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ORD 2004-15 OPEN SPACE UTGO BONDS $3,500,000CITY OF BAINBRIDGE ISLAND, WASHINGTON ORDINANCE NO. 2004-15 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 $3,500,000, par value of Unlimited Tax General Obligation Bonds, 2004, 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; providing for bond insurance; and approving the sale and providing for the delivery of the bonds to Banc of America Securities LLC of Seattle, Washington. Passed July 14, 2004 This document prepared by: Foster Pepper & Shefelman PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 50418296.04 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. TABLE OF CONTENTS Page Authorization of Bonds Pursuant to Election .................................................................. 1 Description of Bonds ....................................................................................................... 2 Registration and Transfer of Bonds ................................................................................. 2 Payment of Bonds ....................................................................... ' ..... 3 Redemption Provisions and Open Market Purchase of Bonds ....................................... 4 Notice of Redemption ...................................................................................................... 4 Failure to Redeem Bonds ................................................................................................. 4 Pledge of Taxes ................................................................................................................ 5 Form and Execution of Bonds ......................................................................................... 5 Bond Registrar ................................................................................................................. 5 Preservation of Tax Exemption for Interest on Bonds .................................................... 6 Small Governmental Issuer Arbitrage Rebate Exception and Designation of Bonds as "Qualified Tax-Exempt Obligations.". ........................................................ 6 Refunding or Defeasance of the Bonds ........................................................................... 6 Bond Fund and Deposit of Bond Proceeds ..................................................................... 7 Approval of Bond Purchase Contract .............................................................................. 7 Preliminary Official Statement Deemed Final ....~ ........................................................... 8 Undertaking to Provide Continuing Disclosure .............................................................. 8 Bond Insurance .............................................................................................................. 11 Payment Procedures Under Financial Guaranty Policy ................................................ 11 Parties Interested Herein ................................................................................................ 13 Effective Date of Ordinance .......................................................................................... 14 -i- 50418296.04 CITY OF BAINBRIDGE ISLAND, WASHINGTON ORDINANCE NO. 2004-15 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 $3,500,000, par value of Unlimited Tax General Obligation Bonds, 2004, 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; providing for bond insurance; 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, Banc 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, THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, DO ORDAIN as follows: Section 1. Authorization of Bonds Pursuant to Election. The City of Bainbridge Island, Washington (the "City"), shall issue and sell the total $3,500,000 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 the same 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. -1- 50418296.04 Section 2. Description of Bonds. The bonds shall be called Unlimited Tax General Obligation Bonds, 2004, of the City (the "Bonds"); shall be in the aggregate principal amount of $3,500,000; shall be dated their date of initial delivery; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional designation as the fiscal agent of the State of Washington (as the same may be designated by the State of Washington from time to time) (the "Bond Registrar") deems necessary for purposes of identification; shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) payable semiannually on each June 1 and December 1, commencing June 1, 2005, to the maturity or earlier redemption of the Bonds; and shall mature on December 1 in years and amounts and bear interest at the rates per annum as follows: Maturity Interest Years Amounts Rates 2005 $165,000 3.000% 2007 240,000 3.000 2009 250,000 3.500 2011 260,000 4.000 2012 140,000 3.500 2013 145,000 4.125 2014 155,000 3.900 2015 165,000 4.000 2016 165,000 4.100 2017 175,000 4.250 2018 185,000 4.300 2019 190,000 4.400 2020 195,000 4.450 2021 210,000 4.550 2022 215,000 4.600 2023 645,000 4.650 The life ofthe capital facilities to be acquired with the proceeds ofthe 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 shall be without cost to the owner or transferee. -2- 50418296.04 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 April 22, 1999, 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). 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 payment date to the registered owners at the addresses appearing on the Bond Register on the 15th 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 to the Bond Registrar. 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. -3- 50418296.04 Section 5. Redemption Provisions and Open Market Purchase of Bonds. Bonds maturing in the years 2005 through 2014, inclusive, 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, 2015, prior to their stated maturity dates at any time on or after December 1, 2014, 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 to 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. 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 acceptable to the City 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 the Bond Insurer, at its principal office in New York, New York, or its successor, to Banc of America Securities LLC, at its principal office in Seattle, Washington, 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 shall 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 -4- 50418296.04 in the bond redemption fund hereinafter created and the Bond has been called for payment by giving notice of that 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. 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, 2004, 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 on the date of issuance of the Bonds. Section 10. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, 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 -5- 5041829604 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 11. 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 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 purposes of Section 265(b)(3) of the 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 direct obligations of the United States of America 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 50418296.04 -6- 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 account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. 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 assignment and pledge of the taxes and all other 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. 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. 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, 2004 (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 has been previously created and established in the office of the Director of Finance a special fund designated as the Open Space Acquisition Fund (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. Banc 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. -7- 50418296.04 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. Section 16. Preliminary Official Statement Deemed Final. The City Council has been provided with copies of a preliminary official statement dated July 1, 2004 (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)(1), 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 ("SEC") 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 de.signated 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) of this 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: (1) 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) -8- 50418296.04 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 applicable to governmental units, as such principles may be changed from time to time and as permitted by State law, 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; (3) assessed valuation for the fiscal year; and (4) ad valorem property tax rate and amount collected in 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 ina 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 annual financial 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. -9- 50418296.04 (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 shall 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 counsel or 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 shall constitute a default in respect of the 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 the 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. -10- 5041829604 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 at no cost to the Bond Insurer; (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) request. such additional information the Bond Insurer may reasonably The Bond Registrar shall notify the Bond Insurer 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. Section 19. Payment Procedures Under Financial Guaranty Policy. 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) business 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 50418296.04 -11- Funds 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) business 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 (lst) business 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 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 Holder 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 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. -12- 50418296.04 "(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 Holder 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. "(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 -13- 50418296.04 enforcement of all rights and remedies granted to the Bond owners for the benefit of the Bond owners pursuant to state law. 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. The Bond Insurer reserves the right to charge the City a reasonable fee for any such consent or amendment to this ordinance while the Financial Guaranty Insurance Policy is outstanding. 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 shall 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. 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 14th day of July, 2004. ATTEST: Mayor Ci~ Clerk APPROVED AS TO FORM: City Attorney -14- 5041829604 CERTIFICATION I, the undersigned, City Clerk of the City of Bainbridge Island, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 2004-15 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on July 14, 2004, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after the publication of its summary in the City's official newspaper; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of July, 2004. CITY OF BAINBRIDGE ISLAND, WASHINGTON Sdsan Kasper, City Clerk 50418296.04 David Trageser Vice President Pacific Public Finance Banc of America Securities~~ Honorable City Councilmembers City of Bainbridge Island 280 Madison Ave N Bainbridge Island, WA 98110 July 14, 2004 RE: City of Bainbridge Island, Washington Unlimited Tax General Obligation Bonds, 2004 Honorable City Councilmembers: Banc of America Securities LLC (the "Underwriter") offers to purchase from the City of Bainbridge Island (the "Issuer" or the "City") all of the above-described Bonds (the "Bonds"), on the terms and based upon the covenants, representations and warranties set forth below and in Appendix A, which is incorporated into this agreement (the "Purchase Agreement") by reference, and contains a brief description of the Bonds, including principal amounts, maturities, interest rates, purchase price, and the proposed date and place of delivery and payment (the "Closing"). Other provisions of this Purchase Agreement are as follows: 1. Prior to the Closing, the Issuer will approve an Official Statement (defined hereinafter) and will pass an Ordinance authorizing the Bonds (the "Bond Ordinance") with such changes as are requested by the Issuer and Underwriter and their respective counsel. The Underwriter is authorized by the Issuer to use these documents and the information contained in them in connection with the public offering of the Bonds and the Official Statement in connection with the sale and delivery of the Bonds. 2. The Issuer, to the best of its knowledge, represents and covenants to the Underwriter that: (A) It has, and will have at the Closing, the power and authority to enter into and perform this Purchase Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the Underwriter; (B) This Purchase Agreement and the Bonds do not and will not conflict with, or constitute or create a breach or default under, any existing law, regulation, order or agreement to which the Issuer is subject; (C) Other than the Bond Ordinance, no governmental approval or authorization is required to be obtained by the City in connection with the sale of the Bonds to the Underwriter; (D) The Issuer has complied with all prior undertakings to provide ongoing disclosure information pursuant to paragraph (d)(2) of the United States Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule") as required under paragraph (b)(5) of the Rule and will have made an undertaking to provide continuing disclosure to meet the conditions of paragraph (d)(2) of the Rule as provided in the Bond Ordinance; Banc of Amedca Securities LLC, member NYSE/NASD/SIPC, is a subsidiary of Bank of Amedca Corporation 800 Fifth Avenue, Suite 3400, Seattle, WA 98104, Tel 206-358-8922/Fax 206-358-8818, david.trageser@bankofamedca,com City of Bainbridge Island, Washington July 14, 2O04 Page 2 o (E) (F) (G) The Issuer hereby ratifies and approves the distribution of the Preliminary Official Statement, dated July 1, 2004 (together with the appendices thereto, any documents incorporated therein by reference, and any supplements or amendments thereto, the ("Preliminary Official Statement"), in connection with the public offering of the Bonds by the Underwriter and deems such Preliminary Official Statement final as of its date for purposes of paragraph (b)(1) of the Rule; except for the omission of maturity amounts, interest rates, redemption dates and prices, ratings, identification of the Bond Insurer, terms relating to the Bond Insurance Policy, underwriter's discount and related terms of the Bonds dependent on such matters; The Issuer agrees to deliver or cause to be delivered to the Underwriter within seven business days after signing of this Purchase Agreement and in sufficient time to accompany any confirmation that requests payment from any customer of the Underwriter, copies of a final Official Statement (the "Official Statement") in sufficient quantity to permit the Underwriter to comply with the requirements of paragraph (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board ("MSRB"); If, between the date of this Purchase Agreement and 25 days after the end of the underwriting period, any event shall occur or any preexisting fact shall become known by the Issuer which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Issuer shall promptly notify the Underwriter, and if, in the reasonable opinion of the Underwriter, such event requires the preparation and distribution of a supplement or amendment to the Official Statement, the Issuer will at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriter, which approval shall not be unreasonably withheld. The end of the underwriting period shall be the date of Closing unless the Issuer is informed otherwise in writing by the Underwriter and, in any event, the end of the underwriting period shall be no later than 25 days following the Closing; The Underwriter agrees to deliver the appropriate number of copies of the Official Statement to each of the nationally recognized municipal securities information repositories on the business day on which the Official Statement is available, and in any event no later than seven business days after the date thereof. The Underwriter shall have the right to cancel this Purchase Agreement by notifying the Issuer of its election to do so if, after the execution of this Purchase Agreement and prior to the Closing: (A) A decision by a court of the United States or the United States Tax Court shall be rendered, or a ruling or a regulation (final, temporary, or proposed) by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be issued and in the case of any such regulation, published in the Federal Register, or legislation shall have been introduced in, enacted by or favorably reported to either the House of Representatives or the Senate of the United States with respect to federal taxation upon interest received on bonds of the type and character of any of the Bonds which, in the reasonable judgment of the Underwriter, materially adversely affects the marketability of the Bonds or their sale by the Underwriter, at the contemplated public offering prices; or City of Bainbridge Island, Washington July 14, 2004 Page 3 o (B) The United States shall have become engaged in hostilities which have resulted in declaration of war or national emergency, or other national or international calamity or other event shall have occurred or accelerated to such an extent as, in the reasonable opinion of the Underwriter, to have a materially adverse affect on the marketability of the Bonds; or (C) There shall have occurred a general suspension of trading on the New York Stock Exchange; or (D) A general banking moratorium shall have been declared by United States, New York State or Washington State authorities; or legislation shall hereafter be enacted, or actively considered for enactment, with an effective date prior to the date of the delivery of the Bonds, or a decision by a court of the United States shall hereafter be rendered, or a ruling or regulation by the Securities and Exchange Commission or other govermnental agency having jurisdiction on the subject matter shall hereafter be made, the effect of which is that: (i) The Bonds are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and then in effect, or (ii) The Bond Ordinance is not exempt from the registration, qualification or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect, or (E) A stop order, ruling or regulation by the Securities and Exchange Commission shall hereafter be issued or made, the effect of which is that the issuance, offering or sale of the Bonds, as contemplated herein or in the Official Statement, is in violation of any provision of the Securities Act of 1933, as amended and as then in effect, and which, in its reasonable judgment, adversely affects the marketability of the Bonds or the market price thereof. The Underwriter's obligations hereunder are also subject to the following conditions: (A) At or prior to the Closing, the Issuer will deliver, make available to the Underwriter, or have adopted: (i) The Bonds, fully registered in book-entry form only in the name of Cede & Co., as bond owner and nominee for The Depository Trust Company ("DTC"); (ii) A certificate from an authorized officer of the Issuer, in form and substance acceptable to the Issuer and the Underwriter, stating that execution of the Certificate shall constitute execution of the Official Statement by the Issuer, that the Official Statement (except for information concerning the Bond Insurer (hereafter defined), the Underwriter, the Bond Registrar and DTC), to the knowledge and belief of such officer, after due review, as of its date, did not and as of the date of Closing, does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in the light of the circumstances under which made, not misleading, and that the representations of the Issuer contained in this Purchase Agreement were tree and correct when made and are tree and correct as of the Closing; and that there has not been any material adverse change in the normal operations or financial condition of the City since the date of the Preliminary Official Statement; City of Bainbridge Island, Washington July 14, 2004 Page 4 (iii) The approving opinion of Bond Counsel dated the day of Closing in the form attached to the Official Statement; (iv) The Underwfiter's obligations are subject to the issuance of a municipal bond insurance policy on the Bonds by Ambac Assurance Corp. (the "Bond Insurer"), and the assignment to the Bonds of a rating of "Aaa" and an underlying rating of "Aa3" by Moody's Investors Service Inc.; (v) The following documents executed by authorized officers of the Issuer: (a) A certificate, dated the day of the Closing to the effect that no litigation or other proceedings are pending or threatened in any way affecting the issuance, sale or delivery of, or security for, any of the Bonds, except as identified in the Official Statement; (b) A certificate setting forth the facts, estimates and circumstances in existence on the date of Closing which establish that it is not expected that the proceeds of the Bonds will be used in a manner that could cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code and any applicable regulations thereunder; (c) A certified copy of the Bond Ordinance. The Issuer will pay the cost of preparing, printing and executing the Bonds if any, the fees and disbursements of Bond Counsel, bond rating fees, bond insurance fees, Financial Advisor, bond registration, travel and lodging expenses of the Issuer's employees, and other expenses of the Issuer. The Underwriter will pay fees and disbursements of the Underwfiter's travel expenses, official statement printing costs, and other expenses of the Underwriter. As a convenience to the Issuer, the Underwriter may from time to time make arrangements for certain items for which the Issuer is responsible hereunder. The Underwriter also may advance for the Issuer's account when approved or authorized by the Issuer the cost of the items for which the Issuer is responsible by making payments to third-party vendors. In such cases, the Issuer shall pay such costs or expenses directly, upon submission of appropriate invoices by the Underwriter, or promptly reimburse the Underwriter in the event the Underwriter has advanced such costs or expenses for the Issuer's account. It is understood that the Issuer shall be primarily responsible for payment of all such items and that the Underwriter may agree to advance the cost of such items from time to time solely as an accommodation to the Issuer and on the condition that it shall be reimbursed in full by the Issuer. This Purchase Agreement is intended to benefit only the parties hereto, and the Issuer's representations and warranties shall survive any investigation made by or for the Underwriter, delivery and payment for the Bonds, and the termination of this Purchase Agreement. Should the Issuer fail to satisfy any of the foregoing conditions or covenants, or if the Underwriter's obligations are terminated for any reasons permitted under this Purchase Agreement, then neither the City of Bainbridge Island, Washington July 14, 2004 Page 5 Underwriter nor the Issuer shall have any further obligations under this Purchase except that any expenses incurred shall be borne in accordance with Section 6 hereof. 8. This offer expires on the date, and at the time, set forth on Appendix A. Agreement, Respectfully submitted, BANC OF AMERICA SECURITIES LLC by: David Trageser, Vice President Accepted July 14, 2004 ~Lt: o f B a~~.~_~~d,~/W~~o~/~ Title: ~.//~~~ ~} APPENDIX A DESCRIPTION OF BONDS (a) Purchase Price: $3,502,334.00 ($100.066686 per $100) (b) Dated: July 28, 2004 (c) Par: $3,500,000 (d) Denominations: $5,000 or any integral multiple thereof within a single maturity (e) Form: Book-Entry only (f) Interest Payment Dates: June 1 and December 1, commencing June 1, 2005 (g) Maturity Schedule: Bonds shall mature on December 1 of each year and shall bear interest as follows: (h) (i) O) (k) Due Interest Price or Due Interest Price or Dec 1 Amount Rate Yield Dec 1 Amount Rate Yield 2005 $165,000 3.00% 1.70% 2015 $165,000 4.00% 4.00% 2006 - 2016 165,000 4.10 4.10 2007 240,000 3.00 2.60 2017 175,000 4.25 4.23 2008 - 2018 185,000 4.30 4.28 2009 250,000 3.50 3.15 2019 190,000 4.40 4.37 2010 2020 195,000 4.45 4.43 2011 260,000 4.00 3.50 2021 210,000 4.55 4.53 2012 140,000 3.50 3.60 2022 215,000 4.60 4.58 2013 145,000 4.125 3.80 2023 645,000 4.65 4.63 2014 155,000 3.90 3.90 Optional Redemption. Bonds maturing in the years 2005 through 2014, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after December 1, 2015, prior to their stated maturity dates at any time on or after December 1, 2014, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. Closing Date: July 28, 2004 Offer Expires: 11:59 p.m. July 14, 2004 Bond Counsel: Foster Pepper & Shefelman PLLC For Information Purposes Only: Gross Interest Cost Less: Net Premium Plus: Underwriter's Discount Estimated Net Interest Cost ($) Estimated Net Interest Cost (%) $1,881,986.41 (24,174.00) 21,840.00 $1,879,652.41 4.325929%