ORD 2002-40 UTGO BONDS 2002
CITY OF BAINBRIDGE ISLAND, W ASIDNGTON
ORDINANCE No. h?oz -.vo
AN ORDINANCE of the City of Bainbridge Island,
Washington, relating to contracting indebtedness; providing for the
Issuance, specifying the maturities, interest rates, terms and
covenants of $4,500,000 par value of Unlimited Tax General
Obligation Bonds, 2002, authorized by the qualified voters of the
City at a special election held therein pursuant to Ordinance No.
2001-36; establishing a bond redemption fund and an acquisition
fund; and approving the sale and providing for the delivery of the
bonds to Bane of America Securities LLC of Seattle, Washington.
ADOPTED NOVEMBER Zo, 2002
This document was prepared by:
FOSTER PEPPER & SHEFELMAN PLLe
IIII Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
50150423.02
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CITY OF BAINBRIDGE ISLAND, W ASillNGTON
ORDINANCE No. 2.::>aZ-t(C7
AN ORDINANCE of the City of Bainbridge Island,
Washington, relating to contracting indebtedness; providing for the
Issuance, specifying the maturities, interest rates, terms and
covenants of $4,500,000 par value of Unlimited Tax General
Obligation Bonds, 2002, authorized by the qualified voters of the
City at a special election held therein pursuant to Ordinance No.
2001 -36; establishing a bond redemption fund and an acquisition
fund; and approving the sale and providing for the delivery of the
bonds to Banc of America Securities LLC of Seattle, Washington.
WHEREAS, at a special election held in conjunction with the state general election on
November 6, 2001, the City's voters approved the issuance of no more than $8,000,000 unlimited
tax general obligation bonds to acquire or otherwise preserve forested areas, open space, wildlife
habitat, farms and agricultural lands and create new trails and passive parks; and
WHEREAS, Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance
company (" Ambac Assurance" or the "Bond Insurer"), has made a commitment to issue an
insurance policy (the "Financial Guaranty Insurance Policy") insuring the payment when due of
the principal of and interest on the Bonds as provided therein, and the City Council deems that
the purchase of the Financial Guaranty Insurance Policy is in the best interest of the City; and
WHEREAS, Bane of America Securities LLC of Seattle, Washington, has offered to
purchase the Bonds under the terms and conditions set forth in this ordinance and the bond
purchase contract; NOW, THEREFORE,
TIlE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, DO
ORDAIN as follows:
Section I. Authorization of Bonds Pursuant to Election. The City of Bainbridge Island,
Washington (the "City"), shall issue and sell the total $4,500,000 par value of negotiable general
obligation bonds authorized by the qualified voters of the City at a special election held on
November 6, 2001, in conjunction with the state general election held on that date, pursuant to
Ordinance No. 2001-36 passed and approved September 12,2001, for the purpose of acquiring
or otherwise preserving forested areas, open space, wildlife habitat, farms and agricultural lands
and creating new trails and passive parks.
Section 2. Description of Bonds. The bonds shall be called Unlimited Tax General
Obligation Bonds, 2002, of the City (the "Bonds"); shall be in the aggregate principal amount of
$4,500,000; shall be dated December 1, 2002; shall be in the denomination of $5,000 or any
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integral multiple thereof within a single maturity; shall be numbered separately in the manner
and with any additional designation as the Bond Registrar (collectively, the fiscal agent and co-
fiscal agent of the State of Washington) deems necessary for purposes of identification; shall
bear interest at the rate or rates specified herein (computed on the basis of a 360-day year of
twelve 30-day months) payable semiannually on each December 1 and June 1, commencing
June 1,2003, to the maturity or earlier redemption of the Bonds; and shall mature on in the years
and amounts and bear interest at the rates per annum as follows:
Maturity Maturity
Dates Interest Dates Interest
(December 1) Amounts Rates (December 1) Amounts Rates
2003 - - 2013 $ 270,000.00 4.000 %
2004 $ 230,000.00 2.500 % 2014 280,000.00 4.125
2005 - - 2015 290,000.00 4.125
2006 235,000.00 3.000 2016 305,000.00 4.125
2007 - - 2017 315,000.00 4.250
2008 240,000.00 3.250 2018 330,000.00 4.375
2009 - - 2019 350,000.00 4.500
2010 250,000.00 3.750 2020 365,000.00 4.600
2011 - 2021 380,000.00 4.625
20]2 260,000.00 4.000 2022 400,000.00 4.700
The life of the capital facilities to be acquired with the proceeds of the Bonds exceeds the term of
the Bonds.
Section 3. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on books or records
maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the
name and mailing address of the owner of each Bond and the principal amount and number of
each of the Bonds held by each owner.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized
denomination of an equal aggregate principal amount and of the same interest rate and maturity.
Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to
the Bond Registrar. Any exchange or transfer shaH be without cost to the owner or transferee.
The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days
preceding any principal payment or redemption date.
The Bonds initially shall be registered in the name of Cede & Co., as the nominee of The
Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall be
held in fully immobilized form by DTC as depository in accordance with the provisions of a
Blanket Issuer Letter of Representations dated December 10, 1998 between the City and DTC
(as it may be amended from time to time, the "Letter of Representations") Neither the City nor
the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons
for whom they act as nominees with respect to the Bonds regarding accuracy of any records
maintained by DTC or DTC participants of any amount in respect of principal of or interest on
the Bonds, or any notice that is permitted or required to be given to registered owners hereunder
(except such notice as is required to be given by the Bond Registrar to DTC).
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For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the registered owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds
are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Section 4. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
checks or drafts of the Bond Registrar mailed on the interest par?ent date to the registered
owners at the addresses appearing on the Bond Register on the 15t day of the month preceding
the interest payment date or, if requested in writing by a registered owner of $1 ,000,000 or more
in principal amount of Bonds prior to the applicable record date; by wire transfer on the interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds by the registered owners at either of the principal offices of the Bond Registrar at the
option of the owners. Notwithstanding the foregoing, as long as the Bonds are registered in the
name of DTC or its nominee, payment of principal of and interest on the Bonds shall be made in
the manner set forth in the Letter of Representations.
Section 5. Redemption Provisions and Open Market Purchase of Bonds. Bonds maturing
in the years 2004,2006,2008,2010 and 2012, shall be issued without the right or option of the
City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and
option to redeem the Bonds maturing on or after December 1,2013 prior to their stated maturity
dates at any time on or after December I, 2012, as a whole or in part (within one or more
maturities selected by the City and randomly within a maturity in such manner as the Bond
Registrar shall determine), at par plus accrued interest to the date fixed for redemption.
Portions of the principal amount of any Bond, in installments of $5,000 or any integral
multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is
redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar,
there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at
the option of the registered owner) of the same maturity and interest rate in any of the
denominations authorized by this ordinance in the aggregate principal amount remaining
unredeemed.
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The City further reserves the right and option to purchase any or all of the Bonds in the
open market at any time at any price plus accrued interest to the date of purchase.
All Bonds purchased or redeemed under this section shall be cancelled.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name of
DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of
Representations.
Section 6. Notice of Redemption. The City shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the owner of any
Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for
redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New
York, or their successors, to Bane of America Securities LLC, at its principal office in Seattle,
Washington, or its successor, Ambac Assurance Corporation at its principal office in New York,
New York, or its successor, to each NRMSIR or the MSRB and to such other persons and with
such additional information as the City Director of Finance shall determine, but these additional
mailings shall not be a condition precedent to the redemption of Bonds. Notwithstanding the
foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, notice of
redemption shaH be given in'accordance with the Letter of Representations.
Section 7. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at
the same rate provided in the Bond from and after its maturity or call date until that Bond, both
principal and interest, is paid in full or until sufficient money for its payment in full is on deposit
in the bond redemption fund hereinafter created and the Bond has been called for payment by
giving notice ofthat call to the registered owner thereof.
Section 8. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to levy taxes annually without limitation as to rate or amount on all of the
taxable property within the City in an amount sufficient, together with other money legally
available and to be used therefor, to pay when due the principal of and interest on the Bonds, and
the full faith, credit and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and interest.
Section 9. Form and Execution of Bonds. The Bonds shall be printed or lithographed on
good bond paper in a form consistent with the provisions of this ordinance and state law, shall be
signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in
facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or
printed thereon.
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Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fUlly registered City of Bainbridge
Island, Washington, Unlimited Tax General Obligation Bonds, 2002.
described in the Bond Ordinance.
WASHINGTON STATE FISCAL AGENT
Bond Registrar
By
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond
so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits
of this ordinance.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are
authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless
may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall
be as binding on the City as though that person had continued to be an officer of the City
authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person
who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds,
although he or she did not hold the required office onthe date of issuance of the Bonds.
Section 10. 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 be open to inspection by the City at all times. The Bond Registrar is authorized, on
behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with
the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds
and to carry out all of the Bond Registrar's powers and duties under this ordinance and City
Ordinance No. 83-10 establishing a system of registration for the City's bonds and obligations.
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the
owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the
extent permitted by law, may act as depository for and permit any of its officers or directors to
act as members of, or in any other capacity with respect to, any committee formed to protect the
rights of Bond owners.
Section II. Preservation of Tax Exemption for Interest on Bonds. The City covenants
that it will take all actions necessary to prevent interest on the Bonds from being included in
gross income for federal income tax purposes, and it will neither take any action nor make or
permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the
Bonds at any time during the term of the Bonds, which will cause interest on the Bonds to be
included in gross income for federal income tax purposes. The City also covenants that it will, to
the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986,
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as amended (the "Code"), is applicable to the Bonds, take all actions necessary to comply (or to
be treated as having complied) with that requirement in connection with the Bonds, including the
calculation and payment of any penalties that the City has elected to pay as an alternative to
calculating rebatable arbitrage, and the payment of any other penalties if required under Section
148 of the Code to prevent interest on the Bonds from being included in gross income for federal
income tax purposes. The City certifies that it has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage
certifications may not be relied upon.
Section 12. Small Governmental Issuer Arbitrage Rebate Exception and Designation of
Bonds as "Qualified Tax-Exempt Obligations." The City finds and declares that (a) it is a duly
organized and existing governmental unit of the State of Washington and has general taxing
power; (b )no Bond that is part of this issue of Bonds is a "private activity bond" within the
meaning of Section 141 of the United States Internal Revenue Code of 1986, as amended (the
"Code"); (c) at least 95% of the net proceeds of the Bonds will be used for local governmental
activities of the City (or of a governmental unit the jurisdiction of which is entirely within the
jurisdiction of the City); (d) the aggregate face amount of all tax-exempt obligations (other than
private activity bonds and other obligations not required to be included in such calculation)
issued by the City and all entities subordinate to the City (including any entity that the City
controls, that derives its authority to issue tax-exempt obligations from the City, or that issues
tax-exempt obligations on behalf of the City) during the calendar year in which the Bonds are
issued is not reasonably expected to exceed $5,000,000; and (e) the amount of tax-exempt
obligations, including the Bonds, designated by the City as "qualified tax-exempt obligations"
for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds
are issued does not exceed $10,000,000. The City therefore certifies that the Bonds are eligible
for the arbitrage rebate exception under Section 148(f)(4)(D) of the Code and designates the
Bonds as "qualified tax-exempt obligations" for the puiposes of Section 265(b)(3) ofthe Code.
Section 13. Refunding or Defeasance of the Bonds. The City may issue refunding bonds
pursuant to the laws of the State of Washington or use money available from any other lawful
source to pay when due the principal of and interest on the Bonds, or any portion thereof
included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
then-outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the
costs of the refunding or defeasance. If money and/or "government obligations" (as defined in
chapter 39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing
interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or
defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or
escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased
Bonds (hereinafter called the "trust account"), then all right and interest of the owners of the
defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the
payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds
shall have the right to receive payment of the principal of and interest on the defeased Bonds
from the trust account. The City shall include in the refunding or defeasance plan such
provisions as the City deems necessary for the random selection of any defeased Bonds that
constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be
given to the owners of the defeased Bonds and to such other persons as the City shall determine,
and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds
shall be deemed no longer outstanding, and the City may apply any money in any other fund or
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account established for the payment or redemption of the defeased Bonds to any lawful purposes
as it shall determine.
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
Notwithstanding anything in this section to the contrary, if the principal of and/or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance
Policy, the Bonds shall be treated as remaining outstanding for all purposes, not defeased or
otherwise satisfied and shall not be considered paid by the City, and the covenants, agreements
and other obligations of the City to the registered owners of the Bonds shall continue to exist and
shall run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights
of those registered owners.
Section 14. Bond Fund and Deposit of Bond Proceeds. There is created and established
in the office of the Director of Finance a special fund designated as the Unlimited Tax General
Obligation Bond Fund, 2002 (the "Bond Fund"). Accrued interest on the Bonds, if any, received
from the sale and delivery of the Bonds shall be paid into the Bond Fund. All taxes collected for
and allocated to the payment of the principal of and interest on the Bonds shall be deposited in
the Bond Fund.
There also is created and established in the office of the Director of Finance a special
fund designated as the Parks and Open Space Fund, 2002 (the "Acquisition Fund"). The
principal proceeds and premium, if any, received from the sale and delivery of the Bonds shall be
paid into the Acquisition Fund and used for the purposes specified in Section 1 of this ordinance.
Until needed to pay the costs of the Project and costs of issuance of the Bonds, the City may
invest principal proceeds temporarily in any legal investment, and the investment earnings may
be retained in the Acquisition Fund and be spent for the purposes of that fund.
Section 15. Approval of Bond Purchase Contract. Bane of America Securities LLC of
Seattle, Washington, has presented a purchase contract (the "Bond Purchase Contract") to the
City offering to purchase the Bonds under the terms and conditions provided in the Bond
Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk and is
incorporated herein by this reference. The City Council finds that entering into the Bond
Purchase Contract is in the City's best interest and therefore accepts the offer contained therein
and authorizes its execution by City officials.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster
Pepper & Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
Bonds. Bond counsel shall not be required to review and shall express no opinion concerning
the completeness or accuracy of any official statement, offering circular or other sales or
disclosure material issued or used in connection with the Bonds, and bond counsel's opinion shall
so state.
The proper City officials are authorized and directed to do everything necessary for the
prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof.
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Section 16. Preliminary Official Statement Deemed Final. The City Council has been
provided with copies of a preliminary official statement dated November 7. 2002 (the
"Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For the
sole purpose of the Bond purchaser's compliance with Securities and Exchange Commission
Rule 15c2-12(b)(I), the City "deems final" that Preliminary Official Statement as of its date,
except for the omission of information as to offering prices, interest rates, selling compensation,
aggregate principal amount, principal amount per maturity, maturity dates, options of
redemption, delivery dates, ratings and other terms of the Bonds dependent on such matters.
Section 17. Undertaking to Provide Continuing Disclosure. To meet the requirements of
United States Securities and Exchange Commission CSEC") Rule 15c2-12(b)(5) (the "Rule"), as
applicable to a participating underwriter for the Bonds, the City makes the following written
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice of
Material Events. The City undertakes to provide or cause to be provided, either
directly or through a designated agent: '
(i) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
("NRMSIR") and to a state information depository, if any, established in the
State of Washington (the "SID'') annual financial information and operating
data of the type included in the final official statement for the Bonds and
described in subsection (b) ofthis section ("annual financial information");
(ii) To each NRMSIR or the Municipal Securities Rulemaking
Board ("MSRB"), and to the SID, timely notice of the occurrence of any of
the following events with respect to the Bonds, if material: (I) principal and
interest payment delinquencies; (2) non-payment related defaults; (3)
unscheduled draws on debt service reserves reflecting financial difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to
perform; (6) adverse tax opinions or events affecting the tax-exempt status of
the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls
(other than scheduled mandatory redemptions of Term Bonds); (9)
defeasances; (10) release, substitution, or sale of property securing
repayment of the Bonds; and (11) rating changes; and
(iii) To each NRMSIR or to the MSRB, and to the SID, timely
notice of a failure by the City to provide required annual financial
information on or before the date specified in subsection (b) of this section.
(b) Type of Annual Financial Information Undertaken to be Provided.
The annual' financial information that the City undertakes to provide in subsection
(a) of this section:
(i) Shall consist of (1) annual financial statements prepared
(except as noted in the financial statements) in accordance with applicable
generally accepted accounting principles promulgated by the Government
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Accounting Standards Board ("GASB"), as such principles may be changed
from time to time, which statements shall not be audited, except, however,
that if and when audited financial statements are otherwise prepared and
available to the City they will be provided; (2) authorized, issued and
outstanding balance of general obligation bonds; and (3) assessed
valuation for the fiscal year;
(ii) Shall be provided to each NRMSIR and the SID, not later
than the last day of the ninth month after the end of each fiscal year of the
City (currently, a fiscal year ending December 31), as such fiscal year may
be changed as required or permitted by State law, commencing with the
City's fiscal year ending December 31,2003; and
(iii) May be provided in a single or multiple documents, and may
be incorporated by reference to other documents that have been filed with
each NRMSIR and the SID, or, if the document incorporated by reference is
a "final official statement" with respect to other obligations of the City, that
has been filed with the MSRB.
(c) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter,rating agency, NRMSIR, the SID or the MSRB, under the
circumstances and in the manner permitted by the Rule.
The City will give notice to each NRMSIR or the MSRB, and the SID, of the
substance (or provide a copy) of any amendment to the Undertaking and a brief
statement of the reasons for the amendment. If the amendment changes the type of
annual financial information to be provided, the ~ual [mancial information
containing the amended financial information will include a narrative explanation of
the effect of that change on the type of information to be provided:
(d) Beneficiaries. The Undertaking evidenced by this section shall inure
to the benefit of the City and any holder of Bonds, and shall not inure to the benefit
of or create any rights in any other person.
(e) Termination. of Undertaking. The City's obligations under this
Undertaking shaIl terminate upon the legal defeasance of all of the Bonds. In
addition, the City's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the City to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed by
an opinion of nationally recognized bond counselor other counsel familiar with
federal securities laws delivered to the City, and the City provides timely notice of
such termination to each NRMSIR or the MSRB and the SID.
(f) Remedy for Failure to Comply with Undertaking. As soon as
practicable after the City learns of any failure to comply with the Undertaking, the
City will proceed with due diligence to cause such noncompliance to be corrected.
No failure by the City or other obligated person to comply with the Undertaking
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shall constitute a default in respect ofthe Bonds. The sole remedy of any holder of a
Bond shall be to take such actions as that holder deems necessary, including seeking
an order of specific performance from an appropriate court, to compel the City or
other obligated person to comply with the Undertaking.
(g) Designation of Official Responsible to Administer Undertaking. The
Director of Finance of the City (or such other officer of the City who may in the
future perform tlie duties of that office) or his or her designee is authorized and
directed in his or her discretion to take such further actions as may be necessary,
appropriate or convenient to carry out the Undertaking of the City in respect of the
Bonds set forth in this section and in accordance with the Rule, including, without
limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality with respect to the Bonds, and, if
material, preparing and disseminating notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of the Rule with respect to the Bonds,
and obtaining from such person an undertaking to provide any annual
financial information and notice of material events for that person in
accordance with the Rule;
(iv) Selecting, engaging and compensating designated agents and
consultants, including but not limited to financial advisors and legal counsel,
to assist and advise the City in carrying out the Undertaking; and"
(v) Effecting any necessary amendment of the Undertaking.
Section 18. Bond Insurance. The City is authorized to purchase from the Bond Insurer
the Financial Guaranty Insurance Policy insuring the prompt payment of the principal of and
interest on the Bonds and agrees to the conditions for obtaining that policy, including the
payment of the premium therefor. Any notice required to be given to the Bond Insurer shall be
sent by certified or registered mail to Ambac Assurance Corporation, One State Street Plaza,
New York, New York 10004.
While the Financial Guaranty Insurance Policy is in effect, the City or the Bond Registrar
shall furnish to the Bond Insurer (to the attention of the Surveillance Department, unless
otherwise indicated):
(a) As soon as practicable after the filing thereof, copies of any
financial statements, audits and annual reports of the City;
(b) copies of any notices given to the registered owners of the Bonds,
including, without limitation, notices of any redemption of or defeasance of
Bonds, and any certificate rendered pursuant to this ordinance relating to the
security for the Bonds;
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(c) to the extent that the City has entered into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as a party
to be notified; and
(d) such additional information the Bond Insurer may reasonably
request.
The Bond Registrar shall notify the Bond Insurer (to the attention of the General Counsel
Office) of any failure of the City to provide relevant notices and certificates.
The City will permit the Bond Insurer to discuss the affairs, finances and accounts of the
City or any information the Bond Insurer may reasonably request regarding the security for the
Bonds with appropriate officers of the City. The Bond Registrar and the City will permit the
Bond Insurer to have access to and make copies of all books and records relating to the Bonds at
any reasonable time.
The Bond Insurer shall have the right to direct an accounting at the City's expense, and
the City's failure to comply with such direction within 30 days after receipt of written notice of
the direction from the Bond Insurer shall be deemed a default hereunder unless compliance
cannot occui within such period. In that event and only if an extension would not materially
adversely affect the interest of any registered owner of the Bonds, that 30-day period will be
extended so long as compliance is begun within that period and diligently pursued.
Section 19. Payment Procedures Under Bond Insurance. The Bond Insurer requires that
the following sections be included in this ordinance:
"As long as the bond insurance shall be in full force and effect, the
Obligor, the Trustee and any Paying Agent agree to comply with the following
provisions"
"(a) At least one (1) day prior to all Interest Payment Dates the Trustee
or Paying Agent [the Bond Registrar], if any, will determine whether there will be
sufficient funds in the Funds and Accounts to pay the principal of or interest on
the Obligations on such Interest Payment Date. If the Trustee or Paying Agent, if
any, determines that there will be insufficient funds in such FW1ds or Accounts,
the Trustee or Paying Agent, if any, shall so notify Ambac Assurance. Such
notice shall specify the amount of the anticipated deficiency, the Obligations to
which such deficiency is applicable and whether such Obligations will be
deficient as to principal or interest, or both. If the Trustee or Paying Agent, if
any, has not so notified Ambac Assurance at least one (1) day prior to an Interest
Payment Date, Ambac Assurance will make payments of principal or interest due
on the Obligations on or before the first (1st) day next following the date on
which Ambac Assurance shall have received notice of nonpayment from the
Trustee or Paying Agent, if any.
"(b) the Trustee or Paying Agent, if any, shall, after giving notice to
Ambac Assurance as provided in (a) above, make available to Ambac Assurance
and, at Ambac Assurance's direction, to The Bank of New York, as insurance
trustee for Ambac Assurance or any successor insurance trustee (the "Insurance
Trustee"), the registration books of the Obligor maintained by the Trustee or
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Paying Agent, if any, and all records relating to the Funds and Accounts
maintained under this ordinance.
"(C) the Trustee or Paying Agent, if any, shall provide Ambac
Assurance and the Insurance Trustee . with a list of registered owners of
Obligations. entitled to receive principal or interest payments from Ambac
Assurance under the terms of the Financial Guaranty Insurance Policy, and shall
make arrangements with the Insurance Trustee (i) to mail checks or drafts to the
registered owners of Obligations entitled to receive full or partial interest
payments from Ambac Assurance and (ii) to pay principal upon Obligations
surrendered to the Insurance Trustee by the registered owners of Obligations
entitled to receive full or partial principal payments from Ambac Assurance.
"(d) the Trustee or Paying Agent, if any, shall, at the time it provides
notice to Ambac Assurance pursuant to (a) above, notify registered owners of
Obligations entitled to receive the payment of principal or interest thereon from
Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance
will remit to them all or a part of the interest payments next coming due upon
proof of Bondholder entitlement to interest payments and delivery to the
Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate
assignment of the registered owner's right to payment, (iii) that should they be
entitled to receive full payment of principal from Ambac Assurance, they must
surrender their Obligations (along with an appropriate instrument of assignment in
form satisfactory to the Insurance Trustee to permit ownership of such
Obligations to be registered in the name of Ambac Assurance) for payment to the
Insurance Trustee, and not the Trustee or Paying Agent, if any, and (iv) that
should they be entitled to receive partial payment of principal from Ambac
Assurance, they must first surrender their Obligations for payment thereon first to
the Trustee or Paying Agent, if any, who shall note on such Obligations the
portion of the principal paid by the Trustee or Paying Agent, if any, and then,
along with an appropriate instrument of assignment in form satisfactory to the
Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid
portion of principal.
"(e) in the event that the Trustee or Paying Agent, if any, has notice
that any payment of principal of or interest on a Bond which has become Due for
Payment and which is made to a Bondholder by or on behalf of the Obligor has
been deemed a preferential transfer and theretofore recovered from its registered
owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy
in accordance with the final, nonappealable order of a court having competent
jurisdiction, the Trustee or Paying Agent, if any, shall, at the time Ambac
Assurance is notified pursuant to (a) above, notify all registered owners that.in the
event that any registered owner's payment is so recovered, such registered owner
will be entitled to payment from Ambac Assurance to the extent of such recovery
if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if
any, shall furnish to Ambac Assurance its records evidencing the payments of
principal of and interest on the Obligations which have been made by the Trustee
or Paying Agent, if any, and subsequently recovered from registered owners and
the dates on which such payments were made.
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"(f) in addition to those rights granted Ambac Assurance under this
ordinance, Ambac Assurance shall, to the extent it makes payment of principal of
or interest on Obligations, become subrogated. to the rights of the recipients of
such payments in accordance with the terms of the Financial Guaranty Insurance
Policy, and to evidence such subrogation (i) in the case of subrogation as to
claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac
Assurance's rights as subrogee on the registration books of the Obligor maintained
by the Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of
proof of the payment of interest thereon to the registered owners of the
Obligations, and (ii) in the case of subrogation as to claims for past due principal,
the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as
subrogee on the registration books of the Obligor maintained by the Trustee or
Paying Agent, if any, upon surrender of the Obligations by the registered owners
thereof together with the proof of the payment of principal thereof."
Section 20. Parties Interested Herein. To the extent that this ordinance confers upon or
gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this
ordinance, the Bond Insurer is explicitly recognized as being a third-party beneficiary hereunder
and ... may enforce any such right, remedy or claim conferred, given or granted hereunder.
Nothing expressed or implied in this ordinance is intended or shall be construed to confer upon,
or to give or grant to, any person or entity, other than the City, the Bond Insurer and the
registered owners of the Bonds, any right, remedy or claim under or by reason of this ordinance
or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and
agreements in this ordinance contained by and on behalf of the City shall be for the sole and
exclusive benefit of the City, the Bond Insurer and the registered owners of the Bonds.
Notwithstanding any other provision of this ordinance, the City shall notify the Bond
Insurer immediately if at any time there are insufficient funds to make any payments of principal
and/or interest as required and immediately upon the occurrence of any event of default
hereunder. Anything in this ordinance to the contrary notwithstanding, upon the occurrence and
continuance of an event of default, the Bond Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Bond owners for the benefit of the Bond
owners under this ordinance.
Any provision of this ordinance expressly recognizing or granting rights in or to the Bond
Insurer may not be amended in any manner which affects the rights of the Bond Insurer
hereunder without the prior written consent of the Bond Insurer. Unless otherwise provided in
this section, the Bond Insurer's consent shall be required, in addition to Bond owner consent,
when required, for the following purposes: (i) execution and delivery of any supplemental
ordinance, and (ii) initiation or approval of any other action which requires Bond owner consent.
Any reorganization or liquidation plan with respect to the City must be acceptable to the
Bond Insurer. In the event of any reorganization or liquidation, the Bond Insurer shaH have the
right to vote on behalf of all Bond owners who hold Ambac Assurance-insured bonds absent a
default by the Bond Insurer under the applicable Financial Guaranty Insurance Policy insuring
such bonds.
Section 21. Effective Date of Ordinance. This ordinance shall take effect and be in force
from and after its passage and five (5) days following its publication as required by law.
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PASSED by the City Council and APPROVED by the Mayor of the City of Bainbridge
Island, Washington, at a regular open public meeting thereof, this 20th day of November, 2002.
Mayor
ATTEST:
,~{P ~A-/
City Clerk
APPROVED AS TO FORM:
City Attorney
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