ORD NO 31-1978 ORDINANCE NO. 3/ 17 767
AN ORDINANCE PROVIDING FOR THE ISSUANCE OF WATER AND
SEWER REVENUE REFUNDING AND IMPROVEMENT BONDS FOR THE
PURPOSE OF REFUNDING CERTAIN OUTSTANDING REVENUE BONDS
(DESCRIBED IN THE AUTHORIZING ORDINANCE), AND FOR THE
PURPOSE OF CONSTRUCTING BETTERMENTS, EXTENSIONS, AND
IMPROVEMENTS TO THE EXISTING WATERWORKS AND SEWER SYSTEMS
NOW SERVING THE CITY OF VAN BUREN, ARKANSAS; 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 a city
of the first class, owns and operates its own municipal water and
sewer systems as a single municipal undertaking (the "System
and
WHEREAS, the City has outstanding an issue of water and sewer
refunding and improvement revenue bonds dated October 1, 1963,,
(the "1963 Bonds and an issue of 4.5% waterworks and sewer revenue
bonds, 1972 series, dated November 1, 1.972 (the "1972 Bonds and
WHEREAS, the City Council of the City of Van Buren, Arkansas, has
determined that it is necessary to construct betterments, extensions,
and improvements to the existing system in order to supply the needs
of the City's inhabitants to provide them with water and sewer service
and to protect their health and safety; and
WHEREAS, the City Council has determined that, by refunding the
1963 Bonds and the 1972 Bonds (also hereinafter collectively called
the "previous bonds the City will realize significant savings, will
realize other significant benefits such as removal of restrictions on
the operation of the System and the restrictions of System improvements,
will realize additional funds for construction of betterments, exten-
sions, and improvements to the System, without the necessity of
raising existing water and sewer rates, and that the refunding of the
previous bonds would be in the interest of the City; and
WHEREAS, the City Council has caused to be filed with the
City Clerk by a duly qualified engineer, chosen by the Council, plans
and specifications for, and an estimate of the cost of, constructing
the betterments, extensions, and improvements, to the System, con-
sisting principally of planning and construction of a sewage treatment
plant or sewage collection lines and water mains and facilities (the
"Project
WHEREAS, the City is authorized to issue bonds to accomplish
the refunding under the Constitution and laws of the State of Arkansas,
including Act No. 297 of 1937, as amended, Act No. 449 of 1961 and
Act No. 145 of 1967, as amended, and the City is authorized to issue
bonds for the purpose of constructing betterments, extensions, and
improvements to the System under the provisions of Acts 131 and 132
of the 1933 Acts of Arkansas, as amended, and applicable decisions
of the Supreme Court of the State of Arkansas; and
WHEREAS, the City has received an offer for the purchase of
$1,887,000 in principal amount of bonds from E. L. Villareal and
Company, Inc., of Little Rock, Arkansas (the "Purchaser at a price
of par plus accrued interest for bonds bearing interest at the rates
as set forth hereinafter, and has determined that the offer should be
accepted;
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City
of Van Buren, Arkansas:
Section 1. That the refunding and construction should be ac-
complished and the Mayor and City Clerk are hereby authorized to
execute and deliver such documents and writings and to take such
other action as may be necessary or appropriate thereto.
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Section 2. Under the Constitution and laws of the State of
Arkansas, including Acts Nos. 131 and 132 of 1933, as amended,
Act No. 297 of 1937, as amended, Act No. 449 of 1961 and Act No. 145
of 1967, as amended, and applicable decisions of the Supreme Court of
the State of Arkansas, including 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 Improvement Bonds (the "Bonds are
hereby authorized and ordered issued in the total principal sum of
$1,887,000 for the purpose of refunding the 1963 Bonds and the 1972
Bonds and paying expenses incidental thereto, and for the purpose of
funding the construction of betterments, extensions, and improvements
to the System, including the necessary expenses incidental thereto
and the expenses of issuing the bonds. The bonds shall be dated
September 1, 1978, and shall bear interest, shall be numbered, and
shall mature on December 1 of each year as follows:
YEAR BOND NOS. PRINCIPAL INTEREST RATE
1984 1 -22 $102,000 6.00
1986 23 -47 125,000 6.25
1988 48 -77 150,000 6.40
1990 78 -107 150,000 6.60
1992 108 -137 150,000 6.80
1994 138 -167 150,000 7.00
1996 168 -179 60,000 7.20
2001 180 -379 1,000,000 7.40
Interest on the bonds shall be payable on June 1 and December 1 of
each year, commencing June 1, 1979, to be evidenced by dual coupons,
denoted Coupons A and Coupons B, with separate rates of interest for
the interest payment dates beginning June 1, 1979, and ending
December 1, 1983, as follows:
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BONDS NOS. INTEREST RATE AMOUNT OF BONDS
COUPON A. COUPON B.
1 thru 22 5.00% 1.00% 102,000
23 thru 47 5.25% 1,00% 125,000
48 thru 77 5.40% 1,00% 150,000
78 thru 107 5.60% 1.00% 150,000
108 thru 137 5.80% 1.00% 150,000
138 thru 167 6,00°% 1,00% 150,000
168 thru 179 6.00% 1,20% 60,000
180 thru 379 6.10% 1.30% 1,000,000
and by single coupons beginning June 1, 1984, and ending on December 1,
2001, at the rates of interest shown in the schedule of maturities
hereinabove set forth,.,
The bonds shall be numbered consecutively from 1 to 379,
inclusive, shall be in the denomination of $5,000 each, except Bonds
Nos, 21 and 22, in the denomination of $1,000 each, and shall be in
substantially the form hereinafter set forth. The bonds shall be
subject to redemption prior to maturity as set forth in the form of
bond hereinafter. The Purchaser may name the Trustee and Paying Agent
for the bonds, subject to the approval of the City Council, which
approval shall be set forth in a resolution adopted by the City Council.
Section 3. The bonds shall be executed on behalf of the City
by the Mayor and City Clerk and shall have impressed thereon the seal
of the City. The bonds may be executed by the facsimile signature of
the Mayor and the interest coupons attached to the bonds may be
executed by the facsimile signature of the Mayor. Any facsimile
signature of the Mayor shall have the same force and effect as a manual
signature. The bond:; must be executed by the manual signature of the
City Clerk. The bonds, together with interest thereon, shall be pay-
able solely from the Water and Sewer Revenue Bond Fund, as hereinafter
set forth, and shall be a valid claim of the holders thereof only
against such fund and the revenues pledged to such fund, which revenues
are hereby pledged acid mortgaged for the equal and ratable payment of
Page 4.
the bonds, and shall be used for no other purpose than to pay
the principal, interest, and trustee's and paying agent's fees on
the bonds, except as otherwise specifically provided in this Ordinance.
The bonds shall not be general obligations of the City but shall be
special obligations, the principal of *Id interest on which are
secured by a pledge of net revenues (gross revenues less operation
and maintenance expenses) derived from the operation of the System.
The bonds and interest thereon shall not constitute an indebtedness
of the City within any constitutional or statutory limitation.
Section 4. The bonds and coupons 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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UNITED STATES OF AMERICA
STATE OF ,ARKANSAS
COUNTY OF CRAWFORD
CITY OF VAN BUREN
WATER AND SEWER REVENUE REFUNDING AND IMPROVEMENT BOND
No,
KNOW ALL MEN BY THESE PRESENTS:
That the City of Van Buren, Arkapsas (the "city acknowledges
itself to owe, and for value received jiereby promises to pay to bearer,
solely from the special fund as hereinafter set forth, the principal
sum of
DOLLARS
in lawful money of the United States of America on the first day of
December, 19 and to pay solely from the special fund interest
thereon at the rate of percent per annum
from the date hereof until paid. Interest is payable semiannually on
June 1 and December 1 of each year, commencing June 1, 1979. Principal
and interest are payable at the principal office of
(the "Trustee" and "Paying Agent
This bond is one of an issue of Water and Sewer Revenue Refunding
and Improvement Bonds, aggregating $1,887,000 in principal amount,
dated September 1, 1978, all of like tenor and effect except as to
number, denomination, rate of interest, and maturity (the "bonds
issued for the purpose of refunding bonds previously issued, constructir
betterments, extensions and improvements to the municipal waterworks
and sewer system of the City, and paying necessary expenses incidental
thereto,
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The bonds are issued pursuant tq and in full compliance with
the Constitution and laws of the State of Arkansas, including
particularly Acts Nos. 131 and 132 of 1933, as amended, Act No. 297
of 1937, as amended, Act No, 449 of 1961 and Act No. 145 of 1967, as
amended, 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), and pursuant to Ordinance
No, duly adopted by the City Council and approved on the
day of 1978 (the "Authorizing Ordinance"
and do not constitute an indebtedness of the City within any consti-
tutional or statutory limitation. The bonds are not general obligations
of the City, but are special obligations payable solely from net
revenues of the City's waterworks and sewer system (the "System An
amount of System revenues sufficient to pay the principal and interest
on the bonds is to be set aside in a special fund for that purpose
identified as "Water and Sewer Revenue Bond Fund," created by the
Authorizing Ordinance, to which reference is hereby made for a state-
ment of the nature and extent of the security and the rights and
obligations of the City, the Trustee and the holders of the bonds.
The City has fixed and has covenanted and agreed to maintain rates for
services of the System which shall be sufficient at all times at least
to provide for the payment of the reasonable expenses of operation and
maintenance of the System, to provide for the payment, when due, of
the principal of and interest on the bonds, with Trustee's and Paying
Agent's fees, as the same become due and payable, to maintain required
II
reserves, and to make required deposits for the depreciation of the
System. The bonds are additionally se,;.ured by a statutory mortgage
lien on the waterworks system, and improvements thereto.
Page 7.
The bonds are subject to redemption prior to maturity, at the
option of the City, in whole or in part, with there to be no partial
redemption of any bond, in inverse numerical order, from surplus
construction funds and revenues on any interest payment date, and
from funds from any source on any interest payment date on and after
December 1, 1983, at a price of the principal amount of the bonds
being redeemed, plus accrued interest to date of redemption.
Notice of the call for redemption shall be published one time
in a newspaper of general circulation throughout the State of Arkansas
published in the City of Little Rock, Arkansas, giving the number and
maturity of each bond being called, with the publication to be at
least fifteen (15) days prior to the redemption date, and after the
date fixed for redemption each bond so called shall cease to bear
interest, provided funds for its payment are on deposit with the
Paying Agent at that time.
This bond shall be deemed a negotiable instrument under the laws
of the State of Arkansas, and is issued with the intent that the laws
of the State of Arkansas will govern its construction.
This bond shall not be valid until it shall have been authenticate
by the certificate hereon duly signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,
conditions and things required to exist, happen and to be performed
precedent to and in the issuance of the bonds have existed, have
happened and have been performed in due time, form and manner, as
required by law; that the indebtedness represented by the bonds does
not exceed any constitutional or statutory limitation; and that
sufficient revenues have been pledged to and will be set aside for
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the payment of the principal of and interest on the bonds.
IN WITNESS WHEREOF, the City of Van Buren, Arkansas, by its
City Council, has caused this bond to be signed by the Mayor and
City Clerk thereof (with the facsimile signature of the Mayor and
the manual signature of the City Clerk) and sealed with the seal of
the City, and has caused the interest coupons attached to be signed
by the facsimile signature of the Mayor, all as of the first day of
September, 1978.
CITY OF VAN BUREN, ARKANSAS
By (Facsimile Signature)
MAYOR
ATTEST:
City Clerk
(SEAL)
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(Form of Coupon)
(Coupon A)
(Coupon B)
Ill No.
On the first day of June 19 the City of Van Buren,
December
Arkansas, unless the bond to which this coupon is attached is paid
prior thereto, hereby promises to pay to bearer solely out of the
fund specified in the bond to which this coupon is attached
DOLLARS
in lawful money of the United States of America, at the principal
office of
being six (6) months' interest then due on
its Water and Sewer Revenue Refunding Bond, dated September 1, 1978,
and numbered
CITY OF VAN BUREN, ARKANSAS
By (facsimile signature)
Mayor
(The first coupon is for nine months' interest, and all other
coupons are for six months' interest. The signature of the Mayor
may be lithographed or engraved on the coupons. All bonds will have
dual coupons, to be designated Coupon A and coupon B for the interest
payments due June 1, 1979, through December 1, 1983, bearing separate
rates of interest as shown on the foregoing interest coupon rate
schedule, and the bonds shall all have single coupons with no "A"
or "B" designation beginning February 1, 1984, through December 1, 2001,
at the single rate of interest shown in the foregoing schedule of bond
maturities.)
On each of the bonds shall appear the following:
CERTIFICATE OF AUTHENTICATION
This is one of the 379 bonds of the issue of the City of
Van Buren, Arkansas, Water and Sewer Revenue Refunding and Improvement
Bonds, dated September 1, 1978, described within,
B
Authorized Signature
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Section 5. The rates to be charged for the services furnished
by the System, heretofore fixed'by ordinances of the City duly adopted
and approved, and the conditions, rights and obligations pertaining
thereto, as set forth therein, 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 systems), with the
reduced rates, will always be equal to the amount required to be
deposited in the Depreciation Fund plus at least 150% of the average
annual principal and interest requirements on all outstanding bonds
payable from the revenues of the Systejn, The City further covenants
and agrees that the rates if necessary, from time to time, shall be
increased to that amount which will produce net revenues at least
sufficient to pay principal, interest and Trustee's and Paying Agent's
fees when due, on all bonds to which System revenues are pledged, make
required deposits into the Depreciation Fund, and otherwise comply
with the provisions of this Ordinance and all ordinances authorizing
bonds.
Section 6. 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
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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
derived from the operation of the System and shall be used and accounted
for in the same manner as any other revenue derived from the operation
of the System. Nothing herein,however, 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 7. The System shall be continuously operated as a revonuo
producing undertaking. All moneys received from the operation of the
System shall be deposited in such depository or depositories for the
City as may be lawfully designated from time to time by the City Council
but which must hold membership in the Federal Deposit Insurance Cor-
poration. All deposits shall be in the name of the City and shall be
so designated as to indicate the particular funds to which the revenues
belong.
Section 8. Water and Sewer Fund. All revenues derived from the
operation of the System shall be paid into a special fund, which is
hereby created and designated "Water and Sewer Fund." The revenues 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 the bonds, to the providing of the Depreciation Fund, and
otherwise as in this Ordinance expressly authorized.
Section 9. Water and Sewer Operation and Maintenance Fund.
There shall be paid from the Water and Sewer Fund into a fund which is
III Page 12.
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hereby created and designated "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 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 (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 said fund, the amount of
any deficiency shall be added to the amount otherwise required to be
transferred and paid into said 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 costs of operation, repair
and maintenance of the System during the remainder of the then
current fiscal year and the next ensuing fiscal year, such surplus
may be transferred and deposited in the Bond Fund (hereinafter created)
or in the Depreciation Fund (hereinafter created); provided, however,
that any such transfer into the Bond Fund shall be in addition to all
other payments required to be made into the Bond Fund,
Section 10. Water and Sewer Revenue Bond Fund. (a) After
making the monthly deposit in the Operation and Maintenance Fund,
there shall be transferred from the Water and Sewer Fund into a special
fund which is hereby created and designated "Water and Sewer Revenue
Bond Fund" (the "Bond Fund the sums in the amounts and at the times
Page 13.
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hereinafter stated in subsection (b) for the purpose of providing
funds for the payment of the principal of and interest on the bonds
herein authorized, with the Trustee's and Paying Agent's fees, (and
for the maintenance of a debt service reserve), as principal and
interest become due on the bonds as follows:
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YEAR PRINCIPAL A A B B TOTAL
DEC. 1 COUPON COUPON COUPON COUPON REQUIREMENTS
JUNE 1 DEC. 1 JUNE 1 DEC. 1
1978
1979 82,846.88 55,231.25 16,492.50 10,995.00 165,565.63
1980 55,231.25 55,231.25 10,995.00 10,995.00 132,452.50
1981 55,231.25 55,231.25 10,995.00 10,995.00 132,452.50
1982 55,231.25 55,231.25 10,995.00 10,995.00 132,452.50
1983 55,231.25 55,231.25 10,995.00 10,995.00 132,452.50
1984 102,000 66,226.25 66,226.25 None None 234,452.50
1985 63,166.25 63,166.25 126,332.50
1986 125,000 63,166.25 63,166.25 P 251,332.50
1987 59,260.00 59,260.00 1' 118,520.00
1988 150,000 59,260.00 59,260.00 M 268,520.00
1989 54,460.00 54,460.00 il'; 108,920.00
1990 150,000 54,460.00 54,460.00 iY 1 258,920.00
1991 49,510.00 49,510.00 1N a 99,020.00
1992 150,000 49,510.00 49,510.00 M 249,020.00
1993 44,410.00 44,410.00 r a 88,820.00
1994 150,000 44,410.00 44,410.00 r 238,820.00
1995 39,160.00 39,160.00 78,320.00
1996 60,000 39,160.00 39,160.00 138,320.00
1997 37,000.00 37,000.00 74,000.00
1998 37,000.00 37,000.00 74,000.00
1999 37,000.00 37,000.00 74,000.00
2000 37,000.00 37,000.00 74,000.00
2001 1,000,000 37,000.00 37,000.00 1,074,000.00
Page 15.
(b) There shall be paid from the Water and Sewer Fund into
the Bond Fund as follows:
(1) Beginning on the first business day of the month
immediately following the month in which the bonds are
delivered, and continuing on the first day of each month
thereafter through December 1, 1983, a sum equal to one -sixth
(1/6) of the next installment of interest, plus such additional
sums as necessary to provide for Trustee's and Paying Agent's
fees;
(2) Beginning on January 1, 1984, or the first business
day thereafter, and continuing on the first day of each month
thereafter through December 1, 1984, a sum equal to one -sixth
(1/6) of the next installment of interest and one -tenth (1 /10)•'
of the next installment of principal, plus such additional sums
as necessary to provide for Trustee's and Paying Agent's fees;
(3) Beginning on January 1, 1985, or the first business
day thereafter, and continuing on the first day of each month
thereafter through December 1, 1996, a sum equal to one-sixth
(1/6) of the next installment of interest and one- twentieth
(1/20) of the next installment of principal, plus such additional
sums as necessary to provide for Trustee's and Paying Agent's
fees; and
(4) Beginning on January 1, 1997, or the first business
day thereafter, and continuing on the first day of each month
thereafter until all outstanding bonds of this issue with
interest thereon have been paid in full, or provision made
for such payment, a sum equal to one -sixth (1/6) of the next
installment of interest and one fiftieth (1/50) of the next
installment of principal, plus such additional sums as necessary
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to provide for Trustee's and Paying Agent's fees, on all
outstanding bonds.
There shall be accumulated from the fractional payments on
principal a debt service reserve of $100,000 in excess of the debt
service requirements for accruing principal, and if a surplus shall
exist in the Bond Fund in excess of the amount required for making
all principal and interest payments to the next maturity date of
principal and the Trustee's and Paying Agent's fees, and in excess
of the debt service reserve, such surplus may be applied to the
payment of the principal on any bonds of this issue that may be called
for redemption prior to maturity.
(c) If the revenues of the System are insufficient to make the
required payment on the first business day of the following month
into the Bond Fund, then 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.
(d) If for any reason the City shall fail at any time to make
any of the required payments into the Bond Fund, any sums then held' as
a debt service reserve shall be used to the extent necessary in the
payment of the principal of and interest on the bonds, but such
reserve shall be reimbursed from the Water and Sewer Fund before any,
of the moneys in the Water and Sewer Fund shall be used for any other
purpose except for making the payments hereinabove required to be made
into the Operation and Maintenance Fund and into the Bond Fund. The
debt service reserve shall be used solely as herein provided.
(e) 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 bonds then outstanding, and the Trustee's and
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Paying Agent's fees, the Treasurer shall not be obligated to make
any further payments into the Bond Fund.
(f) All moneys in the Bond Fund shall be used solely for the
purpose of paying the principal of and interest on the bonds, and
the Trustee's and Paying Agent's fees, except as herein specifically
provided.
(g) It shall be the duty of the Treasurer to withdraw from the
Bond Fund at least ten (10) days before the maturity date of any bond
or interest coupon issued hereunder and to deposit with the Paying
Agent an amount equal to the amount of such bond or coupon for the
sole purpose of paying the same, together with the customary Trustee's
and Paying Agent's fees, and no withdrawal of funds from the Bond Fund
shall be made for any other purpose except as otherwise authorized
in this Ordinance,
(h) The bonds shall be specifically secured by a pledge of all
the 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 11. Water and Sewer Depreciation Fund. After making
the required payments into the Operation and Maintenance Fund and the
Bond Fund, there shall be paid from the Water and Sewer Fund into a
fund which is hereby created and designated "Water and Sewer Depre-
ciation Fund" (the "Depreciation Fund on the first business day of
the month immediately following the month in which the bonds are
delivered and continuing on the first business day of each month
thereafter while any of the bonds are outstanding, 5% of the gross
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revenues of the System 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;
provided, however, in the event that no other funds are available
therefor, the moneys in the Depreciation Fund may be used to the
extent necessary to prevent a default in the payment of the principal
of and interest on the bonds.
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 then current fiscal year,
and the next ensuing fiscal year, such surplus may be transferred and
paid into the Bond Fund; provided, however, that such payments into
the Bond Fund shall be in addition to all other payments hereinbefore
required to be made into the Bond Fund. z
Section 12. Any surplus in the Water and Sewer Fund after making
all disbursements required by the provisions of this Ordinance and
making full provision for the other funds herein provided may be used,
at the option of the City, for the redemption of bonds prior to
maturity in accordance with the redemption provisions herein set forth,
for constructing extensions, betterments and improvements to the
System, or for any other lawful municipal purpose.
Section 13. (a) Upon delivery of the bonds, any portions of
the revenue bond and sinking fund accounts being maintained pursuant
to ordinances authorizing and pertaining to the previous bonds not
used for the redemption of any previous bonds shall be transferred and
deposited in the Water and Sewer Fund created by Section 8 of this
ordinance and shall be held and used as set forth in Sections 8 and
12'hereof.
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(b) After complying with subsection (a) above, any moneys
now being held in any other fund or account being maintained pursuant
to the ordinances authorizing and pertaining to the previous bonds
shall be transferred to the Water and Sewer Fund or to the corres-
ponding fund or funds created and to be maintained pursuant to the
provisions of this Ordinance.
Section 14. The City hereby agrees that all payments on the
bonds and interest shall be made only through the Paying Agent. All
bonds paid at maturity or redemption prior to maturity shall be
cancelled when such payment is made, together with all inmatured
coupons appertaining thereto, and shall not be reissued. All unpaid
interest coupons maturing on or prior to the date of such payment
shall continue to be payable to the respective bearers thereof.
Section 15. As long as any of the bonds authorized and issued
under and pursuant to the provisions of this Ordinance 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 of this issue. Nothing contained in this
Ordinance shall be construed to prevent the issuance by the City of
additional bonds to finance or pay the cost of constructing any future
extensions, betterments or improvements to the System; provided, how-
ever, the City shall not authorize or issue any such additional bonds
ranking on a parity with these bonds 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 of the System for the fiscal year immediately preceding
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the fiscal year in which it is proposed to issue such additional bonds
shall equal not less than 150% of the average annual principal and
interest requirements on the bonds then outstanding and the bonds
proposed to be issued. For the purposes of the computation required
by this paragraph, 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 the 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.
The term "net revenues" as used in this Section shall mean gross
revenues of the System less the amount required to pay the cost of
operation, maintenance and repair of the System.
The additional bonds, the issuance of which is restricted and
i
conditioned by this Section, shall be understood to mean bonds payable
from the revenues of the System on a parity with these bonds and shall
not be deemed to include other obligations the security and source of
payment of which are subordinate and subject to the priority of these
bonds.
Section 16. It is covenanted and agreed by the City and with
the holders of the bonds, or any of them, that the City will faithfully
and punctually perform all duties with reference to the System required
by the constitution and laws of the State of Arkansas, including the
Page 21.
charging and collecting of reasonable and sufficient rates, as herein
specified, lawfully established for services rendered by the System,
the segregating of the revenues of the System as herein required and
the applying of the revenues to the respective funds herein created
and referred to.
Section 17. The bonds authorized hereby and issued hereunder
shall be subject to redemption prior to maturity in accordance with
the terms set out in the bond form.
Section 18. The City will keep proper books of accounts and
records (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 holder 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 interested holders. In the event
the City fails or refuses to make the audit, the Trustee, or any holder
of the bonds may have the audit made, and the cost thereof shall be
charged against the Operation and Maintenance Fund.
Section 19. 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 bonds authorized hereby 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 authorized and. qualified
Page 22.
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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 businesses. The insurance policies are
to be taken with companies approved by the Trustee, are to carry a
clause making them payable to the Trustee as an additional insured
as its interest may appear, and are either to be placed in the custody
of the Trustee or satisfactory evidence of the 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 remainixg 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 herein shall be construed as requiring
the City to expend any funds 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 herein shall be
construed as preventing the City from doing so.
Page 23.
Section 20. The City covenants and agrees that so long as any
bonds authorized hereby are outstanding, that it will not mortgage,
pledge or otherwise encumber the System, or any part thereor or any
revenues derived from the operation thereof, except as herein
specifically provided, and will not sell, lease or otherwise dispose
of any substantial portion of the same.
Section 21. There shall be a statutory mortgage lien upon the
water facilities, which shall exist in favor of the holders of the
bonds 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 22. The owner or owners of all improved property lying
within the area that will be served by the sewer facilities are hereby
directed and required, upon written request from the City, to connect
all toilet and wast water facilities of such improved property with
the sewer facilities. The required notice by the City shall be given
a t least thirty (30) days prior tc; the final date for connection, and
if any property owner shall fail to make such connection after having
been so requested in writing, the City hereby covenants and agrees to
institute appropriate proceedings in a court of competent jurisdiction
to compel such connection. Furthermore, any property owner who fails
or refuses to connect his improved property with the sewer facilities
after having been so requested by the City shall be guilty of a mis-
demeanor and upon conviction shall be fined in any sum not less than
$2.00 and not more than $10.00, and each day's failure or refusal after
Page 24.
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the expiration of the time fixed in the notice to make the connection
shall be a separate offense; provided, however, that the provisions
hereof pertaining to a misdemeanor shall be effective only in the
event that the City Health Officer, or other duly designated individual
or board, has found and declared that such failure on the part of any
particular property owner constitutes a hazard to the public health
and safety of the City and its inhabitants.
Section 23. (a) The City covenants and agrees that the holders
and registered owners of the bonds shall have the protection of the
provisions of Section 13 of Act No. 132 of the Acts of Arkansas of
1933, as amended (Ark. Stat. Ann. §19 -4113 [Repl. 1968]) "Act No.132
and the City will diligently proceed tp enforce the lien of unpaid
sewer charges against the premises served by the sewer facilities and
to collect the amount due, together wikh the penalty and expenses
authorized by Act No. 132. And, if thy; City shall fail to proceed,
within thirty (30) days after written request shall have been filed
by the Trustee, the Trustee may, and upon the written request of the
holders of not less than ten percent (10%) in principal amount of the
bonds then outstanding shall, proceed to enforce the lien in accordance
with and pursuant to the authorization of Act No. 132.
(b) 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 requirements or in the performance of any of the other covenants
contained and set forth in this Ordinance,'the Trustee may, and upon
the written request of the holders of not less than ten percent (10
in principal amount of the bonds then outstanding 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
Page 25.
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payment of the principal of and interest on any of the bonds, the
Trustee may, and upon the written request of holders of not less
than ten percent (10%) in principal amount of the bonds then outstanding
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 holders 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 revenue 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.
(c) No holder of any of the outstanding bonds shall have any
right to institute any suit, action, mandamus or other proceeding in
equity or in law for the protection or enforcement of any right under
this Ordinance or under the laws of Arkansas unless such holder
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 holders 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 powers 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 herein granted or granted by the laws of
Arkansas, or to institute such action, suit or proceeding in its name,
and unless, also, there shall have been offered to the Trustee
Page 26.
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, and such notification, request and offer of indemnity
are hereby declared in every such case, at the option of the Trustee,
to be conditions precedent to the execution of the powers and trusts
of this Ordinance or to any other remedy hereunder. It is understood
and intended that no one or more holders of the bonds hereby secured
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 hereunder except in the manner herein provided, that
all proceedings at law or in equity shall be instituted, had and
maintained in the manner herein provided and for the benefit of,all
holders of the outstanding bonds and coupons, and that any individual
rights of action or other right given to one or more of such holders
by law are restricted by this Ordinance to the rights and remedies
herein provided.
(d) All rights of action under this Ordinance or under any of
the bonds secured hereby, enforceable by the Trustee, may be enforced
by it without the possession of any of the bonds or coupons appertaining
thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the holders
of such bonds and coupons, subject to the provisions of this Ordinance.
(e) No remedy herein conferred upon or reserved to the Trustee
or to the holders of the bonds is intended to be exclusive of any
other remedy or remedies herein provided, and each and every such
remedy shall be cumulative and shall b9 in addition to every other
Page 27.
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remedy given hereunder or given by any other law.
(f) No delay or omission of the Trustee or of any holders 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
holders of the bonds, respectively, mar be exercised from time to
time and as often as may be deemed expedient.
(g) The Trustee may, and upon the written request of the holders
of not less than fifty percent (50°%) in principal amount of the bonds
then outstanding shall, waive any 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.
Section 24. When the bonds have been executed and the seal of
the City impressed as herein provided, they shall be delivered to the
Trustee and the Trustee shall authenticate them and deliver them to
the purchaser upon payment of the purchase price, plus accrued interest
from the date of the bonds to the date of delivery "total sale
proceeds The manner of payment of the purchase price may be set
forth in a letter of delivery instructions executed by the Mayor and
delivered to the Trustee. The total sale proceeds shall be disbursed
as follows:
(a) The accrued interest shall be deposited in the Bond Fund.
(b) From the balance of the total sale proceeds, 887,000
shall be applied to the refunding of the previous bonds and to that end
Page 28.
shall be invested, as set forth in the letter of delivery instructions
or as set forth in the Trust Agreement (identified below), in direct
obligations of, or obligations the principal of and interest on which
are fully guaranteed by, the United States of America, with such
maturities and redemption provisions as, together with available cash,
will produce, as needed, sufficient moneys to pay principal, interest,
l and Trustee's and Paying Agent's fees on the previous bonds, as due
and payable. The investment securities and cash, if any, shall be
identified in a Trust Agreement executed by the Mayor and City Clerk,
which Trust Agreement shall provide that the investment securities and
cash, if any, shall be held in trust for the security of the previous
bonds and shall provide for the proper handling and disbursement of
moneys held in trust thereunder for the payment of principal, interest,
and.Trustee's and Paying Agent's fees on the previous bonds, as due
and payable. The Mayor and City Clerk are authorized and directed to
enter into the Trust Agreement, and such writings as may be incidental
thereto, incorporating and implementing the provisions of this Section.
All moneys remaining after payment and redemption of all previous
bonds shall be remitted to the City for deposit and handling as set
forth in this Ordinance.
(c) The remainder of the total sales proceeds shall be deposited
into a fund hereby created and designated "Construction Fund" in a
bank that is a member of the Federal Deposit Insurance Corporation
and used for the payment of costs of the Project and paying expenses
incidental thereto, including engineering and legal fees and expenses,
except that part of the Construction Fund not immediately needed for
the Project shall be invested and reinvested pursuant to the direction
Ill of the City in direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United
States of America, including but not limited to certificates of
deposit with banks that are members of the'Federa-1 Deposit Insurance
Page 29.
Corporation, and in the event there:,shall accumulate in the Construction
Fund a surplus of funds in excess of the anticipatory needs of Project
costs, such surplus shall be transferred and paid into the Bond Fund.
The moneys in the Construction Fund, except the surplus funds mentioned
above, shall be disbursed solely in payment of costs of the Project
and expenses incidental thereto. Each check or voucher for disburse-
ment of funds must be signed by the individual occupying the position of
managing officer of the System, and in the case of all items of expense
over which the consulting engineers shall exercise supervision each
check or voucher must be accompanied by a certificate signed by the
consulting engineers or their representative certifying approval
thereof. The managing officer of the System shall keep records of all
payments made by check or voucher.
When the Project has been completed, this fact shall be evidenced
by a certificate of the consulting engineers to that effect, to be
delivered and filed with the managing officer of the System and the city
Clerk, which certificate shall state the date of completion and shall
state that all obligations which are payable from the Construction Fund
have been discharged. Upon receipt of such certificate, the managing
officer of the System shall by check or voucher signed by him, pay
and transfer any remaining balance in the Construction Fund into the
Bond Fund, and if part of such balance is in excess of the required
debt service reserve, that part shall be used for the prepayment of the
bonds of this issue prior to maturity.
Section 25. (a) Moneys held for the credit of the debt service
reserve in the Bond Fund shall be continuously y invested and rein
vested pursuant to the direction of the City in direct obligations
of, or obligations the principal of and interest on which are uncon-
1 ditionally guaranteed by, the United States of America, in certificates
of deposit of banks that are members of the Federal Deposit Insurance
Corporation, or other investments as slay be, from time to time, per-
mitted by law, which shall mature, or which shall be subject to
Page 30.
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redemption by the holder thereof, at the option of such holder, not
later than ten (10) years after the date of such investment.
(b) Moneys held for the credit pf any other fund may, at the
1
option of the City, be invested and reinvested pursuant to the
direction of the City in direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by,
the United States of America, in certificates of deposit of banks
that are members of the Federal Deposit Insurance Corporation, or
other investments as may be from time to time 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 the purposes intended.
(c) Obligations so purchased as an investment of moneys in any
such fund shall be deemed at all times to be a part of such fund and
the interest accruing thereon and any profit realized from such
investment shall be credited to such fund, and any loss resulting from
such investment shall be charged to such fund. However, if the moneys
in the debt service reserve exceed the required level thereof, such
excess may be transferred to the Bond Fund.
(d) Moneys so invested in United States Government obligations,
as above defined, need not be secured by the depository bank.
Section 26. Bonds and coupons for the payment or redemption of
which moneys or investment securities, as hereafter defined in this
Section, shall have been deposited in the Bond Fund (whether upon or
prior to the maturity or the redemption date of such bonds) shall be
deemed to be paid within the meaning of this Ordinance; provided,
however, that if such bonds are to be redeemed prior to the maturity
Page 31.
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thereof, notice of such redemption shall have been duly given.
"Investment securities" shall mean direct or fully guaranteed obli-
411 gations of the United States of America maturing on or prior to the
maturity or redemption date of the bonds and in determining the
sufficiency of the deposit there shall be considered the principal
amount of such investment securities and interest to be earned thereon
until the maturity of such investment securities.
The City may at any time surrender to the Trustee for cancellation
by it any bonds previously authenticated and delivered hereunder,
together with any unpaid coupons thereto belonging, which the City
may have acquired in any manner whatsoever, and such bonds and coupons,
upon such surrender and cancellation, shall be deemed to be paid and
retired.
Section 27. In the event the office of Mayor, City Clerk, City
Treasurer, Manager of the System 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 other-
wise, 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
e duties shall be imposed by law.
Section 28, The City covenants jphat it shall not take any action
or suffer or permit any action to be taken or condition to exist which
Page 32.
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causes or may cause the interest payable on the bonds to be subject
to federal income taxation. Without limiting the generality of the
O foregoing, the City covenants that the proceeds of the sale of the
bonds will not be used directly or indirectly in such manner as to
cause the bonds to be treated as "arb4rage bonds" within the meaning
of Section 103 (d) of the Internal Revenue Code of 1954, as amended.
Section 29. The provisions of this Ordinance shall constitute
a binding contract between the City and the holders of the outstanding
bonds and coupons issued hereunder, and the City will at all times
strictly adhere to the terms and provisions hereof and fully discharge
all of its obligations hereunder. Subject to the terms and provisions
contained in this Section and not otherwise, the holders 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, any-
thing 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 rescinding, in any
particular, any of the terms or provisions contained in this Ordinance
or in any supplemental ordinance; provided, however, that nothing
herein contained shall permit or be coxstrued as permitting (a) an
extension of the maturity of the principal of or the interest on any
bond issued hereunder, or (b) a reduction in the principal amount of
any bond or the rate of interest thereon, or (c) the creation of a
lien upon or a pledge of revenues other than as expressly authorized
by the appropriate provisions of this Ordinance as now adopted, or
(d) the creation of a privilege of priority of any bond or bonds over
Page 33.
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any other bond or bonds, or (e) a reduction in the aggregate principal
amount of the bonds required for consent to such supplemental ordi-
o nance.
Section 30, The Mayor is hereby directed to publish for one
insertion in a newspaper published in the City and of general circulatio
therein, this Ordinance, to which shall be attached a Notice signed
by him in substantially the following form:
Page 34.
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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 Improvement Bonds described in the Ordinance;
that any person interested may appear before the Council on the
day of 1978, at
O'clock, .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 1978.
MAYOR
0 c�
Section 31. 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 holders of
not less than ten percent (10 in principal amount of the bonds of
this issue 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 ten (10) days notice in writing to the City Clerk and the
majority in principal amount of the holders of the outstanding bonds
of this issue at any time, with or without cause, may remove the
Trustee. In the event of a vacancy in the office of Trustee, either
by resignation or by removal, the majority in principal amount of the
holders of the outstanding bonds of this issue 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 principal
amount of the holders of the outstanding bonds of this issue shall fail
to fill a vacancy within thirty (30) days after the same shall occur,
then the City shall forthwith designat, 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
Ordinance, but only upon the terms and conditions set forth in this
S Ordinance and subject to the provisions of this Ordinance, to all of
which the respective holders of the bonds agree. Such written acceptance
Page 35.
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. In the event
of a change in the office of Trustee, the old Trustee which has
resigned or been removed shall cease to be Paying Agent.
Section 32, 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 authorized by this Ordinance shall be issued and
delivered.
Section 33. If any provision of this Ordinance shall for any
reason be declared to be illegal or invalid, such declaration shall
not affect the validity of the remainder of the provisions of the
Ordinance and to that event all provisions of this Ordinance are
hereby declared to be severable.
Section 34. Al] ordinances, resolutions and parts thereof in
conflict herewith, including specifically any parts of the ordinances
and resolutions authorizing and pertaining to the previous bonds,
that are in conflict herewith are hereby repealed to the extent of
such conflict.
Section 35. It is hereby ascertained and declared that an
immediate need exists for the refunding of the indebtedness evidenced
by the previous bonds, in order that the savings and other significant
benefits may be realized. It is, therefore, declared that an emergency
exists, and this Ordinance being necessary for the immediate preser-
vation of the public peace, health and safety shall take effect and
be in force from and after its passage.
PASSED: Jc 4t1 f, 1978.
APPROVED:
ATTEST: MAYOR
i
.f 1_. i2
City Clerk
(SEAL)
Page 36.
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CERTIFICATE
The undersigned, City Clerk of the City of Van Buren,
Arkansas, hereby certifies that the foregoing pages, numbered 1 to 36,
inclusive, are a true and perfect copy of Ordinance No. ,3 /97s
adopted at a f session of the City Council of the City,
held in the regular meeting place of the Council in the City at
Y!' 00 o'clock, J° .M., on the ,3/ sy day of
C( 1978, and that that the Ordinance is of record
in Ordinance Record Book No. Y page 3/ now in
my possession. 111
GIVEN under my hand and seal on this day of
�.f li cJt� 1978.
City Clerk
(SEAL)