HomeMy Public PortalAboutResolution 00-22 Water Treatment FinancingRESOLUTION NO. 00-22
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MCCALL,
IDAHO, MAKING FINDINGS AND DECLARATIONS WITH RESPECT TO THE
FINANCING OF DOMESTIC WATER TREATMENT PLANT FACILITIES;
APPROVING AND AUTHORIZING, SUBJECT TO JUDICIAL CONFIRMATION,
THE EXECUTION OF A LOAN AGREEMENT AND TRUST INDENTURE
BETWEEN THE CITY OF MCCALL AND U.S. BANK NATIONAL
ASSOCIATION FOR ALL OR A PORTION OF THE FINANCING OF THE
FACILITIES; FURTHER APPROVING AND AUTHORIZING, SUBJECT TO
JUDICIAL CONFIRMATION, THE EXECUTION OF A LOAN AGREEMENT
BETWEEN THE STATE OF IDAHO, DIVISION OF ENVIRONMENTAL
QUALITY, AND THE CITY OF MCCALL FOR THE FINANCING OF ALL OR
A PORTION OF THE FACILITIES; AUTHORIZING THE FILING OF A
PETITION FOR JUDICIAL CONFIRMATION IN THE DISTRICT COURT OF
THE FOURTH JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND
FOR VALLEY COUNTY; PROVIDING FOR RELATED MATTERS; AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of McCall, Valley County, Idaho (the
"City"), is a municipal corporation duly organized and
operating under the laws of the State of Idaho, and has for
many years owned and operated a domestic water treatment and
distribution system (the "System"); and
WHEREAS, the City Council (the "Council") of the City
has determined that certain improvements to the water
treatment facilities of the System (the "Improvements") are
required for the continued operation of the System in
compliance with applicable state and federal water quality
and other environmental protection laws, regulations, and
standards; and
WHEREAS, the estimated cost of the Improvements to the
City (exclusive of bond proceeds, grants, and other state
and federal contributions) is $8,000,000; and
WHEREAS, the City does not have sufficient funds
available in its current fiscal year's budget to finance the
cost of the acquisition of the Improvements, and the Mayor
and Council have determined that it is necessary to finance
the cost thereof from future years' water revenues; and
WHEREAS, the Council has now determined that it is in
the best interests of the City to finance all or a portion
of the cost of the Improvements by entering into a Loan
Agreement and Trust Indenture with U.S. Bank National
Association, as Trustee, whereby the Trustee will issue
certificates of participation in the Loan Agreement and
Trust Indenture and loan the proceeds to the City, such
certificates to be repaid from the loan payments to be made
by the City from its water revenues, all as more
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particularly set forth in the Loan Agreement and Trust
Indenture; and
WHEREAS the Council has further determined that it is
in the best interests of the City to finance all or a
portion of the cost of the Improvements through a loan from
the Drinking Water Loan Account of the State of Idaho,
Department of Health and Welfare, Division of Environmental
Quality (the "State") , and the City has made application to
the State for such loan; and
WHEREAS, the financing of the costs of the Improvements
in the manner described would create an indebtedness or
liability of the City exceeding the current year's revenues;
and
WHEREAS, the Council has determined that the cost of
the Improvements, and the proposed loan obligations to be
incurred to finance the same, constitute "ordinary and
necessary expenses" of the City authorized by the general
laws of the State within the meaning of Article 8, Section
3, of the Idaho Constitution, for which no approving vote of
the electors is required; and
WHEREAS the Council, on September 14, 2000, held and
conducted a public hearing, pursuant to at least fifteen
(15) days' published notice in the manner required by
Sections 7-1304 and 7-1306, Idaho Code, on the question of
whether the Council should adopt a resolution authorizing
the filing of a petition with the District Court of the
Fourth Judicial District of the State of Idaho, in and for
the County of Valley, seeking judicial confirmation of the
proposed Loan Agreement and Trust Indenture with the Trustee
and the loan from the State, and the incurring of such
indebtedness as "ordinary and necessary expenses" within the
meaning of Article 8, Section 3, of the Idaho Constitution,
pursuant to the Judicial Confirmation Law; and
WHEREAS, as least fourteen (14) days have elapsed
following such public hearing, and the Council has
determined that it is in the best interests of the City and
the public health, safety, and welfare for the City to file
a petition for judicial confirmation pursuant to the
Judicial Confirmation Law upon the question of the authority
of the City to incur such indebtedness, to enter into the
proposed loan agreements, to issue its certificates of
participation, promissory note, or other evidence thereof,
and to pledge its water System revenues as security for the
payment thereof.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF MCCALL, IDAHO, as follows:
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Section 1: The foregoing recitations are hereby
adopted as findings of fact by the Council.
Section 2: Subject to the entry of a final order of
the District Court of the Fourth Judicial District of the
State of Idaho, in and for the County of Valley (the
"District Court"), confirming the authority of the City to
enter into the transaction, the Loan Agreement and Trust
Indenture substantially in the form which is annexed hereto
as Exhibit "A," and the Loan Offer, Acceptance and Contract
with the State of Idaho, Division of Environmental Quality
(the "Loan Agreement"), substantially in the form which is
annexed hereto as Exhibit "B," are hereby approved, and the
Mayor is hereby authorized to execute the same for and on
behalf of the City. The appropriate officials of the City
are hereby further authorized to execute such additional
documents and certifications as may be required to carry out
the intent of this Resolution.
Section 3: The Petition for Judicial Confirmation
(the "Petition"), substantially in the form which is annexed
hereto as Exhibit "C" and by reference made a part hereof,
is hereby approved, and the Mayor is authorized to execute
the verification of the same.
Section 4: The City's attorney and the law firm of
Manweiler Trout Manweiler & Breen, PLLC, as special counsel
to the City, are hereby authorized to file the Petition on
behalf of the City in the District Court, and to take all
actions necessary with respect thereto in order to obtain a
judgment of said District Court in accordance with the
prayer of the Petition.
Section 5: The Council hereby finds and declares that
the proposed Loan Offer and Trust Indenture with the
Trustee, and the Loan Offer, Acceptance and Contract with
the State, the indebtedness incurred thereby, and any
evidence of indebtedness executed pursuant thereto, for the
financing of the Improvements, constitute ordinary and
necessary expenses of the City authorized by the general
laws of the State of Idaho within the meaning of Article 8,
Section 3, Idaho Constitution, for which no approving vote
of the electors of the City is required, for the following
reasons:
A. The proposed expenditures are necessary to protect
the health and safety of the inhabitants of the
City and to comply with applicable water quality
standards and other environmental laws,
regulations, and standards.
B. The proposed expenditures are for the purpose of
replacing, rehabilitating, maintaining, and
extending existing City property in order to
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render it serviceable, as opposed to the
construction of wholly new facilities.
C. The amount of the proposed indebtedness is not
disproportionate to the City's overall budget for
the current or ensuing fiscal years.
D. The proposed Improvements are authorized by the
general laws of the state.
E. The City has operated the existing water treatment
facilities for many years and has determined that
the Improvements are indispensable to the
efficient continued operation of the City's
domestic water system.
Section 6: This Resolution shall take effect and be
in force immediately upon its passage and approval.
DATED this /02qLday of October, 2000.
CITY OF MCCALL
Valley County, Idaho
ATTEST:
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LOAN AGREEMENT AND TRUST INDENTURE
THIS AGREEMENT AND INDENTURE, made as of the of
, 2000, between THE CITY OF McCALL, Valley County, Idaho,
an Idaho municipal corporation (the "City"), and U.S. BANK
NATIONAL ASSOCIATION (the "Trustee").
WITNESSETH: That, in consideration of the payments to be
made and the covenants to be performed, as set forth hereinafter,
the parties agree:
ARTICLE I
RECITATIONS, DEFINITIONS, AND PURPOSE
Section 1.1: RECITATIONS
A. The City is a municipal corporation duly organized and
operating under the laws of the State of Idaho; and
B. The City owns and operates a sanitary sewer system and
collects rates, fees, and charges for the use of the system; and
C. The City Council (the "Council") of the City has determined
that it is necessary and essential to the health, safety,
comfort, and welfare of the inhabitants of the City to complete
Phase II of the McCall water treatment plant, consisting
generally of the acquisition, construction, and installation of a
gravity/sand filtration facility, plus the costs of engineering,
legal, and fiscal agent services, clerical, advertising, and
other costs and expenses related thereto (the "Project"). The
Council has estimated the cost of the Project to be $8,000,000
and has further determined, and hereby declares, that the
expenditure of funds, and the incurring of indebtedness, for the
Project is an "ordinary and necessary expense" authorized by the
general laws of the State within the meaning of Article 8,
Section 3, Idaho Constitution, for which no approving vote of the
electors of the City is required.
D. The Council has determined to finance the cost of the
Project by (i) borrowing a portion of the cost from the State of
Idaho Drinking Water Loan Account and issuing the promissory note
of the City to the State of Idaho, Department of Health and
Welfare, Division of Environmental Quality, said note to be
payable solely from the revenues of the city's domestic water
system,(ii) the sale of certificates of participation in the
amount of not to exceed $8,000,000 as set forth in this Loan
Page 1 — Exhibit "A"
Agreement and Trust Indenture, and (iii) applying other lawfully
available funds of the City.
E. In order to provide a portion of the funds for the
construction of the Project, the parties hereto have agreed to
enter into a loan agreement and trust indenture whereby the
Trustee shall issue and sell certificates of participation (the
"Certificates") evidencing a proportionate ownership of the
rights to receive certain loan payments from the City pursuant to
said loan agreement and trust indenture, and to loan the proceeds
of the sale of such Certificates to the City, all pursuant to
this Loan Agreement and Trust Indenture.
Section 1.2: DEFINITIONS
Additional Obligations shall mean any bonds, certificates of
participation, or other obligations issued pursuant to Section
8.1(A) of this Indenture secured by a pledge of the Net Revenues.
Authorized Officer shall mean the Mayor of the City or any
other person authorized by resolution or other official action of
the City to perform the act or to execute the document in
question.
Average Annual Debt Service shall mean the average amount of
annual Debt Service required over the term of the Certificates
from the time of calculation.
Beneficial Owner(s) shall mean the owners of the
Certificates whose ownership is recorded under the Book -Entry -
Only System maintained by the Depository.
Book -Entry -Only System shall mean the system of recordation
of ownership of the Certificates on the books of the Depository
pursuant to Article III of this Indenture.
Business Day shall mean any day other than (i) a Saturday,
Sunday, or legal holiday, or (ii) a day on which the Trustee is
required to close.
Cede shall mean Cede & Co., the nominee of the Depository,
and any successor nominee of the Depository with respect to the
Certificates.
Certificate of Authentication shall mean the certificate on
each Certificate of Participation executed by the Trustee
pursuant to Article III of this Indenture.
Certificate or Certificate of Participation shall mean a
certificate prepared, authenticated, and delivered by the Trustee
pursuant to Article III of this Indenture.
Page 2 - Exhibit "A"
Certificate Owner(s) or Owner(s) shall mean the Beneficial
Owners and the person(s) in whose name a Certificate or
Certificates shall be registered, as provided in Section 3.7 of
this Indenture.
Certificates Register shall mean the book or books for the
registration of the names and addresses of the Certificate Owners
maintained by the Trustee.
Certificates Year shall mean the twelve-month period
commencing on October 1 of each year and ending on September 30
of the following calendar year, except for the first Certificates
Year, which shall commence on the date of the Certificates and
terminate on September 30, , and except that the last
Certificates Year shall commence on October 1, , and
terminate on
City shall mean the City of McCall, Valley County, Idaho.
Clerk shall mean the Clerk of the City.
Closing shall mean the date of delivery of the Certificates
to the original purchaser thereof.
Construction Fund shall mean the "Water Treatment Plant
Construction Fund" created by Section 5.1 of this Indenture.
Consultant's Certificate shall mean a report signed by an
independent financial consultant or other independent consultant,
selected by the City, as may be appropriate to the subject of the
report, and including:
(1) a statement that the person or firm making or
giving such report has read the pertinent provisions of this
Indenture to which such report relates;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the report is
based;
(3) a statement that, in the opinion of such person or
firm, sufficient examination or investigation was made as is
necessary to enable said independent financial consultant or
other independent consultant to express an informed opinion
with respect to the subject matter referred to in the
report.
Costs of Acquisition, with respect to the Project, shall
include, together with any other proper item of cost not
Page 3 - Exhibit "A"
specifically mentioned herein, the cost of acquisition and
construction of the Project and the financing thereof, the cost,
whether incurred by the City or another, of advance planning
undertaken in connection with the Project, and the cost of
acquisition of any land or interest therein or for use in
connection therewith, the cost of preparation of the sites
thereof and of any land to be used in connection therewith, the
cost of any indemnity and surety bonds and insurance premiums,
allocable administrative and general expenses of the City,
allocable portions of inspection expenses, financing charges,
legal fees, and fees and expenses of financial advisors and
consultants in connection therewith, cost of audits, the cost of
all machinery, apparatus and equipment, cost of engineering, the
cost of utilities, design, plans, specifications and surveys,
estimates of cost, the payment of any notes of the City
(including any interest and redemption premiums) issued to
temporarily finance the payment of any item or items of cost of
the Project and payable from the proceeds of the Certificates,
and all other expenses necessary or incident to determining the
feasibility or practicability of the Project, and such other
expenses not specified herein as may be necessary or incident to
the construction and acquisition of the Project, the financing
thereof and the placing of the same in use and operation.
Costs of Issuance shall mean printing, legal fees,
underwriting fees, fees and expenses of the Trustee, and all
other fees, charges, and expenses with respect to or incurred in
connection with the issuance, sale, and delivery of the
Certificates.
Council shall mean the City Council of the City.
Debt Service for any period shall mean, as of the date of
calculation, an amount equal to the principal and interest
accruing during such period on the Certificates. Debt service on
the Certificates shall be calculated on the assumption that no
portion of the Certificates Outstanding at the date of
calculation will cease to be Outstanding except by reason of the
payment of principal on the Certificates on the due date thereof.
Depository means the Depository Trust Company, New York, New
York, and its successors and assigns.
Estimated Net Revenues shall mean, for any year, the
estimated Revenues of the System for such year less the estimated
Operation and Maintenance Expenses for such year, based upon
estimates prepared by the City's engineer or an independent
engineer, or by an independent certified public accountant.
Estimated Net Revenues may be adjusted to reflect any changed
schedule of rates and charges.
Page 4 — Exhibit "A"
Event of Default shall have the meaning given to such term
in Section 12.1 of this Indenture.
Fiscal Year shall mean the annual accounting period of the
City, currently October 1 to the following September 30.
Indenture shall mean this Loan Agreement and Trust
Indenture, dated as of , 2000.
Installment Computation Date shall mean the last day of the
fifth Certificates Year and of each succeeding fifth Certificates
Year.
Investment Securities shall mean and include any of the
investments permitted by Section 50 -1013, Idaho Code.
Loan Payment(s) shall mean the loan payment(s) required by
Section 2.2 of this Indenture.
Loan Payment Date shall mean the semiannual payment dates
for the Loan Payments required by Section 2.2 of this Indenture.
Loan Payment Fund shall mean the fund by that name
established by Section 5.3 of this Indenture.
Mayor shall mean the mayor of the City.
Maximum Annual Debt Service shall mean an amount equal to
the greatest annual Debt Service with respect to the Certificates
for the current or any future Certificates Year.
Net Proceeds shall mean the aggregate principal amount of
the Certificates, plus premium, if any, less Costs of Issuance.
Net Revenues shall mean Revenue of the System after the
deduction of Operation and Maintenance Expenses.
Operation and Maintenance Expenses or any phrase of similar
import means all reasonable and necessary current expenses of the
City, paid or accrued, of operating, maintaining, and repairing
the System or of levying, collecting, and otherwise administering
the Net Revenues; and the term includes (except as limited by
contract or otherwise limited by law) without limiting the
generality of the foregoing:
(a) Engineering, auditing, reporting, legal, and other
overhead expenses of the various City departments directly
relating and reasonably allocable to the administration of
the System;
Page 5 - Exhibit "A"
(b) Fidelity bonds and
insurance premiums pertaining to
allocable share of a premium of
pertaining thereto;
(c) Payments to pension,
hospitalization funds and other
property and liability
the System, or a reasonably
any blanket bond or policy
retirement, health, and
insurance;
(d) Any taxes, assessments, excise taxes, or other
charges which may be lawfully imposed on the City, the
System, revenues therefrom, or any privilege in connection
with their operation;
(e) The reasonable charges of the Trustee, fiscal or
paying agent, commercial bank, trust bank, or other
depository bank pertaining to the Certificates or to the
Project, if any;
(f) Contractual services, professional services,
salaries, other administrative expenses, and the cost of
materials, supplies, repairs, and labor, pertaining to the
ordinary operation of the System; and
(g) All other administrative, general, and commercial
expenses properly attributable to the System.
Outstanding, when used with reference to the Certificates,
as of any particular date, shall mean the Certificates which have
been issued, sold and delivered under this Indenture, except (i)
the Certificates (or portion thereof) canceled because of payment
or redemption prior to their stated date of maturity, and (ii)
the Certificates (or portion thereof) for the payment or
redemption of which there has been separately set aside and held
money for the payment thereof.
Participants shall mean those broker - dealers, banks, and
other financial institutions for which the Depository holds
Certificates as securities depository.
Private Person shall mean any natural person engaged in a
trade or business, the United States of America or any agency
thereof, or any trust, estate, partnership, association, company
or corporation. A state or local governmental unit is not a
private person.
Private Person Use shall mean the use of property in a trade
or business by a Private Person if such use is other than as a
member of the general public. Private Person Use includes
ownership of the property by the Private Person as well as other
arrangements that transfer to the Private Person the actual or
Page 6 - Exhibit "A"
beneficial use of the property (such as a lease, management or
incentive payment contract or other special arrangement) in such
a manner as to set the Private Person apart from the general
public. Use of property as a member of the general public
includes attendance by the Private Person at municipal meetings
or business rental of property to the Private Person on a day -to-
day basis if the rental paid by such Private Person is the same
as the rental paid by any Private Person who desires to rent the
property. Use of property by nonprofit community groups or
community recreational groups is not treated as Private Person
Use if such use is incidental to the governmental uses of
property, the property is made available for such use by all such
community groups on an equal basis and such community groups are
charged only a de minimis fee to cover custodial expenses.
Project shall mean the water treatment facility project
described in Section 1.4 of this Indenture.
Promissory Note shall mean the loan obligation of the City
to the State of Idaho, Department of Health and Welfare, payable
from Net Revenues on a subordinate basis to the lien of the
Certificates.
Purchase Agreement shall mean the purchase agreement between
the Trustee and the Underwriter pursuant to which the
Certificates are being sold.
Representation Letter shall mean the representation letter
from the City to the Depository, as authorized in Article III of
this Indenture.
Required Reserve Fund Balance shall mean the lesser of (i)
Maximum Annual Debt Service, (ii) 1250 of Average Annual Debt
Service, or (iii) 100 of the proceeds of the Certificates and of
any Additional Obligations.
Reserve Fund shall mean the fund by that name established by
Section 5.4 of this Indenture.
Revenue of the System shall mean all revenues received by
the City from its System and may include, at the discretion of
the City, moneys derived from one, all, or any combination of
revenue sources pertaining to the System, including, without
limitation, rates, charges, rents, fees, and any other income
derived from the operation or ownership of, the use of services
of, or the availability of or services pertaining to, or other-
wise derived in connection with, the System or all or any part of
any property pertaining to the System.
Page 7 — Exhibit "A"
Revenue Fund shall mean the fund by that name established by
Section 5.2 of this Indenture.
System shall mean the domestic water treatment and
distribution system of the City, as it now exists and as it may
hereafter be enlarged, altered, and extended.
Treasurer shall mean the Treasurer of the City.
Trustee shall mean the Corporate Trust Department of U.S.
Bank National Association, Boise, Idaho, which shall act as
certificates registrar, transfer agent, and authenticating and
paying agent for the Certificates pursuant to Section 3.7 of this
Indenture, and as trustee of the Loan Payment Fund and Reserve
Fund established by Section 5.3 and 5.4 of this Indenture.
Underwriter shall mean Seattle - Northwest Securities
Corporation.
Written Certificate shall mean an instrument in writing on
behalf of the City executed by an Authorized Officer of the City.
Section 1.3: PURPOSE
The purpose of this Indenture is to provide a portion of the
financing needed for the Project, to be owned and operated by the
City in accordance with the terms of this Indenture, the Costs of
Acquisition of which are to be financed in part by the issuance
of Certificates of Participation as provided herein.
Section 1.4: THE PROJECT
The City of McCall Water Treatment Facility Project (the
"Project ") consists generally of (i) the payment of the Costs of
Acquisition of the improvements to the water treatment facility
of the City, including completion of Phase II of the City's water
treatment plant facility, consisting generally of a gravity /sand
filtration facility, plus the costs of construction, engineering,
legal, and fiscal agent services, clerical, advertising, and
other costs and expenses related thereto; (ii)funding of the
Reserve Fund in the amount of the Required Reserve Fund Balance;
and (iii) payment of the Costs of Issuance of the Certificates.
ARTICLE II
LOAN AGREEMENT
Section 2.1: LOAN AGREEMENT
Page 8 - Exhibit "A"
Expressly conditioned upon the issuance, sale, and delivery
of the Certificates, as hereinafter provided, the Trustee agrees
to loan to the City, solely from the proceeds of the
Certificates, the amount of $8,000,000, payable at the times and
bearing interest at the rates set forth in Exhibit "A" which is
annexed hereto and by reference incorporated herein. The
proceeds of said loan shall be utilized for the purposes of the
Project as set forth in this Indenture, and for no other purpose.
Section 2.2: LOAN PAYMENTS
The City hereby promises to repay the loan referred to in
Section 2.1 by the payment to the Trustee of the principal sum of
Eight Million Dollars ($8,000,000), in principal installments
payable commencing on , and to pay interest on
the unpaid principal amount from J, all in
accordance with the schedule set forth in Exhibit "A" which is
annexed hereto and by reference incorporated herein. Interest
shall be computed on the basis of a 360 -day year. All payments
of principal and interest shall be due and payable in lawful
money of the United States of America.
ARTICLE III
THE CERTIFICATES OF PARTICIPATION
Section 3.1: AUTHORIZATION
Upon receipt of a Written Certificate from an Authorized
Officer of the City, the Trustee shall prepare, authenticate, and
issue the City of McCall, Idaho, Certificates of Participation,
Series 2000 (the "Certificates ") , in the aggregate principal
amount of $8,000,000, evidencing undivided ownership interests in
the Loan Payments to be paid by the City pursuant to this
Indenture.
Section 3.2: SECURITY FOR THE CERTIFICATES
The Certificates represent undivided proportional interests
in and shall be payable from the Loan Payments due from the City
under the Indenture, which Loan Payments are hereby irrevocably
pledged for the payment of the principal of and interest on the
Certificates. The Certificates are additionally secured by the
accounts held hereunder and any sums which the Trustee may
realize from the exercise of default remedies.
Section 3.3: DESCRIPTION OF THE CERTIFICATES
The Certificates shall be issued in accordance with the
Book - Entry -Only System described in this Article III, shall be
Page 9 - Exhibit "A"
dated as of 1 2000, shall be issued in fully
registered from without coupons in denominations of $5,000 each
or integral multiples thereof (provided that no single
Certificate shall represent more than one maturity), shall be
payable in the principal amounts and on the dates shown in
Exhibit "B" which is annexed hereto, and shall be payable solely
from Loan Payments and other sums received by the Trustee from
the City. The Certificates shall bear interest from their date
at this rates, payable semiannually on the dates, set forth in
Exhibit "B," until their redemption at maturity or prior
redemption.
The interest component of Loan Payments received by the
Trustee shall be divided among the Certificate Owners
proportionately according to the interest rates attributable to
the Certificates and paid semiannually on each Loan Payment Date
to the Certificate Owner whose name appears on the Certificates
Register on the fifteenth day of the calendar month next
preceding the Loan Payment Date, and shall be paid by check or
draft of the Trustee mailed to such Certificate Owner at the
address appearing on the Certificates Register or at such other
address as may be furnished in writing by such Certificate Owner
to the Trustee. Interest shall be calculated on the basis of a
360 -day year and twelve 30 -day months. If payment is so mailed,
the Trustee shall have no further liability to any party for such
payment.
Principal components of Loan Payments shall be payable to
the Certificate Owners upon presentation and surrender of the
Certificates on the date of maturity or prior redemption, at the
principal corporate trust office of the Trustee.
The Certificates shall be numbered serially in the manner
and with any additional designation as the Trustee deems
necessary for purposes of identification. No Certificate shall
be entitled to any right or benefit under this Indenture unless
it shall have been authenticated by an authorized officer of the
Trustee. The Trustee shall authenticate all Certificates to be
delivered at Closing, and shall additionally authenticate all
Certificates properly surrendered for exchange or transfer
pursuant to this Indenture.
Section 3.4: THE BOOK- ENTRY -ONLY SYSTEM
The Certificates shall be issued in book - entry -only form,
with no Certificates being made available to Beneficial Owners
thereof unless the Book - Entry -Only System is discontinued. So
long as the Certificates are issued in book - entry -only form, the
City and the Trustee shall recognize the Depository or its
nominee as the Certificates Owner for all purposes. Beneficial
ownership interests in the Certificates will be available to
Page 10 - Exhibit "A"
Beneficial Owners in book - entry -only form, in accordance with the
book - entry -only practices of the Depository.
The Certificates shall be issued in the form of one
Certificate representing each maturity of the Certificates, in
conformance with the book - entry -only practices of the Depository.
Each Certificate shall be substantially in the form set forth in
Exhibit "C" attached hereto and incorporated herein by reference.
Each Certificate shall be manually authenticated by the Trustee.
Each Certificate shall be registered in the name of Cede & Co. as
nominee of the Depository and shall be lodged with the Depository
until maturity of the Certificates. The Trustee shall remit each
payment of interest, or principal and interest, and redemption
premium, if applicable, directly to the Depository for
distribution to the Beneficial Owners by recorded entry on the
books of the Depository in accordance with the book - entry -only
practices of the Depository, and the City and the Trustee shall
have no liability therefor. Such payment shall be valid and
effective fully to satisfy and discharge the Trustee's obligation
to each Beneficial Owner with respect to the payment thereof to
the extent of the sums so paid.
The Representation Letter substantially in the form annexed
hereto as Exhibit "D" is hereby approved, and the Mayor is hereby
authorized to execute and deliver such Representation Letter on
behalf of the City.
With respect to the Certificates registered in the name of
Cede & Co. as nominee for the Depository, neither the City nor
the Trustee shall have any responsibility to any Beneficial Owner
with respect to:
(i) the sending of transaction statements, or
maintenance, supervision, or review of records of the
Depository;
(ii) the accuracy of
Depository or its nominee with
interest in the Certificates;
(iii) the payment to any
other person other than the D
with respect to principal
redemption premium, if any, on
the records of the
respect to any ownership
Beneficial Owner, or any
epository, of any amount
of, interest on, or
the Certificates;
(iv) any consent given or other action taken by
the Depository or its nominee as owner of the
Certificates.
Page 11 - Exhibit "A"
In the event that either the City or the Depository shall
determine to discontinue the Book - Entry -Only System as to the
Certificates, and the City elects not to designate a substitute
depository, then the Trustee will cause Certificated Certificates
to be issued to the Beneficial Owners in accordance with
Section 3.5 of this Indenture.
Section 3.5 EXECUTION OF CERTIFICATED CERTIFICATES
In the event that the Book - Entry -Only System is discontinued
with respect to the Certificates, the Trustee shall cause
Certificated Certificates to be prepared, executed,
authenticated, and delivered. The Certificated Certificates
shall be substantially in the form set forth in Exhibit "E" which
is annexed hereto and by reference made a part hereof. The
Certificated Certificates shall be numbered separately in the
manner and with such additional designation as the Trustee shall
deem necessary for purposes of identification. The Certificated
Certificates shall be lithographed or printed with engraved or
lithographed borders. The Certificated Certificates shall then
be manually authenticated by the Trustee.
Only such of the Certificated Certificates shall bear
thereon a certificate of authentication in the form set forth in
Exhibit "E," manually executed by the Trustee, shall be valid or
obligatory for any purpose or entitled to the benefits of this
Indenture, and such certificate of authentication shall be
conclusive evidence that the Certificated Certificates so
authenticated have been duly executed, authenticated, and
delivered hereunder and are entitled to the benefits of this
Indenture.
Section 3.6: REDEMPTION PRIOR TO MATURITY; DEFEASANCE
A. Optional Redemption. The Certificates maturing on or
before , shall not be subject to call or redemption
prior to their stated dates of maturity. Certificates maturing
on and after , shall be subject to redemption on any
date on or after in whole or in part, from maturities
selected by the City (or by lot selected by the Trustee within a
maturity), from and to the extent of monies available to the
Trustee therefor from the prepayment of Loan Payments or other
lawfully available monies, at the price of par plus accrued
interest to the redemption date.
The City shall notify the Trustee at least 45 days
in advance of any redemption date of its intent to call and
redeem any Certificates.
Page 12 - Exhibit "A"
Portions of the principal component of any Certificates in
installments of $5,000 or any integral multiple of $5,000, may
also be redeemed. If less than all of the principal amount of any
Certificate is redeemed, upon surrender of such Certificate at
the principal corporate trust office of the Trustee there shall
be issued to the Certificate Owner, without charge therefor, for
the then unredeemed balance of the principal amount thereof, a
new Certificate or Certificates, at the option of the Certificate
Owner, with like maturity and interest rate in any of the
denominations authorized by this Indenture.
B. Notice of Redemption. Notice of any such redemption
shall be sent by the Trustee by first class mail, postage
prepaid, not less than thirty (30) nor more than sixty (60) days
prior to the date fixed for redemption, to the Certificate Owner
of each Certificate to be redeemed at the address shown on the
Certificates Register. This requirement shall be deemed to be
complied with when notice is mailed as herein provided,
regardless of whether or not it is actually received by the
Certificate Owner of any Certificate to be redeemed.
C. Effect of Redemption. When so called for redemption,
such Certificates shall cease to accrue interest on the specified
redemption date, provided funds for redemption are on deposit at
the place of payment at that time, and such Certificates shall
not be deemed to be Outstanding as of such redemption date.
D. Voluntary Redemption Notice. In addition to the notice
required by subsection C above, further notice may be given by
the Trustee as set out below, but no defect in said further
notice nor any failure to give all or any portion of such further
notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as prescribed in said
subsection C.
(1) Each further notice of redemption given hereunder may
contain the following information:
(a) the redemption date;
(b) the redemption price;
(c) if less than all Outstanding Certificates are to
be redeemed, the identification (and, in the case of partial
redemption, the respective principal amounts) of the
Certificates to be redeemed;
(d) that on the redemption date the redemption price
Page 13 - Exhibit "A"
will become due and payable upon each such Certificate or
portion thereof called for redemption, and that interest
thereon shall cease to accrue from and after said date;
(e) the place where such Certificates are to be
surrendered for payment of the redemption price, which place
of payment shall be the principal corporate trust office of
the Trustee;
(f) the CUSIP numbers (if any) of all Certificates
being redeemed;
(g) the date of issue of the Certificates as
originally issued;
(h) the rate of interest borne by each Certificate
being redeemed;
(i) the maturity date of each Certificate being
redeemed; and
(j) any other descriptive information needed to
identify accurately the Certificates being redeemed.
(2) Upon the payment of the redemption price of
Certificates being redeemed, each check or other transfer of
funds issued for such purpose shall bear the CUSIP number
identifying, by issue and maturity, the Certificates being
redeemed with the proceeds of such check or other transfer.
E. Open Market Purchase. The City hereby reserves the
right to purchase the Certificates on the open market at a price
equal to or less than par. In the event the City shall so
purchase Certificates, the Certificates so purchased shall be
credited at the par amount thereof against the amount coming due
in the year of maturity of the Certificates so purchased.
F.. Defeasance. In the event that money and /or direct
obligations of, or obligations guaranteed by the United States,
as provided by Section 57 -504 of the Idaho Code, as it now reads
or is hereafter amended, maturing or having guaranteed redemption
prices at the option of the City at such time or times and
bearing interest to be earned thereon in such amounts as are
sufficient (together with any resulting cash balances) to redeem
and retire part or all of the Certificates in accordance with its
terms, are hereafter irrevocably set aside in a special account
and pledged to effect such redemption and retirement, then no
further payment need be made into the Loan Payment Fund for the
payment of the principal of and interest on that portion of the
Certificates so provided for, and such portion of the
Page 14 — Exhibit "A"
Certificates and interest accrued thereon shall then cease to be
entitled to any lien, benefit or security of this Indenture,
except the right to receive the interest accrued thereon shall no
longer be deemed to be Outstanding hereunder.
Section 3.7:
REGISTRATION, TRANSFER, AND EXCHANGE OF
CERTIFICATES
A. The Corporate Trust Department of U.S. Bank National
Association, Boise, Idaho, is hereby appointed as certificates
registrar, transfer agent, and authenticating and paying agent,
and is herein referred to as the "Trustee." A successor trustee
may be appointed for the Certificates by resolution of the
Council, and the Owners of the Certificates shall be notified by
the Trustee of any change in the Trustee within sixty (60) days
following the change. The Trustee shall keep, or cause to be
kept, at its principal corporate trust office, sufficient books
for the registration and transfer of the Certificates, which
shall at all times be open to inspection by the City.
B. All Certificates shall be in fully registered form,
both as to principal and interest.
C. The ownership of all Certificates shall be entered in
the Certificates Register maintained by the Trustee, and the City
and the Trustee may treat the person listed as owner in the
Certificates Register as the owner of the Certificate for all
purposes.
D. Certificates may be exchanged for an equal principal
amount of Certificates of the same maturity which are in
different denominations, and Certificates may be transferred to
other owners if the Owner submits the following to the Trustee:
(a) written instructions for exchange or transfer
satisfactory to the Trustee, signed by the Certificate Owner
or his attorney in fact and guaranteed or witnessed in a
manner satisfactory to the Trustee; and
(b) the Certificates to be exchanged or transferred.
E. The Trustee shall not be required to exchange or
transfer any Certificates during the fifteen business days next
preceding any Loan Payment Date or selection of Certificates to
be redeemed, or to register, transfer, or exchange any
Certificates selected or being called for redemption.
F. The Trustee shall note the date of authentication on
each Certificate. The date of authentication shall be the date
on which the Certificate Owner's name is listed on the
Certificates Register.
Page 15 - Exhibit "A"
G. For purposes of this section, Certificates shall be
considered submitted to the Trustee on the date the Trustee
actually receives the materials described in Subsection D of this
section.
H. The Trustee shall be responsible for its represen-
tations contained in the Certificate of Authentication on the
Certificates.
I. The Trustee may become the owner of Certificates with
the same rights it would have if it were not the Trustee, and, to
the extent permitted by law, may act as Depository for and permit
any of its officers or directors to act as a member of, or in any
other capacity with respect to, any committee formed to protect
the rights of Certificate Owners.
J. This Section is intended to provide the system of
registration required by Chapter 9, Title 57, Idaho Code.
Whenever any Certificate or Certificates shall be
surrendered for transfer, the Trustee shall authenticate, issue,
and deliver to the transferee in exchange therefor, a new fully
registered Certificate or Certificates of authorized denomination
or denominations, of the same maturity, interest rate, and for
the aggregate principal amount of such Certificate or
Certificates being surrendered. The Trustee shall require the
payment by the Certificate Owner requesting such transfer of any
tax, fee, or governmental charge required to be paid with respect
to such transfer.
Section 3.8: TEMPORARY CERTIFICATES
The Trustee may, if deemed necessary by the Trustee, utilize
a temporary certificate or temporary certificates for each
maturity which shall be typewritten, and which shall be delivered
to the purchaser or purchasers of the Certificates in lieu of
definitive Certificates, but subject to the same provisions,
limitations and conditions as the definitive Certificates. The
temporary certificate or certificates shall be dated as of the
date of the Certificates, shall be in the denomination or denomi-
nations aggregating $8,000,000, shall be numbered T -1 (or, if
appropriate, consecutively thereafter), shall be substantially of
the tenor of such definitive Certificates, but with such
omissions, insertions and variations as may be appropriate to
temporary certificates, and shall be manually signed by the
Trustee.
Section 3.9•
LOST, STOLEN, MUTILATED OR DESTROYED
CERTIFICATES
Page 16 - Exhibit "A"
In case any Certificate shall be lost, stolen, mutilated, or
destroyed, the Trustee may authenticate and deliver a new
Certificate or Certificates of like date, denomination, interest
rate, maturity, number, tenor and effect to the Certificate Owner
thereof upon the Certificate Owner's paying the expenses and
charges of the City and the Trustee in connection therewith and
upon his filing with the City and the Trustee evidence
satisfactory to the City and the Trustee of his ownership
thereof, and upon furnishing the City and the Trustee with
indemnity satisfactory to the City and the Trustee.
ARTICLE IV
RATE COVENANT; PLEDGE OF REVENUES
Section 4.1: RATE COVENANT
The City has heretofore established, may from time to time
revise, and shall maintain and collect domestic water system
rates and charges for furnishing the services of the System to
its customers fully sufficient, after taking into consideration
anticipated delinquencies, to provide Net Revenues sufficient to
provide funds equal to not less than 1.2 times the Average Annual
Debt Service on the Certificates and any Additional Obligations
payable from the Net Revenues of the System. Water System rates
and charges shall be uniform as to all persons and properties
which are of the same class.
Section 4.2: PLEDGE OF REVENUES
The Net Revenues of the System are
payment of the Loan Payments and shall be
order of priority provided in Section 5.2
ARTTCT,F V
FUNDS AND ACCOUNTS
Section 5.1: CONSTRUCTION FUND
hereby pledged for the
used and applied in the
of this Indenture.
There is hereby created a special fund, to be held by the
City separate and apart from all other funds and accounts of the
City, designated the "Water Treatment Plant Construction Fund"
(the "Construction Fund "), into which shall be deposited the
original proceeds of the Certificates, less any accrued interest
(which shall be deposited into the Loan Payment Fund), and less
the Required Reserve Fund Balance (which shall be deposited into
the Reserve Fund). Moneys in the Construction Fund shall be used
solely for the purpose of paying the Costs of Issuance and the
Page 17 — Exhibit "A"
Costs of Acquisition of the Project. Such proceeds may be
invested in Investment Securities which mature not later than
such times as shall be necessary to provide moneys to pay such
Costs of Acquisition and Costs of Issuance. All earnings on such
investments shall be credited to the Construction Fund. After
completion of the Project and payment of all Costs of Acquisition
and Costs of Issuance, any balance in the Construction Fund shall
be transferred to the Loan Payment Fund.
Section 5.2: REVENUE FUND
A. Fund Created. There is hereby created a special fund,
designated the "City of McCall Water Revenue Fund (the "Revenue
Fund "), which shall be maintained by the Treasurer and into which
the Revenue of the System shall be deposited immediately upon its
receipt.
B. Use of Revenues. The Revenue of the System shall be
used for the payment of the following obligations in the
following order of priority:
(1) First Charge and Lien: The Costs of Operation and
Maintenance Expenses.
(2) Second Charge and Lien: The payment of the Loan
Payments and the payment of the principal of and interest on
any Additional Obligations payable from the Net Revenues and
issued on a parity with the Loan Payments.
(3) Third Charge and Lien: To maintain the Reserve
Fund.
(4 To administer surplus funds in accordance with
Section 5.5 of this Indenture.
C. Investment Earnings. Interest and investment earnings
on deposits in the Revenue Fund shall remain in and be used for
the purposes of the Revenue Fund.
Section 5.3: LOAN PAYMENT FUND
There is hereby created a special fund, to be held by the
Trustee separate and apart from all other funds and accounts of
the City, designated the "Loan Payment Fund." All Loan Payments
shall be promptly deposited by the Trustee upon receipt thereof
to the Loan Payment Fund, to be utilized and paid in the
following manner:
A. Each required Loan Payment shall be made by the City to
the Trustee at least two (2) Business Days before each Loan
Page 18 - Exhibit "A"
Payment Date. As each Loan Payment is received by the Trustee,
the same shall be deposited in the Loan Payment Fund for the
account of the Certificate Owners and invested by the Trustee,
pursuant to Written Certificate of the City, in Investment
Securities until needed to make payments of amounts due with
respect to the Certificates on each Loan Payment Date. Earnings
thereon shall be credited to the Loan Payment Fund.
B. On each Loan Payment Date, the Trustee shall withdraw
from the Loan Payment Fund an amount equal to the amount of
payments due with respect to the Certificates on such Loan
Payment Date and shall pay the amounts required to be paid with
respect to the Certificates pursuant to Section 3.3 of this
Indenture. On the first Loan Payment Date, the Trustee shall
also pay out of the Loan Payment Fund the accrued interest
included in the purchase price of the Certificates.
C. If, on any Loan Payment Date, monies in the Loan
Payment Fund exceed the amount of the principal and interest
components due on the Certificates, then the balance shall be
held in the Loan Payment Fund as a credit against the next Loan
Payment(s) due from the City. The Loan Payment Fund will be
depleted at least once each year hereafter except for a carryover
amount not to exceed the greater of one year's earnings on the
monies in the Loan Payment Fund or 1/12 of the next annual Loan
Payments. In determining the amount of any Loan Payment due from
the City, the City shall receive a credit for any amount then
remaining on the Loan Payment Fund.
Section 5.4: RESERVE FUND
A. There is hereby created a special fund, to be held by
the Trustee separate and apart from all other funds and accounts
of the Trustee, designated the "Reserve Fund." There shall be
deposited into the Reserve Fund, either from the original
proceeds of the Certificates, or from other lawfully available
funds of the City, the amount of the Required Reserve Fund
Balance as shall be specified in a Written Certificate of the
City, and said amount shall be maintained in the Reserve Fund.
Monies held by the Trustee in the Reserve Fund shall be invested,
pursuant to Written Certificate of the City, in Investment
Securities. Monies required to be maintained in the Reserve Fund
shall be used only to pay Loan Payments, and only in the event
that the monies in the Loan Payment Fund are insufficient to make
payments with respect to the Certificates when due.
B. If on any Loan Payment Date the amount in the Loan
Payment Fund shall be less than the amount required to make
payments with respect to the Certificates in full, the Trustee
Page 19 — Exhibit "A"
shall apply amounts from the Reserve Fund to the extent necessary
to make good the deficiency.
C. If on any Loan Payment Date the amount in the Reserve
Fund shall be less than the Required Reserve Fund Balance, the
Trustee shall notify the City in writing of such shortage, and
there shall be transferred to the Reserve Fund from the Loan
Payment Fund or from any other legally available source such
amounts as shall be required to maintain in the Reserve Fund the
Required Reserve Fund Balance within one year from the date such
deficiency occurs. So long as the amount in the Reserve Fund
equals the Required Reserve Fund Balance, then investment
earnings and any excess over the Required Reserve Fund Balance,
be transferred to the Loan Payment Fund as received. For
purposes of determining the amount on deposit in the Reserve
Fund, Investment Securities shall be valued as of each Loan
Payment Date on the basis of their initial cost or current market
value, whichever is less.
D. Whenever the amount in the Reserve Fund, together with
the amount in the Loan Payment Fund, is sufficient to pay in full
all Outstanding Certificates in accordance with their terms, the
funds on deposit in the Reserve Fund shall be transferred to the
Loan Payment Fund. Any provision of this Indenture to the
contrary notwithstanding, so long as there shall be held in the
Loan Payment Fund an amount sufficient to pay in full all
Outstanding Certificates in accordance with their terms, no
deposits shall be required to be made into the Reserve Fund.
E. The City may, at its option, withdraw the moneys within
the Reserve Fund and substitute therefor an insurance policy or
letter of credit, issued by a municipal bond insurance company or
a commercial bank having, at the time the insurance policy or
letter of credit is issued, a long -term credit rating of at least
"A" as determined by Standard & Poor' s Ratings Group so long as
Standard & Poor's Ratings Group rates the Certificates, in which
the insurance company or bank agrees unconditionally to provide
funds in the amount of the Required Reserve Fund Balance.
Section 5.5 REBATE FUND
There is hereby created a special fun, to be known as the
"Rebate Fund," separate and apart from other funds and accounts
of the City, to be held and administered by the Treasurer. The
City shall make deposits into the Rebate Fund from any lawfully
available funds of the City, and shall make withdrawals and
payments of Rebatable Arbitrage therefrom, at the times and in
the manner provided in Section 6.1 of this Indenture.
Section 5.6 SURPLUS FUNDS
Page 20 - Exhibit "A"
Moneys remaining in the Revenue Fund after having been
applied as provided in Section 5.2(B) of this Indenture shall
constitute surplus funds and may be used for any of the following
purposes:
(1) To pay the costs of unusual or extraordinary
maintenance of or repair to the System;
(2) To pay the principal of and interest on any
subordinate lien obligations which may have been issued to
provide domestic water facilities in or for the City;
(3) To improve, extend, enlarge, or replace any
domestic water facilities;
(4) To acquire or construct additional domestic water
facilities in or for the City;
(5) To call or redeem prior to their fixed dates of
maturity any Certificate, parity bonds, or subordinate lien
obligations issued to provide domestic water facilities for
the City; and
(6) For any other lawful purpose.
ARTICLE VI
ARBITRAGE REBATE
Section 6.1 ARBITRAGE REBATE
A. General Rule. The City will pay to the United States
of America, from the Rebate Fund, in accordance with the
provisions of this section, 90 percent of the Rebatable Arbitrage
with respect to the Certificates as of each Installment
Computation Date and 100 percent of the Rebatable Arbitrage with
respect to the Certificates as of the Final Computation Date.
The Trustee shall notify the City, at lease thirty (30) days but
not more than ninety (90) days, in advance of each Computation
Date.
B. Computation of Rebatable Arbitrage. The Rebatable
Arbitrage with respect to the Certificates shall be computed in
accordance with Section 148(f) of the Code and Section 1.148 -3 of
the Income Tax Regulations under Section 148(f) of the Code, as
of each Computation Date.
C. Payment Procedure.
Page 21 — Exhibit "A"
(1) The payment of Rebatable Arbitrage due as of each
Installment Computation Date will be paid no later than the
date that is 60 days after the Installment Computation Date.
(2) Each payment of Rebatable Arbitrage will be made
to the Internal Revenue Service Center, Philadelphia,
Pennsylvania 1925 and will be accompanied by IRS Form 8038 -
T.
D. Other Methodology. Notwithstanding this Section 6.1,
payments of Rebatable Arbitrage will be made in accordance with
instructions provided by nationally- recognized bond counsel
retained by the City if necessary to maintain the federal income
tax exemption for interest payments made on the Certificates.
ARTICLE VII
VALUATION AND SALE OF INVESTMENTS
Section 7.1:
VALUATION AND SALE OF INVESTMENTS
Obligations purchased as an investment of money in any fund
or account created under the provisions of this Indenture shall
be deemed at all times to be a part of such fund or account and
any profit realized from the liquidation of such investment shall
be credited to, and any loss resulting from the liquidation of
such investment shall be charged to the computation of net
interest earned on the money and investments in such fund or
account.
In computing the amount in any fund or account created under
the provisions of this Indenture for any purposes provided in
this Indenture, obligations purchased as an investment of money
therein shall be valued at initial cost or current market value,
whichever is less. Such computations shall be determined as of
each Loan Payment Date.
Except as otherwise provided in this Indenture, the Trustee
shall sell at the current price obtainable or present for
redemption or transfer as provided in the next sentence any
obligation so purchased as an investment whenever either shall be
requested in writing by an Authorized Officer of the City so to
do or whenever it shall be necessary in order to provide money to
meet any payment or transfer from any fund or account held by
them. In lieu of such sale or presentment for redemption, the
Trustee may, in making the payment or transfer from any fund or
account mentioned in the preceding sentence, transfer such
investment obligations, or interest appertaining thereto if such
investment obligations shall mature or be collectable at or prior
to the time the proceeds thereof shall be needed and such
Page 22 - Exhibit "A"
transfer of investment obligations may be made in book entry
form. The Trustee shall not be liable or responsible for making
any such investment in the manner provided above or for any loss
resulting from such investment.
Section 8.1:
ARTICLE VIII
ADDITIONAL OBLIGATIONS
ADDITIONAL OBLIGATIONS
A. Limitation Upon Issuance of Parity Obligations.
Nothing contained in this Indenture shall be construed in such a
manner as to prevent the issuance by the City of Additional
Obligations payable from the Net Revenues on a parity with, but
neither prior nor superior to, the lien of the Certificates
herein authorized; provided, however, that before any such
Additional Obligations are authorized or actually issued:
(1) The City is not, and has not been, in default as
to any payments required by the provisions of this Indenture
for a period of not less than twelve (12) months immediately
preceding the issuance of such Additional Obligations.
(2) The Net Revenues of the System for the past twelve
(12) consecutive months immediately preceding the year of
the issuance of such Additional Obligations shall have been
sufficient to pay the Operation and Maintenance Expenses of
the sewer System for said past twelve (12) months, and, in
addition, sufficient so that the Net Revenues for such
preceding year equal an amount representing at least 1200 of
the annual principal and interest requirements of the
outstanding Certificates, and any other obligations of the
City payable from the Net Revenues of the System except the
Promissory Note.
(3) The Estimated Net Revenues of the System for the
twelve -month period immediately succeeding the issuance of
the bonds or other obligations proposed to be issued will be
not less than 1200 of the annual principal and interest
requirements of the Certificates and any other obligations
of the City payable from the Net Revenues of the System
(excluding the Promissory Note), plus the Average Annual
Debt Service requirements of the Additional Obligations
proposed to be issued.
(4) A written certification by an independent
certified public accountant, that the 120% Net Revenue
requirement of subsection (1) above, and the 120% Estimated
Net Revenues requirement of subsection (2) above, have been
Page 23 — Exhibit "A"
satisfied, shall be obtained and filed with the City, which
certification shall be conclusively presumed to be accurate
in determining the right of the City to authorize, issue,
sell, and deliver said Additional Obligations on a parity
with the Certificates authorized herein.
(5) The foregoing limitations, or any of them, may be
waived or modified by the written consent of the Certificate
Owners of not less than 75% of the principal amount of the
Certificates then outstanding.
B. Subordinate Lien Obligations. No provision of this
Indenture shall be deemed to limit or restrict the power of the
City to issue bonds, notes or warrants, or to make pledges of the
revenues which shall be subordinate as to the lien of the
Certificates and which shall provide for compliance with the
current provisions hereof prior to the application of any funds
to said subordinate purpose.
C. Refunding. The restrictions with respect to the
issuance of parity obligations shall not apply if such additional
parity obligations proposed to be issued are for the sole purpose
of refunding outstanding water revenue obligations.
ARTICLE IX
THE TRUSTEE
Section 9.1: THE TRUSTEE
U.S. Bank National Association, Boise, Idaho, is hereby
appointed as Trustee, and shall also act as certificates
registrar, authenticating agent, paying agent, and transfer agent
with respect to the Certificates, subject to the following terms
and conditions:
(i) The Trustee shall keep, or cause to be kept at its
corporate trust office, sufficient books for the
registration and transfer of the Certificates, which shall
at all times be open to inspection by the City.
(ii) Subject to the terms of any agreement with the
Trustee, the City shall pay to the Trustee from time to time
reasonable compensation for all services rendered under this
Indenture, together with reasonable expenses, charges, fees
of counsel, accountants and consultants and other
disbursements, including those of its attorneys, agents and
employees, incurred in good faith in and about the
performance of their powers and duties under this Indenture.
Page 24 - Exhibit "A"
(iii) The Trustee shall be responsible for its
representations contained in the Certificate of
Authentication on the Certificates.
(iv) The Trustee may become the Owner of Certificates
with the same rights it would have if it were not a Trustee,
and, to the extent permitted by law, may act as Depository
for and permit any of its officers or directors to act as a
member of, or in any other capacity with respect to, any
committee formed to protect the rights of Certificate
Owners.
The Trustee shall signify its acceptance of the duties and
obligations imposed upon it by this Indenture by executing and
delivering to the City a written acceptance thereof, and upon
executing such acceptance the Trustee shall be deemed to have
accepted the duties and obligations with respect to all of the
Certificates thereafter to be issued, but only, however, upon the
terms and conditions set forth in this Indenture.
Section 9.2:
RESPONSIBILITIES OF TRUSTEE
The recitals of fact herein and in the Certificates
contained shall be taken as the statements of the City and no
Trustee assumes any responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of any Certificates issued
thereunder or as to the security afforded by this Indenture, and
the Trustee shall not incur any liability in respect thereof.
The Trustee shall not be under any responsibility or duty with
respect to the application of any moneys paid by such Trustee in
accordance with the provisions of this Indenture to the City or
to any other Trustee. The Trustee shall not be under any
obligation or duty to perform any act which would involve it in
expense or liability or to institute or defend any suit in
respect thereof, or to advance any of its own moneys, unless
properly indemnified. The Trustee shall not be liable in
connection with the performance of its duties hereunder except
for its own negligence, misconduct or default.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured) the
Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in
its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs. Any provisions
of this Indenture relating to action taken or to be taken by the
Page 25 - Exhibit "A"
Trustee or to evidence upon which the Trustee may rely shall be
subject to the provisions of this Section 8.2.
Section 9.3:
EVIDENCE ON WHICH TRUSTEES MAY ACT
A. The Trustee, upon receipt of any notice, resolution,
request, consent, order, certificate, report, opinion, bond, or
other paper or document furnished to it pursuant to any
provisions of this Indenture, shall examine such instrument to
determine whether it conforms to the requirements of this
Indenture and shall be protected in acting upon any such
instrument believed by it to be genuine and to have been signed
or presented by the proper party or parties. The Trustee may
consult with counsel, who may or may not be counsel to the City,
and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered by it under this Indenture in good faith and in
accordance therewith.
B. Whenever the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking
or suffering any action under this Indenture, such matter (unless
other evidence in respect thereof be therein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate of an Authorized Officer of the
City, and such certificate shall be full warrant for any action
taken or suffered in good faith under the provisions of this
Indenture upon the faith thereof; but in its discretion the
Trustee may in lieu thereof accept other evidence of such fact or
matter or may require such further or additional evidence to it
may seem reasonable.
C. Except as otherwise expressly provided in this
Indenture, any request, order, notice or other direction required
or permitted to be furnished pursuant to any provision thereof by
the City to the Trustee shall be sufficiently executed in the
name of the City by an Authorized Officer of the City.
Section 9.4: COMPENSATION OF TRUSTEE
The City shall pay to the
for all services rendered unde
reasonable expenses, charges,
disbursements, including those
employees, incurred in and about
and duties under this Indenture.
Section 9.5•
Trustee reasonable compensation
_ this Indenture and also all
counsel fees, and other
of its attorneys, agents, and
the performance of their powers
RESIGNATION AND REMOVAL OF TRUSTEE
Page 26 - Exhibit "A"
A. Resignation of Trustee. The Trustee may at any time
resign and be discharged of the duties and obligations created by
this Indenture by giving not less than 45 days' written notice to
the City, specifying the date when such resignation shall take
effect, and such resignation shall take effect upon the day
specified in such notice unless previously a successor shall have
been appointed by the City or the Certificate Owners as provided
in Section 8.6 of this Indenture, in which event such resignation
shall take effect immediately on the appointment of such
successor.
B. Removal of Trustee. The Trustee may be removed at any
time by the City upon giving thirty (30) days notice by an
instrument in writing filed with the Trustee.
Section 9.6: SUCCESSOR TRUSTEE
A. Appointment of Successor Trustee.
(i) In case at any time the Trustee shall resign or
shall be removed or shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or if a receiver,
liquidator or conservator of the Trustee, or of its property
shall be appointed, or if any public officer shall take
charge or control of the Trustee or of its property or
affairs, a successor shall be appointed by the City.
(ii) If in a proper case no appointment of a successor
Trustee shall be made pursuant to the foregoing provisions
of this Section within 45 days after the Trustee shall have
given to the City written notice as provided in subsection
8.5 of this Indenture or after a vacancy in the office of
the Trustee shall have occurred by reason of its inability
to act, the Trustee shall apply to any court of competent
jurisdiction to appoint a successor Trustee. Said court may
thereupon, after such notice, if any, as such court may deem
proper, appoint a successor Trustee.
(iii) Any Trustee appointed under the provisions of this
subsection (A) in succession to the Trustee shall be a bank
or trust company or national banking association or
subsidiary thereof doing business and having an office in
the State of Idaho, and having capital stock and surplus
aggregating at least $20,000,000, if there be such bank or
trust company or national banking association willing and
able to accept the office on reasonable and customary terms
and authorized by law to perform all the duties imposed upon
it by this Indenture.
Page 27 — Exhibit "A"
B. Transfer of Rights and Property to Successor Trustee.
Any successor Trustee appointed under this Indenture shall
execute, acknowledge and deliver to its predecessor Trustee, and
also to the City, an instrument accepting such appointment, and
thereupon such successor Trustee, without any further act, shall
become fully vested with all rights, powers, duties, and
obligations of such predecessor Trustee, with like effect as if
originally named as Trustee; but the Trustee, ceasing to act
shall, nevertheless, on the written request of the City, or of
the successor Trustee, execute, acknowledge and deliver such
instrument of conveyance and further assurance and do such other
things as may reasonably be required for more fully and certainly
vesting and confirming in such successor Trustee all the right,
title and interest of the predecessor Trustee in and to any
property held by it under this Indenture, and shall pay over,
assign, and deliver to the successor Trustee any money or other
property subject to the trusts and conditions herein set forth.
Should any deed, conveyance, or instrument in writing from the
City be required by such successor Trustee for more fully and
certainly vesting in and confirming to such successor Trustee any
such estates, rights, power and duties, any and all such deeds,
conveyances and instruments in writing shall, on request, and so
far as may be authorized by law, be executed, acknowledged and
delivered by the City.
C. Merger or Consolidation. Any company into which the
Trustee may be merged or converted or with which it may be
consolidated or any company resulting from any merger,
conversion, or consolidation to which it shall be a party or any
company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such
company shall be a bank or trust company organized under the laws
of any state of the United States or a national banking
association and shall be authorized by law to perform all the
duties imposed upon it by this Indenture, shall be the successor
to the Trustee without the execution or filing of any paper or
the performance of any further act.
D. Successor Trustee; Qualifications. Notwithstanding
anything else in this section to the contrary, any successor
Trustee appointed pursuant to the provisions of this section
shall (i) be a trust company or bank in good standing, or a
subsidiary thereof, located in or incorporated under the laws of
the State of Idaho, duly authorized to exercise trust powers and
subject to examination by federal or state authority, (ii) have a
reported capital and surplus of not less than $20,000,000, and
(iii) have substantial prior experience as a trustee for the
benefit of municipal bondholders.
Page 28 — Exhibit "A"
ARTICLE X
COVENANTS OF THE CITY
Section 10.1: GENERAL COVENANTS
So long as any of the Certificates or any Additional
Obligations are outstanding, the City covenants as follows:
A. Complete Project. It will complete the construction of
the Project with all practical dispatch and in a sound and
economical manner.
B. Operate System. It will operate the System in an
efficient and economical manner and prescribe, revise, and
collect such charges in connection therewith so that the
services, facilities, and properties of the System may be
furnished at the lowest possible cost consistent with sound
economy and prudent management.
C. Good Repair. It will operate, maintain, preserve, and
keep the System and every part hereof in good repair, working
order, and condition.
D. Preserve Security. It will preserve and protect the
security of the Certificates and the rights of the Registered
Owners thereof.
E. Collect Revenues. It will collect and hold in trust
the revenues and other funds pledged to the payment of the Loan
Payments and apply such revenue or other funds only as provided
in this Indenture.
F. Punctual Payments. It will pay and cause to be paid
punctually the Loan Payments on the date or dates and at the
place or places and in the manner provided in this Indenture.
G. Pay Claims. It will pay and discharge any and all
lawful claims for labor, materials, and supplies which, if
unpaid, might by law become a lien or charge upon the Revenue of
the System, or any part of said Revenue of the System, or any
funds in the hands of the Treasurer, prior or superior to the
lien of the Loan Payments or which might impair the security of
the Certificates, to the end that the priority and security of
the Certificates shall be fully preserved and protected.
H. Encumbrances. It will not mortgage or otherwise
encumber, sell, lease, or dispose of the System or any part
thereof, nor enter into any lease or agreement which would impair
or impede the operation of the System or any part thereof
Page 29 — Exhibit "A"
necessary to secure adequate revenues for the payment of the
principal of and interest on the Certificates, nor which would
otherwise impair or impede the rights of the Certificate Owners
with. respect to such revenues of the operation of the System
without provisions for the retirement of the Certificates then
outstanding from the proceeds thereof.
I. Insurance. It will procure and keep in force insurance
upon all buildings and structures of the System and the machinery
and equipment therein, which are usually insured by entities
operating like property, in good and responsible insurance
companies. The amount of the insurance shall be such as may be
required to adequately protect it and the Certificate Owners from
loss due to any casualty, and in the event of any such loss, the
proceeds shall be used to repair or restore the System or for the
payment of the Loan Payments.
J. Fidelity Bonds. It will procure suitable fidelity
bonds covering all of its officers and other employees charged
with the operation of the System and the collection and
disbursement of revenues therefrom.
K. Engineers. It will employ consulting engineers of
acknowledged reputation, skill, and experience in the improvement
and operation of the System for any unusual or extraordinary
items of maintenance, repair, or betterments as shall be required
from time to time, all reports, estimates, and recommendations of
such consulting engineers to be filed with the Clerk and
furnished to the Trustee.
L. Accounts. It will keep proper and separate accounts
and records in which complete and separate entries shall be made
of all transactions relating to the System, and it will furnish
complete operating and income statements upon request.
M. Delinquencies. It will not furnish sewer service to
any customer whatsoever free of charge, and it shall not later
than sixty (60) days after an account becomes delinquent, take
such legal action as may be reasonable to enforce collection of
any collectible delinquent account.
Section 10.2: REGISTERED FORM
In accordance with Section 149(a) of the Internal Revenue
Code of 1986, as amended (the "Code "), the Certificates shall be
issued and remain in fully registered form in order that the
interest thereon be excluded from gross income of the Certificate
Owners for federal income tax purposes. The City covenants and
agrees that it will take no action to permit the Certificates to
be issued in or converted to bearer or coupon form.
Page 30 — Exhibit "A"
Section 10.3: ARBITRAGE; SPECIAL TAX COVENANTS
The City shall comply with the provisions of this Section
unless, in the written opinion of nationally- recognized bond
counsel to the City, such compliance is not required in order to
maintain the exemption of the interest on the Certificates from
federal income taxation.
The City hereby covenants that it will not make any use of
the proceeds of sale of the Certificates or any other funds of
the City which may be deemed to be proceeds of such Certificates
pursuant to Section 148 of the Code which will cause the
Certificates to be "arbitrage bonds" within the meaning of said
Section. The City will comply with the requirements of Section
148 of the Code (or any successor provision thereof applicable to
the Certificates) throughout the term of the Certificates.
The City hereby further covenants that it will not take any
action or permit any action to be taken that would cause the
Certificates to constitute "private activity bonds" under Section
141 of the Code. The Project shall be owned by the City or other
state or local government unit and shall at all times be
available for use by members of the general public.
Section 10.4: PRIVATE PERSON USE LIMITATION
The City shall comply with the provisions of this Section
unless, in the written opinion of nationally- recognized bond
counsel to the City, such compliance is not required in order to
maintain the exemption of the interest on the Certificates from
federal income taxation.
The City covenants that so long as any portion of the
Certificates are Outstanding, it will not permit:
(a) More than 100 of the principal or interest
payments on the Certificates in a Certificates Year to be
(under the terms of this Indenture or any underlying
arrangement) directly or indirectly: (i) secured by any
interest in property used or to be used for any Private
Person Use or secured by payments in respect of property
used or to be used for any Private Person Use, or (ii)
derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used
for any Private Person Use.
The City further covenants that, if:
Page 31 - Exhibit "A"
(b) More than 50 of the Net Proceeds of the
Certificates are used for any Private Person Use; and
(c) More than S% of the principal or interest payments
on the Certificates in a Certificate Year are (under the
terms of this Indenture or any underlying arrangement)
directly or indirectly: (i) secured by any interest in
property used or to be used for any Private Person Use or
secured by payments in respect of property used or to be
used for any Private Person Use, or (ii) derived from
payments (whether or not made to the City) in respect of
property, or borrowed money, used or to be used for any
Private Person Use;
then, (i) any Private Person Use of the Project described in
subsection (c) hereof or Private Person Use payments described in
subsection (d) hereof that is in excess of the 50 limitation
described in such subsections (b) or (c) will be for a Private
Person Use that is related to the state or local governmental use
of the Project, and (ii) any Private Person Use will not exceed
the amount of Net Proceeds of the Certificates used for the state
or local governmental use portion of the Project to which the
Private Person Use of such portion of the Project relates. The
City further covenants that it will comply with any limitations
on the use of the Project by other than state and local
governmental users that are necessary, in the opinion of
nationally- recognized bond counsel, to preserve the tax exemption
of the interest on the Certificates.
Section 10.5: PRIVATE LOAN LIMITATION
The City shall comply with the provisions of this Section
unless, in the written opinion of nationally- recognized bond
counsel to the City, such compliance is not required in order to
maintain the exemption of the interest on the Certificates from
federal income taxation.
The City covenants that so long as any portion of the
Certificates are Outstanding, it will not permit Certificate
proceeds in excess of 50 of the Net Proceeds of the Certificates
to be used (directly or indirectly) to make loans (other than
loans that enable a borrower to finance a governmental tax or
assessment of general application for a specific essential
governmental function) to a Private Person.
Section 10.6: FEDERAL GUARANTY PROHIBITION
The City shall comply with the provisions of this section
unless, in the written opinion of nationally- recognized bond
counsel to the City, such compliance is not required in order to
Page 32 - Exhibit "A"
maintain he exemption of the interest on the Certificates from
federal income taxation.
The City covenants that so long as any portion of the
Certificates is Outstanding, it will not take any action or
permit or suffer any action to be taken if the result thereof
would be to cause the Certificates to be "federally guaranteed"
within the meaning of Section 149(b) of the Code and any
Regulations promulgated thereunder.
Section 10.7: CONTINUING DISCLOSURE
The City will comply with the applicable requirements of
Rule 15c2 -12 of the U.S. Securities and Exchange Commission with
respect to (1) notice of certain material events with respect to
the Certificates, and (2) the provision of financial information
and operating data as presented in the Final Official Statement
with respect to the Certificates and which financial information
and operating data is customarily prepared by the City and is
publicly available.
Section 10.8: OPINIONS OF BOND COUNSEL
Whenever an opinion of bond counsel is rendered in
connection with any provision of this Indenture, the opinion
shall affirmatively state, in a manner acceptable to the City and
the Trustee, that interest on the Certificates is excluded from
gross income for federal and State of Idaho income tax purposes
and will remain so after the action in question.
ARTICLE XI
AMENDMENTS
Section 11.1: AMENDMENTS
This Indenture may not be amended, altered, or modified by
the parties without the written consent of the Certificate Owners
of at least two - thirds (2/3) of the principal amount of the
Certificates then outstanding; provided, that the City may amend
or modify this Indenture if, in the written opinion of
nationally- recognized bond counsel, such amendment or
modification would not materially alter the rights of the
Certificate Owners.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
Section 12.1: EVENTS OF DEFAULT
Page 33 — Exhibit "A"
If one or more of the following events occur, it is hereby
declared to constitute an Event of Default under this Indenture:
(1) Failure to make any payment of interest or
principal on the Certificates as the same shall become due;
or
(2) Filing by the City, or any successor or assignee
of the City, while in possession of the Project, of a
petition in bankruptcy or insolvency, or for reorganization
under any bankruptcy act, or the making of an assignment for
the benefit of creditors; or
(3) Failure by the City to pay the Trustee any
semiannual Loan Payment as the same shall become due; or
(4) Any other default by the City under this
Indenture, and failure to remedy the same for a period of
sixty days after written notice thereof, as set forth in
Section 11.2 of this Indenture, specifying such failure and
requiring the same to be remedied, shall have been given to
the City by the Trustee, or to the City and the Trustee by
the Certificate Owners of not less than twenty -five percent
in aggregate principal amount of the Certificates at the
time outstanding.
Section 12.2: REMEDIES UPON EVENT OF DEFAULT
A. Remedies. Upon the occurrence of an Event of Default,
the Trustee may, in its discretion (or, as provided in Section
11.5 of this Indenture, at the direction of the Owners of not
less than twenty -five percent in aggregate principal amount of
the Certificates at the time outstanding, shall), take one or
more of the following actions:
(1) Bring action at law or in equity for payment of
any Loan Payment duly appropriated by the City for the then -
current Fiscal Year and not yet paid to the Trustee.
(2) Take any other action for which provision is made
in this Article XI, including, without limitation,
application of the funds under the control of the Trustee as
provided in Article V of this Indenture.
B. Declaration of Event of Default. Prior to taking any
such action, the Trustee shall cause written notice, declaring an
Event of Default to have occurred and specifying the Event of
Default complained of, to be given to the City. If, within sixty
(60) days of the mailing or delivery of such written notice, such
Page 34 - Exhibit "A"
Event of Default specified in the written notice shall have been
cured, and the reasonable and proper charges of the Trustee shall
be paid to the Trustee, then in such case the Certificate Owners
of not less than fifty percent in aggregate principal amount of
the Certificates at the time outstanding, by written notice to
the City and the Trustee, may rescind such declaration and annul
such Event of Default in its entirety, or, if the Trustee shall
have acted without a direction of the Certificate Owners of not
less than twenty -five percent in aggregate principal amount of
the Certificates outstanding at the time of the written
direction, and if there shall not have been theretofore delivered
to the Trustee written direction to the contrary by the
Certificate Owners of not less than fifty percent in aggregate
principal amount of the Certificates then outstanding, then any
such declaration shall ipso facto be deemed to be annulled. No
such rescission and annulment shall affect any subsequent Event
of Default.
The Trustee shall, within 30 days after receipt of notice of
the occurrence thereof, give written notice by first class mail
to Certificate Owners of all Events of Default known to the
Trustee and send a copy of such notice to the City, unless such
Events of Default have been remedied. The Trustee shall not be
deemed to have notice of any Events of Default under Section 11.1
hereof unless it has actual knowledge thereof or has been
notified in writing of such Events of Default by the Certificate
Owners of at least 25% in principal amount of the Certificates
then outstanding.
Section 12.3:
ACCOUNTING AND EXAMINATION OF RECORDS AFTER
EVENT OF DEFAULT
The City covenants that if an Event of Default shall have
occurred and shall not have been remedied, the books of record
and accounts of the City shall at all times be subject to the
inspection and use of the Trustee and of its agents and
attorneys.
Section 12.4•
APPLICATION OF REVENUES AND OTHER MONEYS
AFTER EVENT OF DEFAULT
A. During the continuance of an Event of Default, the
Trustee shall apply such Loan Payments and such moneys, securi-
ties and funds and the income therefrom as follows and in the
following order:
(1) to the payment of the reasonable and proper
charges and expenses of the Trustee and the reasonable fees
and disbursements of its counsel;
Page 35 - Exhibit "A"
(2) to the payment of the Certificates, as follows:
FIRST: To the payment to the persons entitled
thereto of the interest component of any Loan
Payments then due and, if the amount available
shall not be sufficient to pay in full all
interest then due, then to the payment thereof pro
rata, according to the amounts due thereon, to the
persons entitled thereto, without any
discrimination or preference; and
SECOND: To the payment to the persons entitled
thereto of the unpaid principal or redemption
price of the Certificates which shall have become
due.
B. If and whenever all overdue Loan Payments and all other
sums payable by the City under this Indenture, shall be paid by
or for the account of the City, and all defaults under this
Indenture or the Certificates shall be made good or secured to
the satisfaction of the Trustee, the City and the Trustee shall
thereupon be restored, respectively, to their former positions
and rights under this Indenture.
Section 12.5: RIGHTS AND REMEDIES OF CERTIFICATE OWNERS
A. No Owner of any Certificates shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for any other remedy hereunder, unless
(1) such Owner has previously given written notice to
the Trustee of a continuing Event of Default;
(2) the Owners of not less than twenty -five percent
(250) in principal amount of the Certificates shall have
made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Owners have provided to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for sixty (60) days after its receipt
of such notice, request and offer of indemnity has failed to
institute any such proceedings; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such sixty -day
period by the Owners of a majority in principal amount of
Page 36 - Exhibit "A"
the Certificates; it being understood and intended that no
one or more Owners of Certificates shall have any right in
any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice
the rights of any other Owner of Certificates, or to obtain
or to seek to obtain priority or preference over any other
Owner or to enforce any right under this Indenture, except
in the manner herein and therein provided and for the equal
and ratable benefit of all the Owners of Certificates.
B. The Owners of a majority in principal amount of the
Outstanding Certificates shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power
conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any
rule of law or this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Owners not
taking part in such direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
Section 12.6: WAIVER BY TRUSTEE
The Trustee may, in its discretion, waive any Event of
Default, provided there has been no default in payment of any
Loan Payment. The Certificate Owners shall have no rights under
Section 11.2 of this Indenture if the Trustee waives an Event of
Default.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1: SALE OF THE CERTIFICATES APPROVED
The sale of the Certificates to the Underwriter by the
Trustee, in accordance with the Purchase Agreement attached
hereto as Exhibit "F," is hereby approved.
Section 13.2: NOTICES
Any notice, request, authorization, or demand required or
permitted to be given by this Indenture shall be deemed
sufficiently given when delivered or mailed, by registered or
Page 37 — Exhibit "A"
certified mail, postage prepaid, as follows: if to the City at:
City of McCall, Attn: City Treasurer, 216 Park Street, McCall,
Idaho 83638; if to the Trustee, at: Corporate Trust Department,
P.O. Box 7928, Boise, Idaho 83707.
Section 12.3: FURTHER AUTHORITY
The Mayor, Clerk, and Treasurer of the City are hereby
authorized to do or perform all such acts, to complete other
documents, and to execute all such certificates, documents, and
other instruments as may be necessary or advisable to comply with
the Purchase Agreement and to carry the same into effect.
IN WITNESS WHEREOF, the parties have executed the foregoing
Loan Agreement and Trust Indenture on the date first hereinabove
written.
CITY OF McCall
Valley County, Idaho
BY &JI _k,,
Mayor
ATTEST:
City Clerk
( S E A L )
U.S. Bank National Association
:1
Page 38 - Exhibit "A"
Authorized Officer
Michael C. Moore, ISB# 1188
MOORE SMITH BUXTON & TURCKE, CHARTERED
225 North 9th Street, Suite 420
Boise, Idaho 83702
Telephone: (208) 331 -1800
Facsimile: (208) 331 -1202
Kim J. Trout, ISB# 2468
MANWEILER TROUT MANWEILER & BREEN, PLLC
209 Bobwhite Ct., Suite 300
P.O. Box 937
Boise, Idaho 83701 -0937
Telephone: (208) 424 -9100
Facsimile: (208) 424 -3100
Attorneys for Petitioner
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF VALLEY
In re: ) Case No.
THE CITY OF McCALL, ) PETITION FOR JUDICIAL
an Idaho municipal ) CONFIRMATION
corporation, )
Fee Category: G
Petitioner. ) Fee: $77.00
COMES NOW the Petitioner, City of McCall, Valley County,
Idaho, an Idaho municipal corporation (the "Petitioner "), by and
through its undersigned attorneys, and petitions this Court,
pursuant to the Idaho Judicial Confirmation Law, Idaho Code
Sections 7 -1301 through 7 -1312, inclusive, for a judicial
examination and determination of the authority of Petitioner (1) to
incur an indebtedness as an "ordinary and necessary expense" of the
City authorized by the general laws of the state within the meaning
of Article 8, Section 3, of the Idaho Constitution, in an amount
PETITION FOR JUDICIAL CONFIRMATION - Page 1
EXHIBIT "C"
not to exceed $8,000,000 for the purpose of financing the cost of
necessary improvements to its water treatment facilities; (2) to
enter into a loan agreement with the State of Idaho, Division of
Environmental Quality, to finance a portion of such indebtedness
and to issue its promissory note or other evidence of indebtedness
for the same; (3) to enter into a Loan Agreement and Trust
Indenture with U.S. Bank National Association, and to authorize the
issuance of certificates of participation to finance a portion of
such indebtedness; and (4) to pledge the net revenues of its
domestic water system for the payment of such indebtedness. In
support thereof, Petitioner represents as follows:
I.
This action is in the nature of a proceeding in rem, and
jurisdiction of all parties interested will be obtained by
publication and posting as provided in Sections 7 -1305 and 7 -1306,
Idaho Code.
II.
Petitioner is an incorporated city duly organized, existing,
and operating pursuant to Title 50, Idaho Code, and as such is a
"political subdivision" within the definition contained in Section
7- 1303(6), Idaho Code. Petitioner is authorized to institute a
judicial confirmation proceeding pursuant to Section 7 -1304, Idaho
Code. Petitioner's governing body has adopted a resolution
authorizing the filing of this Petition for Judicial Confirmation
at least fourteen (14) days following a public hearing duly held
and conducted pursuant to publication of notice containing the
date, time, and place of such hearing and a summary of the matter
at least fifteen (15) days prior to the date set for the public
PETITION FOR JUDICIAL CONFIRMATION - Page 2
EXHIBIT "C"
hearing in a newspaper of general circulation within Petitioner, in
the form and content described in Section 7- 1306(2), Idaho Code.
III.
Petitioner is authorized by law to own, operate, and maintain,
and has for many years owned, operated, and maintained, a municipal
domestic water treatment and distribution system (the "System ") .
The System serves the entire City of McCall, Idaho. Petitioner's
System serves approximately 1797 residential households and
businesses within the City of McCall.
IV.
As part of its water treatment process, Petitioner has for
many years treated water at its municipal water treatment plant.
The City has been advised by the State that the current method of
treatment and discharge will not meet applicable state and federal
water quality standards to be imposed upon the City. In order to
comply with such standards, the City must improve the performance
and reliability of its domestic water treatment system.
V.
Petitioner, through its Mayor and Council,
engineering facility planning study, and has
certain improvements to its existing domestic
facilities are required in order to operate
compliance with state and federal environmental
water quality protection.
VI.
has obtained an
determined that
water treatment
its system in
regulations for
The improvements which Petitioner's Mayor and Council have
determined to be necessary for the foregoing purposes include: a
gravity /sand filtration facility necessary for compliance with the
PETITION FOR JUDICIAL CONFIRMATION - Page 3
EXHIBIT "C"
Voluntary Consent Order of the Idaho Division of Environmental
Quality dated February 21, 1997, together with related facilities
and improvements and costs incidental thereto (collectively, the
"Improvements ").
VII.
The total cost of the Improvements has been estimated by the
City's engineers as $8,000,000. Petitioner does not have funds
available to it within its present budget or its budget for the
next fiscal year to meet its share of the cost of the Improvements
and has determined that such cost must be financed over a term of
years from the revenues of the System.
VIII.
Pursuant to Sections 39 -7601 through 39 -7605, Idaho Code, and
rules and regulations promulgated pursuant thereto, the State of
Idaho, Department of Health and Welfare, Division of Environmental
Quality (the "State "), has established a Drinking Water Loan
Account for the purpose, among other purposes, of making loans to
municipalities for the financing of public water system facilities.
IX.
In order to finance a portion of the cost of the Improvements,
Petitioner has made application to the State for a loan from the
Drinking Water Loan Account referred to above in the amount of not
to exceed $8,000,000. If the State should determine that
Petitioner is eligible for all or part of such loan, the loan would
be made on the terms and conditions set forth in the Loan Offer,
Acceptance and Contract for Wastewater Treatment Facility Design
and Construction (the "Loan Agreement ") which is annexed hereto as
Exhibit "A" and by reference incorporated herein.
PETITION FOR JUDICIAL CONFIRMATION - Page 4
EXHIBIT "C"
X.
In order to finance the remainder of the costs of the
Improvements, Petitioner proposes to enter into a Loan Agreement
and Trust Indenture (the "Indenture ") with U.S. Bank National
Association (the "Trustee "), substantially in the form of Exhibit
"B" which is annexed hereto, whereby the Trustee will issue
Certificates of Participation pursuant to the Indenture and loan
the proceeds to Petitioner, Petitioner will repay the loan amount
over a period of years from domestic water system revenues, and the
Trustee will pay the Certificates of Participation from the
proceeds of the loan payments.
XI.
The Loan Agreement with the State and the Indenture, if
entered into by Petitioner, would be in the aggregate principal
amount of not to exceed $8,000,000, payable over a 20 -year period
from domestic water system revenues, and would constitute an
indebtedness of Petitioner extending beyond the current year's
revenues of Petitioner. No approving vote of the electors of
Petitioner has been sought or obtained.
XII.
Article 8, Section 3, Idaho Constitution, provides that no
county, city, or other political subdivision shall incur any
indebtedness or liability, in any manner or for any purpose,
exceeding in that year the income and revenue provided to it for
such year, without the assent of two- thirds (or, in the case of
certain revenue bonds, the assent of the majority) of the qualified
electors thereof voting at an election held for that purpose, but
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EXHIBIT "C"
said Article 8, Section 3, contains the following exception:
"provided, that this section shall not be construed to apply to the
ordinary and necessary expenses authorized by the general laws of
the state...."
XIII.
Petitioner, by and through its Mayor and Council, has
determined that the proposed Loan Agreement for the financing of
the Improvements constitutes an ordinary and necessary expense of
the Petitioner authorized by the general laws of the State, within
the meaning of the above - quoted proviso to Article 8, Section 3,
Idaho Constitution, for which no approving vote of the electors is
required. This determination is based upon the following factors:
A. The proposed expenditure is necessary to protect the
health and safety of the inhabitants of the Petitioner
and to comply with state and federal health and
environmental standards;
B. The proposed expenditure is for the purpose of repairing,
rehabilitating, maintaining, and extending existing city
services in order to render them serviceable, as opposed
to the construction of wholly new facilities;
C. The proposed Improvements are authorized by the general
laws of the State;
D. Petitioner has operated the existing System for many
years and has determined that the Improvements are
indispensable to the efficient continued operation of the
System; and
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EXHIBIT "C"
E. The amount of the proposed indebtedness is not
disproportionate to the Petitioner's overall budget for
the current fiscal year.
XIV.
Petitioner seeks a determination of the validity of the
proposed Loan Agreement with the State and of the Indenture (the
"Obligations "), including the Petitioner's proposed pledge to repay
the same from domestic water system revenues, based upon:
A. The legal issue, arising under Article 8, Section 3,
Idaho Constitution, as to whether or not the proposed
Obligations and any promissory note, certificates of
participation, or other obligation evidencing such
Obligations constitute "ordinary and necessary expenses"
of Petitioner, authorized by the general laws of the
State, for which an approving vote of the electors is not
required; and
B. The requirement contained in the State's loan offer that
judicial confirmation of the validity of the Loan
Agreement be obtained as a condition precedent to the
execution of the Loan Agreement.
XV.
Judicial examination and confirmation pursuant to this
Petition would serve an important public purpose by providing an
early determination of the validity of the power of Petitioner to
enter into the proposed Obligations, to issue its promissory note,
certificates of participation, or other evidence thereof, and to
pledge to repay said obligations from the revenues of the
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EXHIBIT "C"
Petitioner's domestic water system, all as provided by the Judicial
Confirmation Act and in particular Section 7 -1302, Idaho Code.
WHEREFORE, Petitioner prays (1) for an order setting the date
and time of a hearing herein and directing the giving of notice
hereof as provided by law, and (2) for a judicial examination and
determination of the validity of the power and authority of
Petitioner (1) to incur an indebtedness as an "ordinary and
necessary expense" of the City authorized by the general laws of
the state within the meaning of Article 8, Section 3, of the Idaho
Constitution, in an amount not to exceed $8,000,000 for the purpose
of financing the cost of necessary improvements to its domestic
water treatment facilities; (2) to enter into a Loan Agreement with
a portion of such indebtedness and to issue its promissory note or
other evidence of indebtedness for the same; (3) to enter into a
Loan Agreement and Trust Indenture with U.S. Bank National
Association and to authorize the issuance of certificates of
participation to finance a portion of such indebtedness; and (4) to
pledge the net revenues of its domestic water system for the
payment of such indebtedness; and a declaration that the
Obligations and the evidence of indebtedness thereof, when issued
pursuant to such authority, will be valid and binding special
obligations of Petitioner, payable in accordance with their terms.
DATED this day of , 2000.
Michael C. Moore
Kim J. Trout
Attorneys for Petitioner
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EXHIBIT "C"
VERIFICATION
STATE OF IDAHO )
) ss.
County of Valley )
being first duly sworn, deposes and says:
That he is the Mayor of the City of McCall, Idaho; that he has
read the foregoing Petition, knows the contents thereof, and
believes the same to be true and correct.
SUBSCRIBED AND SWORN TO before me this day of
2000.
Notary Public in and for t e State
of Idaho, residing at
therein
My Commission expires
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EXHIBIT "C"