HomeMy Public PortalAbout030-2008 - Authorizes the issuance of electricORDINANCE NO. 30-2008
An Ordinance of the City of Richmond authorizing the issuance of electric
utility revenue bonds for the purpose of providing funds to apply on the cost
of the construction of certain additions, extensions and improvements to the
municipal electric utility of said City, providing for the safeguarding of the
interests of the owners of said bonds, other matters connected therewith,
including the issuance of notes in anticipation of bonds, and repealing
ordinances inconsistent herewith
WHEREAS, the City of Richmond ("City") now owns and operates a municipal electric
utility in said City in accordance with the provisions of Title 8, Article 1.5 of the Indiana Code,
as in effect on the date of delivery of the bonds herein authorized ("Act"); and
WHEREAS, the Common Council of the City now finds that certain additions,
extensions and improvements to the electric utility are necessary; and that plans and estimates
have been prepared and filed by the engineers employed by the City for the construction of said
additions, extensions and improvements, as more fully described on Exhibit A attached hereto
("Project"), which plans and estimates will be approved by all governmental authorities having
jurisdiction; and
WHEREAS, the City has obtained engineers' estimates of the costs for the construction
of the Project and has advertised for and received bids for the Project, which bids are subject to
the City's obtaining funds to pay for said Project; that on the basis of said estimates and bids, the
cost of the Project, including incidental expenses, is in an amount not to exceed $8,000,000; and
WHEREAS, the Common Council has been advised that utility funds on hand will be
available to pay a portion of the Project costs, but that it is necessary to finance the balance of the
costs of the Project by the issuance of electric utility revenue bonds in an aggregate principal
amount not to exceed $4,000,000 and, if necessary, bond anticipation notes ("BANS"); and
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WHEREAS, the City has heretofore issued certain Electric Utility Revenue Bonds of
2006, dated February 15, 2006 in the issuance amount of $3,300,000 ("2006 Bonds"), now
outstanding in the aggregate principal amount of $2,760,000 and maturing annually over a period
ending March 1, 2016, which 2006 Bonds constitute a first charge against the Net Revenues (as
hereinafter defined) of the electric utility; and
WHEREAS, the terms and conditions of the ordinance authorizing the issuance of the
now outstanding 2006 Bonds provide that additional revenue bonds may be issued on a parity
with the 2006 Bonds provided certain tests are met, and the City finds that the finances of said
electric utility are such as will enable meeting the conditions for the issuance of additional parity
bonds and that, accordingly, the additional revenue bonds to be issued hereunder shall rank on a
parity with the 2006 Bonds; and
WHEREAS, the bonds to be issued pursuant to this ordinance are to be issued subject to
the provisions of the laws of the State of Indiana, including, without limitation, the Act, and the
terms and restrictions of this ordinance; and
WHEREAS, the City desires to authorize the issuance of BANS hereunder, if necessary,
to provide interim financing for the Project and to authorize the refunding of the BANS, if issued;
and
WHEREAS, the Common Council now finds that all conditions precedent to the adoption
of an ordinance authorizing the issuance of said bonds and BANS have been complied with in
accordance with the provisions of the Act; now, therefore,
BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF RICHMOND,
INDIANA:
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Section 1. Issuance of Bonds and BANS. (a) The City, being the owner of and
engaged in operating a municipal electric utility furnishing the City, its inhabitants and the
residents adjacent thereto, with electric current for public, domestic and industrial uses, now
proceed with the Project, the cost of which shall not exceed $8,000,000, plus investment earnings
on the BAN and bond proceeds, without further authorization from the Common Council, and
the financing thereof by the issuance of revenue bonds pursuant to and in the manner prescribed
by the Act, which revenue bonds shall be payable solely out of the Net Revenues (herein defined
as gross revenues after deduction only for the reasonable expenses of operation, repair and
maintenance, including any payments required under the City's Power Sales Contract with the
Indiana Municipal Power Agency, including any amendments thereto) of said electric utility,
including all additions and improvements thereto and replacements thereof subsequently
constructed or acquired of said electric utility. The terms "municipal electric utility, " "electric
utility, " "utility, " "electric utility system, " "system, " and words of like import where used in
this ordinance shall be construed to mean and include the existing electric utility and all real
estate and equipment used in connection therewith and appurtenances thereto, and all extensions,
additions and improvements thereto and replacements thereof now or at any time hereafter
constructed or acquired.
(b) That said Project shall be constructed and installed in accordance with the plans
and estimates prepared by the engineers employed for the Project.
(c) The City shall issue, if necessary, its BANS for the purpose of procuring
interim financing to apply on the costs of said Project. The City shall issue its BANS in an
amount not to exceed Four Million Dollars ($4,000,000) to be designated "Electric Utility
Bond Anticipation Notes of 2008. " The BANS shall be sold at not less than 99.5% of their
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par value, shall be numbered consecutively from 1 upward, shall be in multiples of $1 as
designated in the purchase agreement for the BANS, shall be dated as of the date of delivery
thereof, and shall bear interest at a rate not to exceed 7% per annum (the exact rate or rates to
be determined through bidding or negotiation) payable either (i) at maturity or upon
redemption, or (ii) semiannually on the first day of the month, beginning with the first month
which is at least six full months following delivery of the BANS, and semiannually thereafter.
Interest on the BANS is payable from (i) Net Revenues, subject to the prior payment of the
2006 Bonds, the bonds and any parity bonds, or (ii) in the case of interest at maturity or upon
prepayment, from proceeds of the bonds. Principal on the BANS will be payable no later than
five (5) years from their date of delivery. The BANS are subject to renewal or extension at an
interest rate or rates not to exceed 7% per annum (the exact rate or rates to be determined
through bidding or negotiation). The term of the BANS and all renewal BANS may not exceed
five (5) years from the date of delivery of the initial BANS. The BANS shall be registered in
the name of the purchasers thereof. The BANS may be paid for in installments.
The BANS shall be issued pursuant to IC 5-1.5-8-6.1 if sold to the Indiana Bond Bank or
pursuant to IC 5-1-14-5 if sold to a financial institution or any other purchaser. The principal of
and interest on the BANS may be payable from (i) the issuance of revenue bonds pursuant to and
in the manner prescribed by the Act or (ii) the Net Revenues of the electric utility, subject to the
prior payment of the 2006 Bonds, the bonds and any parity bonds.. The revenue bonds will be
payable solely out of and constitute a first charge against the Net Revenues of the electric utility
of the City, including all additions and improvements thereto and replacements thereof
subsequently constructed or acquired, on a parity with the 2006 Bonds.
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(d) The City shall issue its revenue bonds designated "Electric Utility Revenue
Bonds of 2008", in an aggregate principal amount not to exceed Four Million Dollars
($4,000,000) for the purpose of procuring funds to apply on the funding of the costs of said
Project, refunding the BANS, if issued, and the payment of costs of issuance.
(e) The bonds shall be issued in the denomination of Five Thousand Dollars
($5,000) each or integral multiples thereof, numbered consecutively from 1 upward, dated as
of the date of delivery thereof or the first day of the month in with sold, as determined by the
Controller, with the advice of the City's financial advisor, and shall bear interest at a rate or
rates not exceeding 7% per annum (the exact rate or rates to be determined by bidding),
payable semiannually on March 1 and September 1, beginning on the first March 1 or the first
September 1 following delivery of the bonds, as designated by the Controller with the advice
of the City's financial advisor. The bonds shall be sold at a price not less than 98% of the par
value thereof, and shall mature annually or be subject to mandatory sinking fund redemption
on March 1, over a term not exceed 11 years, and in such principal amounts as will achieve as
level annual debt service as possible with $5,000 denominations.
Interest on the bonds and BANS shall be calculated according to a 360-day calendar year
containing twelve 30-day months.
All or a portion of the bonds may be issued as one or more term bonds, upon election of
the successful bidder. Such term bonds shall have a stated maturity or maturities on March 1 in
the years as determined by the successful bidder, but in no event later than the final serial
maturity of the bonds as established in accordance with the above paragraph. The term bonds
shall be subject to mandatory sinking fund redemption and final payment(s) at maturity at 100%
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of the principal amount thereof, plus accrued interest to the redemption date, on principal
payment dates which are hereinafter determined in accordance with the above paragraph.
Section 2. Registrar and Paying Agent; Book Entry Provisions. The Controller is
hereby authorized to contract with a qualified institution to serve as Registrar and Paying Agent
for the bonds ("Registrar" or "Paying Agent"). The Registrar is hereby charged with the
responsibility of authenticating the bonds. The Controller is hereby authorized to enter into such
agreements or understandings with the Registrar on the date of issuance of the bonds, or at any
later date until all the bonds mature or are redeemed, as will enable the institution to perform the
services required of registrar and paying agent for the bonds as set forth herein. The Controller
is further authorized to pay such fees as the Registrar may charge for the services it provides as
Registrar and Paying Agent and such fees may be paid from the Electric Utility Sinking Fund
continued in Section 13 hereof to pay the principal of and interest on the bonds and fiscal agency
charges.
As to the BANS and as to the bonds, if sold to a purchaser that does not object to such
designation, the Controller may be designated the Registrar and Paying Agent and in that case
will be charged with the performance of all of the duties and responsibilities of Registrar and
Paying Agent.
The principal of the bonds shall be payable at the principal office of the Paying Agent.
All payments of interest on the bonds and all payments of interest and principal on the BANS
shall be paid by check mailed one business day prior to the payment date to the registered
owners thereof as of the fifteenth day of the month immediately preceding such interest payment
date ("Record Date"), at the addresses as they appear on the registration books kept by the
Registrar or at such other address as is provided to the Paying Agent in writing by such
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registered owner. If payment of principal or interest is made to a depository, payment shall be
made by wire transfer on the payment date in same -day funds. If the payment date occurs on a
date when financial institutions are not open for business, the wire transfer shall be made on the
next succeeding business day. The Paying Agent shall be instructed to wire transfer payments by
1:00 p.m. (New York City time) so such payments are received at the depository by 2:30 p.m.
(New York City time). Payments on the BANS may also be made by wire transfer. All
payments on the bonds and BANS shall be made in any lawful money of the United States of
America, which on the date of such payment, shall be legal tender for the payment of public and
private debts.
Each bond shall be transferable or exchangeable only upon the books of the City kept for
that purpose at the principal office of the Registrar by the registered owner thereof in person, or
by its attorney duly authorized in writing, upon surrender of such bond together with a written
instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered
owner, or its attorney duly authorized in writing, and thereupon a new fully registered bond or
bonds in an authorized aggregate principal amount and of the same maturity, shall be executed
and delivered in the name of the transferee or transferees or the registered owner, as the case may
be, in exchange therefor. The costs of such transfer or exchange shall be borne by the City
except for any tax or governmental charge required to be paid with respect to the transfer or
exchange, which taxes or governmental charges are payable by the person requesting such
transfer or exchange. The City, Registrar and Paying Agent for the bonds may treat and consider
the person in whose name such bonds are registered as the absolute owner thereof for all
purposes including for the purpose of receiving payment of, or on account of, the principal
thereof and interest due thereon.
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Interest on such bonds shall be payable from the interest payment date to which interest
has been paid next preceding the authentication date of the bonds unless the bonds are
authenticated after the Record Date and on or before such interest payment date in which case
they shall bear interest from such interest payment date, or unless the bonds are authenticated on
or before the Record Date preceding the first interest payment date in which case they shall bear
interest from the original date of the bonds until the principal shall be fully paid.
The City has determined that it may be beneficial to the City to have the bonds held by a
central depository system pursuant to an agreement between the City and The Depository Trust
Company, New York, New York ("Depository Trust Company") and have transfers of the bonds
effected by book -entry on the books of the central depository system ("Book Entry System")
The bonds may be initially issued in the form of a separate single authenticated fully registered
bond for the aggregate principal amount of each separate maturity of the bonds. In such case,
upon initial issuance, the ownership of such bonds shall be registered in the register kept by the
Registrar in the name of CEDE & CO., as nominee of the Depository Trust Company.
With respect to the bonds registered in the register kept by the Registrar in the name of
CEDE & CO., as nominee of the Depository Trust Company, the City and the Paying Agent
shall have no responsibility or obligation to any other holders or owners (including any
beneficial owner (`Beneficial Owner")) of the bonds with respect to (i) the accuracy of the
records of the Depository Trust Company, CEDE & CO., or any Beneficial Owner with respect
to ownership questions, (ii) the delivery to any bondholder (including any Beneficial Owner) or
any other person, other than the Depository Trust Company, of any notice with respect to the
bonds including any notice of redemption, or (iii) the payment to any bondholder (including any
Beneficial Owner) or any other person, other than the Depository Trust Company, of any amount
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with respect to the principal of, or premium, if any, or interest on the bonds except as otherwise
provided herein.
No person other than the Depository Trust Company shall receive an authenticated bond
evidencing an obligation of the City to make payments of the principal of and premium, if any,
and interest on the bonds pursuant to this ordinance. The City and the Registrar and Paying
Agent may treat as and deem the Depository Trust Company or CEDE & CO. to be the absolute
bondholder of each of the bonds for the purpose of (i) payment of the principal of and premium,
if any, and interest on such bonds; (ii) giving notices of redemption and other notices permitted
to be given to bondholders with respect to such bonds; (iii) registering transfers with respect to
such bonds; (iv) obtaining any consent or other action required or permitted to be taken of or by
bondholders; (v) voting; and (vi) for all other purposes whatsoever. The Paying Agent shall pay
all principal of and premium, if any, and interest on the bonds only to or upon the order of the
Depository Trust Company, and all such payments shall be valid and effective fully to satisfy
and discharge the City's and the Paying Agent's obligations with respect to principal of and
premium, if any, and interest on the bonds to the extent of the sum or sums so paid. Upon
delivery by the Depository Trust Company to the City of written notice to the effect that the
Depository Trust Company has determined to substitute a new nominee in place of CEDE &
CO., and subject to the provisions herein with respect to consents, the words "CEDE & CO. " in
this ordinance shall refer to such new nominee of the Depository Trust Company.
Notwithstanding any other provision hereof to the contrary, so long as any bond is registered in
the name of CEDE & CO., as nominee of the Depository Trust Company, all payments with
respect to the principal of and premium, if any, and interest on such bonds and all notices with
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respect to such bonds shall be made and given, respectively, to the Depository Trust Company as
provided in a representation letter from the City to the Depository Trust Company.
Upon receipt by the City of written notice from the Depository Trust Company to the
effect that the Depository Trust Company is unable or unwilling to discharge its responsibilities
and no substitute depository willing to undertake the functions of the Depository Trust Company
hereunder can be found which is willing and able to undertake such functions upon reasonable
and customary terms, then the bonds shall no longer be restricted to being registered in the
register of the City kept by the Registrar in the name of CEDE & CO., as nominee of the
Depository Trust Company, but may be registered in whatever name or names the bondholders
transferring or exchanging the bonds shall designate, in accordance with the provisions of this
ordinance.
If the City determines that it is in the best interest of the bondholders that they be able to
obtain certificates for the fully registered bonds, the City may notify the Depository Trust
Company and the Registrar, whereupon the Depository Trust Company will notify the Beneficial
Owners of the availability through the Depository Trust Company of certificates for the bonds.
In such event, the Registrar shall prepare, authenticate, transfer and exchange certificates for the
bonds as requested by the Depository Trust Company and any Beneficial Owners in appropriate
amounts, and whenever the Depository Trust Company requests the City and the Registrar to do
so, the Registrar and the City will cooperate with the Depository Trust Company by taking
appropriate action after reasonable notice (i) to make available one or more separate certificates
evidencing the fully registered bonds of any Beneficial Owner's Depository Trust Company
account or (ii) to arrange for another securities depository to maintain custody of certificates for
and evidencing the bonds.
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If the bonds shall no longer be restricted to being registered in the name of a Depository
Trust Company, the Registrar shall cause said bonds to be printed in blank in such number as the
Registrar shall determine to be necessary or customary; provided, however, that the Registrar
shall not be required to have such bonds printed until it shall have received from the City
indemnification for all costs and expenses associated with such printing.
In connection with any notice or other communication to be provided to bondholders by
the City or the Registrar with respect to any consent or other action to be taken by bondholders,
the City or the Registrar, as the case may be, shall establish a record date for such consent or
other action and give the Depository Trust Company notice of such record date not less than
fifteen (15) calendar days in advance of such record date to the extent possible.
So long as said bonds are registered in the name of the Depository Trust Company or
CEDE & CO. or any substitute nominee, the City and the Registrar and Paying Agent shall be
entitled to request and to rely upon a certificate or other written representation from the
Beneficial Owners of the bonds or from the Depository Trust Company on behalf of such
Beneficial Owners stating the amount of their respective beneficial ownership interests in the
bonds and setting forth the consent, advice, direction, demand or vote of the Beneficial Owners
as of a record date selected by the Registrar and the Depository Trust Company, to the same
extent as if such consent, advice, direction, demand or vote were made by the bondholders for
purposes of this ordinance and the City and the Registrar and Paying Agent shall for such
purposes treat the Beneficial Owners as the bondholders. Along with any such certificate or
representation, the Registrar may request the Depository Trust Company to deliver, or cause to
be delivered, to the Registrar a list of all Beneficial Owners of the bonds, together with the dollar
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amount of each Beneficial Owner's interest in the bonds and the current addresses of such
Beneficial Owners.
The BANS may also be issued in book -entry form and in that case all of the provisions set
forth in this Section 2 shall apply.
Section 3. Redemption of BANS and Bonds. (a) The BANS are prepayable by the
City, in whole or in part, at any time upon seven days' notice to the owner of the BANS without
any premium.
The bonds of this issue may be issued to permit an optional call on March 1, 2016 or any
date thereafter, on thirty (30) days' notice, in whole or in part, in the order of maturity
determined by the City and by lot within a maturity, at face value together with a premium not to
exceed 1%, plus accrued interest to the date fixed for redemption. The exact redemption dates
and premium, if any, shall be established by the Controller, with the advice of the City's
financial advisor, prior to the sale of the bonds.
If any bond is issued as a term bond, the Paying Agent shall credit against the mandatory
sinking fund requirement for the bonds maturing as term bonds, and corresponding mandatory
redemption obligation, in the order determined by the City, any bonds maturing as term bonds
which have previously been redeemed (otherwise than as a result of a previous mandatory
redemption requirement) or delivered to the Registrar for cancellation or purchased for
cancellation by the Paying Agent and not theretofore applied as a credit against any redemption
obligation. Each bond maturing as a term bond so delivered or canceled shall be credited by the
Paying Agent at 100% of the principal amount thereof against the mandatory sinking fund
obligation on such mandatory sinking fund date, and any excess of such amount shall be credited
on future redemption obligations, and the principal amount of the bonds to be redeemed by
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operation of the mandatory sinking fund requirement shall be accordingly reduced; provided,
however, the Paying Agent shall credit only such bonds maturing as term bonds to the extent
received on or before forty-five (45) days preceding the applicable mandatory redemption date.
If less than an entire maturity is called for redemption at one time, the bonds to be
redeemed shall be selected by lot within a maturity by the Registrar. Each Five Thousand
Dollars ($5,000) principal amount shall be considered a separate bond for purposes of optional
and mandatory redemption. If some bonds are to be redeemed by optional and mandatory
sinking fund redemption on the same date, the Registrar shall select by lot the bonds for optional
redemption before selecting the bonds by lot for the mandatory sinking fund redemption.
In either case, notice of such redemption shall be mailed to the registered owner not less
than thirty (30) days prior to the date fixed for redemption at the address of the registered owner
as shown on the registration record of the City as of the date which is forty-five (45) days prior
to said redemption date, unless such redemption notice is waived by the owner of the bond or
bonds redeemed. The notice shall specify the date and place of redemption and sufficient
identification of the bonds called for redemption. The place of redemption may be determined
by the City. Interest on the bonds so called for redemption shall cease on the redemption date
fixed in such notice if sufficient funds are available at the place of redemption to pay the
redemption price on the date so named.
Section 4. Execution. Each of said bonds and BANS shall be executed in the name of
the City by the manual or facsimile signature of the Mayor, attested by the manual or facsimile
signature of its Clerk and the seal of the City shall be affixed, imprinted or impressed to or on
each of said bonds and BANS manually, by facsimile or any other means; and said officials, by
the execution of a Signature and No Litigation Certificate, shall adopt as and for their own
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proper signatures the facsimile signatures appearing on said bonds and BANS. In case any
officer whose signature or facsimile signature appears on the bonds or BANS shall cease to be
such officer before the delivery of the bonds or BANS, the signature of such officer shall
nevertheless be valid and sufficient for all purposes the same as if such officer had remained in
office until such delivery. The bonds shall also be authenticated by the manual signature of an
authorized representative of the Registrar and no bond shall be valid or become obligatory for
any purpose until the certificate of authentication thereon has been so executed.
Said bonds and BANS shall have all of the qualities and incidents of negotiable
instruments under the laws of the State of Indiana, subject to the provisions for registration
herein.
Section 5. Form of Bonds. The form and tenor of said bonds shall be substantially as
follows, with such changes as are necessary, all blanks to be filled in properly prior to delivery
thereof:
[Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation
("DTC"), to the City of Richmond, Indiana, or its agent for
registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede &
Co., has an interest herein.]
STATE OF INDIANA
UNITED STATES OF AMERICA
CITY OF RICHMOND
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COUNTY OF WAYNE
ELECTRIC UTILITY REVENUE BOND OF 2008
Authentication
Interest Rate Maturity Date Original Date Date CUSIP
REGISTERED OWNER:
PRINCIPAL SUM:
The City of Richmond ("City"), in Wayne County, State of Indiana, for value received,
hereby promises to pay to the Registered Owner named above ("Registered Owner") or
registered assigns, solely out of the special revenue fund hereinafter referred to, the Principal
Sum set forth above ("Principal Sum") on the Maturity Date set forth above (unless this bond is
subject to and shall have been duly called for redemption and payment as provided for herein),
and to pay interest hereon until the Principal Sum is paid at the Interest Rate per annum specified
above, from the interest payment date to which interest has been paid next preceding the
Authentication Date of this bond unless this bond is authenticated after the fifteenth day of the
month preceding an interest payment date and on or before such interest payment date in which
case it shall bear interest from such interest payment date, or unless this bond is authenticated on
or before , in which case it shall bear interest from the Original Date,
which interest is payable semiannually on March 1 and September 1 beginning
, 200. Interest shall be calculated according to a 360-day calendar year
containing twelve 30-day months.
The principal of this bond is payable at the principal office of
("Registrar" or "Paying Agent"), in the City of
Indiana. All payments of interest on this bond shall be paid by
check mailed one business day prior to the interest payment date to the Registered Owner hereof,
as of the fifteenth day of the month immediately preceding such interest payment date, at the
address as it appears on the registration books kept by the Registrar or at such other address as is
provided to the Paying Agent in writing by the registered owner. If payment of principal or
interest is made to a depository, payment shall be made by wire transfer on the payment date in
same -day funds. If the payment date occurs on a date when financial institutions are not open for
business, the wire transfer shall be made on the next succeeding business day. The Paying Agent
shall be instructed to wire transfer payments by 1:00 p.m. (New York City time) so such
payments are received at the depository by 2:30 p.m. (New York City time). All payments on
the bond shall be made in any lawful money of the United States of America, which on the dates
of such payment, shall be legal tender for the payment of public and private debts.
THE CITY SHALL NOT BE OBLIGATED TO PAY THIS BOND OR THE INTEREST
HEREON EXCEPT FROM THE HEREINAFTER DESCRIBED SPECIAL REVENUE FUND,
AND NEITHER THIS BOND NOR THE ISSUE OF WHICH IT IS A PART SHALL IN ANY
RESPECT CONSTITUTE A CORPORATE INDEBTEDNESS OF THE CITY WITHIN THE
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PROVISIONS AND LIMITATIONS OF THE CONSTITUTION OF THE STATE OF
INDIANA.
This bond is one of an authorized issue of bonds of the City, of like date, tenor and effect,
except as to numbering, interest rates and dates of maturity in the total amount of
$ ; numbered consecutively from 1 up; issued for the purpose of providing
funds to pay the costs of certain additions, extensions and improvements to the municipally
owned electric utility system of the City, [refunding notes issued in anticipation of bonds] and to
pay issuance expenses. This bond is issued pursuant to an Ordinance adopted by the Common
Council of the City on the day of , 2007, entitled "An Ordinance
of the City of Richmond authorizing the issuance of electric utility revenue bonds for the purpose
of providing funds to apply on the cost of the construction of certain additions, extensions and
improvements to the municipal electric utility of said City, providing for the safeguarding of the
interests of the owners of said bonds, other matters connected therewith, including the issuance
of notes in anticipation of bonds, and repealing ordinances inconsistent herewith" ("Ordinance"),
and in accordance with the provisions of Indiana law, including without limitation Indiana Code
8-1.5 as in effect on the date of delivery of the bonds of this issue ("Act"), the proceeds of which
are to be applied solely to the construction of said additions, extensions and improvements,
[refunding said interim notes issued in anticipation of bonds,] and the incidental expenses
incurred in connection therewith.
The City has designated the bonds as qualified tax-exempt obligations to qualify the
bonds for the $10,000,000 exception from the provisions of Section 265(b)(3) of the Internal
Revenue Code of 1986 relating to the disallowance of 100% of the deduction for interest expense
allocable to tax-exempt obligations.
Pursuant to the provisions of the Act and the Ordinance, the principal of and interest on
this bond and all other bonds of said issue and any bonds hereafter issued on a parity herewith,
are payable solely from the Electric Utility Sinking Fund continued by the Ordinance ("Sinking
Fund") to be provided from the Net Revenues (defined as the gross revenues after deduction only
for the reasonable expenses of operation, repair and maintenance, including any payments
required under the City's Power Sales Contract with the Indiana Municipal Power Agency,
including any amendments thereto), of the electric utility, including the works authorized by the
Ordinance to be acquired and constructed and all additions and improvements thereto and
replacements thereof subsequently constructed or acquired. This bond and the issue of which it
is a part constitute a first charge upon the Net Revenues, on a parity with the 2006 Bonds (as
defined in the Ordinance).
The City irrevocably pledges the entire Net Revenues of said electric utility to the prompt
payment of the principal and interest on this bond, and any bonds ranking on a parity therewith,
including the 2006 Bonds, to the extent necessary for that purpose, and covenants that it will
cause to be fixed, maintained and collected such rates and charges for service rendered by said
utility as are sufficient in each year for the payment of the proper and reasonable expenses of
operation, repair and maintenance of said utility, and for the payment of the sums required to be
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paid into its Sinking Fund under the provisions of the Ordinance and the Act. In the event the
City or the proper officers thereof shall fail or refuse to so fix, maintain and collect such rates or
charges, or if there be a default in the payment of the interest on or principal of this bond, the
owner of this bond shall have all of the rights and remedies provided for under Indiana law.
The City further covenants that it will set aside and pay into its Sinking Fund monthly, as
available, or more often if necessary, a sufficient amount of the Net Revenues of said works for
payment of (a) the interest on all bonds which by their terms are payable from the revenues of
said electric utility, as such interest shall fall due, (b) the necessary fiscal agency charges for
paying bonds and interest, (c) the principal of all bonds which by their terms are payable from
the revenues of said electric utility, as such principal shall fall due, and (d) an additional amount
as a margin of safety to [create and] maintain the reserve required by the Ordinance. Such
required payments shall constitute a first charge upon all the Net Revenues of said electric utility,
on a parity with the aforementioned 2006 Bonds.
The bonds of this issue maturing on or after March 1, 20 , are redeemable at the option
of the City on 1, 20 , or any date thereafter, on thirty (30) days' notice, in whole or
in part, in the order of maturity determined by the City and by lot within a maturity, at face value
together with the following premiums:
if redeemed on 1, 20�
or thereafter on or before 20 ;
if redeemed on 1, 20 ,
or thereafter on or before 20 ;
if redeemed on
or thereafter prior to maturity;
plus in each case accrued interest to the date fixed for redemption.
[The bonds maturing on March 1, are subject to mandatory sinking fund
redemption prior to maturity, at a redemption price equal to the principal amount thereof plus
accrued interest, on the dates and in the amounts set forth below:
Term Bond
Date Amount
*
*Final Maturity]
If less than an entire maturity is called for redemption at one time, the bonds to be
redeemed shall be selected by lot within a maturity by the Registrar. Each Five Thousand
Dollars ($5,000) principal amount shall be considered a separate bond for purposes of optional
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[and mandatory] redemption. [If some bonds are to be redeemed by optional and mandatory
sinking fund redemption on the same date, the Registrar shall select by lot the bonds for optional
redemption before selecting the bonds by lot for the mandatory sinking fund redemption.]
In either case, notice of such redemption shall be mailed to the address of the registered
owner as shown on the registration records of the City, as of the date which is forty-five (45)
days prior to such redemption date, not less than thirty (30) days prior to the date fixed for
redemption. The notice shall specify the date and place of redemption and sufficient
identification of the bonds called for redemption. The place of redemption may be determined
by the City. Interest on the bonds so called for redemption shall cease on the redemption date
fixed in such notice if sufficient funds are available at the place of redemption to pay the
redemption price on the date so named.
If this bond shall not be presented for payment or redemption on the date fixed therefor,
the City may deposit in trust with its depository bank, an amount sufficient to pay such bond or
the redemption price, as the case may be, and thereafter the registered owner shall look only to
the funds so deposited in trust with said bank for payment and the City shall have no further
obligation or liability in respect thereto.
This bond is transferable or exchangeable only upon the books of the City kept for that
purpose at the office of the Registrar, by the Registered Owner hereof in person, or by its
attorney duly authorized in writing, upon surrender of this bond together with a written
instrument of transfer or exchange satisfactory to the Registrar duly executed by the Registered
Owner, or its attorney duly authorized in writing, and thereupon a new fully registered bond or
bonds in an authorized aggregate principal amount and of the same maturity, shall be executed
and delivered in the name of the transferee or transferees or to the Registered Owner, as the case
may be, in exchange therefor. This bond may be transferred or exchanged without cost to the
Registered Owner except for any tax or governmental charges required with respect to the
transfer. The City, the Registrar and any paying agent for this bond may treat and consider the
person in whose name this bond is registered as the absolute owner hereof for all purposes
including for the purpose of receiving payment of, or on account of, the principal hereof and
interest due hereon.
[The bonds shall be initially issued in a Book Entry System (as defined in the Ordinance).
The provisions of this bond and of the Ordinance are subject in all respects to the provisions of
the Letter of Representations between the City and The Depository Trust Company, or any
substitute agreement, effecting such Book Entry System.]
THE OWNER OF THIS BOND, BY THE ACCEPTANCE HEREOF, HEREBY
AGREES TO ALL THE TERMS AND PROVISIONS CONTAINED IN THE ORDINANCE.
This bond is subject to defeasance prior to payment or redemption as provided in the Ordinance.
The Ordinance may be amended without the consent of the owners of the bonds as provided in
the Ordinance if the Common Council determines, in its sole discretion, that the amendment
shall not adversely affect the rights of any of the owners of the bonds.
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The bonds maturing in any one year are issuable only in fully registered form in the
denomination of $5,000 or any integral multiple thereof not exceeding the aggregate principal
amount of the bonds maturing in such year.
It is hereby certified and recited that all acts, conditions and things required to be done
precedent to and in the execution, issuance and delivery of this bond have been done and
performed in regular and due form as provided by law.
This bond shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been executed by an authorized representative of the Registrar.
IN WITNESS WHEREOF, the City of Richmond, in Wayne County, Indiana, has caused
this bond to be executed in its corporate name by the manual or facsimile signature of its Mayor,
its corporate seal to be hereunto affixed, imprinted or impressed by any means and attested
manually or by facsimile by its Clerk.
(SEAL)
Attest:
Clerk
CITY OF RICHMOND, INDIANA
RIM
Mayor
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This bond is one of the bonds described in the within -mentioned Ordinance.
, as Registrar
I�
Authorized Representative
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
the within bond and all rights thereunder, and hereby
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irrevocably constitutes and appoints , attorney, to transfer the within
bond in the books kept for the registration thereof with full power of substitution in the premises.
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this assignment
by an eligible guarantor institution must correspond with the name as it appears
participating in a Securities Transfer on the face of the within bond in every
Association recognized signature guarantee particular, without alteration or enlargement
program. or any change whatsoever.
Section 6. Authorization for Prebaration and Sale of the BANS and the Bonds. The
Controller is hereby authorized and directed to have said bonds and BANS prepared, and the
Mayor and Clerk are hereby authorized and directed to execute and attest said bonds and BANS
in the form and manner herein provided. The Controller is hereby authorized and directed to
deliver said bonds and BANS to the purchasers thereof after sale made in accordance with the
provisions of this ordinance, provided that at the time of said delivery the Controller shall collect
the full amount which the purchaser has agreed to pay therefor, which amount shall not be less
than 99.5% of the par value of the BANS or not less than 98% of the par value of said bonds, as
the case may be, plus accrued interest to the date of delivery. The City may receive payment on
the BANS and bonds in installments. The bonds herein authorized, when fully paid for and
delivered to the purchaser, shall be the binding special revenue obligations of the City, payable
out of the Net Revenues of the electric utility to be set aside into the Electric Utility Sinking
Fund, as herein provided. The proceeds derived from the sale of said bonds shall be and are
hereby set aside for payment of the costs of the Project, the refunding of the BANS, if issued, and
the expenses necessarily incurred in connection with the bonds and BANS. The proper officers
of the City are hereby directed to draw all proper and necessary warrants, and to do whatever
acts and things which may be necessary to carry out the provisions of this ordinance.
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Section 7. Sale of Bonds; Award of Bonds. Prior to the sale of said bonds, the
Controller shall cause to be published either (i) a notice of bond sale in the Palladium -Item, the
only newspaper published in the City, two times, at least one week apart, the first publication
made at least fifteen (15) days before the date of the sale and the second publication being made
at least three (3) days before the date of the sale, or (ii) a notice of intent to sell in the Palladium -
Item and the Court & Commercial Record, all in accordance with IC 5-1-11 and IC 5-3-1. A
notice or summary notice of sale may also be published in the Court & Commercial Record or in
The Bond Buyer in New York, New York. The notice shall state the character and amount of the
bonds, the maximum rates of interest thereon, the terms and conditions upon which bids will be
received and the sale made, and such other information as the Controller and the attorneys
employed by the City shall deem advisable, and any summary notice may contain any
information deemed so advisable. Said notice shall provide, among other things, that bidders for
said bonds will be required to name the rate or rates of interest which the bonds are to bear, not
exceeding the maximum rate hereinbefore fixed, and that such interest rate or rates shall be in
multiples of one -eighth (1/8) or one -hundredth (1/100) of one percent (1%). The rate bid on a
maturity shall be equal to or greater than the rate bid on the immediately preceding maturity.
The notice may provide, among other things, that each bid shall be accompanied by a certified or
cashier's check or a financial surety bond in the amount of one percent (1%) of the principal
amount of the bonds to guarantee performance on the part of the bidder. If a financial surety
bond is used, it must be from an insurance company licensed to issue such bond in the State of
Indiana, and such bond must be submitted to the City prior to the opening of the bids. The
financial surety bond must identify each bidder whose good faith deposit is guaranteed by such
financial surety bonds. If the bonds are awarded to a bidder utilizing a financial surety bond,
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then that purchaser is required to submit to the City a certified or cashier's check (or wire
transfer such amount as instructed by the City) not later than 3:30 p.m. (Richmond Time) on the
next business day following the award. In the event the successful bidder shall fail or refuse to
accept delivery of the bonds and pay for the same as soon as the bonds are ready for delivery, or
at the time fixed in the notice of sale, then said check and the proceeds thereof shall be the
property of the City and shall be considered as its liquidated damages on account of such default.
No conditional bids or bids for less than 98% of the par value of the bonds will be considered.
The opinion of Ice Miller LLP, bond counsel of Indianapolis, Indiana, approving the legality of
said bonds will be furnished to the purchaser at the expense of the City.
The bonds shall be awarded by the Controller to the best bidder who has submitted its bid
in accordance with the terms of this ordinance and the notice. The best bidder will be the one
who offers the lowest net interest cost to the City to be determined by computing the total
interest on all of the bonds to their maturities, deducting therefrom the premium bid, if any, and
adding thereto the discount bid, if any. The right to reject any and all bids is hereby reserved. If
an acceptable bid is not received on the date of sale, the sale may be continued from day to day
thereafter without further advertisement for a period of thirty (30) days, during which time no bid
which provides a higher net interest cost to the City than the best bid received at the time of the
advertised sale will be considered.
The Common Council hereby ratifies and approves the publication of the bond sale
notice in accordance with this Section 7, the sale of the Bonds and the award of the Bonds to the
best bid submitted in accordance with this Section 7.
Section 8. Financial Records and Accounts; Continuing Disclosure. The City shall
keep proper records and books of account, separate from all of its other records and accounts, in
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which complete and correct entries shall be made showing all revenues received on account of
the operation of said electric utility and all disbursements made therefrom and all transactions
relating to said electric utility. There shall be furnished upon written request, to any owner of the
bonds, the most recent audit report of the electric utility prepared by the State Board of
Accounts. Copies of all such statements and reports shall be kept on file in the office of the
Clerk. If the bonds or BANS are subject to Rule 15c2-12 of the Securities and Exchange
Commission ("Rule"), the Mayor and the Controller are authorized to execute and deliver a
continuing disclosure undertaking agreement in satisfaction of the Rule.
Section 9. Pledge of Net Revenues. (a) The BANS, if issued, shall be payable from
the proceeds of the bonds, and may also be payable from Net Revenues, subject to the prior
payment of the 2006 Bonds, the bonds and any parity bonds.
(b) The interest on and principal of the bonds issued pursuant to the provisions of
this ordinance, and any bonds hereinafter issued on a parity therewith, shall constitute a first
charge on all the Net Revenues, on a parity with the 2006 Bonds, and such Net Revenues are
hereby irrevocably pledged to the payment of the interest on and principal of such bonds, to
the extent necessary for that purpose.
Section 10. Construction Account. Any accrued interest and any premium received at
the time of delivery of the bonds shall be deposited in the Electric Utility Sinking Fund and
credited to the Bond and Interest Account thereof. The remaining proceeds from the sale of said
bonds, to the extent not used to refund BANS, and BAN proceeds shall upon receipt be deposited
in a bank or banks which are legally designated and qualified depositories of the City, in a
special account or accounts to be designated as "City of Richmond, Electric Utility Construction
Account. " The funds in each of such special accounts shall be deposited, held, secured or
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invested in accordance with the laws of the State of Indiana relating to the depositing, holding,
securing or investing of public funds. The funds in such special account or accounts and any
income derived from the investment hereof shall be expended only for the purpose of paying the
cost of the Project, refunding the BANS, if issued, and the incidental expenses incurred in
connection therewith and with the issuance of the bonds and BANS. Any balance or balances
remaining unexpended in such special account or accounts after the completion of the Project,
which are not required to meet unpaid obligations incurred in connection with the construction of
the Project, shall either (i) be deposited in the Electric Utility Sinking Fund and used solely for
the purposes of said Fund, or (ii) be used for the same purpose or type of project for which the
bonds were issued, all in accordance with IC 5-1-13, as amended.
Section 11. Use of Revenues. All revenues derived from the operation of the electric
utility and from the collection of electric rates and charges shall be segregated and kept separate
and apart from all other funds and accounts of the City. Said revenues shall be deposited into the
Operation and Maintenance Fund, the Electric Utility Sinking Fund and the Depreciation
Reserve Fund of the utility in accordance with this ordinance.
Section 12. Operation and Maintenance Fund. The Operation and Maintenance Fund
("O&M Fund"), is hereby continued. There shall be credited to the O&M Fund as of the last day
of each calendar month a sufficient amount of the revenues of the electric utility so that the
balance in the O&M Fund shall be sufficient to pay the reasonable expenses of operation, repair
and maintenance for the next succeeding calendar month. The moneys credited to this O&M
Fund shall be used for the payment of the reasonable operation, repair and maintenance expenses
of the electric utility on a day-to-day basis, but none of the moneys in such O&M Fund shall be
used for depreciation, replacements, improvements, extensions or additions. Any balance in the
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O&M Fund in excess of the expected expenses of operation, repair and maintenance for the next
succeeding month may be transferred to the Electric Utility Sinking Fund if necessary to prevent
a default in the payment of principal or interest on the then outstanding bonds.
Section 13. Electric Utility Sinking Fund. (a) The Electric Utility Sinking Fund
("Sinking Fund") is hereby continued and constitutes the sinking fund for the payment of the
principal of and interest on the bonds. There shall be set aside and deposited in the Sinking
Fund, as available, and as hereinafter provided a sufficient amount of the Net Revenues of said
electric utility to meet the requirements of the Bond and Interest Account and of the Debt Service
Reserve Account hereby continued in the Sinking Fund. Such payments shall continue until the
balance in the Bond and Interest Account, plus the balance in the Debt Service Reserve Account,
equal the principal of and interest on all of the then outstanding bonds to the final maturity
thereof.
(b) Bond and Interest Account. There shall be credited on the last day of each
calendar month to the Bond and Interest Account an amount equal to the sum of at least one -
sixth (1/6) of the interest on and at least one -twelfth (1/12) of the principal of such outstanding
bonds which will be payable on the then next succeeding interest and principal payment dates,
until the amount of interest and principal payable on the then next succeeding principal and
interest payment dates shall have been so credited. There shall similarly be credited to the
account any amounts necessary to pay the bank fiscal agency charges for paying principal and
interest on said bonds as the same become payable. The City shall, from the sums deposited
in the Sinking Fund and credited to the Bond and Interest Account, remit promptly to the bank
fiscal agency sufficient moneys to pay the principal and interest on the due dates thereof
together with the amount of bank fiscal agency charges.
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(c) Debt Service Reserve Account. The Debt Service Reserve Account ("Reserve
Account") is hereby continued. On the date of delivery of the bonds, bond proceeds, funds on
hand of the electric utility or a combination thereof may be deposited into the Reserve
Account. The initial deposit or the balance accumulated in the Reserve Account shall equal
but not exceed the least of (i) the maximum annual debt service on the bonds and the 2006
Bonds, (ii) 125% of the average annual debt service on the bonds and the 2006 Bonds or (iii)
10% of the proceeds of the bonds and the 2006 Bonds ("Reserve Requirement"). If the initial
deposit into the Reserve Account does not cause the balance therein to equal the Reserve
Requirement or if no deposit is made, the City shall deposit a sum of Net Revenues into the
Reserve Account on the last day of each calendar month until the balance therein equals the
Reserve Requirement. The monthly deposits shall be equal in amount and sufficient to
accumulate the Reserve Requirement within five years of the date of delivery of the bonds.
The City may fund all or part of the Reserve Account with a debt service reserve surety bond.
The surety bond must be issued by an insurance company rated in the highest rating category
by Standard & Poor's Corporation and Moody's Investors Service. The Reserve Account shall
constitute the margin for safety and as protection against default in the payment of principal of
and interest on the 2006 Bonds, the bonds and any parity bonds, and moneys in the Reserve
Account shall be used to pay current principal and interest on the 2006 Bonds, the bonds and
any parity bonds to the extent that moneys in the Bond and Interest Account are insufficient
for that purpose. Any deficiency in the balance maintained in the Reserve Account shall be
made up from the next available Net Revenues remaining after credits into the Bond and
Interest Account.
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In the event moneys in the Reserve Account are transferred to the Bond and Interest
Account to pay interest and principal on the 2006 Bonds, the bonds, or any parity bonds, then
such depletion of the balance in the Reserve Account shall be made up from the next available
Net Revenues after the credits into the Bond and Interest Account hereinbefore provided for.
Any moneys in the Reserve Account in excess of the Reserve Requirement shall be transferred to
the Depreciation Reserve Fund.
Section 14. Depreciation Reserve Fund. There is hereby continued a special fund
designated the Depreciation Reserve Fund (hereafter, "Depreciation Fund"). There shall be
deposited into the Depreciation Fund on or before the last day of each calendar month any excess
revenues remaining after making the required deposits into the O&M Fund and the Sinking
Fund. The Depreciation Fund shall be expended in making good depreciation in the property of
said electric utility, or applied on the cost of the improvements herein referred to or future
replacements, extensions, additions and improvements to such property. The Depreciation Fund
may also be used to pay principal of and interest on the BANS. Funds may also be transferred to
the Bond and Interest Account to prevent a default on all outstanding bonds, or, if necessary, to
eliminate any deficiencies in credits to or minimum balance in the Reserve Account of the
Sinking Fund or may be transferred to the O&M Fund to meet unforeseen contingencies in the
operation, repair and maintenance of the electric utility.
Section 15. Maintenance of Accounts. The Sinking Fund shall be deposited in and
maintained as a separate account or accounts from all other accounts of the City. The O&M
Fund and the Depreciation Fund may be maintained in a single account or accounts but such
account or accounts shall likewise be maintained separate and apart from all other accounts of
the City and apart from the Sinking Fund account or accounts. This section shall not be
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construed as requiring the City to maintain separate bank accounts. All moneys deposited in said
accounts shall be deposited, held and secured as public funds in accordance with the public
depository laws of the State of Indiana, provided that moneys therein may be invested in
accordance with the applicable laws, including particularly Indiana Code, Title 5, Article 13, as
amended or supplemented, and in the event of such investment the income therefrom shall
become a part of the funds invested and shall be used only as provided in this ordinance.
Section 16. Defeasance of the Bonds. If, when the bonds issued hereunder or any
portion thereof shall have become due and payable in accordance with their terms or shall have
been duly called for redemption or irrevocable instructions to call the bonds or any portion
thereof for redemption shall have been given, and the whole amount of the principal and the
interest and the premium, if any, so due and payable upon all of the bonds or any portion thereof
then outstanding shall be paid; or (i) sufficient moneys, or (ii) direct obligations of, or
obligations the principal of and interest on which are unconditionally guaranteed by the United
States of America, the principal of and the interest on which when due will provide sufficient
moneys for such purpose, shall be held in trust for such purpose, and provision shall also be
made for paying all fees and expenses for the redemption, then and in that case the bonds issued
hereunder or any designated portion thereof shall no longer be deemed outstanding or entitled to
the pledge of the Net Revenues of the City's electric utility.
Section 17. Rate Covenant. The City shall by ordinance establish, maintain and
collect reasonable and just rates and charges for facilities and services afforded and rendered by
said electric utility, which shall to the extent permitted by law produce sufficient revenues at all
times to pay all the legal and other necessary expense incident to the operation of such electric
utility, to include maintenance costs, operating charges, upkeep, repairs, interest charges on
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bonds or other obligations, to provide the sinking fund and reserve account as herein required for
the liquidation of bonds or other evidences of indebtedness, to provide adequate funds to be used
as working capital, as well as funds for making extensions, additions, improvements and
replacements, and also, for the payment of any taxes that may be assessed against such electric
utility, it being the intent and purpose hereof that such charges shall produce an income sufficient
to maintain such electric utility property in a sound physical and financial condition to render
adequate and efficient service. So long as any of the bonds herein authorized are outstanding,
none of the facilities or services afforded or rendered by said system shall be furnished without a
reasonable and just charge being made therefor. The City shall pay like charges for any and all
services rendered by said electric utility to the City, and all such payments shall be deemed to be
revenues of the electric utility. Such rates or charges shall, if necessary, be changed and
readjusted from time to time so that the revenues therefrom shall always be sufficient to meet the
expenses of operation and maintenance, and the requirements of the Sinking Fund.
Section 18. Additional Bond Provisions. (a) The City reserves the right to authorize
and issue additional BANS at any time ranking on a parity with the BANS. The City also
reserves the right to authorize and issue additional bonds payable out of the revenues of its
electric utility ranking on a parity with the bonds authorized by this ordinance for the purpose of
financing the cost of future additions, extensions, and improvements to the electric utility, or to
refund obligations, subject to the following conditions:
(b) The interest on and principal of all bonds or other obligations payable from the
revenues of the electric utility shall have been paid to date in accordance with the terms
thereof and all credits required to be made to the Sinking Fund and the accounts thereof shall
have been made to date.
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(c) The Net Revenues of the electric utility in the fiscal year immediately
preceding the issuance of any such bonds ranking on a parity with the bonds authorized by this
ordinance shall not be less than one hundred twenty-five percent (125%) of the maximum
annual interest and principal requirements of the then outstanding bonds payable from Net
Revenues and the additional parity bonds proposed to be issued; or, prior to the issuance of
said parity bonds, the electric rates and charges shall be increased sufficiently so that said
increased rates and charges applied to the previous fiscal year's operations would have
produced Net Revenues for said year equal to not less than one hundred twenty-five percent
(125%) of the maximum annual interest and principal requirements of the then outstanding
bonds and the additional parity bonds proposed to be issued. For the purposes of this
subsection, the records of the electric utility shall be analyzed and all showings shall be
prepared by a certified public accountant retained by the City for that purpose. The term "Net
Revenues" as used in this subsection shall be construed to mean the revenues remaining after
the reasonable expenses of operation, repair and maintenance, including any payments
required under any power sales or supply agreement or agreements, has been paid or provided
for, excluding depreciation expense and interest costs on bonds.
(d) The interest on the additional parity bonds shall be payable semiannually on
March 1 and September 1, and the principal shall be payable annually on March 1.
Section 19. Further Covenants of the City; Maintenance, Insurance, Pledge Not To
Encumber, Subordinate Indebtedness, and Contract with Bondholders. For the purpose of
further safeguarding the interests of the owners of the BANS and the bonds, it is hereby
specifically provided as follows:
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(a) All contracts let by the City in connection with the construction of the Project
shall be let after due advertisement as required by the laws of the State of Indiana, and all
contractors shall be required to furnish surety bonds in an amount equal to one hundred
percent (100%) of the amount of such contracts, to insure the completion of said contracts, in
accordance with their terms, and such contractors shall also be required to carry such
employers' liability and public liability insurance as are required under the laws of the State of
Indiana in the case of public contracts, and shall be governed in all respects by the laws of the
State of Indiana relating to public contracts.
(b) The Project shall be constructed under the supervision and subject to the
approval of such competent engineer as shall be designated by the City. All estimates for
work done or material furnished shall be examined by the engineer and approved by the City
prior to payment therefor.
(c) The City shall at all times maintain its electric utility in good condition and
operate the same in an efficient manner and at a reasonable cost.
(d) So long as the BANS and the bonds herein authorized are outstanding, the City
shall maintain insurance on the insurable parts of said electric utility of a kind and in an
amount such as would normally be carried by private companies engaged in a similar type of
business. All insurance shall be placed with responsible insurance companies qualified to do
business under the laws of the State of Indiana. Insurance proceeds shall be used in replacing
the property destroyed or damaged; or if not used for that purpose shall be deposited in the
Sinking Fund. As an alternative to maintaining such insurance, the City may maintain a self-
insurance program with catastrophic or similar coverage so long as such program meets the
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requirements of any applicable laws or regulations and is maintained in a manner consistent
with programs maintained by similarly situated municipalities.
(e) So long as the BANS and the bonds herein authorized are outstanding, the City
shall not mortgage, pledge or otherwise encumber such utility or any part thereof, nor shall it
sell, lease or otherwise dispose of any portion thereof except equipment or property which
may become worn out, obsolete or no longer suitable for use in the electric utility.
(f) Except as hereinbefore provided in Section 18, so long as the bonds herein
authorized are outstanding, no additional bonds or other obligations pledging any portion of
the revenues of said electric utility shall be authorized, executed or issued by the City except
such as shall be made subordinate and junior in all respects to the bonds herein authorized,
unless the bonds herein authorized have been defeased and sufficient funds to effect the
retirement have been deposited in accordance with the terms and conditions of said bonds and
Section 16 of this ordinance.
(g) The provisions of this ordinance shall constitute a contract by and between the
City and the owners of the BANS and the bonds herein authorized, and after the issuance of
said BANS or bonds, this ordinance shall not be repealed or amended in any respect which will
adversely affect the rights of the owners of said bonds or BANS, nor shall the Common
Council adopt any law, ordinance or resolution which in any way adversely affects the rights
of such owners so long as said BANS or bonds, or the interest thereon, remain unpaid.
Excluding the changes set forth in Section 22(a)-(f), the ordinance may be amended, however,
without the consent of bond or BAN owners, if the Common Council determines, in its sole
discretion, that such amendment would not adversely affect the owners of the BANS or bonds.
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(h) The provisions of this ordinance shall be construed to create a trust in the
proceeds of the sale of the BANS and bonds herein authorized for the uses and purposes herein
set forth, and the owners of the BANS and bonds shall retain a lien on such proceeds until the
same are applied in accordance with the provisions of this ordinance and of said governing
Act. The provisions of this ordinance shall also be construed to create a trust in the portion of
Net Revenues herein directed to be set apart and paid into the Sinking Fund for the uses and
purposes of said Fund as in this ordinance set forth. The owners of said BANS and bonds
shall have all the rights, remedies and privileges set forth under Indiana law in the event the
City shall default in the payment of the interest on or principal of the BANS or bonds, or fail
or refuse to fix and collect sufficient rates and charges for said purposes, or shall fail or refuse
to operate and maintain said system and to apply properly the revenues derived from the
operation thereof.
Section 20. Investment of Moneys. (a) The Controller is hereby authorized to invest
moneys pursuant to IC 5-1-14-3 and the provisions of this ordinance (subject to applicable
requirements of federal law to insure such yield is the then current market rate) to the extent
necessary or advisable to preserve the exclusion from gross income of interest on the BANS and
bonds under federal law.
(b) The Finance Manager of the electric utility shall keep full and accurate records
of investment earnings and income from moneys held in the funds and accounts referenced
herein. In order to comply with the provisions of the ordinance, the Finance Manager is
hereby authorized and directed to employ consultants or attorneys from time to time to advise
the City as to requirements of federal law to preserve the tax exclusion. The Finance Manager
may pay any fees as operation expenses of the electric utility.
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Section 21. Tax Covenants. In order to preserve the exclusion of interest on the bonds
and BANS from gross income for federal tax purposes under Section 103 of the Internal Revenue
Code of 1986 as existing on the date of issuance of the bonds or BANS, as the case may be
("Code"), and as an inducement to purchasers of the bonds and BANS, the City represents,
covenants and agrees that:
(a) The electric utility will be available for use by members of the general public.
Use by a member of the general public means use by natural persons not engaged in a trade or
business. No person or entity other than the City or another state or local governmental unit
will use more than 10% of the proceeds of the bonds or BANS or property financed by the
bond or BAN proceeds other than as a member of the general public. No person or entity
other than the City or another state or local governmental unit will own property financed by
bond or BAN proceeds or will have any actual or beneficial use of such property pursuant to a
lease, management, service or incentive payment contract, an arrangement including take -or -
pay or other type of output contracts or any other type of arrangement that conveys other
special legal entitlements and differentiates that person's or entity's use of such property from
use by the general public, unless such uses in the aggregate relate to no more than 10% of the
proceeds of the bonds or BANS, as the case may be. If the City enters into a management
contract for all or a portion of the electric utility, the terms of the contract will comply with the
Regulations and IRS Revenue Procedure 97-13, as amended, supplemented or superseded
from time to time, so that the contract will not give rise to private business use under the Code
and the Regulations unless such use in the aggregate will not relate to more than 10% of the
proceeds of the BANS or bonds, as the case may be.
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(b) No more than 10% of the principal of or interest on the bonds or BANS is
(under the terms of the bonds, BANS, this ordinance or any underlying arrangement), directly
or indirectly, secured by an interest in property used or to be used for private business use or
payments in respect of such property, or to be derived from payments (whether or not to the
City) in respect of such property or borrowed money used or to be used for a private business
use.
(c) No more than 5% of the bond or BAN proceeds will be loaned to any person or
entity other than another state or local governmental unit. No more than 5% of the bond or
BAN proceeds will be transferred, directly or indirectly, or deemed transferred to a
nongovernmental person in any manner that would in substance constitute a loan of the bond
or BAN proceeds.
(d) The City reasonably expects, as of the date hereof, that the bonds and BANS
will not meet either the private business use test described in paragraph (a) and (b) above or
the private loan test described in paragraph (c) above during the entire term of the bonds or
BANS, as the case may be.
(e) No more than 5% of the proceeds of the bonds or BANS will be attributable to
private business use as described in (a) and private security or payments described in
(b) attributable to unrelated or disproportionate private business use. For this purpose, the
private business use test is applied by taking into account only use that is not related to any
government use of proceeds of the issue (Unrelated Use) and use that is related but
disproportionate to any governmental use of those proceeds (Disproportionate Use).
(f) The City will not take any action nor fail to take any action with respect to the
bonds or BANS that would result in the loss of the exclusion from gross income for federal tax
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purposes of interest on the bonds or BANS pursuant to Section 103 of the Code, nor will the
City act in any other manner which would adversely affect such exclusion, and it will not
make any investment or do any other act or thing during the period that the bonds or BANS are
outstanding which would cause the bonds or BANS to be private activity bonds under the
meaning of Section 141 of the Code.
(g) It shall be not an event of default under this ordinance if the interest on any
bonds or BANS is not excludable from gross income for federal tax purposes or otherwise
pursuant to any provision of the Code which is not currently in effect and in existence on the
date of issuance of the bonds or BANS, as the case may be.
(h) The City represents that:
(1) The bonds and BANS are not private activity bonds as defined in Section
141 of the Code;
(2) The City hereby designates the bonds and BANS as qualified tax-exempt
obligations for purposes of Section 265(b) of the Code;
(3) The reasonably anticipated amount of qualified tax-exempt obligations
(including qualified 501(c)(3) obligations and tax-exempt leases but excluding other
private activity bonds) which will be issued by the City and all entities subordinate to the
City during 2008 does not exceed $10,000,000; and
(4) The City has not and will not designate more than $10,000,000 of
qualified tax-exempt obligations during 2008.
Therefore, the bonds and BANS qualify for the exception in the Code from the
disallowance of 100% of the deduction by financial institutions of interest expense allocable to
newly acquired tax-exempt obligations.
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(i) The City represents that:
(1) The City is a governmental unit with general taxing powers, which powers
include the power to impose taxes of general applicability that, when
collected, may be used for the general purposes of the City;
(2) The Bonds and BANS are not private activity bonds as defined in Section
141 of the Code;
(3) At least 95% of the net proceeds of the BANS and Bonds will be used for
local governmental activities of the City or of a governmental unit, the
jurisdiction of which is entirely within the jurisdiction of the City;
(4) The aggregate face amount of all tax-exempt bonds (other than private
activity bonds) issued by the City and all units subordinate to the City,
including on -behalf -of issuers and subordinate entities as those terms are
defined in Regulations Section 1.148-8(c)(2), is not reasonably expected
to exceed $5,000,000 in calendar year 2008; and
(5) The City has not been formed or availed of to otherwise avoid the
purposes of the $5,000,000 size limitation.
Therefore, the City meets the requirements of Section 148(f)(4)(D) of the Code and will
not have to rebate any arbitrage profits to the United States.
0) These covenants are based solely on current law in effect and in existence on
the date of delivery of the bonds or BANS, as the case may be.
Section 22. Amendments with Consent of Bondholders. Subject to the terms and
provisions contained in this section, and not otherwise, the owners of not less than sixty-six and
two-thirds percent (66 2/3%) in aggregate principal amount of the bonds issued pursuant to this
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ordinance and then outstanding shall have the right from time to time, anything contained in this
ordinance to the contrary notwithstanding, to consent to and approve the adoption by the
Common Council of the City of such ordinance or ordinances supplemental hereto or
amendatory hereof, as shall be deemed necessary or desirable by the City 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 construed as permitting:
(a) An extension of the maturity of the principal of, mandatory sinking fund
redemption dates, if any, or interest on any bond issued pursuant to this ordinance; or
(b) A reduction in the principal amount of any bond or the redemption premium or
the rate of interest thereon; or
(c) Except as otherwise noted in Section 1 with respect to the BANS, the creation
of a lien upon or a pledge of the Net Revenues of the electric utility to the bonds ranking prior
to the pledge thereof created by this ordinance; or
(d) A preference or priority of any bond or bonds issued pursuant to this ordinance
over any other bond or bonds issued pursuant to the provisions of this ordinance;
(e) A reduction in the Reserve Requirement; or
(f) A reduction in the aggregate principal amount of the bonds required for consent
to such supplemental ordinance.
In the event that the owners of not less than sixty-six and two-thirds percent (66 2/3%) in
aggregate principal amount of the bonds outstanding at the time of adoption of such
supplemental ordinance shall have consented to and approved the adoption thereof by written
instrument to be maintained on file in the office of the Clerk of the City, no owner of any bond
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issued pursuant to this ordinance shall have any right to object to the adoption of such
supplemental ordinance or to object to any of the terms and provisions contained therein or the
operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin
or restrain the Common Council of the City from adopting the same, or from taking any action
pursuant to the provisions thereof. Upon the adoption of any supplemental ordinance pursuant to
the provisions of this section, this ordinance shall be, and shall be deemed, modified and
amended in accordance therewith, and the respective rights, duties and obligations under this
ordinance of the City and all owners of bonds then outstanding, shall thereafter be determined,
exercised and enforced in accordance with this ordinance, subject in all respects to such
modifications and amendments. Notwithstanding anything contained in the foregoing provisions
of this ordinance, the rights and obligations of the City and of the owners of the bonds authorized
by this ordinance, and the terms and provisions of the bonds and this ordinance, or any
supplemental or amendatory ordinance, may be modified or altered in any respect with the
consent of the City and the consent of the owners of all the bonds then outstanding.
Section 23. Issuance of BANS. (a) The City, having satisfied all the statutory
requirements for the issuance of its bonds, may elect to issue its BAN or BANS to a financial
institution, the Indiana Bond Bank, or any other purchaser, pursuant to a Bond Anticipation Note
Purchase Agreement ("BAN Purchase Agreement") to be entered into between the City and the
purchaser of the BAN or BANS. The Common Council hereby authorizes the issuance and
execution of the BAN or BANS in lieu of initially issuing bonds to provide interim financing for
the Project until permanent financing becomes available. It shall not be necessary for the City to
repeat the procedures for the issuance of its bonds, as the procedures followed before the
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issuance of the BAN or BANS are for all purposes sufficient to authorize the issuance of the
bonds and the use of the proceeds to repay the BAN or BANS.
(b) The Mayor and the Controller are hereby authorized to execute a BAN
Purchase Agreement in such form or substance as they shall approve acting upon the advice of
counsel. The Mayor, the Clerk and the Controller may also take such other actions or deliver
such other certificates as are necessary or desirable in connection with the issuance of the
BANS or the bonds and the other documents needed for the financing as they deem necessary
or desirable in connection therewith.
Section 24. Permitted Non -Compliance with Tax Covenants. Notwithstanding any
other provisions of this ordinance, the covenants and authorizations contained in this ordinance
("Tax Sections") which are designed to preserve the exclusion of interest on the BANS and
bonds from gross income under federal law ("Tax Exemption") need not be complied with if the
City receives an opinion of bond counsel that compliance with any Tax Section is unnecessary to
preserve the Tax Exemption.
Section 25. Conflicting Ordinances. All ordinances and parts of ordinances in conflict
herewith are hereby repealed; provided, however that this ordinance shall not be deemed in any
way to repeal or amend the ordinance authorizing the issuance of the 2006 Bonds, nor be
construed as adversely affecting the rights of the holders or the 2006 Bonds.
Section 26. Headings. The headings or titles of the several sections shall be solely for
convenience of reference and shall not affect the meaning, construction or effect of this
ordinance.
Section 27. Effective Date. This ordinance shall be in full force and effect from and
after its passage by the Common Council and execution by the Mayor.
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Adopted by the Common Council of the City of Richmond, Indiana, this 14th day of
April, 2008.
COMMON COUNCIL
CITY OF RICHMOND, INDIANA
S/S Larry Parker
Presiding Officer
ATTEST:
S/S Karen Chasteem
Clerk
Presented by me to the Mayor of the City of Richmond, Indiana, on the day of
April, 2008.
S/S Karen Chasteen
Clerk
This ordinance approved and signed by me, the Mayor of the City of Richmond, Indiana,
on the 15th day of April, 2008.
S/S Sarah L. Hutton
Mayor
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Exhibit A
Description of Project
Improvements to the Electric Generation Plant — Environmental compliance for Clean Air
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