Res. 2122 - Authorizing sale of Water Revenue Refunding Bonds COUNCIL BILL NO. 3079
RESOLUTION NO. 2122
A RESOLUTION OF THE CITY OF WOODBURN, OREGON AUTHORIZING THE SALE OF
A WATER REVENUE REFUNDING BOND
WHEREAS, in 2002 the City entered into Loan Agreement No. Y02007 with
the State of Oregon acting by and through its Economic and Community
Development Department (the "Y02007 Financing") to finance water system
improvements including construction of the National Way Treatment Facility,
construction of the Parr Road Treatment Facility, and construction of the Country
Club Road Facility (the "Project"); and
WHEREAS, in 2002 the City entered into Loan Agreement No. S02010 with
the State of Oregon acting by and through its Economic and Community
Development Department (the "S02010 Financing") to finance the Project; and
WHEREAS, in 2003 the City entered into Loan Agreement No. G02003 with
the State of Oregon acting by and through its Economic and Commmunity
Development Department (the "G02003 Financing," and collectively with the
Y02007 Financing and the S02010 Financing, the "Refundable Borrowings") to
finance the Project., and
WHEREAS, Oregon Revised Statutes sections 287A.360 through 287A.375
authorize Oregon cities to refund outstanding borrowings like the Refundable
Borrowings; and
WHEREAS, under current market conditions refunding all or a portion of the
Refundable Borrowings may produce debt service savings; and
WHEREAS, it is now desirable to authorize the refunding of the Refundable
Borrowings to achieve debt service savings and restructure the annual debt
service payments; NOW, THEREFORE,
THE CITY OF WOODBURN RESOLVES AS FOLLOWS:
Section 1. Refunding Bond Authorized.
The City Council hereby authorizes the issuance of a water revenue
refunding bond (the "Bond") to refund all or any portion of the Refundable
Borrowings. The Bond may be issued in an amount sufficient to refund all or any
portion of the Refundable Borrowings that are being refunded and to pay
estimated costs related to issuing the Bond and refunding the Refundable
Borrowings.
Page 1 T Council Bill No. 3079
Resolution No. 2122
Section 2, Delegation.
The City Administrator or the City Finance Director or the person
designated by the City Administrator or the City Finance Director (any of whom
is referred to in this resolution as a "City Official") are each hereby authorized, on
behalf of the City and without further action by the Council, to:
2.1 Select one or more commercial banks or other investors and negotiate
the sale of the Bond with those commercial banks or investors.
2.2 Issue the Bond in one or more series.
2.3 Establish the form, principal amount, interest rates, prepayment terms,
payment terms and dates, and other terms of each series of the Bond.
2.4 Engage the services of verification agents, escrow agents and any other
professionals whose services are desirable for the Bond and negotiate the
terms of and execute any agreement with such professionals.
2.5 Determine whether the savings produced by the refunding are adequate
to justify the refunding and select portions of the Refundable Borrowings
that will be refunded.
2.6 Prepare, finalize the terms of, and execute a new master water system
revenue bond declaration (the "Master Declaration") which pledges the
revenues of the City's water system to the Bond, contains covenants
regarding the levels of fees and charges that the City must impose for its
water system, describes the terms under which the City may issue
obligations in the future that are secured by the revenues of the City's
water system, describes the Bond, and specifies administrative provisions
relating to obligations that are secured by the revenues of fhe City's water
system. The Master Declaration will be in substantially the form attached
as Exhibit A, but with such changes as are approved by the City Official.
2.7 Determine whether each series of the Bond will bear interest that is
excludable from gross income under the Infernal Revenue Code of 1986,
as amended (the "Code") , or is includable in gross income under the
Code. If a series bears interest that is excludable from gross income under
the Code, the City Official may enter into covenants to maintain the
excludability of interest on that series of the Bond from gross income.
2.8 Designate any series of Bond as a "qualified tax-exempt obligation" under
Section 265(b)(3) of the Code, if applicable.
2.9 Execute and deliver each series of the Bond to its purchaser.
Page 2 - Council Bill No. 3079
Resolution No. 2122
2.10 Take any actions to call and prepay the Refundable Borrowings.
2.11 Execute and deliver any agreements or certificates and take any other
action in connection with each series of the Bond which the City Official
finds is desirable to permit the sale and issuance of that series of the Bond
in accordance with this Resolution.
Section 3. Security for the Bond.
The Bond will constitute a special obligation of the City that is payable
solely from the revenues of the City's wafer system and related amounts, as
provided in the Master Declaration or other document executed pursuant to
Section 2 above.
Section 4. Effective Date.
This resolution is effective immediately upon adoption.
Approved and adopted by the City Council, at a regular meeting held on
the 0 day of , 2018.
Approved as to Form.
City Attorney Date/
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APPROVED: '
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Passed by the Council: 4D - I R"
Submitted to the Mayor:
Approved by the Mayor:
Filed in the Office of the Recorder: ei r,
ATTEST:
Heather Pierson, City Recorder
City of Woodburn, Oregon
Page 3 - Council Bill No, 3079
Resolution No. 2122
Exhibit A
Page 1 of 29
MASTER WATER SYSTEM REVENUE
BOND DECLARATION
City of Woodburn, Oregon
Water Revenue Refunding Bond
Series 2018
Executed by the City Official of the City of Woodburn, Oregon
As of the day of , 2018
2917083.3 042038 RSIND
Exhibit A
Page 2 of 29
TABLE OF CONTENTS
Section1. Findings........................................................................................................................1
Section2. Definitions....................................................................................................................1
Section 3. Rules of Construction. .................................................................................................7
Section 4. Deposit, Pledge and Use of Gross Revenues. ..............................................................8
Section 5. Bond Funds and Accounts. ..........................................................................................9
Section 6. Rate Covenant; Calculations Relating to Balloon Indebtedness
and Interest Subsidy Bonds........................................................................................11
Section7. Parity Bonds...............................................................................................................13
Section 8. Subordinate Obligations.............................................................................................16
Section 9. Separate Utility System..............................................................................................16
Section10. General Covenants. ....................................................................................................16
Section 11. Events of Default and Remedies................................................................................18
Section 12. Amendment of Master Declaration............................................................................22
Section13. Defeasance. ................................................................................................................24
Section 14. The Series 2018 Bond................................................................................................24
Appendix A: Form of Water Revenue Refunding Bond, Series 2018
2917083.3 042038 RSIND
Exhibit A
Page 3 of 29
MASTER WATER SYSTEM REVENUE BOND DECLARATION
THIS MASTER WATER SYSTEM REVENUE BOND DECLARATION is
executed as of , 2018, by the City Official of the City of Woodburn, Oregon pursuant to
the authority granted to the City Official by Resolution No. []/Council Bill No. [ ] adopted
by the City Council on , to establish the terms under which the City's Water
Revenue Refunding Bond, Series 2018 and future Parity Bonds may be issued.
Section 1. Findings.
The City finds that it adopted Resolution No. [_]/Council Bill No. on , 2018],
authorizing the City to issue revenue bonds under Oregon Revised Statutes Section 287A.360
through 287A.375 to refund the Refunded Obligations, and to enter into a Master Declaration.
This Master Declaration establishes the terms under which the City's Water Revenue Refunding
Bond, Series 2018 is issued and the terms under which future obligations may be issued on a
parity with the Series 2018 Bond.
Section 2. Definitions.
Unless the context clearly requires otherwise, capitalized terms that are used in this Master
Declaration and are defined in this Section 2 shall have the meanings defined for those terms in
this Section 2.
"Adjusted Coverage Revenues"means the Coverage Revenues, adjusted for purposes of
Section 7.1.C(ii) as provided in Section 7.3.
"Adjusted Net Revenues"means the Net Revenues, adjusted for purposes of Section 7.1.C(ii) as
provided in Section 7.3.
"Annual Bond Debt Service"means in any Fiscal Year the amount of principal and interest
required to be paid in that Fiscal Year on all Outstanding Bonds, calculated as follows:
(a) Interest which is to be paid from Bond Proceeds shall be subtracted;
(b) Bonds which are subject to scheduled, noncontingent redemption or tender shall
be deemed to mature on the dates and in the amounts which are subject to mandatory redemption
or tender, and only the amount scheduled to be Outstanding on the final maturity date shall be
treated as maturing on that date;
(c) Interest subsidies shall be subtracted from the interest due on Interest Subsidy
Bonds as provided in Section 6.5;
(d) Bonds which are subject to contingent redemption or tender shall be treated as
maturing on their stated maturity dates; and,
(e) Each Balloon Payment shall be assumed to be paid according to its Balloon Debt
Service Requirement.
"Auditor" means a person authorized by the State Board of Accountancy to conduct municipal
audits pursuant to ORS 297.670.
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Exhibit A
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"Balloon Debt Service Requirement" means the Committed Debt Service Requirement for a
Balloon Payment or, if the City has not entered into a firm commitment to sell Bonds or other
obligations to refund that Balloon Payment, the Estimated Debt Service Requirement for that
Balloon Payment.
"Balloon Payment" means any principal payment for a Series of Bonds which comprises more
than twenty-five percent of the original principal amount of that Series, but only if that principal
payment is designated as a Balloon Payment in the closing documents for the Series.
"Base Period" means the alternative selected by the City from the following two options: (a) any
twelve consecutive months selected by the City or Qualified Consultant out of the most recent
eighteen months preceding the delivery of a Series of Parity Bonds; or(b)the most recently
completed fiscal year for which audited financial statements are available.
"Bond" or"Bonds"means the Series 2018 Bond and any Parity Bonds.
"Bond Counsel"means a law firm selected by the City and having knowledge and expertise in
the field of municipal law and whose opinions are generally accepted by purchasers of municipal
bonds.
"Bond Reserve Account"means the Bond Reserve Account in the Water Fund described in
Section 5.3 of this Master Declaration.
"Business Day"means any day except a Saturday, a Sunday, a legal holiday, a day on which the
offices of banks in Oregon or New York are authorized or required by law or executive order to
remain closed, or a day on which the New York Stock Exchange is closed.
"City" means the City of Woodburn in Marion County, Oregon, a municipal corporation of the
State of Oregon.
"City Council" means the City Council of the City, or its successors.
"City Official" means the [City Administrator or the City Finance Director], or a person
designated by either the [City Administrator or the City Finance Director] to act on behalf of the
City pursuant to the Resolution.
"Closing"means the date on which a Series of Bonds is delivered in exchange for payment.
"Code"means the Internal Revenue Code of 1986, as amended, including the rules and
regulations promulgated thereunder.
"Committed Debt Service Requirement" means the schedule of principal and interest payments
for a Series of Bonds or other obligations which refund a Balloon Payment, as shown in the
documents evidencing the City's firm commitment to sell that Series. A "firm commitment to
sell" means a bond purchase agreement or similar document which obligates the City to sell, and
obligates a purchaser to purchase, the Series of refunding Bonds or other obligations, subject
only to the conditions which customarily are included in such documents.
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Exhibit A
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"Coverage Revenues"means the Net Revenues less systems development charges.
"Credit Facility" means a letter of credit, a municipal bond insurance policy, standby bond
purchase agreement or other credit enhancement device which is obtained by the City to secure
payment in full of Bonds, and which is issued or provided by a Credit Provider.
"Credit Provider" means the person or entity that is: (i) obligated to make or guarantee payments
under a Credit Facility or Reserve Credit Facility; and (ii)whose long-term debt obligations or
claims-paying ability (as appropriate) are rated, at the time the Credit Facility or Reserve Credit
Facility is issued, in one of the three highest rating categories by a Rating Agency that has issued
a rating on Outstanding Bonds. Under rating systems in effect on the date of this Master
Declaration, a rating in one of the three highest rating categories by a Rating Agency would be a
rating of"A" or better.
"Debt Service Account" means the Debt Service Account described in Section 5.2 of this Master
Declaration.
"DTC" means The Depository Trust Company or any other qualified securities depository
designated by the City as its successor.
"Estimated Debt Service Requirement" means the schedule of principal and interest payments for
a hypothetical Series of Bonds that refunds a Balloon Payment, that is prepared by the City
Official and that meets the requirements of Section 6.4.
"Event of Default" means any event specified in 11.2 of this Master Declaration.
"Fiscal Year" means the period beginning on July 1 of each year and ending on the next
succeeding June 30, or as otherwise defined by State law.
"Fitch" means Fitch Investors Service, Inc., its successors and assigns.
"Fund" or"Account"refers to any fund, account, or other accounting concept that permits the
City to account accurately for amounts that are credited to it under this Master Declaration. A
"Fund" in this Master Declaration does not need to appear as a"fund" in the City's budget and an
"Account"in this Master Declaration does not need to appear as an "account" in the City's
budget.
"Government Obligations" means (a) direct, noncallable obligations of the United States of
America(including obligations issued or held in book-entry form on the books of the Department
of the Treasury and principal-only and interest-only strips that are issued by the U.S. Treasury);
or(b)noncallable obligations the principal of and interest on which are secured by the full faith
and credit of the United States of America or are unconditionally guaranteed by the United States
of America.
"Gross Revenues" means all fees and charges and other revenues that are properly accrued under
generally accepted accounting principles as revenues of the Water System, including systems
development charges but only to the extent Oregon law allows those systems development
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Exhibit A
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charges to be used to pay Bonds, revenues from product sales, and interest earnings on Gross
Revenues in the Water Fund. Gross Revenues shall be increased by any withdrawals from the
Rate Stabilization Account as provided in Section 5.6.13, and shall be reduced by any deposits to
the Rate Stabilization Account as provided in Section 5.6.A. However, the term "Gross
Revenues" shall not include:
(a) The interest income or other earnings derived from the investment of any escrow
fund established for the defeasance or refunding of outstanding indebtedness of the City;
(b) Any gifts, grants, donations or other amounts received by the City from any State
or Federal Agency or other person if such amounts are restricted by law or the grantor to uses
inconsistent with the payment of Bonds;
(c) The proceeds of any borrowing;
(d) The proceeds of any liability or other insurance (excluding business interruption
insurance or other insurance of like nature insuring against the loss of revenues);
(e) The proceeds of any casualty insurance which the City intends to utilize for repair
or replacement of the Water System;
(f) The proceeds derived from the sales of assets pursuant to Section 10.9 of this
Master Declaration;
(g) Any ad valorem or other taxes imposed by the City (except charges or payments
for Water System services which become "taxes"within the meaning of Article XI, Section 1 lb
of the Oregon Constitution only because they are imposed on property or property owners);
(h) Any income, fees, charges, receipts,profits or other amounts derived by the City
from its ownership or operation of any Separate Utility System;
(i) Installment payments of City line and branch charges, connection fees, or local
improvement district assessments that have been pledged as security for a borrowing other than a
Bond; or
0) Any federal interest subsidies the City receives for Interest Subsidy Bonds.
"Interest Payment Date" means any date on which Bond interest is scheduled to be paid, and any
date on which Bonds are called for redemption.
"Interest Subsidy Bonds" means Bonds for which the City is eligible to receive federal interest
rate subsidies that are similar to the interest subsidies that were available for Build America
Bonds.
"Master Declaration"means this Master Water System Revenue Bond Declaration, including any
amendments made pursuant to Section 12.
"Maximum Annual Bond Debt Service"means the greatest amount of Annual Bond Debt
Service that is due in any Fiscal Year, beginning with the Fiscal Year for which the calculation is
made, and ending with the last Fiscal Year in which Outstanding Bonds are scheduled to be paid.
"Moody's" means Moody's Investors Service, a corporation organized and existing under the
laws of the State of Delaware, its successors and their assigns.
"Net Revenues"means the Gross Revenues less the Operating Expenses.
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Exhibit A
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"Operating Expenses" means all costs which are properly treated as expenses of operating and
maintaining the Water System under generally accepted accounting principles. However,
Operating Expenses do not include:
(a) Any rebates or penalties paid from Gross Revenues under Section 148 of the
Code;
(b) Payments of judgments against the City and payments for the settlement of
litigation;
(c) Depreciation and amortization of property values or losses, and other non-cash
expenses, including non-cash expenses related to pensions and postemployment benefits„
(d) All amounts eligible to be treated for accounting purposes as payments for capital
expenditures;
(e) Interest and other debt service payments,paying agent fees, broker-dealer fees and
similar charges for the maintenance of borrowings;
(f) The expenses of owning, operating or maintaining any Separate Utility System;
(g) Expenditures made from any liability insurance proceeds;
(h) Expenditures made from any casualty insurance proceeds used to pay for costs of
repairing or replacing portions of the Water System;
(i) Expenditures made from grant funds, regardless of whether such grant funds are
dedicated to a specific purpose or available for the general operation, maintenance and repair or
replacement of the Water System;
0) Extraordinary, non-recurring expenses of the Water System; or
(k) Expenditures allocable to any other funding source which does not constitute
Gross Revenues of the Water System.
"ORS"means the Oregon Revised Statutes.
"Outstanding"refers to all Bonds except Bonds that have been defeased pursuant to Section 13
of this Master Declaration, and Bonds which have matured and not been presented for payment
(provided sufficient funds to pay those Bonds have been transferred to their paying agent or
Owner).
"Owner"means a registered owner of a Bond.
"Parity Bond"means any obligation that is secured by the Net Revenues on an equal basis with
the Bonds and is issued in accordance with Section 7.
"Payment Date"means a Principal Payment Date or an Interest Payment Date.
"Permitted Investments" means any investments which the City is permitted to make under the
laws of the State.
"Principal Payment Date" means any date on which any Bonds are scheduled to be retired,
whether by virtue of their maturity or by mandatory sinking fund redemption prior to maturity,
and the redemption date of any Bonds which have been called for redemption.
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Exhibit A
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"Qualified Consultant" means an independent engineer, an independent auditor, an independent
financial advisor, or similar independent professional consultant of recognized standing and
having experience and expertise in the area for which such person or firm is retained by the City
for purposes of performing activities specified in this Master Declaration or any Supplemental
Declaration.
"Rate Stabilization Account" means the Rate Stabilization Account established in the Water
Fund pursuant to Section 5.6.
"Rating Agency" means Fitch, Moody's, S&P, or any other nationally recognized financial rating
Agency which has rated Outstanding Bonds or a Credit Facility at the request of the City.
"Record Date" for the Bonds means the [fifteenth day] of the month preceding the month in
which each Interest Payment Date occurs, whether or not a Business Day.
"Refunded Obligations"means the outstanding Loan Agreement No. Y02007, entered into
between the City and the State of Oregon Economic and Community Development Department
in 2002,the outstanding Loan Agreement No. 502010, entered into between the City and the
State of Oregon Economic and Community Development Department in 2002, and the
outstanding Loan Agreement No. G02003 entered into between the City and the State of Oregon
Economic and Community Development Department in 2003.
"Reserve Credit Facility" means any arrangement in which the City pays a fee in exchange for an
agreement of a Credit Provider to advance money to the City in the future that the City will use in
lieu of using cash or Permitted Investments credited to a subaccount in the Bond Reserve
Account. "Reserve Credit Facility" does not include guaranteed investment contracts, master
repurchase agreements and similar Permitted Investments.
"Reserve Credit Facility Rating" means a long-term debt, financial strength or claims-paying
ability rating assigned by a Rating Agency to: (a) a provider of a Reserve Credit Facility, or(b)to
any reinsurer of the obligations of a provider of a Reserve Credit Facility.
"Reserve Requirement" means a set of rules for funding a subaccount in the Bond Reserve
Account. Each Reserve Requirement shall indicate the amount that is required to be credited to
the subaccount, the dates by which that amount must be credited to the subaccount, and the
requirements for restoring amounts to the subaccount if amounts are withdrawn to pay Bonds
that are secured by the subaccount. The Series 2018 Bond is not secured by the Bond Reserve
Account or any subaccount therein.
"Resolution" means City Resolution No. [_]/Council Bill No. adopted by the City
Council on [, 2018].
"S&P"means S&P Global Ratings, a corporation organized and existing under the laws of the
State of New York, its successors and their assigns.
"Separate Utility System" means any utility property which is declared by the City to constitute a
system which is distinct from the Water System in accordance with Section 9.
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Exhibit A
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"Series"refers to all Bonds authorized by a single ordinance or declaration and delivered in
exchange for payment on the same date, regardless of variations in maturity, interest rate or other
provisions, unless the closing documents for the Series provide otherwise.
"Series 2018 Bond"means the City's Water Revenue Refunding Bond, Series 2018 issued
pursuant to Section 17 of this Master Declaration.
"State" means the State of Oregon.
"Subordinate Obligations" means obligations having a lien on the Net Revenues which is
subordinate to the lien of the Bonds. Restrictions on Subordinate Obligations are described in
Section 8. [On the date of this Master Declaration, the City has no borrowings outstanding with
a subordinate lien on the Net Revenues.]
"Subordinate Obligations Account"means the Subordinate Obligations Account of the Water
Fund which is described in Section 5.5.
"Supplemental Declaration" means any declaration, resolution or other document which
supplements or amends this Master Declaration, entered into by the City in compliance with
Section 12.
"Tax Maximum" means, for any Series of Bonds, the lessor of: the greatest amount of principal,
interest and premium, if any, required to be paid in any Fiscal Year on such Series; 125% of
average amount of principal, interest and premium, if any, required to be paid on such Series
during all Fiscal Years in which such Series will be Outstanding, calculated as of the date of
issuance of such Series; or, ten percent of the proceeds of such Series, as "proceeds" is defined
for purposes of Section 148(d) of the Code.
"Valuation Date" means the date or dates on which a subaccount of the Bond Reserve Account
shall be valued as prescribed in the Supplemental Declaration authorizing the establishment of
such subaccount.
"Water Fund" means the collection of funds and accounts used by the City to hold the Gross
Revenues and the proceeds of Bonds.
"Water System" means "all utility property now or hereafter used by the City to supply water
within or without the City limits. However, the Water System does not include any Separate
Utility System.
Section 3. Rules of Construction.
In determining the meaning of the provisions of this Master Declaration, the following rules shall
apply unless the context clearly requires application of a different meaning:
A. References to section numbers shall be construed as references to sections of this Master
Declaration.
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Exhibit A
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B. References to one gender shall include all genders.
C. References to the singular include the plural, and references to the plural include the
singular.
Section 4. Deposit, Pledge and Use of Gross Revenues.
4.1. All Gross Revenues shall be deposited to and maintained in the Water Fund, and shall be
used only as described in this Section as long as any Bonds remain Outstanding. The City
shall apply Gross Revenues in the Water Fund on or before the following dates for the
following purposes in the following order of priority:
A. At any time to pay Operating Expenses which are then due;
B. At least one Business Day prior to each Payment Date, to transfer Net Revenues to the
Debt Service Account in an amount sufficient(with amounts available in the Debt
Service Account)to pay in full all Bond principal, interest and premium, if any, which is
due to be paid on that Payment Date;
C. On the Closing date for a Series of Bonds and on the first day of the months specified in
the provisions creating the subaccounts in the Bond Reserve Account, if the balance in
any subaccount of the Bond Reserve Account is determined to be less than the applicable
Reserve Requirement, to transfer Net Revenues to the Bond Reserve Account in the
amounts required by the provisions creating the subaccounts in the Bond Reserve
Account until the balances in all subaccounts of the Bond Reserve Account are equal to
their Reserve Requirement;
D. On the day on which any rebates or penalties for Bonds are due to be paid to the United
States pursuant to Section 148 of the Code, an amount of Net Revenues that is sufficient,
with other available funds, to pay the amounts due to the United States;
E. On the dates specified in any proceedings authorizing Subordinate Obligations, the City
shall transfer to the Subordinate Obligations Account the Net Revenues required by those
proceedings; and,
F. On any date, the City may transfer Net Revenues to the Rate Stabilization Account or
spend Net Revenues for any other lawful purpose relating to the Water System, but only
if all deposits and payments that are required to be made on or before that date and that
have a higher priority under this Section have been made.
4.2. The City hereby pledges the Net Revenues and federal interest subsidies the City receives
for Interest Subsidy Bonds to the payment of principal of,premium (if any) and interest
on all Bonds. Pursuant to ORS 287A.310, this pledge made by the City shall be valid and
binding from the Closing of the Series 2018 Bond. The Net Revenues and federal interest
subsidies so pledged and hereafter received by the City shall immediately be subject to
the lien of such pledge without any physical delivery or further act. The lien of these
pledges shall be superior to all other claims and liens except liens and claims for the
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Exhibit A
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payment of Operating Expenses. The City covenants and agrees to take such action as is
necessary from time to time to perfect or otherwise preserve the priority of the pledge.
4.3. If a Reserve Credit Facility is permitted to fund a subaccount in the Bond Reserve
Account, the City may pledge the Net Revenues available for transfer to that subaccount
of the Bond Reserve Account to pay amounts due under any Reserve Credit Facility
securing that subaccount.
Section 5. Bond Funds and Accounts.
5.1. So long as Bonds are Outstanding, the City shall maintain the Debt Service Account and
the Bond Reserve Account as discrete accounts in the Water Fund.
5.2. Debt Service Account. The City shall hold the Debt Service Account. Until all Bonds
are paid or defeased, amounts in the Debt Service Account shall be used only to pay
Bonds.
A. After the transfer described in Section 4.1.13, if the balance in the Debt Service Account is
less than the amount of Bond principal,premium and interest that is due on that Payment
Date, the City shall credit to the Debt Service Account an amount equal to the deficiency
from any Net Revenues in the Subordinate Obligations Account.
B. If, after the credit described in Section 5.2.A, the amounts available to pay Debt Service
Account is not sufficient to pay all amounts due on the Payment Date, the City shall
allocate the available amounts:
(i) First, to pay Bond interest, and pro rata based on the amount due on Bonds if
the available amount is not sufficient to pay all Bond interest that is due on that
Payment Date; and,
(ii) Second, to pay Bond principal and premium that is due on that Payment Date,
and pro rata based on the amount of principal and premium due on each Bond
if the available amount is not sufficient to pay all Bond principal and premium
that is due on that Payment Date.
C. If, after the allocation described in Section 5.2.13, there is not enough to pay all principal,
interest and premium allocated to pay Bonds that are secured by a subaccount in the Bond
Reserve Account, the City shall apply any amounts available in the subaccounts in the
Bond Reserve Account, but only to pay the principal, interest and premium on the Bonds
that are secured by those subaccounts.
D. The City shall transfer sufficient amounts from the Debt Service Account in time to
permit payment of all Bond principal, interest and premium (if any)when due in
accordance with the Bonds.
E. Amounts in the Debt Service Account shall be invested only in Permitted Investments.
Earnings on the Debt Service Account shall be credited to the Water Fund.
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Exhibit A
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5.3. Bond Reserve Account.
A. The Bond Reserve Account shall be held by the City. The City may create one or more
subaccounts in the Bond Reserve Account to secure Series of Bonds and covenant to
make deposits into any subaccounts it creates; however, the City is not obligated to create
any subaccounts in the Bond Reserve Account, and is not obligated to secure any Series
of Bonds with a subaccount in the Bond Reserve Account.
B. When a subaccount in the Bond Reserve Account is created, the City shall determine
whether the subaccount will secure one or more Series of Bonds. If the City creates a
subaccount in the Bond Reserve Account, the City shall, when it issues the first Series of
Bonds that is secured by that subaccount: a) establish the Reserve Requirement for that
subaccount; b)pledge amounts credited to that subaccount to pay the Bonds that are
secured by that subaccount; and c) determine if the Reserve Requirement for that
subaccount may be funded with Reserve Credit Facilities and the requirements for those
Reserve Credit Facilities, and the valuation and replenishment provisions that apply to
that subaccount.
C. The City shall not create any subaccounts in the Bond Reserve Account for any purpose
except securing Bonds in accordance with this Master Declaration.
D. The Series 2018 Bond is not secured by the Bond Reserve Account or any subaccount
therein.
5.4. Subordinate Obligations Account. The City shall create and maintain the Subordinate
Obligations Account in the Water Fund as long as Subordinate Obligations are
Outstanding. The Subordinate Obligations Account may be divided into subaccounts,
and the City may establish priorities for funding the subaccounts in the Subordinate
Obligations Subaccount. Net Revenues shall be deposited into the Subordinate
Obligations Account only as permitted by Section 4.1.E. Earnings on the Subordinate
Obligations Account shall be credited as provided in the proceedings authorizing the
Subordinate Obligations.
5.5. Rate Stabilization Account. The City may create a-the Rate Stabilization Account in the
Water Fund and if created will maintain that account as long as Bonds are Outstanding.
Net Revenues may be transferred to the Rate Stabilization Account at the option of the
City as permitted by Section 4.1.F. Money in the Rate Stabilization Account may be
withdrawn at any time and used for any purpose for which the Gross Revenues may be
used. [Does the City want to make a deposit to the RSA before closing?]
A. Deposits to the Rate Stabilization Account decrease Gross Revenues in the Fiscal Year
for which the deposit is made.
B. Withdrawals from the Rate Stabilization Account increase Gross Revenues in the Fiscal
Year for which the withdrawal is made.
Page 10 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 13 of 29
C. The City may adjust deposits to and withdrawals from the Rate Stabilization Account for
a Fiscal Year at any time prior to the date on which the audit for that Fiscal Year is
finalized.
D. 1Ititeres;t;,,1�, ,arnings on the Rate Stabilization Account shall be credited to the Water Fund.
Section 6. Rate Covenant; Calculations Relating to Balloon Indebtedness and
Interest Subsidy Bonds.
6.1. The City covenants for the benefit of the Owners that it will establish and maintain rates
and charges in connection with the operation of the Water System which are sufficient to
permit the City to pay all Operating Expenses and all lawful charges against the Net
Revenues, and to make all transfers required by this Master Declaration to the Debt
Service Account, the Bond Reserve Account and the Subordinate Obligations Account.
6.2. The City covenants for the benefit of the Owners of all Bonds that it shall charge rates
and fees in connection with the operation of the Water System which, when combined
with other Gross Revenues are adequate to generate Coverage Revenues each Fiscal Year
at least equal to [one hundred twenty-five percent(125%)] of Annual Bond Debt Service
due in that Fiscal Year.
6.3. Not later than six months after the end of each Fiscal Year, the City shall prepare a report
that demonstrates whether the City has complied with Section 6.2 during that Fiscal Year
and shall file that report in the City records. If the report demonstrates that the City has
not complied with Section 6.2 during that Fiscal Year, it shall not constitute a default
under this Master Declaration if, within thirty (30) days after the report is filed, the City
files a certificate of a City Official that specifies the actions that the City has taken and
will take within the next ninety (90) days to permit the City to comply with Section 6.2
for the remainder of the Fiscal Year in which the report is filed, and for the succeeding
Fiscal Year, and the City takes the actions specified by the City Official, or actions having
a comparable effect. [City: consider making this part of your audit]
6.4. The Estimated Debt Service Requirement for Balloon Indebtedness shall be calculated in
accordance with this Section 6.4.
A. For the Rate Covenants: For each Balloon Payment that is Outstanding on May 1 of any
Fiscal Year, the City Official shall prepare a schedule of principal and interest payments
for a hypothetical Series of Bonds that refunds that Balloon Payment in accordance with
Section 6A.D. The City Official shall prepare that schedule as of that first day of May,
and that schedule shall be used to determine compliance with the rate covenant in Section
6.2 for the following Fiscal Year.
B. For Parity Bonds: Whenever a Balloon Payment will be Outstanding on the date a Series
of Parity Bonds is issued, the City Official shall prepare a schedule of principal and
interest payments for a hypothetical Series of Bonds that refunds each Outstanding
Balloon Payment in accordance with Section 6A.D. The City Official shall prepare that
Page 11 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 14 of 29
schedule as of the date the Parity Bonds are sold, and that schedule shall be used to
determine compliance with the tests for Parity Bonds in Section 7.1.
C. For the Reserve Requirement: Whenever a Series of Bonds that contains a Balloon
Payment is issued, the City Official shall prepare a schedule of principal and interest
payments for a hypothetical Series of Bonds that refunds each Balloon Payment in that
Series in accordance with Section 6A.D. The City Official shall prepare that schedule as
of the date the Series is sold, and that schedule shall be combined with the schedule for
payment of any debt service on Bonds that are secured by the same subaccount, and that
combined schedule shall be used to determine the Reserve Requirement as long as that
Series is Outstanding.
D. Each hypothetical Series of refunding Bonds shall be assumed to be paid in equal annual
installments of principal and interest sufficient to amortize the principal amount of the
Balloon Payment over the term selected by the City Official; however, the City Official
shall not select a term that exceeds the lesser of: 30 years from the date the Balloon
Payment is originally scheduled to be paid; or the City's estimate of the remaining
weighted average useful life (expressed in years and rounded to the next highest integer)
of the assets which are financed with the Balloon Payment. The annual installments shall
be assumed to be due on the anniversaries of the date the Balloon Payment is originally
scheduled to be paid, with the first installment due on the first anniversary of the date the
Balloon Payment is scheduled to be paid. Each installment shall be assumed to bear
interest at a rate that is estimated by the City from the Bond Buyer Revenue Bond Index
(or if the Bond Buyer Revenue Bond Index is not available, a reasonably comparable
index selected by the City)for a revenue bond with a term that is equal to the term of the
installment. When the City prepares a schedule described in Section 6.4.A, Section 6.4.13
or Section 6.4.C, the City shall use the index that is available to the City on the date the
City is required to prepare that schedule.
6.5. Interest Subsidy Bonds. The amounts assumed to be paid on Interest Subsidy Bonds shall
be calculated as follows:
A. When calculating Annual Bond Debt Service for the rate covenant in Section 6.2, the City
shall subtract from interest to be paid on Interest Subsidy Bonds the federal interest
subsidies on Interest Subsidy Bonds that the City reasonably expects, at the beginning of
the Fiscal Year, to receive during that Fiscal Year.
B. When calculating Annual Bond Debt Service and Maximum Annual Bond Debt Service
for the tests for issuing Parity Bonds in Section 7, the City shall subtract from the
scheduled payments of interest on Interest Subsidy Bonds the amount of federal interest
subsidies that the City reasonably expects, at the time the Parity Bonds are issued, to
receive.
C. When calculating the greatest amount of principal, interest and premium, if any, required
to be paid in any Fiscal Year on a Series of Interest Subsidy Bonds to determine the Tax
Maximum for Interest Subsidy Bonds that are secured by a subaccount in the Bond
Page 12—Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 15 of 29
Reserve Account, the City shall subtract from the scheduled payments of interest on
Interest Subsidy Bonds the federal interest subsidies that the City reasonably expects, at
the time the Series of Interest Subsidy Bonds is issued, to be paid to the City for the
Series of Interest Subsidy Bonds. The City shall not be required to increase the amount
the City is required to hold in a subaccount in the Bond Reserve Account if federal
interest subsidies are not paid when or in the amounts expected. However, if the City
reduces the amount it holds in a subaccount of the Bond Reserve Account because Bonds
secured by that subaccount have been paid, the City must take into account its reasonable
expectations at the time of reduction in determining the amount that the City must retain
in a subaccount of the Bond Reserve Account.
Section 7. Parity Bonds.
7.1. The City may issue Parity Bonds to provide funds for any purpose relating to the Water
System, but only if:
A. No Event of Default under this Master Declaration or any Supplemental Declaration has
occurred and is continuing;
B. At the time of the issuance of the Parity Bonds there is no deficiency in the Debt Service
Account and all required deposits to all subaccounts in the Bond Reserve Account have
been made;
C. There shall have been filed with the City either:
(i) A certificate of the City Official stating that the Coverage Revenues (adjusted
as provided in Section 7.2) for the Base Period were not less than [one hundred
twenty-five percent(125%)] of Maximum Annual Bond Debt Service on all
then Outstanding Bonds, calculated as of the date the Parity Bonds are issued
and with the proposed Parity Bonds treated as Outstanding; or
(ii) A certificate or opinion of a Qualified Consultant:
(a) Stating the amount of the Adjusted Coverage Revenues and the Adjusted
Net Revenues for each of the five Fiscal Years after the last Fiscal Year
for which interest on the Parity Bonds is, or is expected to be, capitalized,
or, if interest will not be capitalized, for each of the five Fiscal Years after
the proposed Parity Bonds are issued; and
(b) Concluding that the respective amounts of Adjusted Coverage Revenues
in each of the first four Fiscal Years described in Section 7.1.C(ii)(a) are
at least equal to [one hundred twenty-five percent(125%)] of the Annual
Bond Debt Service for each of those respective Fiscal Years on all
Outstanding Bonds, with the proposed Parity Bonds treated as
Outstanding; and,
Page 13 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 16 of 29
(c) Concluding that the respective amounts of Adjusted Coverage Revenues
in each of the first four Fiscal Years described in Section 7.1.C(ii)(a) are
at least equal to [one hundred twenty-five percent..(125%) of the Annual
Bond Debt Service] for each of those respective Fiscal Years on all
Outstanding Bonds, with the proposed Parity Bonds treated as
Outstanding; and,
(d) Concluding that the amount of Adjusted Coverage Revenues in the fifth
Fiscal Year described in Section 7.1.C(ii)(a) is at least equal to [one
hundred twenty-five percent(125%)] of the Maximum Annual Bond Debt
Service, calculated for the period beginning with that fifth Fiscal Year on
all then Outstanding Bonds, with the proposed Parity Bonds treated as
Outstanding.
7.2. The City may adjust Coverage Revenues for purposes of Section 7.1.C(i)by adding any
Coverage Revenues or Net Revenues the City Official calculates the City would have had
during the Base Period because of increases in Water System rates, fees and charges
which have been adopted by the City and are in effect on or before the date the Parity
Bonds are issued. The City shall adjust Coverage Revenues for the Base Period by
eliminating the effect of any withdrawals from or deposits to the Rate Stabilization
Account.
7.3. The Qualified Consultant shall calculate Adjusted Coverage Revenues for purposes of
Section 7.1.C(ii) as provided in this Section 7.3:
A. The City shall provide the Qualified Consultant with the following information:
(i) The Base Period, the Coverage Revenues for the Base Period and the amounts
of any withdrawals from or deposits to the Rate Stabilization Account for
Fiscal Years that are included in the Base Period;
(ii) Information regarding any Water System utility properties that are being
acquired with Parity Bonds and that have an earnings record;
(iii) Any changes in rates and charges which have been adopted by the City since
the beginning of the Base Period and the dates on which they are scheduled to
take effect;
(iv) Any changes in customers since the beginning of the Base Period; and,
(v) A description of any extensions or additions to the Water System that were in
the process of construction at the beginning of the Base Period or commenced
construction after the beginning of the Base Period, the expected date of
completion of those extensions or additions, the estimated operating and
capital costs of those extensions or additions, and any other changes to the
Gross Revenues or Operating Expenses that the City reasonably expects to
result from the completion and operation of those extensions or additions.
Page 14 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 17 of 29
B. Using the information provided by the City pursuant to Section 7.3.A and any additional
information the Qualified Consultant determines is necessary, the Qualified Consultant
shall adjust the Coverage Revenues for the Base Period to eliminate the effect of any
withdrawals from or deposits to the Rate Stabilization Account in the manner described
in Section 7.2 and may adjust the Coverage Revenues for the Base Period:
(i) To reflect any changes that the Qualified Consultant projects will result from
the acquisition of Water System utility properties that are being financed with
the Parity Bonds and that have an earnings record;
(ii) To reflect any changes in rates and charges which have been adopted by the
City and which are scheduled to take effect during the period described in
Section 7.1.C(ii)(a), or which increase rates and charges for inflation at a level
which the Qualified Consultant determines is reasonable;
(iii) To reflect any changes in customers of the Water System that occurred after the
beginning of the Base Period and prior to the date of the Qualified Consultant's
certificate; and
(iv) To reflect any changes to Coverage Revenues not included in the preceding
paragraphs that are projected to result from the completion and operation of
additions and extensions to the Water System that were under construction at
the beginning of the Base Period, or commenced construction after the
beginning of the Base Period.
7.4. The City may issue Parity Bonds to refund Outstanding Bonds without complying with
Section 7.1 if the refunded Bonds are legally or economically defeased on the date of
delivery of the refunding Parity Bonds and if the Annual Bond Debt Service on the
refunding Parity Bonds does not exceed the Annual Bond Debt Service on the refunded
Bonds in any Fiscal Year by more than $5,000.
7.5. Bonds shall be treated as "legally defeased"for purposes of Section 7.4 if they are
defeased as provided in Section 13. Bonds shall be treated as "economically defeased"
for purposes of Section 7.4 if they have been irrevocably called for redemption within one
year after the date on which the refunding Bonds are issued, and the City has irrevocably
deposited money or Government Obligations with the paying agent or Owner for the
refunded Bonds, as applicable, or in escrow with an independent trustee or escrow agent,
and the money and any amounts to be received from the Government Obligations have
been calculated to be sufficient, without reinvestment, to pay the Bonds that are
economically defeased.
7.6. All Parity Bonds issued in accordance with this Section 7 shall have a lien on the Net
Revenues which is equal to the lien of all other Outstanding Bonds.
7.7. A Supplemental Declaration describing a Series of Parity Bonds may provide that the
Series will be paid through a paying agent, and may specify the type of authentication,
Page 15 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 18 of 29
registration, transfer, redemption and other administrative provisions that apply to that
Series.
Section 8. Subordinate Obligations.
The City may issue Subordinate Obligations only if:
8.1. The Subordinate Obligations are payable solely from amounts permitted to be deposited
in the Subordinate Obligations Account pursuant to Section 4.l.E;
8.2. The Subordinate Obligations state clearly that they are secured by a lien on or pledge of
the Net Revenues which is subordinate to the lien on, and pledge of, the Net Revenues for
the Bonds.
Section 9. Separate Utility System.
The City may declare property which the City owns and is part of the Water System (but has a
value of less than five percent of the Water System at the time of the declaration), and property
which the City has not yet acquired but would otherwise become part of the Water System, to be
part of a Separate Utility System. The City may pay costs of acquiring, operating and
maintaining Separate Utility Systems from Net Revenues, but only if there is no deficit in the
Debt Service Account or the Bond Reserve Account. The City may issue obligations which are
secured by the revenues produced by the Separate Utility System, and may pledge the Separate
Utility System revenues to pay those obligations. In addition, the City may issue Subordinate
Obligations to pay for costs of a Separate Utility System, and may pledge the revenues of the
Separate Utility System to pay the Subordinate Obligations.
Section 10. General Covenants.
The City hereby covenants and agrees with the Owners of all Outstanding Bonds as follows:
10.1. The City shall promptly cause the principal,premium, if any, and interest on the Bonds to
be paid as they become due in accordance with the provisions of this Master Declaration
and any Supplemental Declaration.
10.2. The City shall maintain complete books and records relating to the operation of the Water
System and all City funds and accounts in accordance with generally accepted accounting
principles, shall cause such books and records to be audited annually at the end of each
Fiscal Year, and shall have an audit report prepared by the Auditor and made available for
the inspection of Owners.
10.3. The City shall not issue obligations which have a lien on the Net Revenues that is
superior to the lien of the Bonds except for obligations to pay Operating Expenses.
10.4. The City shall promptly deposit the Gross Revenues and other amounts described in this
Master Declaration into the funds and accounts specified in this Master Declaration.
Page 16 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 19 of 29
10.5. The City shall work in good faith to cause the Water System to be operated at all times in
a safe, sound, efficient and economic manner in compliance with all health, safety and
environmental laws, regulatory body rules, regulatory body orders and court orders
applicable to the City's operation and ownership of the Water System.
10.6. The City shall maintain the Water System in good repair, working order and condition.
10.7. The City shall not enter into any new agreements or arrangements or make any new offers
to provide Water System products or services at a discount from published rate schedules
or provide free Water System products or services except: a) in case of emergencies, b)
where the City exchanges services with other Water systems, or c)where in the
reasonable judgment of the City such action does not materially reduce the Gross
Revenues received by the City.
10.8. The City shall at all times maintain with responsible insurers all such insurance on the
Water System as is customarily maintained with respect to works and properties of like
character against accident to, loss of or damage to such works or properties.
A. The net proceeds of insurance against material accident to or material destruction of the
Water System shall be used to repair or rebuild the damaged or destroyed Water System,
and to the extent not so applied, will be applied to the payment or redemption of the
Bonds.
B. The insurance described in Section 10.8 shall be in the form of policies or contracts for
insurance with insurers of good standing and shall be payable to the City, or in the form
of self-insurance by the City. The City shall establish such fund or funds or reserves
which it deems are necessary to provide for its share of any such self-insurance.
10.9. The City shall not, nor shall it permit others to, sell, mortgage, lease or otherwise dispose
of or encumber all or any portion of the Water System except:
A. The City may dispose of all or substantially all of the Water System, only if the City pays
all Bonds or defeases them pursuant to Section 13.
B. Except as provided in Section 10.9.C, the City will not dispose of any part of the Water
System in excess of 5% of the value of the Water System in service unless prior to such
disposition either:
(i) There has been filed with the City a certificate of a Qualified Consultant stating
that such disposition will not impair the ability of the City to comply with the
rate covenants contained in Sections 6.1 and 6.2 of this Master Declaration; or
(ii) Provision is made for the payment, redemption or other defeasance of a
principal amount of Bonds equal to the greater of the following amounts:
(a) An amount which will be in the same proportion to the net principal
amount of Bonds then Outstanding (defined as the total principal amount
Page 17 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 20 of 29
of Bonds then Outstanding less the amount of cash and investments in the
Debt Service Account, the Bond Reserve Account, and the Subordinate
Obligations Account)that the Gross Revenues attributable to the part of
the Water System sold or disposed of for the 12 preceding months bears
to the total Gross Revenues for such period; or
(b) An amount which will be in the same proportion to the net principal
amount of Bonds then Outstanding that the book value of the part of the
Water System sold or disposed of bears to the book value of the Water
System immediately prior to such sale or disposition.
C. The City may dispose of any portion of the Water System that has become unserviceable,
inadequate, obsolete, or unfit to be used or no longer necessary for use in the operation of
the Water System.
D. If the ownership of all or part of the Water System is transferred from the City through
the operation of law, the City shall to the extent authorized by law, reconstruct or replace
such transferred portion using any proceeds of the transfer unless the City reasonably
determines that such reconstruction or replacement is not in the best interest of the City
and the Owners, in which case any proceeds shall be used for the payment, redemption or
defeasance of the Bonds.
Section 11. Events of Default and Remedies.
11.1. Continuous Operation Essential. City Official hereby finds and determines that the
continuous operation of the Water System and the collection, deposit and disbursement of
the Net Revenues in the manner provided in this Master Declaration and in any
Supplemental Declaration are essential to the payment and security of the Bonds, and the
failure or refusal of the City to perform the covenants and obligations contained in this
Master Declaration or any such Supplemental Declaration will endanger the necessary
continuous operation of the Water System and the application of the Net Revenues to the
operation of the Water System and the payment of the Bonds.
11.2. Events of Default. The following shall constitute "Events of Default" so long as they are
occurring and have not been cured:
A. If the City shall fail to pay any Bond principal or interest when due.
B. Except as provided in Section 11.3, if the City shall default in the observance and
performance of any other of its covenants, conditions and agreements in this Master
Declaration and the default continues for ninety (90) days after the City receives a written
notice, specifying the Event of Default and demanding the cure of such default, from a
Credit Provider or from the Owners of not less than 25% in aggregate principal amount of
the Bonds Outstanding.
C. If the City shall sell, transfer, assign or convey any properties constituting the Water
System in violation of Section 10.9.
Page 18 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 21 of 29
D. If an order,judgment or decree shall be entered by any court of competent jurisdiction:
(i) Appointing a receiver, trustee or liquidator for the City or the whole or any part
of the Water System;
(ii) Approving a petition filed against the City seeking the bankruptcy,
arrangement or reorganization of the City under any applicable law of the
United States or the State; or
(iii) Assuming custody or control of the City or of the whole or any part of the
Water System under the provisions of any other law for the relief or aid of
debtors and such order,judgment or decree shall not be vacated or set aside or
stayed (or, in case custody or control is assumed by said order, such custody or
control shall not be otherwise terminated)within sixty (60) days from the date
of the entry of such order,judgment or decree.
E. If the City shall:
(i) Admit in writing its inability to pay its debts generally as they become due;
(ii) File a petition in bankruptcy or seeking a composition of indebtedness under
any state or federal bankruptcy or insolvency law;
(iii) Consent to the appointment of a receiver of the whole or any part of the Water
System; or
(iv) Consent to the assumption by any court of competent jurisdiction under the
provisions of any other law for the relief or aid of debtors of custody or control
of the City or of the whole or any part of the Water System.
11.3. Exception. It shall not constitute an Event of Default under 11.2.13 if the default cannot
practicably be remedied within ninety (90) days after the City receives notice of the
default, so long as the City promptly commences reasonable action to remedy the default
after the notice is received, and continues reasonable action to remedy the default until
the default is remedied.
11.4. Remedies. If an Event of Default occurs, any Owner may exercise any remedy available
at law or in equity including mandamus where applicable. However, the Bonds shall not
be subject to acceleration.
A. Books of City Open to Inspection.
(i) The City covenants that if an Event of Default shall have happened and shall
not have been remedied, the books of record and account of the City and all
other records relating to the Water System shall at all reasonable times be
subject to the inspection and use of any persons holding at least twenty percent
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2917083.3 042038 RSIND
Exhibit A
Page 22 of 29
(20%) of the principal amount of Outstanding Bonds and their respective
agents and attorneys.
(ii) The City covenants that if the Event of Default shall happen and shall not have
been remedied, the City will continue to account, as a trustee of an express
trust, for all Net Revenues and other amounts, securities and funds pledged
under this Master Declaration.
B. Appointment of Trustee. Whenever any Event of Default exists, Owners representing
51 percent or more of the Outstanding Bonds may appoint a commercial bank or other
financial institution with a reported capital and surplus in excess of$50 million as trustee
(the "Trustee")to represent the interests of the Owners.
11.5. Trustee Duties Upon Default.
A. Upon the occurrence of an Event of Default the Trustee may pursue any other available
remedy at law or in equity to enforce the payment of the principal of,premium, if any,
and interest on the outstanding Bonds, and to enforce any rights of the Trustee under or
with respect to the Master Declaration.
B. In addition, upon the occurrence of an Event of Default, and upon the filing of a suit or
other commencement of judicial proceedings to enforce the rights of the Trustee and of
the Owners under the Master Declaration, the Trustee will be entitled, as a matter of right
to the fullest extent permitted by Oregon law, to the appointment of a receiver or
receivers of the Net Revenues and other amounts pledged under the Master Declaration,
pending such proceedings, with such powers as the court making such appointment may
confer.
C. If an Event of Default has occurred and is continuing and if requested so to do by the
Owners of at least 25% in aggregate principal amount of Outstanding Bonds and
indemnified as provided in the Master Declaration, the Trustee will be obligated to
exercise any of the rights and powers conferred by this Master Declaration, as the
Trustee, being advised by counsel, deems most expedient in the interest of the Owners.
D. If a Trustee has been appointed pursuant to 11.4.13, no Owner of any Bond shall have the
right to institute any suit, action or proceeding at law or in equity, for any remedy under
the Master Declaration, unless:
(i) such Owner has previously given to the Trustee written notice of the
occurrence of an Event of Default;
(ii) the Owners of a majority in aggregate principal amount of all the Bonds then
Outstanding have requested the Trustee in writing to exercise its powers under
the Master Declaration;
Page 20 —Master Water System Revenue Bond Declaration
2917083.3 042038 RSIND
Exhibit A
Page 23 of 29
(iii) said Owners have tendered to the Trustee indemnity reasonably acceptable to
the Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request; and
(iv) the Trustee has refused or failed to comply with such request for a period of 60
days after such written request has been received by the Trustee and said tender
of indemnity is made to the Trustee.
E. If the Trustee takes any judicial or other action in an Event of Default the Trustee has full
power in its direction with respect to any continuance, discontinuance, withdrawal,
compromise, settlement or other disposition of such action, unless opposed by the written
request of the Owners of a majority in aggregate principal amount of the Outstanding
Bonds. The Trustee is appointed attorney-in-fact of the Owners for the purpose of
bringing any suit action or proceedings in an Event of Default.
F. Waivers of Event of Default.
(i) No delay or omission of any Owner or of the Trustee to exercise any right or
power arising upon the happening of an Event of Default shall impair any right
or power or shall be construed to be a waiver of any such Event of Default or
to be an acquiescence therein; and every power and remedy given by this
Section 11 to the Owners and to the Trustee may be exercised from time to
time and as often as may be deemed expedient by the Owners and/or the
Trustee as applicable.
(ii) The owners of not less than fifty percent(50%) in principal amount of the
affected Bonds that are at the time Outstanding, or their attorneys-in-fact duly
authorized, or the Trustee may, on behalf of the Owners of all of affected
Bonds, waive any past default under this Master Declaration with respect to
such Bonds and its consequences, except a default in the payment of the
principal of,premium, if any, or interest on any of the Bonds. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
(iii) If a default occurs under Section 6 and that default has not become an Event of
Default, that default shall be deemed waived at the end of the first Fiscal Year
following that default in which the City has complied with Section 6.
11.6. Remedies Granted in Master Declaration Not Exclusive.
No remedy by the terms of this Master Declaration conferred upon or reserved to the Owners is
intended to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Master Declaration or
existing at law or in equity or by statute on or after the date of adoption of this Master
Declaration.
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2917083.3 042038 RSIND
Exhibit A
Page 24 of 29
Section 12. Amendment of Master Declaration.
12.1. This Master Declaration may be amended by Supplemental Declaration without the
consent of any Owners for any one or more of the following purposes:
A. To cure any ambiguity or formal defect or omission in this Master Declaration;
B. To add to the covenants and agreements of the City in this Master Declaration, other
covenants and agreements to be observed by the City which are not contrary to or
inconsistent with this Master Declaration as theretofore in effect;
C. To authorize issuance of Bonds or Subordinate Obligations as permitted by this Master
Declaration;
D. To modify, amend or supplement this Master Declaration or any Supplemental
Declaration to qualify this Master Declaration under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect or to permit the qualification of
any Bonds for sale under the securities laws of any of the states of the United States of
America;
E. To confirm, as further assurance, any security interest or pledge created under this Master
Declaration or any Supplemental Declaration;
F. To make any change which, in the reasonable judgment of the City, does not materially
and adversely affect the rights of the owners of any Outstanding Bonds;
G. So long as a Credit Facility (other than a Reserve Credit Facility) is in full force and
effect with respect to the Bonds affected by such Supplemental Declaration, to make any
other change which is consented to in writing by the issuer of such Credit Facility other
than any change which:
(i) Would result in a downgrading or withdrawal of the rating then assigned to the
affected Bonds by the Rating Agencies;
(ii) Changes the maturity (except as permitted herein), the Interest Payment Dates,
interest rates, redemption and purchase provisions, and provisions regarding
notices of redemption and purchase applicable to the affected Bonds or
diminishes the security afforded by such Credit Facility;
(iii) Materially and adversely affects the rights and security afforded to the Owners
of any Outstanding Bonds not secured by such Credit Facility; or
H. To modify any of the provisions of this Master Declaration or any Supplemental
Declaration in any other respect whatever, as long as the modification shall take effect
only after all affected Outstanding Bonds cease to be Outstanding.
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Exhibit A
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12.2. This Master Declaration may be amended for any other purpose only upon consent of
Owners of not less than fifty-one percent(51%) in aggregate principal amount of the
Bonds Outstanding; provided, however, that no amendment shall be valid without the
consent of Owners of 100 percent(100%) of the aggregate principal amount of the Bonds
Outstanding which:
A. Extends the maturity of any Bond, reduces the rate of interest upon any Bond, extends the
time of payment of interest on any Bond, reduces the amount of principal payable on any
Bond, or reduces any premium payable on any Bond, without the consent of the affected
Owner; or
B. Reduces the percent of Owners required to approve Supplemental Declarations.
12.3. For purposes of Section 12.2, and subject to Section 12.4, the initial purchaser of a series
of Bonds may be treated as the Owner of that Series at the time that series of Bonds is
delivered in exchange for payment.
12.4. Except as otherwise expressly provided in Section 12.5, Section 12.6 or a Supplemental
Declaration, as long as a Credit Facility securing all or a portion of any Outstanding
Bonds is in effect, the issuer of such Credit Facility shall be deemed to be the Owner of
the Bonds secured by such Credit Facility for the purpose of the execution and delivery of
a Supplemental Declaration of any amendment, change or modification of this Master
Declaration or the initiation by Owners of any action which under this Master Declaration
requires the written approval or consent of or can be initiated by the Owners of at least a
majority in principal amount of the affected Bonds at the time Outstanding, or following
an Event of Default for all other purposes.
12.5. The issuer of a Credit Facility shall not be deemed to be an Owner for purposes of any
amendment, change or modification of this Master Declaration which:
A. Would result in a downgrading or withdrawal of the rating then assigned to the affected
Bonds by the Rating Agencies; or
B. Changes the maturity (except as expressly permitted herein), the Interest Payment Dates,
interest rates, redemption and purchase provisions, and provisions regarding notices of
redemption and purchase applicable to the affected Bonds or diminishes the security
afforded by such Credit Facility; or
C. Reduces the percentage or otherwise affects the classes of affected Bonds, the consent of
the Owners of which is required to effect any such modification or amendment.
12.6. No issuer of a Credit Facility shall be entitled to act as an Owner during any period in
which:
A. The issuer's Credit Facility is not be in full force and effect;
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Exhibit A
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B. The issuer of a Credit Facility shall have filed a petition or otherwise sought relief under
any federal or state bankruptcy or similar law;
C. The issuer of the Credit Facility shall, for any reason, have failed or refused to honor a
proper demand for payment under such Credit Facility; or
D. An order or decree shall have been entered, with the consent or acquiescence of the issuer
of a Credit Facility, appointing a receiver or receivers or the assets of the issuer of a
Credit Facility, or if such order or decree having been entered without the consent or
acquiescence of the issuer of a Credit Facility, shall not have been vacated or discharged
or stayed within ninety (90) days after the entry thereof.
12.7. For purposes of determining the percentage of Owners consenting to, waiving or
otherwise acting with respect to any matter that may arise under this Master Declaration,
the Owners of Bonds which pay interest only at maturity, and mature more than one year
after they are issued shall be treated as Owners of Bonds in an aggregate principal amount
equal to the accreted value of such Bonds as of the date the notice is sent requesting
consent, waiver or other action as provided herein.
Section 13. Defeasance.
13.1. The City shall be obligated to pay Bonds which are defeased pursuant to this Section
solely from the money and Government Obligations deposited with the escrow agent or
trustee, and the City shall have no further obligation to pay the defeased Bonds from any
source except the amounts deposited in the escrow. Bonds shall be deemed defeased if
the City:
A. irrevocably deposits money or noncallable Government Obligations in escrow with an
independent trustee or escrow agent which are calculated to be sufficient without
reinvestment for the payment of Bonds which are to be defeased;
B. files with the escrow agent or trustee an opinion from an independent, certified public
accountant to the effect that the money and the principal and interest to be received from
the Government Obligations are calculated to be sufficient, without further reinvestment,
to pay the defeased Bonds when due; and
C. files with the escrow agent or trustee an opinion of nationally recognized bond counsel
that the proposed defeasance will not cause interest on the defeased Bonds to be
includable in gross income under the Code.
Section 14. The Series 2018 Bond.
14.1. Pursuant to the authority of the Resolution and this Master Declaration, the City has
issued its Water Revenue Refunding Bond, Series 2018, in the principal amount of
[$ ]. The Series 2018 Bond shall be a Bond as defined in this Master
Declaration. The Series 2018 Bond shall bear interest payable on [ and ]
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Exhibit A
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of each year at the following rates, commencing [ , 2018], and shall mature on
[ , 20 ] and shall be subject to payment in installments as follows:
[to be inserted]
14.2. The Series 2018 Bond is sold to [Bank] pursuant to a bond purchase agreement dated
[ , 2018].
14.3. [The Series 2018 Bond is subject to prepayment at the option of the City at any time after
, 20 , as a whole or in part, at a price of par,plus accrued interest, if any, to
the date of prepayment.]
14.4. The Series 2018 Bond shall be a special obligation of the City, and shall be payable solely
from the Net Revenues and amounts required to be deposited in the Debt Service Account
as required and as provided by this Master Declaration. The Series 2018 Bond is not a
general obligation of the City and is payable solely from the amounts described in the
previous sentence.
14.5. The Series 2018 Bond shall be in the form agreed to by the City Official and shall be
signed with the manual signature of the City Official.
14.6. The Series 2018 Bond proceeds shall be applied to refund the following outstanding
revenue borrowings of the City:
[Outstanding
Principal
Name of Series Issue Date Amount] Redemption Date
OECDD Loan Agreement No. Y02007 April 1, 2002 $4,000,000 [ ]
OECDD Loan Agreement No. S02010 May 31, 2002 4,000,000 [ ]
OECDD Loan Agreement No. G02003 December 23, 2003 8,400,000 [ ]
EXECUTED ON BEHALF OF THE CITY OF WOODBURN BY ITS CITY OFFICIAL AS OF
THE DAY OF , 2018.
City of Woodburn, Oregon
By:
City Official
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Exhibit A
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Appendix A
Form of Bond
No.R-1 $
United States of America
State of Oregon
County of Marion
City of Woodburn
Water Revenue Refunding Bond
Series 2018
The City of Woodburn,Oregon(the"City"),for value received,acknowledges itself indebted and
hereby promises to pay,but solely from the sources described below,to [Name of Bank],as purchaser(the
"Purchaser"),the aggregate principal amount of$ in the following installments,together with interest on
those installments at[_._%]per annum,calculated on a 30/360-day basis[],as follows:
[to follow]
This Series 2018 Bond is issued pursuant to City Resolution No. [ ]/Council Bill No. [ ]
adopted ,2018,and the Master Water System Revenue Bond Declaration(the"Declaration'')for this
Series 2018 Bond dated as of the date of issuance of this Series 2018 Bond. This Series 2018 Bond is sold to the
Purchaser pursuant to a Bond Purchase Agreement(the"Agreement")dated 2018. Capitalized terms
used but not defined in this Series 2018 Bond have the meanings defined for such terms in the Agreement or the
Declaration. The provisions of the Agreement are incorporated into this Series 2018 Bond by this reference.
This Series 2018 Bond is authorized pursuant to the Resolution and is issued by the City for the
purpose of refinancing the City's Refunded Obligations described in the Declaration, in full and strict accordance
and compliance with all of the provisions of the Constitution and statutes of the State of Oregon.
This Series 2018 Bond is a special obligation of the City,payable solely from the Net Revenues
and amounts required to be deposited in the Debt Service Account as described in the Declaration. The City may
issue Parity Bonds under the terms and conditions of Section 7 of the Declaration. The City may issue Subordinate
Obligations which have a lien on the Net Revenues which is subordinate to the lien of the Parity Bonds under the
terms and conditions of Section 8 of the Declaration. THIS SERIES 2018 BOND IS NOT A GENERAL
OBLIGATION OF THE CITY AND IS PAYABLE SOLELY FROM THE SOURCES TO PAY BONDS AS
PROVIDED IN THE DECLARATION.
[Insert prepayment provisions pursuant to Declaration Section 14.3.]
The transfer of this Series 2018 Bond is limited, and this Series 2018 Bond may be transferred
only as provided in the Agreement.
IT IS HEREBY CERTIFIED,RECITED,AND DECLARED that all conditions,acts,and things
required to exist,to happen,and to be performed precedent to and in the issuance of this Series 2018 Bond have
existed,have happened,and have been performed in due time,form,and manner as required by the Constitution and
statutes of the State of Oregon and the Charter of the City; and that this Series 2018 Bond,and all other obligations
of the City,are within every debt limitation and other limit prescribed by such Constitution and statutes.
IN WITNESS WHEREOF,the City has caused this Series 2018 Bond to be signed by the manual
signature of an authorized City Official under the Resolution,all as of the day of ,2018.
City of Woodburn,Oregon
[City Administrator or the City Finance Director]
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Exhibit A
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Page 2 - Appendix A
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