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HomeMy Public PortalAboutOrd. 554 Revenue Bonds for Public Golf Course ImprovementsORDINANCE NO. 554 AN ORDINANCE OF THE CITY OF McCALL, IDAHO, AUTHORIZING THE ISSUANCE AND SALE OF REVENUE BONDS IN THE PRINCIPAL AMOUNT OF $450,000 TO PAY THE COST OF CONSTRUCTION AND INSTALLATION OF CERTAIN PUBLIC GOLF COURSE IMPROVEMENTS; DESCRIBING SAID BONDS; SPECIFYING THE DATE, FORM, MATURITIES, REGISTRATION, AND AUTHEN- TICATION OF SAID BONDS; FIXING THE MAXIMUM RATE OF INTEREST ON SAID BONDS; ESTABLISHING THE DATE, TIME, AND PLACE OF SALE OF SAID BONDS; PROVIDING FOR THE COLLECTION AND DISPOSITION OF REVENUE; ESTABLISHING FUNDS AND ACCOUNTS; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING OTHER COVENANTS; AND PROVIDING FOR OTHER MATTERS RELATING THERETO WHEREAS, the City of McCall, of Valley County, Idaho (the "City"), is a municipal corporation duly organized and existing under the laws of the State of Idaho; and WHEREAS, the City is authorized and empowered by Article 8, Section 3, of the Idaho Constitution and by Idaho Code Sections 50-1027 through 50-1042 (the "Revenue Bond Act") to issue revenue bonds to finance all or part of the cost of acquisition, construction, and installation of recreational facilities of the City; and WHEREAS, the City Council (the "Council") of the City, by adoption of Ordinance No. 545 on April 13, 1989, ordered a special bond election to be held within the City on June 6, 1989, for the submission to the qualified electors of the City the question of whether or not the City should be authorized to issue its revenue bonds in an amount not to exceed $450,000 in order to provide funds for certain capital improvements and betterments to the public golf course of the City; and WHEREAS, the requisite two-thirds majority of the qualified electors of the City, voting at said special bond election of June 6, 1989, authorized the issuance of revenue bonds for such purpose in the amount of not more than $450,000. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF McCALL, IDAHO, as follows: Section 1: DEFINITIONS As used in this Ordinance, the following words shall have the following meanings: A. Acquisition or Acquire includes the opening, laying out, establishment, purchase, construction, securing, installation, Page 1 reconstruction, lease, gift, grant from the Federal Government, the State, any public body therein or any person or entity, the condemnation, transfer, option to purchase, other contract, or other acquirement, or any combination thereof. B. Bonds means the principal amount of $450,000 City of McCall Recreational Revenue Bonds, Series 1989, herein authorized to be issued, sold, and delivered. C. Bond Fund means the "City of McCall Recreational Revenue Bond Fund" created by Section 14 of this Ordinance. D. Bond Register means the registration books on which are maintained the names and addresses of the owners or nominees of the owners of the Bonds. E. Bond Registrar means the bond registrar, transfer agent, and authenticating and paying agent appointed and designated in Section 6 of this Ordinance. F. Capital Improvement Fund means the "City of McCall Golf Course Capital Improvement Fund" created by Section 12 of this Ordinance. G. City means the City of McCall, Valley County, Idaho. H. City Clerk means the de facto or de jure Clerk of the City, or other officer of the City who is the custodian of the seal of the City and of the records of the proceedings of the City, or his/her successor in functions, if any. I. Cost of Proiect or any phrase of similar import, means all or any part designated by the Council of the costs of the Project, or interest therein, which costs, at the option of the Council, may include all or any part of the incidental costs pertaining to the Project, including, without limitation: (1) Preliminary expenses advanced by the City from funds available for the use therefor, or from any other source, with approval of the Council, or any combination thereof; (2) The costs of making surveys, audits, preliminary plans, other plans, specifications, estimates of costs and other preliminaries; (3) The costs of appraising, printing, estimates, advice, services of engineers, architects, financial consultants, attorneys at law, clerical help, or other agents or employees; (4) The costs of contingencies; Page 2 (5) The costs of the issuance of the Bonds; (6) The costs of funding any short-term financing, bond anticipation notes, and other temporary loans pertaining to the Project and of the incidental expenses incurred in con- nection with such loans; (7) The costs of any properties, rights, easements, or other interest in properties, or any licenses, privileges, agreements and franchises; and (8) All other expenses necessary or desirable and appertaining to the Project, as estimated or otherwise ascertained by the Council. J. Council means the City Council of the City. K. Estimated Net Revenues means, for any year, the estimated Revenues of the Facility for such year less the estimated Operation and Maintenance Expenses for such year, based upon estimates prepared by an independent public accountant approved by the City. In computing Estimated Net Revenues, Revenues of the Facility may be adjusted as necessary to reflect any changed schedule of rates and charges. L. Facility means the public golf course facility of the City, as the same now exists, including its assets, real and personal, tangible and intangible, as it may later be added to, extended, and improved by the Project or otherwise, and shall include greens, fairways, buildings, structures, and other income producing golf course facilities from the operation of or in connection with which the revenues from which the payment of the Bonds to be issued hereunder will be derived, and all lands appertaining thereto, including, without limitation, any Improve- ment to be acquired with the proceeds of the Bonds. M. Improvement or Improve includes the construction, extension, widening, lengthening, betterment, alteration, reconstruction, or other major improvement, or any combination thereof, of any properties pertaining to the Project or an interest therein, but does not mean general maintenance or repair. N. Mayor means the de facto or de jure Mayor of the City, or his/her successor in functions, if any. O. Net Revenues means Revenue of the Facility after the deduction of Operation and Maintenance Expenses. P. Operation and Maintenance Expenses or any phrase of similar import means all reasonable and necessary current expenses Page 3 of the City, paid or accrued, of operating, maintaining, and repairing the Facility or of levying, collecting, and otherwise administering the Net Revenues for the payment of the Bonds; and the term includes (except as limited by contract or otherwise limited by law) without limiting the generality of the foregoing: (1) Engineering, auditing, reporting, legal, and other overhead expenses of the various City departments directly relating and reasonably allocable to the administration of the Facility; (2) Fidelity bonds and property and liability insurance premiums appertaining to the Facility, or a reasonably allocable share of a premium of any blanket bond or policy pertaining thereto; (3) Payments to pension, retirement, health, and hospitalization funds and other insurance; (4) Any taxes, assessments, excise taxes, or other charges which may be lawfully imposed on the City, the Facility, revenues therefrom, or any privilege in connection with their operation; (5) The reasonable charges of the bond registrar, fiscal or paying agent, commercial bank, trust bank, or other depository bank appertaining to the Bonds issued by the City or appertaining to the Project, if any; (6) Contractual services, professional services, salaries, other administrative expenses, and the cost of materials, supplies, repairs, and labor, appertaining to the issuance of the Bonds and to the ordinary operation of the Facility; and (7) All other administrative, general, and commercial expenses. Q. Proiect means •the golf course improvement project described in Section 2 of this Ordinance. R. Registered Owner means the purchaser or purchasers of the Bonds and any subsequent transferee or transferees of the Bonds. S. Reserve Fund means the "City of McCall Recreational Revenue Bonds, Series 1989, Debt Service Reserve Fund" created by Section 15 of this Ordinance. T. Revenue Fund means the "City of McCall Golf Course Revenue Fund" created by Section 13 of this Ordinance. Page 4 U. Revenue of the Facility means all revenues received by the City from its Facility and may include, at the discretion of the City, moneys derived from one, all, or any combination of revenue sources appertaining to the Facility, 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 appertaining to, or other- wise derived in connection with, the Facility or all or any part of any property appertaining to the Facility. V. Treasurer means the de facto or de jure Treasurer of the City, or his/her successor in functions, if any. Section 2: THE PROJECT A. Project Description. The golf course improvement project consists of the acquisition, construction, and installa- tion of improvements and betterments to the City's public golf course facility, consisting generally of the construction and equipping of a new golf course caddy house, cart storage facilities, landscaping, and related golf course improvements, architectural, legal, and fiscal advisory fees, administrative costs, and all other costs incidental thereto (the "Project"): B. Project Changes. The Council may make changes in the Project prior to or in the course of actual construction, provided such changes are found necessary and desirable by the Council and that such changes do not substantially affect or alter the plans or the cost of the Project. C. Costs. The costs and expenses of construction and installation of the Project in the amount of $450,000 will be paid from the issuance and sale of the Bonds, hereinafter described, authorized to be issued at a special election held within the City on June 6, 1989. Section 3: BONDS AUTHORIZED Fully registered recreational revenue bonds of the City, designated "City of McCall Recreational Revenue Bonds, Series 1989" (the "Bonds"), in the aggregate principal amount of $450,000, are hereby authorized to be issued, sold, and delivered pursuant to the Revenue Bond Act of the State of Idaho, the same being Sections 50-1027 through 50-1042, Idaho Code, and Chapter 9, Title 57, Idaho Code. The Bonds shall be in denominations of $5,000 each or integral multiples thereof, shall be dated October 1, 1989, shall be issued only in fully registered form, shall be payable in order of maturity, and shall be substantially in the form set forth in Exhibit "A" which is annexed hereto and by reference incorporated herein. The Bonds shall be numbered separately in a consecutive Page 5 series, in the manner and with any additional designation as the Bond Registrar deems necessary for the purposes of identification. Interest on the Bonds shall be calculated on the basis of a 360 - day year and twelve 30 -day months. The Bonds shall mature on October first of each year in the amounts set forth in the following schedule: Maturity Date Principal Amount October 1, 1990 October 1, 1991 October 1, 1992 October 1, 1993 October 1, 1994 October 1, 1995 October 1, 1996 October 1, 1997 October 1, 1998 October 1, 1999 October 1, 2000 October 1, 2001 October 1, 2002 October 1, 2003 October 1, 2004 $ 15,000 20,000 20,000 20,000 25,000 25,000 25,000 30,000 30,000 35,000 35,000 40,000 40,000 45,000 45,000 The Bonds shall bear interest at a net effective rate of not to exceed nine percent (9.0%) per annum or at any lesser rate or rates as shall be stated in the successful bid proposed for the Bonds, which interest shall be payable on April 1, 1990, and semiannually on each October first and April first thereafter, until their respective dates of maturity or prior redemption. Bidders will be permitted to bid different rates of interest. The maximum differential between the highest and lowest rate shall not exceed three percent (3.0%) per annum. All Bonds maturing at the same time shall bear the same rate of interest. None of the Bonds shall be sold at less than par plus accrued interest, nor shall any discount or commission be paid to the purchaser of the Bonds. Section 4: PLACE AND MANNER OF PAYMENT Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America to the Registered Owner thereof whose name and address appear on the Bond Register maintained by the Bond Registrar. Payment of each installment of interest on the Bonds shall be made on its semiannual due date to the Registered Owner whose name appears on the Bond Register on the 15th day of the calendar month next preceding the interest payment date, at the address appearing on the Bond Register, and shall be paid by check or draft of the Bond Registrar mailed to such Registered Owner on the due date at Page 6 such address, or at such other address as may be furnished in writing by such Registered Owner to the Bond Registrar. Interest shall be calculated on the basis of a 360 -day year and twelve 30 - day months. Principal of the Bonds shall be payable to the Registered Owner upon presentation and surrender of the Bonds on the date of maturity or prior redemption, at the principal corporate trust office of the Bond Registrar. Section 5: EXECUTION OF BONDS The City shall cause the Bonds to be prepared, executed, authenticated, and delivered. The Bonds shall be lithographed or printed with engraved or lithographed borders. The Bonds shall be signed by the Mayor, countersigned by the Treasurer, and attested by the City Clerk (all of which signatures shall be by facsimile), and the facsimile seal of the City shall be imprinted thereon. The Bonds shall then be delivered to the Bond Registrar for authentication. Until the Bonds are prepared, the City may, if deemed necessary by the Mayor, utilize a temporary bond which shall be typewritten, and which shall be delivered to the purchaser of the Bonds in lieu of definitive bonds, subject to the same provisions, limitations, and conditions as the Bonds. The temporary bond shall be dated as of the date of the Bonds, shall be in the denomination of $450,000, shall be numbered T-1, shall be substantially of the tenor of the Bonds, but with such omissions, insertions, and variations as may be appropriate to temporary bonds, and shall be manually signed by the Mayor, the Treasurer, the City Clerk, and the Bond Registrar and shall have the seal of the City impressed thereon. In case any of the officers who shall have signed or counter- signed any of the Bonds shall cease to be such officer or officers of the City before the Bonds so signed or countersigned shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bonds may nevertheless be authenticated, delivered, and issued and, upon such authentication, delivery, and issue, shall be as binding upon the City as though those who signed and countersigned the same had continued to be such officers of the City. Any Bond may also be signed and countersigned on behalf of the City by such persons as at the actual date of execution of such bonds shall be the proper officers of the City although at the original date of such Bond any such person shall not have been such officer of the City. Only such of the Bonds as shall bear thereon a certificate of authentication in the form set forth in Exhibit "A," manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Ordinance, and Page 7 such certificate of authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated, and delivered hereunder and are entitled to the benefits of this Ordinance. Section 6: BOND REGISTRAR The Corporate Trust Department of West One Bank, Idaho, N.A., Boise, Idaho, is hereby appointed as bond registrar, transfer agent, and authenticating and paying agent, and is herein referred to as the "Bond Registrar." The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the bonds transferred or exchanged in accordance with the provisions of the Bonds and this Ordinance and to carry out all of the Bond Registrar's powers and duties under this Ordinance. The Bond Registrar shall be responsible for its representations contained in the certificate of authentication on the Bonds. The Bond Registrar may become the owner of the Bonds with the same rights as it would have if it were not the Bond Registrar. The Bonds may be transferred only upon the books for the registration and transfer of bonds, upon the surrender thereof at the principal office of the Bond Registrar, together with a form of transfer duly executed by the Registered Owner or his attorney duly authorized in writing, substantially in the form set forth in the form of bond referred to in Section 3 hereof. Upon the transfer of any bond, there shall be issued in the name of the transferee or transferees a new fully registered bond or bonds of any authorized denomination or denominations and of the same maturity and interest rate, and of the same aggregate principal amount, as the surrendered bond. The new bond or bonds shall bear the same date as the date of the surrendered bond, but shall bear interest from the immediately preceding interest payment date to which interest has been paid or fully provided for. The Bond Registrar shall not be required to exchange or transfer any bond within fifteen (15) days of an interest payment date or, in the case of any redemption of bonds, within fifteen (15) days of the redemption date. This Section is intended to provide the system of registra- tion required by Chapter 9, Title 57, Idaho Code. Page 8 Section 7: DEFEASANCE AND REDEMPTION In the event that money or direct obligations of, or obliga- tions guaranteed by, the United States of America, maturing or having guaranteed redemption prices at the option of the owner at such times and bearing interest to be earned thereon in such amounts as are sufficient (together with any resulting cash balances) to redeem and retire the Bonds in accordance with their terms, are hereafter irrevocably set aside in a special account and pledged to effect such redemption and retirement, then the City shall not be required to make further payments into the Bond Fund for the payment of the principal of and interest on the Bonds, and such Bonds and interest accrued thereon shall then cease to be entitled to any lien, benefit, or security of the Bond Ordinance other than the right to receive the funds so set aside and pledged, and such Bonds and interest accrued thereon shall no longer be deemed to be outstanding. Bonds maturing on or before October 1, 1997, shall not be subject to call or redemption prior to their stated dates of maturity. On any principal payment date on or after October 1, 1997, at the election of the City, Bonds maturing on or after October 1, 1998, shall be subject to redemption, in whole or in part, in inverse order of maturity (and by lot selected by the Bond Registrar within a maturity), upon notice as hereinafter provided, at par plus accrued interest to the redemption date. Notice of redemption of any Bonds shall be given by mailing of notice by the Bond Registrar to the Registered Owner of any Bond being called for redemption not less than thirty nor more than forty-five days prior to the redemption date by first class mail, postage prepaid, at the address appearing on the Bond Register, or at such other address as may be furnished in writing by such Registered Owner to the Bond Registrar. The foregoing requirements shall be deemed to be complied with when notice is mailed as provided herein, regardless of whether or not it is actually received by the owner of such Bond. The Bonds so called for redemption shall cease to accrue interest on the specified redemption date, provided funds for such redemption are on deposit at the place of payment at such time, and shall not be deemed to be outstanding as of such redemption date. Section 8: DATE OF SALE The Bonds shall be sold at public sale on September 14, 1989. The Council shall meet at 7:00 P.M., Mountain Daylight Time, on said date, at the usual meeting place of the Council, at City Hall, McCall, Idaho, for the purpose of receiving sealed bids for the purchase of the Bonds. The bids will be publicly opened, examined, and declared at such time and place, and considered at a meeting of the Council on said date. All bids shall be accompanied by a good faith deposit in the amount of $22,500, in Page 9 the form of a cashier's check or certified check payable to the Treasurer of the City. At said meeting, the Council shall accept the bid providing the lowest net interest cost to the City, and shall return the deposits of all other bidders. Section 9: NOTICE OF SALE The notice of Sale annexed hereto as Exhibit "B" and by this reference incorporated herein, is hereby approved. The Mayor and Clerk are hereby directed to execute the Notice of Sale on behalf of the City, and to call for bids for the sale of the Bonds, such bids to be received on the date specified in the resolution referred to in Section 9, all in the manner more particularly set forth in the Notice of Sale. The Notice of Sale shall be published in a newspaper of general circulation within the City once a week for three (3) successive weeks, the first publication being at least twenty-one (21) full days prior to the date of sale, counting the date of publication as the first of such twenty-one days. The City's financial consultant is authorized and directed to cause a Notice of Sale and an Official Statement pertaining to the sale of the Bonds, upon prior approval of the Council, to be distributed to such municipal bond broker-dealers, such banking institutions, and to such other persons as may be interested in purchasing the Bonds herein offered for sale. The expanded Notice of Sale substantially in the form attached hereto as Exhibit "C" is hereby approved for use in conjunction with the Official Statement. Section 10: CHARGES The City has established, may from time to time revise, and shall maintain and collect fees and charges for the use of the public golf course Facility, which fees and charges shall be collected from the users thereof. Section 11: PLEDGE OF REVENUES The Net Revenues of the Facility are hereby pledged for the payment of the Bonds, and shall be used and applied in the order of priority provided in Section 13 of this Ordinance. The City shall establish, maintain, revise as necessary, and collect charges sufficient, with other revenues received, to provide Net Revenues equal to not less than 1.20 times the average annual debt service on the Bonds. Section 12: THE CAPITAL IMPROVEMENT FUND There is hereby created a special fund and account known as the "City of McCall Golf Course Capital Improvement Fund" (the "Capital Improvement Fund"), into which shall be deposited all of the proceeds of the sale of the Bonds, to be used and applied for Page 10 the payment of the cost and expense of the construction and installation of the Project, including the payment of the principal of and interest on all outstanding bond anticipation notes or other interim financing, if any. Any interest earnings on moneys invested from the Capital Improvement Fund shall remain in and be used for the purposes of the Capital Improvement Fund. The City's share of any liquidated damages or other moneys paid by defaulting contractors or their sureties will be deposited into said Capital Improvement Fund to assure the completion of the Project. When the Project has been completed and all costs related thereto have been paid in full, any balance remaining in the Capital Improvement Fund shall be deposited into the Bond Fund described in Section 14 of this Ordinance. Section 13: THE REVENUE FUND There is hereby created a special fund, to be known as the "City of McCall Golf Course Revenue Fund" (the "Revenue Fund"), which shall be maintained by the Treasurer and into which the Revenue of the Facility shall be deposited forthwith upon its receipt. A. Use of Revenues. The Revenue of the Facility 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 principal of and interest on the Bonds by payment into the Bond Fund, as provided in Section 14 of this Ordinance. (3) Third Charge and Lien: To maintain the Debt Service Reserve Fund; and (4) To administer surplus funds. B. Interest Earnings. Interest earnings on deposits in the Revenue Fund shall remain in and be used for the purposes of the Revenue Fund. C. Surplus Funds. Funds remaining in the Revenue Fund after having been applied to designated funds for the purposes provided in this section shall constitute surplus funds and may be used for the purposes set forth in Section 16 of this Ordinance. Page 11 Section 14: THE BOND FUND There is hereby created a special fund, to be known as the "City of McCall Recreational Revenue Bond Fund" (the "Bond Fund"), into which shall be deposited, from Net Revenues, the following described revenues: A. At least twenty (20) days prior to each semiannual interest, or principal and interest, payment date, the Treasurer shall withdraw from the Revenue Fund and transfer to and deposit in the Bond Fund the amount necessary to pay the next maturing installment of interest, or principal and interest (and redemption premium, if any) on the Bonds. B. If the City for any reason shall fail to make such required deposit from the Revenue Fund, then an amount equal to the deficiency shall be deposited into the Bond Fund out of the Reserve Fund. C. On the fifteenth business day immediately preceding each maturity date or interest payment date of the Bonds, the Treasurer shall pay out of the Bond Fund, to the Bond Registrar, the amount required for the interest, or principal and interest, as the case may be, payable on such due date, and shall also pay the amount, if any, required for payment of redemption premium on any Bonds then to be redeemed. From the amounts so paid from the Bond Fund, the Bond Registrar shall pay (i) on or before each interest payment date for any of the Bonds the amount required for the interest payable on such date; and (ii) on or before any redemp- tion date for the Bonds, the amount required for the payment of principal of, interest on, and redemption premium, if any, on the Bcnds then to be redeemed. D. Interest earnings on deposits in the Bond Fund shall remain in the Bond Fund to be used for the purposes of the Bond Fund. Section 15: DEBT SERVICE RESERVE FUND A. Deposits. There is hereby created a special fund, to be known as the "City of McCall Recreational Revenue Bonds, Series 1989, Debt Service Reserve Fund" (the "Reserve Fund"), which shall be maintained by the Treasurer. Simultaneously with the issuance of the Bonds, there shall be transferred from the proceeds of the Bonds to the Reserve Fund a sum equal to the lesser of (i) the maximum annual debt service on the Bonds or (ii) 125% of the average annual debt service on the Bonds, not to exceed 10% of the proceeds of the Bonds as provided in Section 148(d) of the Internal Revenue Code of 1986 (the "Reserve Requirement"), which sum shall be maintained as a debt service reserve fund for the Bonds until the Bonds have been paid in full. In no event shall Page 12 the amount accumulated in the Reserve Fund exceed the Reserve Requirement. B. Deficiencies or Withdrawals. Whenever any moneys are withdrawn from the Reserve Fund to pay the principal of or interest on the Bonds, or if a deficiency exists in such Fund, the amount so withdrawn or the amount of such deficiency shall be restored by monthly deposits from Net Revenues until there has been restored therein the gross amount provided heretofore in subdivision A of this Section. C. Refunding. In the event Refunding Bonds are ever issued, the amount set aside into the Reserve Fund to secure the payment of the Bonds may be used to retire bonds or may be held in the Reserve Fund to secure payment of the refunding bonds issued, to refund the outstanding bonds, or may be held in the Reserve Fund to secure the payment of any other issue or series of bonds payable out of the Bond Fund and issued on a parity with the Bonds. D. Investments. All moneys in the Reserve Fund may be kept in cash or deposited in institutions permitted by law in an amount in each institution not greater than the amount insured by any department cr agency of the United States Government, or may be invested and reinvested in any legal investment permitted for City moneys maturing not later than the last maturity date of any outstanding bonds. Interest earned on any such investment shall be deposited, directly as earned, into the Bond Fund. E. Reserve Eauivalent. The City may, at its option, if additional funds are needed for completion of the Project, withdraw the funds 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 a long-term debt credit rating, at the time the insurance policy or letter of credit is issued, of at least A as determined by Moody's Investors Services, or its successor, in which the insurance company or commercial bank agrees unconditionally to provide the City with funds in an amount which equals the Reserve Fund requirement specified in Paragraph A hereinabove. Section 16: SURPLUS FUNDS Funds remaining in the Revenue Fund after having been applied to or designated funds for the purposes provided in Section 13 of this Ordinance shall constitute surplus funds and may be used for any of the following purposes: A. To pay the costs of unusual or extraordinary maintenance of or repair to the Facility; Page 13 B. To pay the principal of and interest on any subordinate lien obligations which may have been issued to provide golf course facilities in or for the City; C. To improve, extend, enlarge, or replace any golf course facilities; D. To acquire or construct additional golf course facilities in or for the City; E. To call or redeem prior to their fixed dates of maturity any Bonds, parity bonds, or subordinate lien obligations issued to provide golf course facilities for the City; and F. For any other lawful purpose. Section 17: ADDITIONAL BONDS OR OTHER OBLIGATIONS A. Limitation Upon Issuance of Parity Obligations. Nothing contained in this Ordinance shall be construed in such a manner as to prevent the issuance by the City of additional bonds or other additional obligations payable from the Net Revenues on a parity with, but neither prior nor superior to, the lien of the Bonds herein authorized; provided, however, that before any such additional parity bonds or other additional parity 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 Ordinance for a period of not less than twelve (12) months immediately preceding the issuance of such additional parity bonds or other additional parity obligations. (2) The Net Revenues of the Facility for the past twelve (12) consecutive months immediately preceding the year of the issuance of such additional parity obligations shall have been sufficient to pay the Operation and Maintenance Expenses of the Facility 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 120% of the annual principal and interest requirements of the outstanding Bonds and any other obligations of the City payable from the Net Revenues of the Facility. (3) The Estimated Net Revenues of the Facility for the twelve-month period immediately succeeding the issuance of the bonds or other obligations proposed to be issued will be not less than 120% of the annual principal and interest requirements of the outstanding Bonds and any other obliga- tions of the City payable from the Net Revenues of the Facility, plus the average annual principal and interest Page 14 requirements of the bonds or other obligations proposed to be issued. (4) A written certification by an independent public accountant approved by the City that the 120% Net Revenue requirement of subsection (2) above, and the 120% Estimated Net Revenues requirement of subsection (3) above, have been 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 bonds or other additional obligations on a parity with the Bonds authorized herein. (5) The foregoing limitations, or any of them, may be waived or modified by the written consent of the Registered Owners of not less than 75% of the principal amount of the Bonds then outstanding. B. Parity Bonds to Complete Proiect. In the event that the proceeds of the Bonds provided for in this Ordinance are insufficient to complete the Project, then parity bonds or other obligations approved by the electors may be issued to complete the Project, and the restrictions set forth in this Section pertaining to the issuance of parity bonds shall not apply. C. Subordinate Lien Bonds. No provision of this Ordinance or of any instrument appertaining thereto 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 Bonds and which shall provide for compliance with the current provisions hereof prior to the application of any funds to said subordinate purpose. D. Refunding. The restrictions with respect to the issuance of parity obligations shall not apply if such additional parity bonds proposed to be issued are for the sole purpose of refunding outstanding revenue bonds. Section 18: INVESTMENTS Surplus funds in any of the Funds set forth in this Ordinance may be invested in securities as permitted by law. Section 19: GENERAL COVENANTS For the protection and security of the Bonds, it is covenanted and agreed to and with the Registered Owners of the Bonds from time to time, that the City will perform the following covenants: Page 15 A. Complete Project. It will complete the construction of the Project with all practical dispatch and in a sound and economical manner. B. Operate Facility. It will operate the Facility in an efficient and economical manner. C. Good Repair. It will operate, maintain, preserve, and keep the Facility and every part hereof in good repair, working order, and condition. D. Preserve Security. It will preserve and protect the security of the Bonds 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 Bonds and apply such revenue or other funds only as provided in this Ordinance. F. Service Bonds. It will pay and cause to be paid punc- tually the principal of the Bonds and the interest thereon on the date or dates and at the place or places and in the manner mentioned in the Bonds, and in accordance with this Ordinance. 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 Facility, or any part of said Revenue of the Facility, or any funds in the hands of the Treasurer, prior or superior to the lien of the Bonds or which might impair the security of the Bonds, to the end that the priority and security of the Bonds shall be fully preserved and protected. H. Encumbrances. It will not mortgage or otherwise encumber, sell, lease, or dispose of the Facility or any part thereof, nor enter into any lease or agreement which would impair or impede the operation of the Facility or any part thereof necessary to secure adequate revenues for the payment of the principal of and interest on the Bonds, nor which would otherwise impair or impede the rights of the Registered Owners of the Bonds with respect to such revenues of the operation of the Facility without provisions for the retirement of the Bonds then outstanding from the proceeds thereof. I. Insurance. It will procure and keep in force insurance upon all buildings and structures of the Facility 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 Registered Owner of the Bonds from loss due to any casualty, and in the event of Page 16 any such loss, the proceeds shall be used to repair or restore the Facility or for the payment of the Bonds issued under this Ordinance. J. Fidelity Bonds. It will procure suitable fidelity bonds covering all of its officers and other employees charged with the operation of the Facility and the collection and disbursement of revenues therefrom. K. 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 Facility, and it will furnish complete operating and income statements upon request. Section 20: SPECIAL COVENANTS The City further covenants and agrees: A. The Bonds are qualified tax-exempt obligations within the meaning and for the purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, and the City will not designate more than $10,000,000, including the Bonds, as qualified tax-exempt obligations during the calendar year. B. None of the proceeds of the Bonds will be used directly or indirectly (i) to make or finance loans to persons or (ii) in any trade or business carried on by any person (other than use as a member of the general public). For purposes of the preceding sentence, the term "person" does not include a government unit other than the United States or any agency or instrumentality thereof, and the term "trade or business" means any activity carried on by a person other than a natural person. C. The Bonds are not private activity bonds within the meaning of the Internal Revenue Code of 1986. D. The aggregate face amount of all tax-exempt bonds, including the Bonds, issued by the City during the calendar year in which the Bonds are issued, will not exceed $5,000,000. E. The City will take no action which would cause the Bonds to become arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code. Section 21: AMENDMENTS A. The City from time to time and at any time may adopt an ordinance or ordinances supplemental hereto, which ordinance or ordinances thereafter shall become a part of this Ordinance, for any one or more of all of the following purposes: Page 17 (1) To add to the covenants and agreements of the City in this Ordinance, other covenants and agreements thereafter to be observed, which shall not adversely affect the interest of the Registered Owners of the Bonds, or to surrender any right or power herein reserved. (2) To make such provisions for the purpose of curing any ambiguities or of curing, correcting, or supplementing any defective provisions contained in this Ordinance, or any ordinance authorizing future bonds in regard to matters or questions arising under such ordinances as the Council may deem necessary or desirable and not inconsistent with such ordinances and which shall not adversely affect, in any material respect, the interest of the Registered Owners of the Bonds. Any such supplemental ordinance may be adopted without the consent of the Registered Owners of the Bonds at any time outstanding, notwithstanding any of the provisions of subsection B of this Section. B. With the consent of the Registered Owners of not less than 75% in aggregate principal amount of the Bonds at the time outstanding, the Council may adopt an ordinance or ordinances supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Ordinance or of any supplemental ordinance; provided, however, that no such supplemental ordinance shall: (1) Extend the fixed maturities of the Bonds, or reduce the rate of interest thereon, or extend the time of payments of interest from their due date, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, if applicable, without the consent of the Registered Owners of the Bonds so affected; or (2) Reduce the aforesaid percentage of the Registered Owners required to approve any such supplemental ordinance, without the consent of the Registered Owners of the Bonds then outstanding. It shall not be necessary for the consent of the Registered Owners under this subsection B to approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if such consent shall approve the substance thereof. C. Upon the adoption of any supplemental ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties, and obligations of the City under this Ordinance and the Registered Owners of the Bonds outstanding hereunder shall thereafter be determined, exercised, and enforced Page 18 thereunder, subject in all respects to such modification and amendments, and all terms and conditions of any such supplemental ordinance shall be deemed to be part of the terms and conditions of this Ordinance for any and all purposes. D. Any Bonds executed and delivered after the execution of any supplemental ordinance adopted pursuant to the provisions of this Section may have a notation as to any matter provided for in such supplemental ordinance, and if such supplemental ordinance shall so provide, new bonds so modified as to conform, in the opinion of the Council, to any modification of this Ordinance contained in any such supplemental ordinance, may be prepared and delivered without cost to the Registered Owners of any affected Bonds then outstanding, upon surrender for cancellation of such Bonds. Section 22: VALIDITY OF ISSUANCE The Bonds are issued pursuant to the Idaho Revenue Bond Act, being Idaho Code Sections 50-1027 through 50-1042. This recital is conclusive evidence of the validity of the Bonds and the regularity of their issuance. Section 23: REGISTERED OWNER'S REMEDIES - RECEIVER By action or suit in equity, the Registered Owners or subse- quent owners of the Bonds may, in the event of a material violation of any of the foregoing covenants, cause the appointment of a receiver, which receiver may enter and take possession of the Facility and any Net Revenues for the payment of the Bonds, prescribe fees to be derived from the Facility, and collect, receive, and apply all Net Revenues of other moneys pledged for the payment of the Bonds in the same manner as the City might do in accordance with the obligations of the City. Section 24: ORDINANCE A CONTRACT The provisions of this Ordinance shall constitute a contract between the City and the Registered Owners so long as the Bonds hereby authorized remains unpaid. Section 25: DETERMINATION The Council does hereby find, determine, and declare that it is essential to the public interest, welfare, and convenience of the City and the inhabitants thereof to undertake the Project and to construct the improvements, with said Project being paid for by the issuance of the Bonds in conformity with the Idaho Code. Page 19 Section 26: SEVERABILITY If any one or more of the covenants or agreements provided in this Ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements in this Ordinance and shall in no way affect the validity of the other provisions of this Ordinance or of the Bonds. Section 27: REPEALER All prior ordinances inconsistent herewith are hereby repealed and shall, to the extent of such inconsistency, have no further force or effect. Section 28: BOND ANTICIPATION NOTES Pending the issuance and sale of the Bonds, the City may, by resolution, authorize the issuance and sale of bond anticipation notes in an aggregate amount which, together with interest to accrue thereon prior to issuance and sale of the Bonds, shall not exceed $450,000, to provide funds to pay the costs of construction and installation of the Project. Such bond anticipation notes, together with interest accrued thereon, shall be payable from the proceeds of the sale of the Bonds. Section 29: PUBLICATION This Ordinance, or a summary thereof in compliance with Section 50-901A, Idaho Code, shall be published once in the official newspaper of the City, and shall take effect immediately upon its passage, approval, and publication. DATED this 14th day of July, 1989. ATT : / 1/ CITY OF McCALL Valley County, Idaho By Mayor' Ci Clerk ( S E A L ) Page 20