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HomeMy Public PortalAbout1967.08.07 Regular Meeting Minutes .. McCall, Idaho August 7 , 1967 The City Council of the City of McCall, Valley County, Idaho, met in regular public session at the regular meeting place of the council in the City Hall in the City of McCall at 8 :00 o 'clock P .M. on August 7 , 1967. The roll was called and the following found to be present : Sizemore , Mayor Archer , Councilman Braden , Councilman li Schaufelberger , Councilman Councilman Absent : Mason I i There was also present William A. Kirk , City Clerk. After the meeting had been duly called to order and the minutes of the preceding meeting read and approved, the following ordinance was introduced in written form by Braden and was read by title . Councilman Archer moved that the rule requiring the reading of the ordinance three different days be dispensed with and the motion was adopted by the vote of not less than three-fourths of the Council, to-wit : Aye: Archer , Councilman Braden , Councilman Schaufelberger , Councilman Councilman Nay: None. J s L / . r The ordinance was thereupon read three times by title and was read in full, after which, pursuant to motion made by Braden and seconded by Archer , the ordinance was adopted by the following vote : Aye: Archer , Councilman Braden , Councilman Schaufelberger , Councilman Councilman Nay: None. The ordinance was thereupon signed by the Mayor in evidence of his approval, was attested by the City Clerk, was ordered recorded, and is as follows : ORDINANCE NUMBER 267 AN ORDINANCE authorizing the issuance of $380,000 Sewer Revenue Bonds of the City of McCall for the purpose of providing funds with which to improve and extend the sewerage system of said city, the whole to constitute and be operated as a single public utility, providing for the payment of such bonds and the sale and delivery thereof, and making certain covenants and agreements with respect to the security and payment for such bonds . WHEREAS the City of McCall now owns and operates a revenue producing public utility consisting of a sewerage system and desires to make improvements and extensions thereto and to finance the acquisition and construction of such improvements and extensions through the issuance of revenue bonds of the city, pursuant to the provisions of the Revenue Bond Act of the State of Idaho; and WHEREAS the revenues to be derived by said city from the operation of said system have not been heretofore. pledged or hypothecated in any manner or for any purpose except for the payment .of principal of and interest on $60,000 Sewer Revenue Bonds, R-1 - 2 - J Series June 1, 1955, dated June 1, 1955, which bonds bear interest at 3 % °� per annum, and of which bonds numbered 3 to 60 , inclusive, aggregating 307000.00 , maturing June 1, 1968 to June 1, 1975, inclusive, are outstanding, which bonds enjoy a prior and paramount lien on the revenues of the said system; and WHEREAS in order to pay the cost of making the aforementioned extensions and improvements the City of McCall desires to issue its Sewer Revenue Bonds in the amount of $380,000, which bonds shall enjoy a lien on the revenues of said system which shall be junior and subordinate to that pledged to the aforesaid Sewer Revenue Bonds, Series June 1, 1955; and WHEREAS pursuant to Ordinance Number 263 adopted by the City Council of the City of McCall on May 1, 1967, a special election was held in said city on June 6, 1967, at which election the following question was approved by a two-thirds majority of the qualified electors voting at said election:. QUESTION: Shall the City of McCall, Idaho issue and sell its revenue bonds to the amount of $380,000 for the purpose of providing funds with which to improve and extend the sewerage system of said city by the acquisition, construction and purchase of sewerage collection facilities, a sewerage treatment plant, including a site or sites therefor, the whole to constitute and be operated as a single public utility, as more fully provided in Ordinance Number 263 adopted on May 1, 1967? - 2A - R-1 J and WHEREAS Section 57-227, Idaho Code, 1947, provides that bonds may be sold to the United States Government or to any depart- ment, corporation or agency thereof or to any department, corporation, agency or body created, organized or existing under or pursuant to any. act of Congress, by private sale without giving any prior notice thereof by publication or otherwise and in such manner as the govern- ing authority of the issuer may provide; and WHEREAS the Council of said city has found and determined, and does hereby find and determine, that it is necessary and for the best interests of the city and the inhabitants thereof that said bonds be sold and delivered to the Farmers Home Administration of the United States Department of Agriculture for a price of not less than par and accrued interest to the date of delivery, and bearing interest at the rate of 3-3/4% per annum; and WHEREAS the City of McCall now desires to provide for the issuance of such bonds in the manner and for the purposes specified in said Ordinance Number 263 and pursuant to the provisions of the Revenue Bond Act, and to confirm the sale of such bonds to said Farmers Home Administration; NOW, THEREFORE, Be it ordained by the mayor and council of the City of McCall, Valley County, Idaho, as follows : Section 1. That as used herein the following terms shall have the meanings indicated unless the context otherwise clearly requires : (a) "City" means the City of McCall, Valley County, Idaho. (b) "Sewerage system" shall mean the same as is provided in the Revenue Bond Act (Chapter 47, General Laws of Idaho, 1951, as amended by sections 187 to R-1 - 3 - J a 202 of House Bill No. 3, as amended, of the Thirty-Nrith Session of the Legislature of the State of Idaho) , and as used herein shall apply to the facilities of the city coming within said definition. (c) "System" means the combined public utility comprising the sewerage system of the city and, if and when acquired, the sewerage treatment plant of said city as they now and may hereafter exist and be acquired, improved and extended while any of the bonds or parity bonds re- main outstanding, including all improvements, additions and extensions made thereto and including all real and personal property of every nature owned by the city and used or useful in the operation thereof, whether within or without the boundaries of the city. (d) "Bonds" means the bonds herein authorized. As used in Sections 5, 7 to 9, inclusive, 11 and 12 hereof said term includes parity bonds. (e) "Prior lien bonds" means the now outstanding 30, 000.00 Village of McCall Sewer Revenue Bonds, Series 1955, which enjoy a prior and paramount lien on and pledge of the revenues of the system, as such bonds are more fully described in the preamble hereto. (f) "Parity bonds " means obligations issued on a parity with the bonds herein authorized under the pro- visions of Section 9 hereof . (g) "Revenue Bond Act" means Chapter 47, General Laws of Idaho, 1951, as amended by Sections 187 to 202 of House Bill No. 3, as amended, of the Thirty-Ninth Session of the Legislature of the State of Idaho. (h) "Revenues" means all revenue or income derived directly or indirectly from the sale of services supplied by the system and from the use and operation of the system, including but without limitation interest received on invested money and profits realized from the sale of investments made with the revenues of the system. R-1 - 4 - J / c , (i ) "Cost of maintenance and operation" means all costs reasonably incurred in connection with the mainte- nance and operation of the system, including repairs and renewals (other than capital improvements) necessary to keep the system in efficient operating condition, the cost of audits -hereinafter required, the paying agent 's fees, payment of premiums for the insurance hereinafter required to be carried on the system, and, generally, all expenses (exclusive of depreciation) which under general accounting practices are properly chargeable to maintenance and operation; in every instance, however, only such expenses as are reasonably and properly neces- sary to the efficient maintenance and operation of the system shall be included . W "Net revenues" means the revenues after de- duction therefrom of the cost of maintenance and operation. (k) "Fiscal year" means the twelve months period beginning June 1 and ending on the next succeeding May 31 . (1) "Depositary" means The Idaho First National Bank in the City of McCall., Idaho. If such bank shall become unable longer to carry out its duties as Depositary, the city shall select a successor Depositary, which successor Depositary shall be a bank having capital and surplus of not less than $ 330, 000.00 at the time of such appointment; similar successor Depositaries may be appointed thereafter from time to time as such appointment becomes necessary. Such R-1 - 5 - successor Depositary shall not replace the original Depositary as paying agent for the bonds but shall replace the original Depositary as depositary of the funds hereinafter created and required to be held by the Depositary and there shall be paid over to each such successor Depositary by its predecessor Depositary all money, funds and other property of every nature then held by such predecessor Depositary under the provisions of this ordinance. Any successor Depositary shall make such arrangement with the paying agent bank as will assure prompt payment of maturing bonds and interest coupons when due to the extent of available funds . Section 2. That for the purpose of providing funds with which to improve and extend the sewerage system of said city by the acquisition, construction and purchase of sewerage collection facil- ities, a sewerage treatment plant, including a site or sites therefor, the whole to constitute and be operated as a single public utility, including the payment of incidental engineering, inspection, legal and fiscal costs, there shall be borrowed upon the credit of the revenues of the system the sum of $380,000 . In evidence of the sum to be so borrowed, there shall be issued the Sewer Revenue Bonds of said city pursuant to the provisions of the Revenue Bond Act hereinafter referred to. Section 3. That such bonds shall be designated "Sewer Revenue Bonds ", shall be in the total principal amount of $380,000, shall be dated Jtne 1, 1967, shall be in the denomination of $1,000 each, shall be numbered 1 to 380, inclusive, and shall bear interest at the rate of three and three-fourths per cent (3-3/4%) per annum, payable on Jane 13 1968 and semi-annually thereafter m the first days of June and December of each year. The bonds shall be payable R-1 - 6 - J as to both principal and interest in lawful money of the United States of America at the office of the City Treasurer of the City of McCall, Idaho, or at the option of the holder thereof at The Idaho First National Bank , in the City-of McCall , Idaho, and shall mature serially in numerical order on June 1 of each of the years as follows: Bond Numbers Amount Year 1 to 7 $ 7,000 1969 8 to 15 8,000 1970 16 to 23 8,000 1971 24 to 31 8,000 1972 32 to 40 9,000 1973 41 to 49 93000 1974 50 to 58 9,000 1975 59 to 68 lo,00q 1976 69 to 78 105000 1977 79 to 88 10,000 1978 89 to 99 113000 1979 100 to 110 11,000 1980 111 to 122 12,000 1981 123 to 134 12,000 1982 135 to 147 13,000 1983 148 to 16o 13,000 1984 161 to 174 14,000 1985 175 to 188 14,000 1986 189 to 202 14,000 1987 203 to 217 15,000 1988 218 to 233 16,000 1989 234 to 249 16,000 1990 250 to 266 17,000 1991 267 to 283 17,000 1992 284 to 301 18,000 1993 302 to 320 19,000 1994 321 to 339 19,000 1995 34o to 359 20,000 1996 360 to 380 21,000 1997 All of said bonds shall be callable for redemption at the option of- the city in inverse numerical order on June 1, 1975 and on any interest payment date thereafter at the principal amount thereof and accrued interest to the date fixed for redemption. Notice of redemption shall be given not less than thirty days prior to the date fixed for redemption by filing with the paying agent bank, and by publication of an appropriate notice one time in a financial newspaper or journal published in the City of New York, New York. R-1 _ 7 _ J Section 4. That said bonds shall be signed by the Mayor, shall be countersigned by the City Treasurer, shall be attested by the City Clerk, and shall have impressed thereon the official seal of the City of McCall. Interest accruing on said bonds on and prior to maturity shall be evidenced by coupons to be thereto attached, which coupons shall be signed by the City Treasurer by his facsimile signature and said Treasurer by the execution of said bonds shall adopt as and for his own proper signature his facsimile signature on said coupons . Section 5. That the bonds shall not be payable from or charged upon any funds of the City of McCall other than the revenues to be derived from the operation of the system, nor shall the City of McCall ever be subject to any liability thereon. No holder or holders of any of the bonds shall ever have the right to compel any exercise of the taxing power of the City of McCall to pay any of the bonds or interest thereon or to enforce payment thereof against any property of the city and such bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the city, other than the revenues received from the operation of the system. Section 6. That the bonds herein authorized and the coupons to be thereto attached shall be in substantially the following form: (Form of Bond) UNITED STATES OF AMERICA STATE OF IDAHO COUNTY OF VALLEY CITY OF MC CALL SEWER REVENUE BOND Number $1,000 KNOW ALL MEN BY THESE PRESENTS, that the City of McCall, a duly organized and existing municipal corporation in Valley County, J _ 8 _ Idaho, for value received hereby promises to pay to bearer, in the manner and from the funds hereinafter provided, the sum of One Thousand Dollars ($1,000) on the first day of June, 19_, and to pay interest on said sum from the date hereof until payment of principal at the rate of Three and three-fourths per cent (3-3/4%) per annum, payable June 1, 1968 and semi-annually thereafter on the first days of June and December of each year, interest falling due on and prior to maturity being pay- able upon presentation and surrender of the annexed interest coupons as the same severally become due. Both principal of and interest on this bond are payable in lawful money of the United States of America at the office of the City Treasurer of the City of McCall, Idaho, or at the option of the holder hereof at The Idaho First National Bank in the City of McCall , Idaho. The bonds of the issue of which this is one are callable for redemption at the option of the city in inverse numerical order on June 1, 1975 and on any interest payment date thereafter at the principal amount thereof and accrued interest to the date fixed for redemption. Notice of redemption of any bond so called for redemption is to be given not less than thirty days prior to the date fixed for redemption by filing with the paying agent bank and by publication of an appropriate notice one time in a financial newspaper or journal published in the City of New York, New York. This bond is one of an is.sue of Three Hundred Eighty Thousand Dollars ($380,000) , issued by the City of McCall under the provisions. of the Revenue Bond Act, Chapter 47, General Laws of Idaho, 1951, as amended by Sections 187 to 202 of House Bill No. 3, as amended, of the Thirty-Ninth Session of the Legislature of the State of Idaho, for the purpose of providing funds with which to improve and extend the sewerage system of said city by the acquisition, construction and purchase of sewerage collection facilities, a sewerage treatment plant, R-1 9 - J including a site or sites therefor, the whole to constitute and be operated as a single public utility, and said bonds are payable only from the income and revenues to be derived from the operation of the combined public utility comprising the sewerage system -of the city and, if and when acquired, the sewerage treatment plant of said city as they now and may hereafter exist and be acquired, improved and extended after provision has been made for payment therefrom of the reasonable and necessary expenses of administering, operating and maintaining said plant and system and of all sums required to be paid for the benefit of certain outstanding Village of McCall Sewer Revenue Bonds, Series June 1, 1955, dated June 1, 1955, a portion of which revenues has been set aside as a special fund identified as "The City of McCall 1967 Sewer Revenue Bonds Interest and Sinking Fund", and irrevocably pledged to the payment of principal of and interest on said bonds. This bond does not constitute an indebtedness of the City of McCall within the meaning of any constitutional or statutory limitation of indebtedness, is not payable from or a charge upon any funds of the City of McCall other than said "The City of McCall 1967 Sewer Revenue Bonds Int rest and Sinking Fund", and the City of McCall shall not be subject to any liability thereon. No holder or holders of this bond shall ever have the right to compel any exercise of the taxing power of the City of McCall to pay this bond or interest thereon nor to enforce payment thereof against any property of the City of McCall, nor shall this bond constitute a charge, lien or encumbrance, legal or equit- able, upon any property of the City of McCall, except the net revenues above mentioned. The City of McCall has covenanted and hereby covenants and agrees at all times while this bond, or any bond of the issue of which . it is a part, is outstanding and unpaid, to fix and maintain such rates for services furnished by said combined public utility as will be fully sufficient to provide for the payment of the interest on and principal of all of said bonds as interest and principal become due, including - 10 J R-1. the aforementioned Village of McCall Sewer Revenue Bonds, Series June 1, 1955, dated June 1, 1955, to create a proper reserve therefor, and to provide for the payment of the expenses of maintaining and operating said combined public utility,. . For a more particular statement of the covenants and provisions securing the bonds, including the designation of a Depositary, the conditions under which the holders of 75% of the bonds payable from said net revenues may consent to modification of the authorizing ordinance and the conditions under which additional obligations may be issued on a parity, reference is made to the ordinance adopted by the Council of said city on August 7 , 1967, authorizing this issue. This bond and the issue of which it is a part are issued in conformity with and after full compliance with the Constitution of the State of Idaho and pursuant to the provisions of the Revenue Bond Act, Chapter 47, General Laws of the State of Idaho, 1951, as amended by Sections 187 to 202 of House Bill No. 3, as amended, of the Thirty-Ninth Session of the Legislature of the State of Idaho, and all other laws applicable thereto, after having been authorized by vote of more than a two-thirds majority of the qualified electors of the City of McCall at an election held therein on Jut,; 6, 1967. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this bond have existed, have happened and have been performed in due time, form and manner as required by law, that this bond is by statute made fully negotiable, and that this bond is exempt from taxation, except transfer and estate taxes, in the State of Idaho. IN WITNESS WHEREOF, the City of McCall, Idaho, acting through its Council, has caused this bond to be signed by its Mayor, counter- signed by its City Treasurer and attested by its City Clerk under the official seal of said city, and has caused the interest coupons hereto attached to be executed by the facsimile signature of said City R-1 J Treasurer, all as of this first day of June, 1967. Countersigned: Mayor City Treasurer Attest: City Clerk (Form of Coupon) Number $ On the first day of 19_, unless the herein- after mentioned bond is then optional for redemption and has been properly called for redemption, the City of McCall, Idaho, will pay to bearer the amount shown hereon in the manner and out of the funds described in the bond to which this coupon is attached, in lawful money of the United States of America, at the office of the City Treasurer of the City of McCall, Idaho, or at the option of the holder at The Idaho First National Bank ! in the City of McCall 3 Idaho, being interest then due on its Sewer Revenue Bond, dated June 1, 1967 and numbered City Treasurer (Registration Certificate) We, the undersigned City Clerk and City Treasurer of the City of McCall, Idaho, do hereby certify that the within bond has been duly registered in permanent public record books kept in our respective offices for the purpose of such registration, in full compliance with the provisions of Title 57, Chapter 2, Idaho Code, - R-1 12 J 1947, and laws amendatory tho?b of, such registration showing the number, date, amount of the bond, rate of interest thereon, date of maturity., places of payment and the number and denomination of the attached coupons, and the names of the purchasers and date of the delivery of the bond; and the undersigned City Treasurer does hereby certify that before the delivery of this bond he received the proper consideration therefor. IN WITNESS WHEREOF, we have subscribed our official hands. City Treasurer City Clerk Section 7. PLEDGE OF REVENUES That the bonds herein authorized shall be fully subordinate in all respects to the outstanding Village of McCall Sewer Revenue Bonds, Series June 1, 1955, and so long as any of said prior lien bonds remain outstanding the provisions of the May 2, 1955 resolution, as amended, authorizing the issuance of said prior lien bonds shall control in case of any conflict over the provisions of this resolution. When all of the said prior lien bonds shall have been retired the provisions of this resolution shall govern. Section 8. FLOW OF FUNDS That so long as any of the bonds remain outstanding, all of the revenues shall from day to day as collected be continued to be . deposited with the Depositary in a fund established by the aforesaid resolution of May 2, 1955, as amended, authorizing the prior lien bonds, to be kept separate and apart from all other city funds, which fund shall be hereafter known as the "City of McCall Gross Income Sewer Fund", sometimes hereinafter referred to as the "Income Fund", and are hereby pledged for the following purposes and shall be set aside into the following special funds in the following order of priority. R�l - 13 - From the money in the Income Fund there shall be first transferred from time to time to a fund to be held by the Depositary and known as the "Sewer Operation and Maintenance Fund" such reasonable percentage of the money in the Income Fund as the Council shall determine to be necessary for the proper, efficient and economical operation and maintenance of said system. The Superintendent or Manager of the system may accumulate as an expense of maintenance and operation equitable allowances for accruals and accumulations of accruals of amounts to cover the cost of periodic payments of maintenance and operation expenses, such as insurance premiums and expenditures for renewals, replacements and repairs normally classified as maintenance and operation expenditures, provided however, any surplus remaining in said operation and maintenance fund at the end of the fiscal year and not needed for operation and maintenance purposes, shall be transferred to the Income Fund and used for the purposes thereof, as herein provided. Secondly, there shall be transferred from the money in the Income Fund into the "Village of McCall Sewer Revenue Bond Fund, Series June 1, 1955" established for the benefit of the prior lien bonds all necessary sums required to be deposited into said fund by the provisions of the May 2, 1955 resolution, as amended, authorizing the issuance of the prior lien bonds. After there shall have been transferred from the Income Fund in each month the amounts above required, the City Treasurer shall on or before the 10th day of each month, transfer to a special fund, which is hereby created and shall be known as "The City of McCall 1967 Sewer Revenue Bonds Interest and Sinking Fund" (hereinafter sometimes called the "Bond Fund"), one-sixth of the interest due on the bonds on the next succeeding interest payment R-1 - 14 - J date (except that prior to the payment of the first maturing interest coupons to be attached to the bonds such additional or greater payments shall be made as may be necessary to assure the prompt payment of such interest coupons when due) and, beginning twelve months before the first principal installment shall fall due, one-twelfth of the amount of principal of the bonds falling due on the next succeeding principal payment date. After the payments above required have been made in each month, there shall be transferred, beginning in August , 1968, from the Income Fund into the Bond Fund the sum of $180.97 (or such greater sum as may be provided in proceedings hereafter adopted authorizing parity bonds) until there has been accumulated in said fund the sum of $21,715. 52 in excess of current principal and inter- est requirements. Such excess shall be held in a separate account in 14A - R-1 J the Bond Fund known as the "Reserve Account" and shall be used only to pay currently maturing principal of and interest on the bonds whenever and to the extent necessary to prevent a default . Pro- ceedings authorizing the issuance of parity bonds shall provide that the rate of accumulation or the amount to which the Reserve Account is to be accumulated be increased in accordance with the terms of subparagraph (e) of paragraph 2 of sub-section K of Section 9 hereof . Whenever there is a deficiency in payments into the Reserve Account or whenever after the initial accumulation of the full amount required to be accumulated therein the amount in said fund falls below such required accumulation, such deficiency shall be made up from the money in the Income Fund whenever and to the extent such money is not needed for payment of the cost of mainte- nance and operation and for current principal and interest require- ments, regardless of the foregoing limitation on monthly payments. The money in the Bond Fund, including the Reserve Account when necessary, shall be applied to the payment of currently maturing principal and interest without further instructions . Whenever there is sufficient money in the Bond Fund, including the Reserve Account, to pay principal of and interest on all bonds then outstanding on the next interest payment date, the money in said fund shall be applied for such purpose. SURPLUS REVENUES All money remaining in the Income Fund in each fiscal yea r after all payments hereinabove required to be made in such year have been made and after all deficiencies existing from previous years have been remedied, shall be regarded as surplus and may be used by the city for the making of improvements or additions to the system, for the creation of a special fund to be accumulated and applied to such purpose, for the payment of principal of and R-1 - �5 - interest falling due on general obligation bonds of the city issued for sewer purposes, for the payment of principal, interest and redemption premiums on junior lien bonds issued for the making of improvements and extensions to the system, for the retirement of bonds payable from the Bond Fund in advance of maturity or for any other lawful corporate purpose. Any such retirements so made prior to maturity may be made either through the purchase of bonds on the open market at the best price or prices obtainable not in excess of the lowest price at which any bonds payable from the Bond Fund are then redeemable under their terms, or through the calling of bonds for redemption pursuant to the right therein reserved. All money held by the Depositary in the funds above mentioned shall be held as special and not general deposits, and all money held in the Bond Fund shall be held as a special trust fund, the beneficial interest in which shall be in the holders from time to time of the bonds outstanding. All money so held in excess of the amount guaranteed by the Federal Deposit Insurance Corporation shall be secured either (a) by lodging with the trust department of the Depositary or with some other depositary approved by the city, as collateral security, direct obligations of or obligations, the principal and interest of which are uncondi- tionally guaranteed by the United States of America, or by other marketable securities eligible as security for the deposit of trust funds under regulations of the Board of Governors of the Federal Reserve System, having a market value (exclusive of accrued interest) at least equal to the amount of such deposit, or (b) in such manner as may then be required by all applicable state or federal laws and regulations regarding the security for or granting preference in the case of the deposit of trust funds . .1 - 16 - Money in the Bond Fund required for the payment of principal and interest shall at the request of the city be invested in direct obligations of the United States of America maturing at least fifteen days prior to the date as of which principal or interest falls due. Money held in the Reserve Account in the Bond Fund shall at the request of the city be invested in direct obligations of the United States of America maturing in not more than ten years from the date of investment. It shall not be necessary for the Depositary to give security for the deposit of any money which is so invested. Obliga- tions so purchased shall be deemed at all times to be a part of the fund for which the obligations were purchased. Interest accruing thereon and any profit realized from such investments shall be paid into the Income Fund. The Depositary shall sell at prevailing market prices or shall present for redemption any obligations so purchased whenever it shall be necessary so to do in order to provide money to meet any payment due from the fund. Section 9. COVENANTS That the city covenants and agrees with the successive holders from time to time of the bonds and the coupons representing interest thereon, that so long as any of the bonds remain outstand- ing and unpaid as to either principal or interest : A . The city will maintain the system in good repair and working order and will operate it efficiently and will faithfully and punctually perform all duties with reference to the system required by the Constitution and Laws of the State of Idaho, and that it will make and collect sufficient rates and charges for service furnished by the system and will segregate and apply the revenues derived therefrom in the manner provided in this ordinance so that such revenues will at all times be fully sufficient to operate and maintain the system, and to pay principal of and interest - 17 - R-1 J on the bonds promptly as principal and interest fall due, and to make all payments herein required to be made. B. The city will not permit free use or service of the system by the city or any department thereof or by any person, firm or corporation, public or private . C. The city will cause to be kept proper books of record and account covering the operation of the system. Such books shall be kept in accordance with standard accounting practices and proced- ures customarily used for systems of similar nature. The city will cause such books to be audited annually by an independent certified public accountant or firm of public accountants and will annually within one hundred twenty days after the close of each fiscal year file with the Depositary at least three copies of said report accompanied by a certificate by said accountant or firm. Each such audit, in addition to whatever other matters may be thought proper by the accountant to be included therein, shall include the following: 1. A statement in detail of the income and expenditures of the system for such fiscal year. 2 . A balance sheet as of the end of such fiscal year. 3. The accountant 's comments regarding the manner in which the city has carried out the requirements of this ordinance and the accountant 's recommendations for any changes or improvements in the operation of the system. R-1 - 18 - J 4. A list of insurance policies in force at the end of the fiscal year, setting out as to each policy the amount of the policy, the risks covered, the name of the insurer and the expir- ation date of the policy. 5. The number of properties connected with the sewerage system at the end of the fiscal year. 6. The amount of money in each of the funds created by Section 8 hereof at the beginning and at the end of the fiscal year and the amount of money paid. into and expended from each of said funds during such fiscal year. 7. The total dollar amount billed for sewer service during the fiscal year and the average monthly billing per sewer customer for such service. 8. All schedules of rates and charges in effect during such fiscal year. The city agrees to furnish a copy of each such audit to the holder of any of the bonds at his request after the close of each fiscal year, and that any such holder shall have the right to discuss with the accountant making the audit the contents of the audit and to ask for such additional information as he may reasonably require. Said books of record and account shall be open at all reasonable times for inspection by the holder or holders of any of the bonds or the duly authorized attorney or agent for said bondholder. D. The city will take out and maintain or otherwise provide for insurance on the system of the kinds and in the amounts which are usually carried by private companies operating similar properties. All moneys received for losses under such insurance policies, other than public liability policies, are hereby pledged by the city as security for the bonds until and unless such proceeds J - 19 - are paid out or obligated in making good the loss or damage in respect of which such proceeds are received, either by repairing the property damaged or replacing the property destroyed. Adequate provision for making good such loss and damage shall be made within ninety days from the date of the loss, or, in the event the destroyed property is no longer useful in the operation of the system, the proceeds of the insurance shall be deposited in the Income Fund. E. The city shall not sell, encumber or in any manner dispose of the system or any substantial part thereof until all of the bonds and parity bonds have been paid in full as to both principal and interest, provided that this covenant shall not be construed to prevent the disposal by the city of property which _ in its judgment has become inexpedient to use in connection with the system when other property of equal value is substituted therefor, F. The city will commence and complete the acquisition and construction of the facilities and improvements for which the bonds are herein authorized with all practical dispatch and will cause all construction to be effected in sound and economical manner. G. The city will from time to time duly pay and discharge or cause to be paid and discharged all taxes, assessments and other governmental charges, if any, lawfully imposed upon the system or any part thereof or upon the revenues, as well as any lawful claims for labor, materials or supplies which if unpaid might by law become a lien or charge upon the system or the revenues .or any part thereof or which might impair the security of the bonds. H. The city will not permit nor grant a franchise for the operation of any competing sewer system in the city. I. The city in order to assure the efficient management and operation of the system and to assure the holders from time to , - 20 - R-1 J time of the bonds that same will be operated on sound business principles, will employ competent and experienced management for the system, will use its best efforts to see that the system is at all times operated and maintained in first class repair and condition and in such manner that the operating efficiency thereof shall be of the highest character, and will use its best efforts to see that the cost of such maintenance and operation is at no time in excess of the revenues reasonably available for the payment thereof. J. The holders of the bonds from time to time shall be entitled to exercise all rights and powers for which provision is made in the Revenue Bond Act, including specifically, if any of the bonds shall be permitted to default as to principal or interest, the right to apply to a court of competent jurisdiction to appoint a receiver for the system who may enter and take possession of the system, operate and maintain the system, and prescribe charges and collect, receive and apply the revenues arising therefrom in such manner as the court may direct and as will assure the carrying out of all the covenants contained in this ordinance . Such receiver shall be appointed only when request for such appointment shall have been made by the holders of not less than forty per cent in principal amount of the bonds which are then outstanding, or by a trustee acting in behalf of the holders of such percentage of bonds, and such request shall be represented by a written instrument or con- current written instruments signed by such holders and filed with the application for the appointment of such receiver. K. The bonds shall enjoy complete parity of lien on the revenues despite the fact that any of the bonds may be delivered at an earlier date than any other of the bonds . The city will issue no other bonds or obligations of any kind or nature payable from or J - 21 - enjoying a lien on the revenues having priority over or parity with the bonds herein authorized, provided however, that bonds may here- after be issued on a parity with the bonds herein authorized under the following conditions: 1. The bonds herein authorized or any part thereof or all or any part of the prior lien bonds may be refunded with the consent of the holders thereof (except that as to maturing bonds or bonds which are then optional for redemption and have been properly called for redemption, such consent shall not be necessary) and the refunding bonds so issued shall enjoy complete equality of lien with that portion of the same issue which is not refunded, if any there be, and the refunding bonds shall continue to enjoy whatever priority of lien over subsequent issues that may have been enjoyed by the bonds refunded, provided however, that if only a portion of the outstanding bonds payable from the revenues of the system is so refunded no refunding bonds may mature at a date earlier or bear interest at a rate higher than the corresponding bond refunded thereby, without the consent of the holders of all unrefunded bonds payable from the revenues of the system. 2. Additional bonds may also be issued on a parity with the bonds herein authorized if all of the following conditions are met: (a) The net revenues for the completed fiscal year immed- iately preceding the issuance of the additional bonds must have been equal to or greater than the highest combined interest and principal requirements for any succeeding twelve months period on all bonds then outstanding, and the bonds so proposed to be issued, including the then outstanding prior lien bonds and the bonds herein authorized. (b) The payments required to be made into the various funds hereinabove established must be current and not in default. (c) The additional bonds must be payable as to principal on July 1 of each year in which principal falls due and payable as J to interest on January 1 and July 1 of each year. (d) The proceeds of the additional bonds must be used R-1 - 22 - r solely for the making of improvements, extensions, renewals or replacements to the system, or for the acquisition or construction of or the making of improvements, extensions, renewals or replace- ments to a municipal water system. (e) The proceedings authorizing the additional bonds must provide that the amount to which the Reserve Account in the Bond Fund is to be accumulated shall be increased to an amount no less than the average amount of principal and interest payable from the Bond Fund in any future twelve month period on the bonds then out- standing and the additional bonds . Said proceedings must also require that the rate of accumulation of said Reserve Account be increased if and as necessary to achieve the full required accumul- lation in one hundred twenty months from the issuance of said parity bonds. - L. So far as it legally may, and to the extent that the city may from time to time own and operate a municipal water system, the city agrees that it will bill each customer receiving both water and sewer service in a single bill, will refuse to accept payment for water service unless payment for sewer service is also made, and if payment for sewer service is permitted to become delinquent and remain so for a period of sixty days, will discontinue the service of water to any premises the owner or occupant of which shall be so delinquent, and will not re-commence the supply of water to such premises until all delinquent sewer charges with penalties shall have been paid in full. The city will do all things and exercise all remedies legally available to assure the prompt payment of charges for all service supplied by the system. M. The city will require the owner, tenant or occupant of each lot or parcel of land in the city upon which a building shall have been constructed for residential, commercial or industrial use .7 - 23 - within 300 feet,measured along an accessible route, of any sanitary sewer line to connect such building with the sewerage collection system of said city and to cease to use any other method for the disposal of sanitary or industrial sewage. If within a period of 15 days after the owner of any such lot or parcel shall have been notified to make such sewer connection, such connection is not made, the city will discontinue the service of water to such lot or parcel and will not re-commence supplying water thereto until such sewer connection shall have been made. N. In addition to all other rights enjoyed by the holders of the bonds and parity bonds, such holders shall have the right by mandamus or other appropriate suit or action in any court of competent jurisdiction to enforce his or their rights against the city, the governing body thereof, and any officers, officials and agents thereof, including, but without limitation, the right to require the city and its governing body to fix and collect rates and charges fully adequate to carry out all of the provisions and agreements contained in this ordinance. 0. All payments falling due on the bonds and parity bonds for principal and interest shall be made to the holders thereof at par and all charges made by the paying agent bank shall be paid by the city. Section 10 . SALE OF BONDS AND APPLICATION OF PROCEEDS That the bid of the Farmers Home Administration of the United States Department of Agriculture for the purchase of the bonds herein authorized be and the same is hereby accepted, and that said bonds shall be delivered to said purchaser as soon as may be after the adoption of this ordinance pursuant to due pay- ment therefor in accordance with the terms of the sale. The sale of said bonds to said purchaser at par and accrued interest to the a� - 24 - date of delivery is hereby in all respects ratified and confirmed. All accrued interest received from the purchaser of the bonds shall be paid into the Bond Fund. So much of the remainder of such proceeds as is not required for the payment of engineering, inspection, legal, fiscal and other incidental costs due and owing at the time of the issuance of the bonds shall be held in a special Construction Account and paid out solely for the purposes for which the bonds were voted and are herein authorized and until so paid shall be subject to a lien and charge in favor of the holders of the bonds outstanding at any time and shall be held for the further security of such bonds until so paid out. When all work to be paid for with the proceeds of the bonds shall have been completed and all amounts due therefor shall have been paid, the balance, if any, remaining in such Construction Account shall be transferred to the Bond Fund and first credited to the Reserve Account therein to the extent necessary to bring the Reserve Account up to its full required amount of $21,715.52. Such transfer shall not decrease the amounts hereinabove otherwise required to be paid into such fund, but if the amount so available to be paid into the Bond Fund will cause the amount in the Bond Fund, including the Reserve Account therein, to exceed the sum of $21,715.52 plus all principal and interest payable therefrom during the next succeeding twelve months, such excess shall be used either for the retirement of bonds or the making of improvements and extensions to the system. Money in such Con- struction Account shall be secured as hereinabove provided for the securing of money in the Bord Fund but may be invested in direct obligations of the United States of America maturing not later than ,August 7 9 1968. - 25 - Section 11. SCHEDULE OF RATES AND CHARGES That the schedule of rates and charges to be imposed for sewer service rendered by the system shall, commencing January 1 , 1968 , be as set out in an ordinance or ordinances which shall have been adopted prior to the issuance of any bonds hereunder. Said schedule of charges shall be considered a minimum while any of the bonds remain outstanding, and shall be subject to such increase from time to time as may be necessary to permit full com- pliance with all the provisions and requirements of this ordinance, but shall be subject to reduction only when and to the extent that the revenues available for payment into the Bond Fund in each of the two immediately preceding fiscal years shall have exceeded one and one-half times the total principal and interest payable from said fund during each such respective preceding fiscal year. Section 12. MODIFICATION That the provisions of this ordinance shall constitute a contract between the city and the holders from time to time of the bonds (including parity bonds) and after the issuance of any of the bonds, no change, variation or alteration of any kind in the pro- visions of this ordinance may be made except as follows: The holders of seventy-five per cent in principal amount of the, bonds at any time outstanding (not including in any case any bonds which may then be held or owned by or for the account of the city, but including such refunding bonds as may be issued for the purpose of refunding any of the bonds and are not owned by the city) shall have the right from time to time to consent to and approve the adoption by the city of an ordinance or ordinances modifying or amending any of the terms or provisions contained in this ordinance, provided however, that this ordinance may not be so modified or amended in such manner as to: `7 - 26 - ' 4 (a) Make any change in the maturity of the bonds . (b) Make any change in the rate of interest borne by any of the bonds . (c) Reduce the amount of the principal payable on the bonds . (d) Modify the terms of payment of principal or of inter- est on the bonds or any of them or impose any conditions with re- spect to such payment. (e) Affect the rights of the holders of fewer than all of the bonds then outstanding. Whenever the city shall propose to amend or modify this ordinance under the provisions of this section, it shall cause notice of the proposed amendment to be published one time in a financial newspaper or journal published in the City of . New York, New York, or Chicago, Illinois . Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy of the proposed amendatory ordinance is on file in the office of the City Clerk for public inspection. Whenever at any time within one year from the date of the publication of said notice there shall be filed in the office of said Clerk an instrument or instruments executed by the holders of at least seventy-five per cent in aggregate principal amount of the bonds then outstanding as in this section defined, which instrument or instruments shall refer to the proposed amendatory ordinance described in said notice and shall specifically consent to and approve the adoption thereof, thereupon, but not otherwise, the City Council may adopt such amendatory ordinance and such ordinance shall become effective. If the holders of at least seventy-five per cent in aggregate principal amount of the bonds as in this section defined, .7 - 27 - � 1 P at the time of the adoption of such amendatory ordinance, or the .y . predecessors in title of such holders, shall have consented to and approved the adoption thereof as herein provided, . no holder of any bond, whether or not such holder shall have consented to or shall have revoked any consent as in this section provided, shall have any right or interest to object to the adoption of such amendatory ordinance or to object to any of the terms or provisions therein contained or to the operation thereof or to enjoin or restrain the city from taking any action pursuant to the provisions thereof . Any consent given by the holder of a bond pursuant to the provisions of this section shall be irrevocable for a period of six months from the date of the publication of the notice above provided for and shall be conclusive and binding upon all future holders of the same bond during such period . Such consent may be revoked at any time after six months from the date of the publication of such notice by the holder who gave such consent or by a successor in title by filing notice of such revocation with said City Clerk, but such revocation shall not be effective if the holders of seventy-five per cent in aggregate principal amount of the bonds outstanding as in this section defined have prior to the attempted revocation consented to and approved the amendatory ordinance referred to in such revocation. The fact and date of the execution of any instrument under the provisions of this section may be proved by the certificate of any officer in any jurisdiction who by the laws thereof is author- ized to take acknowledgments of deeds within such jurisdiction, that the person signing such instrument acknowledged before him the execution thereof, or may be proved by any affidavit of a witness to such execution sworn to before such officer . The amount and numbers of the bonds held by any person executing such instrument J - 28 - T ' and the date of his holding the same may be proved by a certificate executed by any responsible bank or trust company showing that on the date therein mentioned such person had on deposit with such bank or trusf company the bonds described in such -certificate. Section 13. SEVERANCE That if any one or more provisions, clauses, paragraphs or sections of this ordinance or the application thereof to any set of circumstances shall be held to be invalid for any reason, such hold- ing shall not affect the validity or enforceability of the remaining provisions, clauses, paragraphs and sections hereof, nor the appli- cation thereof to other sets of circumstances . Section 14. That all ordinances or parts thereof in conflict herewith are to the extent of such conflict hereby repealed, and that this ordinance shall be published in one issue of the Payette Lakes Star, the official journal of said city, and shall take effect and be in full force immediately upon its passage, approval and publication. Adopted and approved August 7 67, -yrs Atte s : yor City Cler (Other business not pertinent to the above appears in the minutes of the meeting. ) Pursuant to motion duly made and carried, the meeting adjourned. Attes : ayor City ME, `? - 29 -