escrow account to be
established with Twin City Bank, North Little Rock, Arkansas, as
escrow agent (the "Escrow Agent The sum of $281,998 shall be
deposited into the Debt Service Reserve. The City shall deposit
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the remainder of total sale proceeds and other available moneys
appropriated hereby into a special account to be established
with the Trustee in the name of the City designated "1989 Water
and Sewer Revenue Construction Fund" (the "Construction Fund
The moneys in the Construction Fund shall be disbursed by the
Trustee solely in payment of the costs of accomplishing the
improvements, paying necessary expenses incidental thereto and
paying expenses of issuing the bonds. Disbursements shall be on
the basis of requisitions which shall contain at least the
following information: the person to whom payment is being
made; the amount of the payment; and the purpose by general
classification of the payment. Each requisition must be signed
by the Manager of the System and one other person designated by
the Commission, and in case of all items of expense over which
the consulting engineer shall exercise supervision (which shall
include all expenses except engineering fees, legal fees, and
expenses pertaining to the issuance of bonds) each requisition
shall be accompanied by a certificate signed by the consulting
engineer certifying his approval thereof.
When the improvements have been completed and all
required expenses paid and expenditures made from the
Construction Fund for and in connection with the accomplishment
of the improvements and the financing thereof, this fact shall
be evidenced by a certificate signed by the Manager of the
System and by the consulting engineer, which certificate shall
state, among other things, the date of the completion and that
all obligations payable from the Construction Fund have been
discharged. A copy of the certificate shall be filed with the
Trustee, and upon receipt thereof the Trustee shall transfer any
remaining balance to the Bond Fund and such funds shall be used
for the redemption of the bonds.
Section 28. That there shall be a statutory mortgage
lien upon the water facilities which are part of the System
(including all extensions, improvements and betterments now or
hereafter existing) which shall exist in favor of the registered
owners of the bonds, and each of them and such water facilities
shall remain subject to such statutory mortgage lien until
payment in full of the interest on and principal of the bonds,
provided, however, that such statutory mortgage lien shall be
interpreted according to the decision of the Supreme Court of
the State of Arkansas in City of Harrison v. Braswell, supra.
Section 29. That there is hereby appropriated for the
accomplishment of the improvements and the refunding all moneys
in the Water and Sewer Revenue Bond Fund (including the debt
service reserve therein) maintained by the 1978 Ordinance.
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Section 30. That in the event the office of Mayor,
City Clerk, City Treasurer, Commission, or City Council shall be
abolished, or any two or more of such offices shall be merged or
consolidated, or in the event the duties of a particular office
shall be transferred to another office or officer, or in the
event of a vacancy in any such office by reason of death,
resignation, removal from office or otherwise, or in the event
any such officer shall become incapable of performing the duties
of his office by reason of sickness, absence from the City or
otherwise, all powers conferred and all obligations and duties
imposed upon such office or officer shall be performed by the
office or officer succeeding to the principal functions thereof,
or by the office or officer upon whom such powers, obligations
and duties shall be imposed by law.
Section 31. That the Mayor is hereby directed to
publish for one insertion in a newspaper which is published in
the City and of general circulation therein, this Ordinance, to
which shall be attached a Notice signed by him in substantially
the following form:
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NOTICE
Notice is hereby given that the City Council of the City of
Van Buren, Arkansas, has adopted the ordinance hereinafter set
out; that the City contemplates the issuance of Water and Sewer
Revenue Refunding and Construction Bonds, Series 1989, described
in the ordinance; that any person interested may appear before
the Council on the day of 1989, at
.m., at the usual meeting place of the Council held in the
City and present protests. At such hearing all objections and
suggestions will be heard, and the Council will take such action
as is deemed proper in the premises.
DATED this day of 1989.
Mayor
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Section 32. There is hereby created and ordered
established with the Trustee a trust fund to be designated by
the Trustee and which is herein referred to as the Rebate Fund.
The Rebate Fund shall be invested by the Trustee at the
direction of the Commission and expended in accordance with this
Section 32, such investments to be in Government Securities,
subject to the provisions of paragraph (d) hereof.
The Rebate Fund shall be held in trust by the Trustee
and, subject to paragraph (c) hereof, shall be held for the
benefit of the United States of America as contemplated under
the provisions of this Section 32. The Rebate Fund shall not be
held for the benefit of the owners of the bonds or the Trustee.
The Trustee shall have no lien on or security interest in the
Rebate Fund with respect to the payment of any fees, charges or
expenses due to the Trustee under this Ordinance.
The Trustee shall keep and maintain adequate records
pertaining to the Rebate Fund and all transfers thereto,
deposits therein, disbursements therefrom, transfers therefrom
and earnings thereon. Copies of such records shall be available
for inspection during regular business hours to the City upon
written request.
(b) Definitions. As used in this Section 32, the
following words and phrases shall have the following meanings:
"Computation Period" means each period from the date
of the issuance of the bonds through each respective Rebate
Determination Date.
"Rebatable Arbitrage" means that amount required to be
rebated to the United States within sixty (60) days after a
Rebate Determination Date as determined in accordance with
Temporary Income Tax Regulation Section 1.148 -2T and any
successor Regulation applicable to the bonds.
"Rebate Bond Yield" on any Rebate Determination Date
means the yield on the bonds determined in accordance with
Temporary Income Tax Regulation Section 1.148 -3T or any
successor Regulation applicable to the bonds.
"Rebate Determination Date" means September 1, 1994,
and each five (5) year anniversary thereof plus the date of
payment in full of all principal of and interest on the bonds,
or such other dates as the Trustee determines the rebate amount
in accordance with subsection(c).
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"Rebate Payment Dates" means the dates to be chosen by
the Trustee which are not more than sixty (60) days after each
Rebate Determination Date.
"Regulations" means those Treasury Regulations validly
issued or proposed under Section 148 of the Code or under
Section 103(c) of the Internal Revenue Code of 1954, as amended,
particularly Sections 1.103 -13, 1.103 -14, 1.103 -15 and 1.148 -1T
through 1.148 -9T.
(c) Rebate Determination Dates; Transfers to the
Rebate Fund. Within twenty (20) days after each Rebate
Determination Date, the Trustee shall calculate and determine
(i) the Rebate Bond Yield on the bonds for the Computation
Period, and (ii) the Rebatable Arbitrage during the Computation
Period on the Construction Fund, the Bond Fund (including the
Debt Service Reserve), the escrow fund established with the
Escrow Agent and any escrow account held in connection with the
bonds which were refunded by the 1978 Bonds (collectively, the
"Funds and shall file a copy of such determinations with the
Commission within twenty -two (22) days after such Rebate
Determination Date. The Trustee may employ a firm of certified
public accountants (which without limitation may be the
accountants for the City) or other firm with expertise in making
such calculations, provided that such firm is approved by the
Commission, which approval shall not be unreasonably withheld.
The City shall pay the reasonable expenses incurred by the
Trustee in any such employment from moneys in the Operation and
Maintenance Fund.
Within thirty (30) day's after each Rebate
Determination Date the City shall pay to the Trustee for deposit
into the Rebate Fund a sum equal to the Rebatable Arbitrage
during the Computation Period.
If the amount on deposit in the Rebate Fund exceeds
the Rebatable Arbitrage during such Computation Period, the
Trustee will transfer the difference from the Rebate Fund to the
Water and Sewer Fund.
(d) Investments. Moneys held in the Funds and the
Rebate Fund may only be invested in obligations which are:
(i) traded on an established market and purchased on
such market,
(ii) purchased directly from the United States
Treasury, or
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(iii) purchased at the fair market value thereof under
circumstances where such fair market value can be
established by public evidence, e.g., market prices
quoted in a financial newspaper.
(e) Rebate Payments. On each Rebate Payment Date the
Trustee will pay to the United States of America the Rebatable
Arbitrage then due. Within sixty (60) days after the payment in
full of all principal of and interest on the bonds, the Trustee
will pay to the United States of America the final rebate
payment, including any income attributable thereto, in
accordance with the Regulations. Each payment shall be
accompanied by a copy of the forms, statements and notices
required by the Regulations.
(f) Records. The Trustee and the Commission shall
keep and retain until six (6) years after payment in full of all
principal of and interest on the bonds, records with respect to
Rebate Fund, which records shall include descriptions of all
calculations of amounts transferred to the Rebate Fund and
descriptions of all calculations of amounts rebated to the
United States of America. Such records will also show all
amounts paid on the bonds, all additions to and disbursements
from, all cash balances of and all earnings on investments in
the Funds and the Rebate Fund, and all principal of and interest
paid on the bonds.
(g) The provisions of this Section 32 may be modified
in any manner whereby the status of interest on the bonds as
exempt from federal income tax is not affected, and shall be so
modified to the extent necessary to assure that such status is
not affected, as set forth in an opinion of counsel nationally
recognized with respect to obligations the interest on which is
exempt from regular federal income tax, which opinion is
acceptable to the Trustee.
Section 33. That the City covenants that it will
faithfully and punctually perform all duties with reference to
the System required by the Constitution and laws of the State of
Arkansas, including making and collecting of reasonable and
sufficient rates lawfully established for services rendered by
the System, segregating Revenues and applying them to the
respective funds herein identified.
So long as the System is under the control of the
Commission, performance by the Commission of any obligation of
the City hereunder shall be deemed performance by the City.
Section 34. That nothing in this Ordinance expressed
or implied is intended or shall be construed to confer upon, or
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to give to, any person or entity, other than the City, the
Trustee and the registered owners of the bonds, any right,
remedy or claim under or by reason of this Ordinance or any
covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Ordinance
contained by and on behalf of the City shall be for the sole
and exclusive benefit of the City, the Trustee and the
registered owners of the bonds.
Section 35. That from time to time during the
construction of the improvements, the City shall deposit when
necessary surplus moneys of the Water and Sewer Fund into the
Construction Fund to finance the costs of the improvements.
Section 36. (a) That the Trustee shall only be
responsible for the exercise of good faith and reasonable
prudence in the execution of its trust. The recitals in this
Ordinance and in the face of the bonds are the recitals of the
City and not of the Trustee. The Trustee shall not be required
to take any action as Trustee unless it shall have been
requested to do so in writing by the owners of not less than ten
percent (10 in principal amount of the bonds then outstanding
and shall have been offered reasonable security and indemnity
against the costs, expenses and liabilities to be incurred
therein or thereby. The Trustee may resign at any time by 60
days notice in writing to the City Clerk and the owners of the
bonds, and the majority in value of the owners of the
outstanding bonds at any time, with or without cause, may remove
the Trustee. The Trustee's resignation shall become effective
upon the acceptance of the trusts by the successor trustee. In
the event of a vacancy in the office of Trustee, either by
resignation or by removal, the majority in value of the owners
of the outstanding bonds may appoint a new Trustee, such
appointment to be evidenced by a written instrument or
instruments filed with the City Clerk. If the majority in value
of the owners of the outstanding bonds shall fail to fill a
vacancy within 45 days after the same shall occur, then the City
shall forthwith designate a new Trustee by a written instrument
filed in the office of the City Clerk. The original Trustee and
any successor Trustee shall file a written acceptance and
agreement to execute the trust imposed upon it or them by this
Ordinance, but only upon the terms and conditions set forth in
this Ordinance and subject to the provisions of this Ordinance,
to all of which the respective owners of the bonds agree. Such
written acceptance shall be filed,with the City Clerk and a copy
thereof shall be placed in the bond transcript. Any successor
Trustee shall have all the powers herein granted to the original
Trustee.
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(b) Every successor Trustee appointed pursuant to
this Section shall be a trust company or bank in good standing
located in or incorporated under the laws of the State of
Arkansas, duly authorized to exercise trust powers and subject
to examination by federal or state authority, having a reported
capital and surplus of not less than $5,000,000.
Section 37. That anything herein to the contrary
notwithstanding, all rights of any owner of any bond hereunder
to or with respect to any moneys or investments held in any fund
hereunder shall terminate at the expiration of five years from
the date of maturity of such bond, whether by scheduled maturity
or by call for redemption prior to maturity in accordance with
the terms hereof.
Section 38. (a) That the City covenants that it shall
not take any action or suffer or permit any action to be taken
or conditions to exist which causes or may cause the interest
payable on the bonds to be excluded from gross income for
regular federal income tax purposes. Without limiting the
generality of the foregoing, the City covenants that the
proceeds of the sale of the bonds and Revenues will not be used
directly or indirectly in such manner as to cause the bonds to
be treated as "arbitrage bonds" within the meaning of Section
148 of the Code.
(b) The City shall assure that (1) not in excess of
ten percent (10 of the Net Proceeds of the bonds is used for
Private Business Use if, in addition, the payment of more than
ten percent (10° of the principal or ten percent (10° of the
interest due on the bonds during the term thereof is, under the
terms of the bonds or any underlying arrangement, directly or
indirectly secured by any interest in property used or to be
used for a Private Business Use or in payments in respect of
property used or to be used for a Private Business Use or is to
be derived from payments, whether or not to the City, in respect
of property or borrowed moneys used or to be used for a Private
Business Use; and (ii) that, in the event that both (A) in
excess of five percent (5 of the Net Proceeds of the bonds are
used for a Private Business Use, and (B) an amount in excess of
five percent (5 of the principal or five percent (5%) of the
interest due on the bonds during the term thereof is, under the
terms of the bonds or any underlying arrangement, directly or
indirectly, secured by any interest in property used or to be
used for said Private Business Use or in payments in respect of
property used or to be used for said Private Business Use or is
to be derived from payments, whether or not to the City, in
respect of property or borrowed money used or to be used for
said Private Business Use, then said excess over said five
percent (5° of Net Proceeds of the bonds used for a Private
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Business Use shall be used for a Private Business Use related to
the governmental use of the improvements. The City covenants
that none of the proceeds of the 1978 Bonds were used for
Private Business Use.
The City shall assure that not in excess of five
percent (5 of the Net Proceeds of the bonds are used, directly
or indirectly, to make or finance a loan to persons other than
state or local governmental units.
As used in this subsection (b),.the following terms
shall have the following meanings:
"Net Proceeds" means the face amount of the bonds,
plus accrued interest and premium, if any, less original issue
discount, if any, less the amount deposited into the Debt
Service Reserve.
"Private Business Use" means use directly or
indirectly in a trade or business carried on by a natural person
or in any activity carried on by a person other than a natural
person, excluding, however, use by a state or local governmental
unit and use as a member of the general public.
(c) The bonds are hereby designated as "qualified
tax exempt obligations" within the meaning of the Code. The
City represents and covenants that the aggregate principal
amount of its qualified tax exempt obligations (excluding
"private activity bonds" within the meaning of Section 141 of
the Code which are not "qualified 501(c)(3) bonds" within the
meaning of Section 145 of the Code), including those of its
subordinate entities, to be issued in calendar year 1989 does
not and will not exceed $10,000,000.
The City further covenants and represents that (i) the
aggregate principal amount of its tax exempt obligations (not
including "private activity bonds" within the meaning of Section
141 of the Code), including those of its subordinate entities,
to be issued in calendar year 1989 will not exceed $5,000,000,
and (ii) at least 95% of the proceeds of the bonds will be
expended for the governmental activities of the City.
(d) The City covenants that it will take no action
which would cause the bonds to be "federally guaranteed" within
the meaning of Section 149(b) of the Code; specifically, (A) the
payment of any portion of principal or interest with respect to
the bonds will not be guaranteed (directly or indirectly) by the
United States or any agency or instrumentality thereof and (B)
not more. than 5% of the proceeds of the bonds (exclusive of
proceeds invested for an initial temporary period until needed
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for the purpose for which the bonds were issued and proceeds
deposited into the Bond Fund) will be invested (directly or
indirectly) in federally insured deposits or accounts. Nothing
in this Section 38 shall prohibit investments in bonds issued by
the United States Treasury.
(e) The City covenants that it will submit to the
Secretary of the Treasury of the United States, not later than
the 15th day of the second calendar month after the close of the
calendar quarter in which the bonds are issued, a statement
required by Section 149(e) of the Code.
Section 39. That the provisions of this Ordinance are
hereby declared to be separable and if any provision shall for
any reason be held illegal or invalid, such holding shall not
affect the validity of the remainder of this Ordinance.
Section 40. That this Ordinance shall not create any
right of any kind and no right of any kind shall arise hereunder
pursuant to it until the bonds shall be issued and delivered.
Section 41. That all ordinances and resolutions or
parts thereof, in conflict herewith are hereby repealed to the
extent of such conflict.
Section 42. That it is hereby ascertained and
declared that the improvements must be accomplished as soon as
possible in order to make the System adequate for the needs of
the City and its inhabitants, without which the life, health,
safety and welfare thereof are jeopardized, and that the
issuance of the bonds and the taking of the other action
authorized by this Ordinance is necessary for the accomplishment
thereof. It is, therefore, declared that an emergency exists
and this Ordinance being necessary for the immediate
preservation of the public peace, health and safety shall take
effect and be in force from and after its passage.
PASSED: August�j71989. Q
APPROV'tyD
ATTEST:
�0 f
/�i✓r�., ��/ft'— /r'�iiu Mayor 1!
L City Clerk
(SEAL)
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CERTIFICATE
The undersigned, City Clerk of the City of Van Buren,
Arkansas, hereby certifies that the foregoing pages are a true
and correct copy of Ordinance No. /R -/9 T7 adopted at a
4 �P� session of the City Council of the City of Van Buren,
Ark- sas, held at the regular meeting place of the City Council
in the City at 7.-'0° p.m., on the €day of August, 1989,
and that said Ordinance is of record in Ordinance Record Book
No. ig,Q 9 Page /,V now in my possession.
GIVEN under my hand and seal this/ 5TH day of August,
1989.
City Clerk
(SEAL),
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