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2200ORDINANCE NO. 2200 COUNCIL MEMBER WOLFF INTRODUCED THE FOLLOWING ORDINANCE: AN ORDINANCE AUTHORIZING THE ISSUANCE OF A SEWER SYSTEM REVENUE BOND, SERIES 2011, OF THE CITY OF BLAIR, NEBRASKA, IN THE PRINCIPAL AMOUNT OF FOUR HUNDRED THOUSAND DOLLARS ($400,000), IN THE FORM OF A PROMISSORY NOTE ISSUED TO EVIDENCE INDEBTEDNESS TO THE NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY; APPROVING THE FORM OF SAID BOND (ISSUED AS A SINGLE PROMISSORY NOTE) AND RELATED LOAN AGREEMENT; PLEDGING AND HYPOTHECATING THE REVENUES AND EARNINGS OF THE SEWAGE DISPOSAL PLANT AND SANITARY SEWER SYSTEM OF SAID CITY FOR THE PAYMENT OF SAID BOND; PROVIDING FOR THE ISSUANCE AND SALE OF SAID BOND; AUTHORIZING THE DELIVERY OF SAID BOND AND RELATED LOAN AGREEMENT TO THE NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY; PROVIDING FOR THE COLLECTION, SEGREGATION AND APPLICATION OF THE REVENUES OF SAID SEWAGE DISPOSAL PLANT AND SANITARY SEWER SYSTEM OF SAID CITY; DETERMINING THAT INTEREST ON SAID BOND SHALL NOT BE EXCLUDABLE FROM GROSS INCOME FOR PURPOSES OF FEDERAL INCOME TAXATION; PROVIDING FOR THE DISPOSITION OF THE PROCEEDS OF SAID BOND AND ORDERING THE ORDINANCE PUBLISHED IN PAMPHLET FORM. BE IT ORDAINED by the Mayor and Council of the City of Blair, Nebraska, as follows: Section 1. The Mayor and Council of the City of Blair, Nebraska (the "City ") hereby find and determine as follows: (a) The City owns and operates a sewage disposal plant and sanitary sewer system which constitutes a revenue producing facility and undertaking within the meaning of such term as set forth in Sections 18 -1803 to 18 -1805 R.R.S. Neb. 2007; that said plant and system together with all additions and improvements thereto hereafter acquired or constructed are herein referred to as the "Sewer System ". (b) The Nebraska Department of Environmental Quality ( "NDEQ ") has approved a project of the City for its Sewer System consisting of extensions and improvements to the Sewer System (more specifically consisting of replacement and enlargement of the existing sewer main on College Drive from 23rd Street to 28th Street and related improvements) which has been designated as Project No. C317638 (the "Project ") and has agreed to lend from monies in NDEQ's Wastewater Treatment Facilities Treatment Construction Loan Fund or from other sources in the total principal amount of $400,000 (the "NDEQ Loan ") and in connection with such loan has agreed to accept one or more bonds payable from the revenues of the Sewer System to be evidenced by and in the form of a single promissory note (the "NDEQ Note" and also sometimes referred to herein as the "Series 2011 Bond "), with such loan to be governed as to terms and conditions by an agreement with NDEQ entitled "Contract for Loan between Nebraska Department of Environmental Quality and the City of Blair, Nebraska, Project No. C317638" (the "NDEQ Contract "). c) The City has issued and outstanding the following bonds which are a lien upon and secured by a pledge of the revenue and earnings of the Sewer System (collectively, the "Outstanding Bonds "): Sewer System Revenue Refunding Bonds, Series 2004, Date of Original Issue - December 15, 2004, issued pursuant to Ordinance No. 2017 of the City (the "2004 Ordinance ") of which $560,000 in principal amount are presently outstanding (the "Series 2004 Bonds "); Sewer System Revenue Bonds, Series 2010, Date of Original Issue — August 17, 2010, issued pursuant to Ordinance No. 2190 of the City (the "2010 Ordinance ") of which $1,645,000 in principal amount are presently outstanding (the "Series 2010 Bonds "); The Series 2004 Bonds and the Series 2010 Bonds represent the only indebtedness of the City for which the revenues and earnings of the Sewer System have been pledged. (d) Section 13 of the Series 2004 Ordinance and Section 13 of the Series 2010 Ordinance permit the issuance of "Additional Bonds" which are payable on a parity with the Outstanding Bonds and equally and ratably secured therewith under the terms of the Series 2004 Ordinance and the Series 2010 Ordinance provided that either (i) the "Net Revenues" (as defined in each of such ordinances and as defined in this Ordinance) have been at least equal to 1.25 times the "Average Annual Debt Service Requirements" (as defined in each of such ordinances and as defined in this Ordinance) of the Outstanding Bonds and the Additional Bonds proposed to be issued or (ii) the City shall have received a projection (the "Projection ") made by a firm of consulting engineers projecting that such "Net Revenues" in each of the three full fiscal years after the issuance of such "Additional Bonds" will be at least equal to 1.25 time such "Average Annual Debt Service Requirements" of the Outstanding Bonds and the proposed Additional Bonds; and provided further that such Additional Bonds shall be issued pursuant to an ordinance which shall provide for an increase in the monthly credits to Bond Payment Account sufficient to pay, when due, the principal of and interest on the Outstanding Bonds and the proposed Additional Bonds; with respect to such requirements the following determinations are hereby made: (i) this Ordinance provides for an increase in the monthly credits to Bond Payment Account sufficient to pay, when due, the principal of and interest on the Outstanding Bonds and the Series 2011 Bond (as the proposed Additional Bonds to be issued); and (ii) the City is in the process of obtaining the Projection for each of the fiscal years ending September 30, 2012, 2013 and 2014 (which may take into consideration the amount of any principal forgiveness provided for in the NDEQ Contract) and such Projection shall be placed on file with the City Clerk prior to the issuance of the Series 2011 Bond. (e) In connection with the NDEQ Loan, as evidenced by the Series 2011 Bond, it is necessary and advisable for the City to approve the execution and delivery of the NDEQ Contract and the NDEQ Note in substantially the forms attached hereto. (f) All conditions, acts and things required by law to exist or to be done precedent to the issuance of the Series 2011 Bond as an Additional Bond of equal lien and standing with the Outstanding Bonds and as provided for in the Series 2004 Ordinance and the Series 2010 Ordinance do exist and have been done in regular and due form and time as required by law. Section 2. In addition to the definitions provided in parentheses elsewhere in this Ordinance, the following definitions of terms shall apply, unless the context shall clearly indicate otherwise: (a) the term "Additional Bonds" shall mean any and all bonds hereafter issued by the City pursuant to the terms of this Ordinance which are equal in lien to the Series 2010 Bonds and the Series 2004 Bonds, including any such bonds issued pursuant to Section 6 and refunding bonds issued pursuant to Section 7 of this Ordinance. (b) the term "Average Annual Debt Service Requirements" shall mean that number computed by adding all of the principal and interest due when computed to the absolute maturity of the bonds for which such computation is required and dividing by the number of years remaining that the longest bond of any issue for which such computation is required has to run to maturity. In making such computation, the principal of any bonds for which mandatory redemptions are scheduled shall be treated as maturing in accordance with such schedule of mandatory redemptions. (c) the term "Deposit Securities" shall mean obligations of the United States of America, direct or unconditionally guaranteed, including any such obligations issued in book entry form. (d) the term "Net Revenues" shall mean the gross revenues derived by the City from the ownership or operation of the Sewer System, including investment income, but not including any income from sale or disposition of any property belonging to or forming a part of the Sewer System, less the ordinary expenses for operating and maintaining the Sewer System payable from the Operation and Maintenance Account described in Section 4 of this Ordinance. Operation and Maintenance expenses for purposes of determining "Net Revenues" shall not include depreciation, amortization of financing expenses or interest on any bonds or other indebtedness. Net Revenues for all purposes of this Ordinance shall be shown by an audit for the fiscal year in question as conducted by an independent certified public accountant or firm of such accountants, provided, however, that in the case of issuance of Additional Bonds, for that period from the end of each fiscal year until the financial statements reported on by the City's accountants are available, Net Revenues shall either (i) be based upon the most recent fiscal year for which there are financial statements which have been reported on by such accountants so long as the unaudited financial information for the then most recently completed fiscal year as certified by the City Treasurer would not result in a contrary determination, if such unaudited financial information were deemed the completed and reported on results or (ii) based upon a report of the City's accountants that the completed and reported on results will not be less than such amount as such accountants shall confirm. (e) the term "Revenues" shall mean all of the rates, rentals, fees and charges, earnings and other monies, including investment income, from any source derived by the City of Blair, Nebraska, through its ownership and operation of the Sewer System. Section 3. To provide for the payment of the costs of the Project, there shall be and there is hereby ordered issued the Series 2011 Bond, in the form of and evidenced by a single promissory note (sometimes referred to in this Ordinance, according to the context, as the "NDEQ Note" and sometimes as the "Series 2011 Bond ") in the principal amount of Four Hundred Thousand Dollars ($400,000), with such NDEQ Note to be substantially in such form and to have such payment terms as are set forth in Exhibit A to this Ordinance, which exhibit is by such reference incorporated herein as if fully set forth. In connection with the issuance of the NDEQ Note, the City shall also enter into the NDEQ Contract in substantially the form set forth in Exhibit B to this Ordinance, which exhibit is by such reference incorporated herein as if fully set forth. The terms and conditions of the NDEQ Note and the NDEQ Contract are hereby approved and the Mayor and the City Clerk are hereby authorized to execute and deliver the NDEQ Note and the NDEQ Contract for and on behalf of the City in substantially the form presented but with such changes from the forms presented and attached hereto as such officers shall deem appropriate for and on behalf of the City. Section 4. The revenues and earnings of the Sewer System are hereby pledged and hypothecated for the payment of the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds as authorized by this Ordinance and interest on such Series 2011 Bond, Series 2010 Bonds, Series 2004 Bonds and Additional Bonds and the City does hereby agree with the holders of said Series 2011 Bond, Series 2010 Bonds, Series 2004 Bonds and Additional Bonds as follows: (a) BLAIR SEWER SYSTEM FUND - The entire gross revenues and income derived from the operation of the Sewer System shall be set aside as collected and deposited in a separate fund previously established and designated as the "Blair Sewer System Fund." For purposes of allocating the monies in the Blair Sewer System Fund, the City shall maintain the following accounts: (1) Operation and Maintenance Account; (2) Bond Payment Account; (3) Debt Service Reserve Account (with sub - accounts therein) and (4) Surplus Account. (b) OPERATION AND MAINTENANCE ACCOUNT - Out of the Blair Sewer System Fund there shall be monthly credited into the Operation and Maintenance Account such amounts as the City shall from time to time determine to be necessary to pay the reasonable and necessary expenses of operating and maintaining the Sewer System and the City may withdraw funds credited to the Operation and Maintenance Account as necessary from time to time to pay such expenses. (c) BOND PAYMENT ACCOUNT — Out of the Blair Sewer System Fund there shall be credited monthly on or before the first day of each month to the Bond Payment Account, starting with the month of May, 2011, the following amounts: (1) during the period from May 1, 2011, until and including that June 30 or December 31 (as the case may be with respect to the earliest occurring of such dates) which immediately follows the "Initiation of Operation" (as defined in the NDEQ Contract; in this Ordinance hereafter referred to as the "Initiation of Operation ") of the Project an amount such that if the same amount were credited on the first day of each calendar month from such date of credit until the next payment date upon which any amount falls due on the NDEQ Note, whether for principal or interest, the amount accumulated by such monthly credits would equal the amount falling due on such payment date on the NDEQ Note, provided, however, that such credits shall be required only as and to the extent that such payments are not provided from other sources including amounts advanced by NDEQ pursuant to the NDEQ Contract and the NDEQ Note; (2) during the period from and including that January 1 or July 1 (as the case may be with respect to the earliest occurring of such dates) which immediately follows the Initiation of Operation until the NDEQ Note has been paid in full an amount equal to one -sixth of the installment amount (principal and interest) due on the next installment payment date for the NDEQ Note; (3) During such periods and in such amounts, all such payments are as required under the terms of the Series 2004 Ordinance and the Series 2010 Ordinance with respect to the principal and interest on the Outstanding Bonds. The City Treasurer is hereby authorized and directed, without further authorization, to withdraw monies credited to the Bond Payment Account, or if the monies in such Account are insufficient, then from the Debt Service Reserve Account (but only from the designated sub - account for the specific issue) and next from the Surplus Account, an amount sufficient to pay, when due, the principal of and interest on the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds or any Additional Bonds and to transfer such amounts due to the Paying Agent and Registrar (or other paying agent for Additional Bonds), at least five (5) business days before each principal and interest payment date and to any direct payee on or before each principal and interest payment date. Upon the issuance of any Additional Bonds pursuant to this Ordinance, appropriate additional credits to the Bond Payment Account shall be provided for sufficient to pay principal and interest on said Additional Bonds. (d) DEBT SERVICE RESERVE ACCOUNT - Within the Debt Service Reserve Account there shall be established separate sub - accounts for each series of bonds payable on a parity with the Series 2011 Bond and the Outstanding Bonds from the revenues of the Sewer System, as shall be deemed appropriate by the Mayor and Council in connection with each such issue. In view of the provisions of the NDEQ Contract, it is hereby determined that no sub - account shall be established for the Series 2011 Bond. Monies credited to the Debt Service Reserve Account may be withdrawn, but only from the designated sub - account for a specific issue, as needed, to provide funds to pay, when due, the principal of and interest on the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds issued pursuant to this Ordinance, as the case may be, if the Bond Payment Account contains insufficient funds for that purpose, and the City Treasurer is hereby authorized and directed to make such withdrawal if and when needed. In the event of a withdrawal from the Debt Service Reserve Account, there shall be credited to the Debt Service Reserve Account in the month following such withdrawal all monies in the Blair Sewer System Fund remaining after making the payments required to be made in such month to the Operation and Maintenance Account and Bond Payment Account and each month thereafter all such remaining monies shall be credited to the Debt Service Reserve Account until such account has been restored to the required balance. Upon the issuance of any Additional Bonds, the amount required to be accumulated and maintained in the Debt Service Reserve Account, in a separate sub - account for each such issue of Additional Bonds, shall be set at an amount equal to the Average Annual Debt Service Requirements on the proposed issue of Additional Bonds or such greater or lesser amount (which may be $ -0 -), if any as determined appropriate by the Mayor and Council in connection with any such issue of Additional Bonds. Any such required increase shall be provided for either by credit made from bond proceeds or current funds of the Sewer System then available or by equal monthly credits from the Blair Sewer System Fund made in such amounts so that the required amount shall be accumulated in a period of not more than five years. Each sub - account in the Debt Service Reserve Account shall be held solely for the specific issue for which it is established. In the event of withdrawal from any such sub - account which results in the amount in such sub - account being deficient to meet the required balance, available amounts for restoring sub - account balances shall be credited to each deficient sub - account on a pro rata basis in accordance with the respective outstanding principal amounts for those issues for which the respective sub - accounts are then deficient. When the Series 2010 Bonds, the Series 2004 Bonds or any issue of Additional Bonds for which a sub - account has been established is no longer outstanding, the particular sub - account for such issue shall no longer be required to be maintained. Anything in this subsection 4(d) to the contrary notwithstanding, the amount required to be maintained in the Debt Service Reserve Account with respect to the Series 2010 Bonds, the Series 2004 Bonds or any issue of Additional Bonds shall not at any time exceed the maximum amount permitted to be invested without yield restriction under Sections 103(b) and 148 of the Internal Revenue Code of 1986, as amended, and applicable regulations of the United States Treasury Department. (e) SURPLUS ACCOUNT - Monies in the Blair Sewer System Fund remaining after the credits required in the foregoing Subsections 4(b), 4(c), and 4(d) shall be credited to the Surplus Account. Monies in the Surplus Account may be used to make up any deficiencies in any of the preceding Accounts, to retire any of the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds or any Additional Bonds prior to their maturity, to pay principal of and interest on any junior lien indebtedness incurred with respect to the Sewer System, to provide for replacements or improvements for the Sewer System or to provide for any other lawful purpose of the City (including payments in lieu of taxes or interfund transfers) as directed by the Mayor and City Council. The provisions of this Section shall require the City to maintain a set of books and records in accordance with such accounting methods and procedures as are generally applicable to municipal utility enterprises, which books and records shall show credits to and expenditures from the several Accounts required by this Section. Monies credited to the Blair Sewer System Fund or any of the Accounts therein as established by this Ordinance shall be deposited or invested separate and apart from other City funds. Except as specified below for the Debt Service Reserve Account, the City shall not be required to establish separate bank or investment accounts for the Accounts described in Subsections 4(b), 4(c), 4(d), and 4(e). Monies credited to the Debt Service Reserve Account shall, if maintained in a demand or time deposit account, be kept in a separate account and not commingled with other Sewer System funds or accounts. If invested, monies credited to the Debt Service Reserve Account may be commingled with other Sewer System funds or accounts so long as the City maintains books and records clearly identifying the specific investments, or portions thereof, which belong to the Debt Service Reserve Account and the respective sub - accounts therein. Monies in any of said Accounts except the Debt Service Reserve Account may be invested in investments permissible for a city of the first class. Monies in the Debt Service Reserve Account may be invested in Deposit Securities. Monies invested from the Debt Service Reserve Account shall be invested to mature in not more than five years. Investments held for the Debt Service Reserve Account will be valued at cost for purposes of determining compliance with the requirements of this Ordinance as to the amount required to be maintained in the Debt Service Reserve Account or any sub - account therein. Income from or profit realized from investments for any Account or any sub - account shall be credited to such Account or sub - account until such Account or sub - account contains any amount then required to be therein, and thereafter such income or profit shall be transferred to the Blair Sewer System Fund and treated as other revenues from the operation of the Sewer System. The ordinance authorizing any series of Additional Bonds for which a debt service reserve sub - account is to be established shall establish the terms for investment related to such sub - account. The pledge and hypothecation provided for the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds in this Ordinance is intended to constitute and shall provide for a first and prior pledge and lien upon and security interest in the revenues and earnings of the Sewer System superior to any pledge, lien or security interest made or given with respect to any other indebtedness of the City as to its Sewer System and is intended as a full exercise of the powers of the City provided for in Sections 18 -1803 to 18 -1805, R.R.S. Neb. 2007, as now or hereafter amended, with respect to the City's Sewer System and the revenues and earnings thereof. Section 5. So long as any of the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds issued pursuant to this Ordinance shall remain outstanding and unpaid, the City covenants and agrees to establish, revise, from time to time as necessary, and collect such rates and charges for the service furnished from the Sewer System adequate to produce revenues and earnings sufficient at all times: (a) To provide funds to pay, when due, the principal of and interest on the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds issued pursuant to this Ordinance. (b) To pay all proper and necessary costs of operation and maintenance of the Sewer System and to pay for the necessary and proper repairs, replacements, enlargements, extensions and improvements to the Sewer System and to perform all covenants and agreements of the City provided for in the ND Q Contract. (c) To provide funds sufficient to make the credits into the Accounts and at the times and in the amounts required by Section 4 of this Ordinance. (d) To maintain Net Revenues in each fiscal year adopted by the City for the Sewer System in an amount not less than 1.25 times the total amount of principal paid or payable (exclusive of any principal redeemed prior to maturity other than principal redeemed pursuant to a schedule of mandatory redemptions) and interest falling due during such fiscal year on the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds. Section 6. To provide funds for any purpose related to the Sewer System, the City may issue Additional Bonds, except for Additional Bonds issued for refunding purposes which are governed by Section 7 of this Ordinance, payable from the revenues of the Sewer System having equal priority and on a parity with the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds then outstanding, only upon compliance with the following conditions: (a) Such Additional Bonds shall be issued only pursuant to an ordinance which shall provide for an increase in the monthly credits into the Bond Payment Account in amounts sufficient to pay, when due, the principal of and interest on the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds, any Additional Bonds then outstanding and the proposed Additional Bonds and for any monthly credits to the Debt Service Reserve Account as are required under Subsection 4(d). (b) The City shall have complied with one or the other of the two following requirements: 1) The Net Revenues derived by the City from its Sewer System for the fiscal year next preceding the issuance of the Additional Bonds (determined in accordance with the definition of such term set forth in Section 2(d), including, if applicable, a determination made for any period when financial statements have not yet been completed and reported on) shall have been at least equal to 1.25 times the Average Annual Debt Service Requirements of the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds, all as then outstanding, and of the proposed Additional Bonds; or 2) The City shall have received a projection made by a consulting engineer or firm of consulting engineers, recognized as having experience and expertise in municipal utility systems, projecting that the Net Revenues of the Sewer System in each of the three full fiscal years after the issuance of such Additional Bonds will be at least equal to 1.25 times the Average Annual Debt Service Requirements of the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds, all as then outstanding, and of the proposed Additional Bonds. In making such projection, the consulting engineer shall use as a basis the Net Revenues of the Sewer System during the last fiscal year for which an independent audit has been prepared and shall adjust such Net Revenues as follows: (A) to reflect changes in rates which have gone into effect since the beginning of the year for which the audit was made, (B) to reflect such engineer's estimate of the net increase over or net decrease under the Net Revenues of the Sewer System for the year for which the audit was made by reason o£ (i) changes of amounts payable under existing contracts for services; (ii) additional general income from sales to customers under existing rate schedules for various classes of customers or as such schedules may be revised under a program of changes which has been adopted by the Mayor and Council of the City; (iii) projected revisions in costs for labor, wages, salaries, machinery, equipment, supplies and other operational items; (iv) revisions in the amount of service to be supplied and any related administrative or other costs associated with such increases due to increased supply from the acquisition of any new facility; and (v) such other factors affecting the projections of revenues and expenses as the consulting engineer deems reasonable and proper. Annual debt service on any proposed Additional Bonds to be issued may be estimated by the consulting engineer in projecting Average Annual Debt Service Requirements, but no Additional Bonds shall be issued requiring any annual debt service payment in excess of the amount so estimated by the consulting engineer (as a matter of final projections). The City hereby covenants and agrees that so long as any of the Series 2011 Bonds, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds are outstanding, it will not issue any bonds or notes payable from the revenues of the Sewer System except in accordance with the provisions of this Ordinance, provided, however, the City reserves the right to issue bonds or notes which are junior in lien to the Series 2011 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any such Additional Bonds with the principal and interest of such bonds or notes to be payable from monies credited to the Surplus Account as provided in Subsection 4(e). Section 7. The City may issue refunding bonds which shall qualify as Additional Bonds of equal lien to refund the Series 2011 Bond, any Series 2010 Bonds, Series 2004 Bonds or Additional Bonds then outstanding, provided, that if any such Series 2011 Bond, Series 2010 Bonds, Series 2004 Bonds or Additional Bonds are to remain outstanding after the issuance of such refunding bonds, the principal payments due in any calendar year in which those bonds which are to remain outstanding mature, or in any calendar year prior thereto, shall not be increased over the amount of such principal payments due in such calendar years immediately prior to such refunding. Refunding bonds issued in accordance with this paragraph of this Section 7 may be issued as Additional Bonds of equal lien without compliance with the conditions set forth in Subsection 6(b) of this Ordinance. The City may also issue refunding bonds which shall qualify as Additional Bonds of equal lien to refund any Series 2011 Bond, Series 2010 Bonds, Series 2004 Bonds or Additional Bonds then outstanding provided, that, if any such Series 2011 Bond, Series 2010 Bonds, Series 2004 Bonds or Additional Bonds are to remain outstanding after the application of the proceeds of the refunding bonds to the payment of the bonds which are to be refunded, such issuance must comply with the Net Revenues test set forth in Subsection 6(b)(1) of this Ordinance and, if the proceeds of such refunding bonds are not to be applied immediately to the satisfaction of the bonds which are to be refunded, then such refunding bonds must provide by their terms that they shall be junior in lien to all of the Series 2011 Bond, the Series 2010 Bonds, Series 2004 Bonds and any Additional Bonds outstanding at the time of issuance of such refunding bonds until the time of application of their proceeds to the satisfaction of the bonds which are to be refunded. In computing Average Annual Debt Service Requirements to show compliance with said Net Revenues test for such refunding bonds, all payments of principal and interest due on such refunding bonds from the time of their issuance to the time of application of the proceeds of such refunding bonds to the satisfaction of the bonds which are to be refunded shall be excluded from such computation to the extent that such principal and interest are payable from sources other than the revenues of the Sewer System (such as bond proceeds held in escrow or investment earnings thereon) or from monies in the Surplus Account, and all payments of principal and interest due on the bonds which are to be refunded from and after the time of such application shall also be excluded. For purposes of this paragraph of this Section 7, the time of application of the proceeds of the refunding bonds to the satisfaction of the bonds which are to be refunded shall be the time of deposit with the paying agent for such bonds which are to be refunded pursuant to Section 10 -126 R.R.S. Neb. 2007 (or any successor statutory provision thereto) or the time when such bonds which are to be refunded under the terms of their authorizing ordinance or ordinances are no longer deemed to be outstanding, whichever occurs sooner. Section 8. So long as any of the Series 2011 Bond, the Series 2010 Bonds, Series 2004 Bonds or Additional Bonds are outstanding, the City hereby covenants and agrees as follows: (a) The City will maintain the Sewer System in good condition and will continuously operate the same in a reasonable and efficient manner, and the City will punctually perform all the duties with reference to said system required by the Constitution and statutes of the State of Nebraska, but this covenant shall not prevent the City from discontinuing the use and operation of all or any portion of the Sewer System so long as the revenues derived from the City's ownership of the properties constituting the Sewer System shall be sufficient to fulfill this City's obligations under Sections 4 and 5 of this Ordinance. (b) The City will not grant any franchise or right to any person, firm or corporation to own or operate a utility system or systems in competition with the Sewer System. (c) The City will maintain insurance on the property constituting the Sewer System (other than such portions of the system as are not normally insured) against risks customarily carried by similar utilities, but including fire and extended coverage insurance in an amount which would enable the City to repair, restore or replace the property damaged to the extent necessary to make the Sewer System operable in an efficient and proper manner to carry out the City's obligations under this Ordinance. The Mayor and Council shall annually, after the end of each fiscal year adopted by the City for the Sewer System, examine the amount of insurance carried with respect to the Sewer System and shall evidence approval of such insurance by resolution. The proceeds of any such insurance received by the City shall be used to repair, replace or restore the property damaged or destroyed to the extent necessary to make the Sewer System operable in an efficient and proper manner, and any amount of insurance proceeds not so used shall be credited to the Surplus Account. In the event of any such insured casualty loss, the City may advance funds to make temporary repairs or provide for an advance on costs of the permanent repair, restoration or replacement from the Operation and Maintenance Account and any such advances shall be repaid from insurance proceeds received. (d) The City will keep proper books, records, and accounts separate from all other records and accounts in which complete and correct entries will be made of all transactions relating to the Sewer System. The City will have its operating and financial statements relating to the Sewer System audited annually by a certified public accountant or firm of certified public accountants. The City will furnish to the original purchaser of the Series 2011 Bond and to the original purchaser or purchasers of each series of Additional Bonds issued hereunder, within six months after the end of each fiscal year of the Sewer System, a copy of the financial statements of the Sewer System and the report thereon of the certified public accountants. (e) The City shall cause each person handling any of the monies in the Blair Sewer System Fund to be bonded by an insurance company licensed to do business in Nebraska in an amount or amounts deemed sufficient by the Mayor and Council to cover the amount of money belonging to said system reasonably expected to be in the possession or control of such person. The amount of such bond or bonds shall be fixed by the Mayor and Council and the costs thereof shall be paid as an operating and maintenance expense from the Operation and Maintenance Account. Section 9. The City's obligations under this Ordinance and the liens, pledges, covenants and agreements of the City herein made or provided for, shall be fully discharged and satisfied as to the Series 2011 Bond or any Additional Bonds issued pursuant to this ordinance and any such bonds shall no longer be deemed outstanding hereunder if such bonds shall be been purchased and canceled by the City, or when payment of the principal of and interest thereon to the respective date of maturity or redemption (a) shall have been made or caused to be made in accordance with the terms thereof; or (b) shall have been provided for by depositing with a national or state bank having trust powers or trust company, in trust solely for such payment (1) sufficient money to make such payment and /or (2) Deposit Securities in such amount and bearing interest at such rates and payable at such time or times and maturing or redeemable at stated fixed prices at the option of the holder as to principal at such time or times as will ensure the availability of sufficient money to make such payment; provided, however, that with respect to any bond to be paid prior to maturity, the City shall have duly given notice of redemption of such bond as required by this Ordinance or given irrevocable instructions for the giving of such notice. Any such money so deposited with such Paying Agent and Registrar or bank or trust company in excess of the amount required to pay principal of and interest on the bonds for which such monies were deposited, shall be paid over to the City as and when collected. For purposes of this Section 9, any Deposit Securities shall be non - callable or callable only at the option of the holder. With respect to any deposit made for purposes of satisfying the Series 2011 Bond under this Section 9, there shall be furnished to NDEQ and the Nebraska Investment Finance Authority ( "NIFA ") an opinion of nationally recognized bond counsel that such deposit for payment of the Series 2011 Bond will not adversely affect the exclusion for interest from gross income for federal tax purposes on any bonds issued by NIFA to provide funds for deposit into the Wastewater Treatment Facilities Construction Loan Fund and the furnishing of such opinion shall be a condition required to be satisfied prior to the making of any such deposit in trust for payment and satisfaction with respect to the Series 2011 Bond unless the Series 2011 Bond is to be prepaid and redeemed within 60 days from the time of such deposit. Section 10. The terms and provisions of this Ordinance do and shall constitute a contract between the City of Blair and the holder of the Series 2011 Bond and no changes, variations or alterations of any kind, except for changes necessary to cure any ambiguity, formal defect or omission, shall be made to this Ordinance without the written consent of the holder of the Series 2011 Bond. The holder of the Series 2011 Bond may, either in law or in equity, by suit, action, mandamus or other proceeding, enforce or compel performance of any and all of the acts and duties required by this Ordinance, and any court of competent jurisdiction may, after default in payment of principal or interest or performance of any other obligations under this Ordinance, on application of any such holder, appoint a receiver to take charge of the Sewer System and operate the same and apply the earnings thereof to the payment of the principal of and interest on bonds issued pursuant to this Ordinance in accordance with the provisions hereof, the provisions of the Series 2004 Ordinance, the Series 2010 Ordinance and any ordinance authorizing Additional Bonds. Any and all actions brought by the holder of the Series 2011 Bond or any registered owner or owners of the Outstanding Bonds or Additional Bonds shall be maintained for the equal and ratable benefit of the holder of the Series 2011 Bond and all registered owners of the Outstanding Bonds and Additional Bonds outstanding and neither the holder of the Series 2011 Bond nor any registered owners of any of the Outstanding Bonds or Additional Bonds shall have any right in any manner whatsoever by any action or proceedings to affect, disturb or prejudice the pledge created by this Ordinance. Section 11. The Mayor and City Clerk of the City are hereby authorized to do all things and execute all such documents as may by them be deemed necessary and proper to complete the issuance and sale of the Series 2011 Bond as contemplated by this Ordinance. Section 12. If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. Section 13. The Mayor and Council hereby expressly declare the intent and understanding that interest on the Series 2011 Bond shall not be excludable from gross income under the terms of Section 103 of the Internal Revenue Code of 1986, as amended, and the City as issuer shall not file any information report with respect to the issuance of the Series 2011 Bond pursuant to Section 149(e) of said Code. Section 14. All ordinances, resolutions or orders or parts thereof in conflict with the provisions of this Ordinance are to the extent of such conflict hereby repealed. law. Section 15. This Ordinance shall be published in pamphlet form and take effect as provided by PASSED AND APPROVED this 22nd day of FEBRUARY, 2011. CITY OF BLAIR, NEBRASKA By -.-� �. J M] E. REALPH, MAYOR 131�VNDA R. WHEELER, CITY CLERK (SEAL) STATE OF NEBRASKA WASHINGTON COUNTY ) ):ss: BRENDA R. WHEELER, hereby certifies that she is the duly appointed, qualified and acting City Clerk of the City of Blair, Nebraska, and that the above and foregoing Ordinance was passed and approved at a regular meeting of the Mayor and City Council of said City held on the 22nd day of February, 2011. B4 J 4ZZ D R. WHEELER, CITY CLERK EXHIBIT "A" U- ATTACHMENT F PROMISSORY NOTE OF THE CITY OF BLAIR, NEBRA FOR VALUE RECEIVED, the undersigned (the "Municipality ") promises to pay, but solely from the sources described herein, to the order of the Nebraska Department of Environmental Quality ( "NDEQ "), or its successors and assigns, the principal sum of not to exceed $400,000 to the extent disbursed pursuant to Section 2.04 of the Loan Contract dated as of March 2011 ( "the Loan Contract "), with interest on each such amount until paid, as provided in Section 2.03 of the Loan Contract between NDEQ and the Municipality. In addition, the Municipality shall pay an Administrative Fee on the outstanding principal amount of this Note at the rate of 1.0 percent per annum as provided in the Loan Contract. The said principal and interest and Administrative Fee shall be payable in semiannual installments each payable on December 15 and June 15 of each year in accordance with Section 2.05 of the Loan Contract. Each installment shall be in the amount set forth opposite its due date in Attachment A to the Loan Contract. All payments under this Note shall be payable at the offices of NDEQ in Lincoln, Nebraska, and upon . the assignment of this Note to NIFA, at the principal corporate trust office of a Trustee designated by NIFA, or such other place as NDEQ may designate in writing. This Note is issued pursuant to and is secured by the Loan Contract and Ordinance No, of the City of Blair, Nebraska (the "Ordinance "), the terms and provisions of which are incorporated herein by reference. All payments of principal of and interest on this Note and other payment obligations of the Municipality hereunder shall be limited obligations of the Municipality payable solely out of the Wastewater User Charge (as defined in the Loan Contract) on a parity with revenue bonds, presently outstanding or hereafter issued pursuant to Ordinances Nos. 2017 and 2190 of the Municipality and pursuant to the Ordinance and shall not be payable out of any other revenues of the Municipality. The obligations of the Municipality under this Note shall never constitute or give rise to a charge against its general credit or taxing power. This note shall not be a debt of the Municipality within the meaning of any constitutional, statutory or charter limitation upon the creation of general obligation indebtedness of the Municipality. If default be made in the payment of any installment due under this Note or by the occurrence of any one or more of the Events of Default specified in Article V of the Loan Contract, and if such Event of Default is not remedied as therein provided, or by failure to comply with any provision of the Ordinance, NDEQ then, or at any time thereafter, may give notice to the Municipality that all unpaid amounts of this Note then outstanding, together with all other unpaid amounts outstanding under the Loan Contract, are due and payable immediately, and thereupon, without further notice or demand, all such amounts shall become and be immediately due and payable. Failure to exercise this option shall not constitute a waiver of the right to exercise the same at any time in the event of any continuing or subsequent default. The Municipality hereby waives presentment for payment, demand, protest, notice of protest and notice of dishonor. 24 This Note and all instruments securing the same are to be construed according to the laws of the State of Nebraska. Signed and sealed this day of March, 2011. [SEAL] CITY OF BLAIR, NEBRASKA Attest: By Title Complete this section upon assignment of this Note to NIFA. Pursuant to the Pledge Agreement dated as of as amended (the "Pledge Agreement "), by and between NDEQ and the Nebraska Investment Finance Authority ( "NIFA "), and the Master Trust Indenture dated as of , as supplemented and amended, by and between NIFA , as trustee, NDEQ hereby assigns, grants and conveys any and all of NDEQ's rights, title and interest in this Note to NIFA, except as provided in the Pledge Agreement, and NIFA hereby assigns such rights, title and interest to the Trustee and any successor Trustee. NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY By Title Director Date Attest: NEBRASKA INVESTMENT FINANCE AUTHORITY By Title Date 25 EXHIBIT "B" g s0. �. P A Y . , •i � .;'" '� CONTRACT FOR LOAN BETWEEN NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY AND THE CITY OF BLAIR, NEBRASKA PROJECT NO. C317638 This Contract, for a Loan (hereinafter "Loan Contract "), dated as of March , 2011, is entered into by and between the State of Nebraska, acting by and through the Nebraska Department of Environmental Quality (hereinafter "NDEQ ") and the City of Blair, Nebraska, (hereinafter "Municipality"). • W ITNESSETH THAT: WHEREAS, the Federal Water Quality Act of 1987 (hereinafter "Federal Act ") established a state revolving fund program; and WHEREAS, to fund the state revolving fund program, the Environmental Protection Agency (hereinafter "EPA ") will make annual capitalization grants to the states under CFDA #66.458, on the condition that each state provide an appropriate match for such state's revolving fund; and WHEREAS, Neb, Rev. Stat. §81- 15,153 empowers the NDEQ to loan available funds in the Wastewater Treatment Facilities Construction Loan Fund (hereinafter "Fund ") to municipalities pursuant to the Wastewater Treatment Facilities Construction Assistance Act (hereinafter "Act ") and rules and regulations adopted under such Act; and WHEREAS, under the Act, the Director of NDEQ is given the responsibility for administration and management of the Fund; and WHEREAS, the Director of NDEQ and the Nebraska Investment Finance Authority (hereinafter "NIFA ") have entered into a Memorandum of Understanding effective November 1, 2000 (hereinafter "MOU "), to define the cooperative relationship between NDEQ and NIFA to jointly administer certain provisions of the Act; and WHEREAS, NIFA is authorized under Neb. Rev. Stat. §58 -201 et. seq. and the Act to issue revenue bonds for the purpose of providing funds for NDEQ to loan to Municipalities within the State of Nebraska for the acquisition, construction, improvement, repair, rehabilitation, or extension of municipal wastewater treatment projects (as defined in the Act), in order to provide the state match requirements of the Federal Act; and WHEREAS, pursuant to such authorization, NIFA proposes to issue its Wastewater Treatment Facilities Construction Loan Fund revenue bonds for the purpose of providing funds to NDEQ to loan to Nebraska Municipalities to pay those eligible portions of the costs of acquiring, constructing, improving, repairing, rehabilitating or extending municipal wastewater treatment projects (as defined in the Act), in order to provide the state match requirements of the Federal Act; and WHEREAS, NDEQ intends to enter into a pledge agreement with NIFA (the "Pledge Agreement"), pursuant to which NDEQ will pledge the interest portion of Loan Repayments (as defined herein) and certain other revenues to NIFA for the payment of the principal of, redemption premium, if any, and interest on Clean Water State Revolving Fund Revenue Bonds which may be issued by NIFA from time to time; and WHEREAS, the City of Blair, Nebraska is a "Municipality" as defined 'in Neb. Rev. Stat. §81- 15,149(7); and WHEREAS, the project (hereinafter "Project ") to be financed under this Loan Contract, includes the engineering and construction of a new 10 inch sanitary sewer main in College Drive from 23 Street to 2758 College Drive; and WHEREAS, the Project Cost is based upon estimates of the Municipality and at times during or at completion of construction the loan amount may be adjusted by the NDEQ pursuant to Section 2.01; and WHEREAS, the Project is included in the NDEQ Intended Use Plan; and' WHEREAS, the NDEQ has approved the Municipality's application for a Loan from federal funds and the state match requirement if and when received by and made available to NDEQ pursuant to the Federal Act and the Act to finance Project Costs; NOW, THEREFORE, for and in consideration of the award of the Loan Contract by NDEQ, the Municipality agrees to complete its Project and to perform under this Loan Contract in accordance with the conditions, covenants and procedures set forth below: ARTICLE I DEFINITIONS Definitions The following terms as used in this Loan Contract shall, unless the context clearly requires otherwise, have the following meanings: "Act" means the Wastewater Treatment Facilities Construction Assistance Act, Neb. Rev. Stat. §81- 15,147 et seq., as amended. "Authorized Representative" means the person or persons authorized pursuant to a resolution or ordinance of the governing body of the Municipality to perform any act or execute any document relating to this Loan Contract. "Cut -off Date" means the date established by NDEQ at the Project's final inspection prior to which the Municipality will make the final disbursement request for eligible Project Costs. "Due Date" means the dates specified for payment of principal and interest on the Loan as specified in Section 2.05(a). "Event of Default" means any occurrence or event specified in Article V. "Fund" means the Wastewater Treatment Facilities Construction Loan Fund. "Initiation of Operation" means the date on which the Municipality places the Project in operation or the Project is capable of being placed in operation for the purposes for which it was planned, designed, and built. "Late Payment" means any payment that is not received within fifteen days of the due date. "Loan" means the loan made by NDEQ to the Municipality to finance or refinance a portion of the Costs of the Project pursuant to this Loan Contract. "Loan Amount" means the amount specified in Section 2.01 hereof which NDEQ has agreed to disburse to the Municipality subject to the terms, provisions, and conditions of this Loan Contract and the availability of State and Federal Funds. "Loan Contract" means this Loan Contract, including the Exhibits attached hereto, as it may be properly supplemented, modified or amended. "Loan Repayments" means the payments payable by the Municipality pursuant to Section 2.05 of this Loan Contract. "Loan Terms" means the terms of this Loan Contract provided in Article II of this Loan Contract. "Municipality" means the Nebraska municipality that is a party to and is described in the first paragraph of this Loan Contract, and its successors and assigns. "NDEQ" means the Nebraska Department of Environmental Quality established pursuant to Neb. Rev. Stat. §81 -1501 et. seq., as amended. "NIFA" means the Nebraska Investment Finance Authority, a public body politic and corporate and an instrumentality of the State, and its successors and assigns established pursuant to Neb. Rev. Stat. §58 -201 et. seq., as amended. "Project" means the acquisition, construction, improvement, repair, rehabilitation 'or extension of Wastewater Treatment Works of the Municipality described herein, which constitutes a project for which NDEQ is making a Loan to the Municipality pursuant to this Loan Contract. "Project Costs" means eligible costs associated with secondary or tertiary treatment and appurtenances; infiltration and inflow correction, major sewer system rehabilitation; new collector sewers and appurtenances; new interceptors and appurtenances; land integral to the treatment process; correction of combined sewer overflows; and other costs eligible under the Federal Act including capitalized interest. Project Costs do not include the costs of water rights and for land which is not integral to the treatment process, easements and rights -of -way, legal costs, fiscal agents fees, operation and maintenance costs and municipal administrative costs. Project Costs are described in Attachment B. "Regulations" means Title 131, Nebraska Department of Environmental Quality, and any amendments thereto promulgated by NDEQ pursuant to the Act. Retainage means construction costs held back by the municipality from the payments due to the contractor to assure satisfactory completion of the construction contract. "State" means the State of Nebraska acting, unless otherwise specifically indicated, by and through NDEQ and its successors and assigns. "Trustee" means the trustee under any trust indenture with respect to the revenue bonds the proceeds of which are deposited in the Fund. "User Charge System" means the methodology used to assess user charge fee(s) for the users of the Sewer System within the Municipality's jurisdiction. "Wastewater Treatment Works" or the "Sewer System" (also known as sewage disposal plant and sanitary sewer system) means the structures, equipment and processes required to collect, transport and treat domestic or industrial wastes and to dispose of the effluent and sludges. "Wastewater User Charge" means the revenues derived by the Municipality from the fees and charges for the use and services furnished by or through the Municipality's Wastewater Treatment Works. Revenues of the Sewer System shall include, without limitation, (a) receipts from all charges imposed upon users of the Sewer System for service provided by the Sewer System and (b) receipts from hook up fees, tap fees, capital facilities charges connected with the use or right to use the Sewer System or any part thereof 3 (specifically including the Project) whether any such receipts (as described in (a) or (b) of this sentence) are directly received by the City from customers or indirectly through inter -local or other agreements with other political subdivisions. ARTICLE 11 LOAN CONDITIONS AND TERMS Section 2.01. Amount of the Loan Subject to all of the terms, provisions and conditions of this Loan Contract, and subject to the availability of State and Federal funds, NDEQ will loan an amount of four hundred thousand dollars ($400,000) to the Municipality to pay a portion of the Project Costs described in Attachment B hereto. Principal Forgiveness provided is 19.0% of the disbursed Loan Amount up to seventy six thousand dollars ($76,000). The forgiveness of a portion of the principal of the Loan, if any, shall be effective only upon the completion of the Project in accordance with this Loan Contract, as determined by NDEQ, and Initiation of Operation. The amount of such Principal Forgiveness shall be stated on the final Attachment A repayment schedule prepared by NDEQ following disbursement of the full Loan Amount and Initiation of Operation. The final actual amount of the Loan (and any Principal Forgiveness) may be reduced without revision of any other terms, provisions or conditions of this Loan Contract, other than adjustment by NDEQ to the Repayment Schedule in Attachment A hereto, to reflect reductions in the estimated or actual total Project Costs as impacted by opening of bids for construction, change orders, final actual costs, and prepayments. The Municipality must make provision for the payment of all eligible costs exceeding the Loan Amount. The NDEQ may provide supplemental loan funds through a separate loan contract. Receipt of any supplemental loan funds is dependent on availability of unobligated funds in the Fund and any obligation of additional funds to this Project is at the sole discretion of NDEQ with such revised or additional terms, conditions, and covenants as NDEQ may require. Section 2.02. Term of the Loan The Municipality agrees to fully repay the Loan with interest on the date of Initiation of Operation or to begin repayment of principal and interest on the Loan within one (1) year from the date of Initiation of Operation but no later than three (3) years from the date of the Loan, and to repay such Loan in full no later than twenty (20) years from Initiation of Operation and to pay all principal, interest, administrative fees and penalty fees when due. The municipality shall provide NDEQ 60 days written notice of its intent to repay the Loan all or in part on the date of the Initiation of Operation. Section 2.03. Interest Rate The interest rate on this loan is determined by the NDEQ pursuant to Regulations and the Intended Use Plan, The interest rate on this loan during construction is 2.0 percent and after the date of Initiation of Operation is 2.25 percent per annum (calculated on the basis of a year equaling 360 days made up of 12 months of 30 days each) to be paid as set out in Attachment A. For the purposes of this paragraph "construction" shall mean the period between the date of this Loan and the date of Initiation of Operation. Section 2.04. Disbursement Of Loan Upon receipt of a disbursement request for work completed and certification by the Municipality, the NDEQ agrees to disburse the principal amount of the loan set out in Section 2.01 of this Article during the progress of the Project for Project Costs. The Municipality may obtain a copy of the disbursement record upon request to NDEQ, Each disbursement shall be upon ACH by the State of Nebraska and shall be equal to that portion of the unobligated principal amount incurred to the date of the request for disbursement from the Municipality, Submitted requests for disbursement must be supported by proper invoices for Project Costs, a certificate of the Authorized Representative to the effect that all representations made in this Loan Contract remain true as of the date of the request and that no adverse developments affecting the financial condition of the Municipality or its ability to complete the Project or to repay the Loan have occurred since the date of this Loan Contract, or of the previous disbursement, and other documentation acceptable to and approved by the NDEQ. All disbursement requests must be made prior to the Cut -off Date established at the Project's final inspection by NDEQ. The Municipality may request disbursement for eligible Project Costs, when such Project Costs have been incurred and are due and payable to project contractors. Retainage withheld by the municipality on contracts will be withheld by the NDEQ until such Retainage is either reduced or released to the contractor by the Municipality. However, actual payment of such Project Costs by the Municipality is not required as a condition of a payment request. The Municipality shall submit a draft of the operation and maintenance manual for the Project to the NDEQ before disbursements exceed 75% of the Project Costs. The Municipality shall submit a final operation and maintenance manual to the NDEQ and receive approval before disbursements exceed 95% of the Project Costs. Section 2.05. Loan Payments (a) Principal and Interest Payments The Municipality shall pay to the NDEQ, or at the direction of NDEQ, to NIFA or the Trustee on or before the due dates specified below, but only from the sources specified in Section 3.02 hereof, appropriate installments of principal and interest until all principal and interest due on the Loan to the NDEQ has been paid in full. Installments of principal and interest (total Loan service) shall be paid semiannually on December 15 and June 15 of each year in accordance with the Loan Repayment Schedule in Attachment A. The NDEQ will send the Municipality an invoice 30 days prior to the due date. When a loan disbursement occurs after invoices are mailed, the NDEQ will include adjustments for interest and fee charges on the next semiannual invoice. (b) Prepayment of the Loan The Municipality may prepay the Loan, together with any accrued interest in whole or in part, at any time without penalty upon giving 60 days written notice to NDEQ of its intent to prepay. The Municipality may make a partial prepayment of the Loan only if the prepayment amount is greater than the lesser of 10% of the outstanding amount of the Loan or $50,000. A new Attachment A will be prepared by NDEQ following receipt of any partial prepayment of the Loan. Section 2.06. Administrative Fee The Municipality shall pay to the NDEQ, or at the direction of NDEQ, to NIFA or the Trustee an annual administrative fee of 1 % per annum of the Loan Amount to be paid in semiannual installments of 0.5% of the Loan Amount outstanding on the date invoices are mailed in accordance with the Loan Repayment schedule in Attachment A. The fee is waived for the first year of the Loan. Section 2.07. Schedule Of Compliance The Municipality agrees to perform steps of the Project in accordance with the following schedule of milestone dates. (a). March 2011, Loan date (b). July 2011, Start Construction Design (c). January 2012, Bid (d). April 2012, Construction Start (c). August 2012, Initiation of Operation (d). August 2012, Substantial completion of construction Section 2.08. Disa dvantaged Business Enterprises (Small Business Enterprise /Minority Business Enterprise/ Business Enterprise /Small Business Rural Area), including Histori Black C olleges and Universities (hereinafter "DBE /HBCU "). The Municipality agrees that ten percent of the Loan Amount shall be the objective for proposed DBE, HBCU subagreement work under this Loan Contract. The Municipality shall take affirmative steps to assure that small, minority, and women's businesses pursuant to 40 CFR 31.36(e) and small businesses rural areas pursuant to 13 CFR 121.2 are used when possible as sources of supplies, construction and services. Affirmative steps shall include the following: (a) Placing disadvantaged business enterprises, including minority, women's, small businesses and small businesses in a rural area and historically black colleges and universities on solicitation lists; (b) Assuring that disadvantaged business enterprises, historically black colleges and universities are solicited whenever they are potential sources; (c) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by disadvantaged business enterprises; (d) Establishing delivery schedules, where the requirement permits, which encourage participation by disadvantaged business enterprises; (e) Using the services and assistance of the Small Business Administration and Minority Business Development Agency of the U. S. Department of Commerce; and (f) Requiring the prime contractor to take the affirmative steps listed above. In addition, the Municipality agrees to submit to the NDEQ a completed SF 334 form within 15 days after the end of each federal fiscal quarter during which the Municipality or its contractors award any subagreements to a disadvantaged business enterprise for building and building - related services and supplies. Section 2.09. Sewer Use Ordinances /User Ch arge Systems The Municipality agrees to obtain approval from the NDEQ of its sewer use ordinance /User Charge System, and to adopt and implement any necessary changes before the Project is placed in operation. The Municipality agrees that it shall not modify or amend, or make additions to or deletions from its sewer use ordinance /User Charge System without the consent of NDEQ during the useful life of the Project, provided, however, that any increase in rates and charges necessary or deemed necessary by the governing body of the Municipality in order to comply with the provisions of any ordinance or any other agreement relating to any revenue bonds* or other revenue obligations for which the revenues of the Sewer System have been pledged or any increase deemed necessary by the governing body of the Municipality in order to permit the issuance of or provide for the payment of additional revenue bonds or other additional revenue obligations may be made without the consent of NDEQ. Section 2.10. Other Conditions and Terms. (a) Engineering Services. The Municipality shall provide and maintain competent and adequate engineering supervision and resident inspection during construction. (b) Construction Contract Award. The Municipality shall obtain NDEQ concurrence and authorization prior to award of the construction contract. (c) Initiation and Operation. The Municipality shall provide written notification to the NDEQ of the date of Initiation of Operation of the Project. (d) Construction Completion. The Municipality shall provide written notification to the NDEQ of the construction completion date of the Project. D (e) Long Term Planning The Municipality agrees to develop and implement a long term wastewater treatment works management plan for the term of the Loan, including yearly renewals. This plan shall recognize the cost relationship between the Project and future projects. (f) Contractor's Security The Municipality agrees to require any contractor of the Project to post separate performance and payment bonds or other security approved by NDEQ in the amount of the bid. (g) Certified Operator The Municipality agrees to provide a certified operator pursuant to Title 197 - Rules and Regulations for the Certification of Wastewater Treatment Facility Operators in Nebraska. (h) Site Title and Easements The Municipality must certify that site title for all easements and rights -of -way necessary to allow construction of the Project have been obtained prior to award of the construction contract (i.e., all real property has been acquired, bonafide options have been taken or formal condemnation proceedings have been initiated for necessary real property). (i) Contractors Payments The Municipality agrees to make prompt payment to its contractor($) of sums due for construction and to retain only such amounts as may be justified by specific circumstances and provisions of the construction contract. (j) Bid Solicitation The Municipality agrees that all bid solicitations will include the following statement: "The prospective participants must certify by submittal of EPA Form 5700 -49 "Certification Regarding Debarment, Suspension and Other Responsibility Matters" that, to the best of its knowledge and belief, it and its principals are not presently debarred, suspended; proposed for debarment, declared ineligible or voluntarily excluded from covered transactions by any federal department or agency." (k) Debarment Suspension The Municipality acknowledges that doing business with any party appearing in the "List of Parties Excluded from Federal Procurement or Non Procurement Programs" may result in disallowance of federal funds under this Loan Contract and may also result in suspension or debarment under 40 CFR Part 32. (1) Other Federal Requirements The Municipality agrees to comply with other applicable Federal Requirements in Attachment D hereto. ARTICLE _III REPRESENTATIONS AND COVENANTS OF MUNICIPALITY Section 3.01. Representations of the Municipality The Municipality represents as follows: (a) Organization and Authority (1) The Municipality is a city, town, village, district, association, or other public body created by or pursuant to the constitution and statutes of the State of Nebraska. (2) The Municipality has full legal right and authority and all necessary licenses and permits required as of the date hereof to own, operate and maintain its Sewer System, to carry on its activities relating thereto, to execute and deliver this Loan Contract, to undertake and complete the Project, and to carry out and consummate all transactions contemplated by this Loan Contract. (3) The proceedings of the Municipality's governing body approving this Loan Contract and authorizing its execution, issuance and delivery on behalf of the Municipality, and authorizing the Municipality to undertake and complete the Project have been duly and lawfully adopted. (4) This Loan Contract has been duly authorized, executed and delivered on behalf of the Municipality, and constitutes the legal, valid and binding obligation of the Municipality enforceable in accordance with its terms. (b) Full Disclosure To the best knowledge of the Municipality, after due investigation, there is no fact that the Municipality has not disclosed to NDEQ in writing on the Municipality's application for the Loan or otherwise anything that materially adversely affects or that will materially adversely affect the properties, activities of its Sewer System, or the ability of the Municipality to make all Loan Repayments and otherwise observe and perform its duties, covenants, obligations and agreement under this Loan Contract. (c) Non - Litigation There is no controversy, suit or other proceeding of any kind pending or threatened questioning, disputing or affecting in any way the legal organization of the Municipality or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act taken in connection with obtaining the Loan, or the constitutionality or validity of the indebtedness represented by the Loan Contract, or any of the proceedings had in relation to the authorization or execution or the pledging of the revenues of the Municipality's Sewer System, or the ability of the Municipality to make all Loan Repayments or otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Contract. (d) Compliance with Existing Laws and Agreements. The authorization, execution and delivery of this Loan Contract by the Municipality, and the performance by the Municipality of its duties, covenants, obligations and agreements thereunder will not result in any breach of any existing law or agreement to which the Municipality is a party. (e) No Defaults No event has occurred and no condition exists that would constitute an Event of Default. The Municipality is not in violation of any agreement which would materially adversely affect the ability of the Municipality to make all Loan Repayments or otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Contract. (f) Governmental Consent The Municipality has obtained all permits and approvals required to date under this Loan Contract or for the undertaking or completion of the Project and the financing or refinancing thereof. The Municipality has complied with all applicable provisions of law requiring any notification, with any governmental body or officer in connection with this Loan Contract or with the undertaking or completion of the Project and the financing or refinancing thereof. 8 (g) Compliance with Law The Municipality: (1) is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, including, without limitation, any public hearing or public notice requirements or environmental review requirements contained in the Regulations, with which the failure to comply would materially adversely affect the ability of the Municipality to conduct its activities, enter into this Loan Contract or undertake or complete the Project; and (2) has obtained all licenses, permits, franchises or other governmental authorizations presently necessary for the ownership of its property which, if not obtained, would materially adversely affect the ability of the Municipality to complete the Project. (h) Use of Loan Proceeds The Municipality will apply the proceeds of the Loan as described in Article II: (1) to finance or refinance a portion of the Project Costs; and (2) where applicable, to reimburse the Municipality for a portion of the Project Costs, which portion was paid or incurred in anticipation of reimbursement by NDEQ and is eligible for such reimbursement pursuant to the Regulations. All of such costs constitute Project Costs for which NDEQ is authorized to make Loans to the Municipality pursuant to the Act and the Regulations. (i) Project Costs The Municipality certifies that the Project Costs, as listed in Attachment B, are reasonable and accurate estimations and, upon direction of NDEQ, will supply the same with a certificate from its engineer stating that such costs are reasonable and accurate estimations, taking into account investment income, if any, to be realized during the course of construction of the Project and other money that would, absent the Loan, have been used to pay the Project Costs, Section 3.02. Particular Covenants of the Municipality (a) Dedicated Source of Revenue for Repayment of the Loan The Municipality hereby pledges the Wastewater User Charge as the dedicated source of revenue for the repayment of the Loan. The pledge herein provided for is made in accordance with and under the terms of Ordinance No. and is on an equal basis with the pledges made under the ordinances described below in this Subsection 3.02(a). The Municipality shall fix, establish, maintain and collect such rates, fees and charges for the use and services furnished by or through the Municipality's Sewer System, including all improvements and additions hereafter constructed or acquired by the Municipality, as will provide revenues sufficient to (i) pay the cost of the operation and maintenance, and replacement of the Sewer System, (ii) pay at least 110% of the principal of and interest on the Loan and other debt of the Municipality payable from the Wastewater User Charge as and when the same become due, and (iii) pay all other amounts due at any time under this Loan Contract, provided, however, the lien of NDEQ on the revenues of the Municipality's Sewer System shall be on a parity with the lien on such revenues of the Municipality's outstanding Sewer System revenue bonds issued pursuant to Ordinances Nos. 2017 and 2190 of the City of Blair, Nebraska and any additional Sewer System revenue bonds hereafter issued on parity with such outstanding revenue bonds. These revenues shall be set aside as collected and deposited in a separate fund with at least two separate accounts, one for the operation and maintenance costs and the other for principal and interest payments on the Loan. The Municipality shall deposit monthly, in the Loan payment account, an amount equal to at least one -sixth of the anticipated amount due on the next Loan payment date. The Municipality agrees to develop the User Charge System for the Sewer System based on actual or estimated use of wastewater treatment services, providing that each user or user class pay its proportionate share of operation and maintenance (including replacement) costs of wastewater treatment costs within the Municipality's service area, based on the user's proportionate contribution to the total sewer system usage from all users or user classes and to conduct at least a biennial review of user charge rates to review the adequacy of the user charge rates. The Municipality agrees the initial financial analysis performed by NDEQ in Attachment C is a reasonable estimate of the Project Costs, of the financial situation of the Municipality in relation to this Project, and of the user charges necessary at the time of Initiation of Operation of the Project, provided that the Municipality 9 makes no representation with respect to funds available for State intercept as set forth in such Attachment C. The NDEQ may review this information annually to insure the Municipality's compliance with the Loan conditions and update Attachment C to reflect any changes. (b) Performance Under Loan Contract The Municipality covenants and agrees: (1) to comply with all applicable State and Federal laws, rules and regulations (including, but not limited to the Federal crosscutting issues listed in Appendix F of the EPA's Initial Guidance for State Revolving Funds and set forth on Attachment D hereto and NDEQ Regulations), in the performance of this Loan Contract; and (2) to cooperate with NDEQ in the observance and performance of the respective duties, covenants, obligations and agreements of the Municipality and NDEQ under this Loan Contract. (c) Completion of Proiect and Provision of Moneys Therefor The Municipality covenants and agrees: (1) to exercise its best efforts in accordance with prudent wastewater treatment utility practice to complete the Project and to so accomplish such completion on or before the estimated Project completion date set forth in Article II hereto; and (2) to provide from its own financial resources all moneys, in excess of the total amount of proceeds it receives under the Loan, required to complete the Project. (d) Delivery of Documents Concurrently with the delivery of this Loan Contract (as previously authorized and executed) at the Loan Closing, the Municipality will cause to be delivered to NDEQ each of the following items: (1) Counterparts of this Loan Contract (as previously executed by parties hereto); (2) copies of the ordinances and /or resolutions of the governing body of the Municipality authorizing the execution and delivery of this Loan Contract certified by an Authorized Representative; (3) an Opinion of Municipality's Counsel substantially in the form of Attachment E hereto; (4) an executed Note (or other evidence of indebtedness) evidencing the Municipality's obligations under this Loan Contract in the form of Attachment F; and (5) such other certificates, documents, opinions and information as NDEQ may require. (e) Operation and Maintenance of Sewer System The Municipality covenants and agrees that it shall, in accordance with prudent wastewater treatment works practice: (1) at all times operate the properties of its Sewer System in an efficient manner; and (2) maintain its Sewer System, making all necessary and proper repairs, renewals, replacements, additions, betterments and improvements necessary to maintain the Sewer System in good repair, working order and operating condition. (f) Disposition of Sewer System The Municipality covenants that it intends to own and operate the Project at all times during the term of the Loan. The Municipality does not know of any reason why the Project will not be so used in the absence of (i) supervening circumstances not anticipated by the Municipality at the time of the Loan, (ii) adverse circumstances beyond the control of the Municipality or (iii) obsolescence of such insubstantial parts or portions of the Project as may occur as a result of normal use thereof. 10 The Municipality shall not sell, lease, abandon or otherwise dispose of all or substantially all of its Sewer System except on ninety (90) days' prior written notice to NDEQ and, in any event, shall not so sell, lease, abandon or otherwise dispose of the same unless the Municipality shall in accordance with Section 4.02 hereof assign this Loan Contract and its rights and interests hereunder to the purchaser or lessee of the Sewer System and such purchaser or lessee shall assume all duties, covenants, obligations and agreements of the Municipality under this Loan Contract. In no event shall the Municipality sell, lease, abandon or otherwise dispose of the Sewer System to any person or entity other than a municipal corporation or other political subdivision of the State of Nebraska or any combination thereof, that has legal responsibility to treat wastewater and perform the other functions of the Sewer System. Before any proposed disposition of the Sewer System can be made, the Municipality shall provide NDEQ with an opinion of a nationally recognized bond counsel that such proposed disposition is permitted by the provisions of this subparagraph, and further, that such disposition shall not endanger the exclusion from gross income for federal income tax purposes of the interest on any bonds issued to fund deposits into the Fund, nor shall it relieve the Municipality of its duties, covenants, obligations and agreements under this Loan Contract. (g) Records and Accounts (1) The Municipality shall keep accurate records and accounts for its Sewer System (the "System Records "), which shall be separate and distinct from its other records and accounts (the "General Accounts "). The System Records and General Accounts shall be made available for inspection upon request by NDEQ at any reasonable time. The Municipality shall, upon written request by NDEQ during the term of the Loan, perform and provide NDEQ a written audit of its System Records and /or General Accounts, provided such audit shall not be due to NDEQ sooner than 210 days following the close of the fiscal year, or years, identified in the request for audit. In the event that during the period in which the Project financed by this agreement is under construction, and the Municipality expends, for any purpose, total federal funds in excess of $500,000 during the Municipality's fiscal year, then the Municipality shall, irrespective of any request from NDEQ, provide NDEQ a copy of the single agency audit made on the Municipality's General Accounts performed by an independent registered municipal accountant required in such cases by the Federal Single Audit Act Amendments of 1996, OMB Circular No. A -133, Audits of States, Local Governments, and Non - Profit Organizations. In the sole discretion of NDEQ, any requirement herein to perform and /or provide an audit at the request of NDEQ may be waived by NDEQ on the basis of the Municipality's receipt of an audit waiver received from some other government agency and accurately acknowledging the Municipality's obligation to NDEQ under this Loan or for any other reason acceptable to NDEQ. (2) The Municipality shall maintain its accounts in accordance with generally accepted government accounting standards defined in the Government Accounting, Auditing, and Financial Reporting Manual (1994 Ed.), or any other more current edition thereafter, issued by the Government f=inance Officers Association. The Municipality's Basic Financial Statements shall comply with the government -wide perspective model and, where applicable, the Statement of Infrastructure Assets prescribed by Government Accounting Standards Board Statement 34. (h) Inspections; Information The Municipality shall permit the EPA, NDEQ and any party designated by NDEQ to examine, visit and inspect, at any and all reasonable times, the property, if any, constituting the Project, and to inspect and make copies of any accounts, books and records, including (without limitation) its records regarding receipts, disbursements, contracts, investments and any other matters relating thereto and to its financial standing, and shall supply such reports and information as the EPA and NDEQ may reasonably require in connection therewith. (i) Insurance. The Municipality will carry and maintain such reasonable amount of all risk insurance on all properties and all operations of the Sewer System as would be carried by similar sized municipal 11 operators of sewer systems, insofar as the properties are of an insurable nature. The Municipality also will carry general liability insurance in amounts not less than the maximum liability of a governmental entity for claims arising out of a single occurrence, as provided by the Nebraska Political Subdivisions Tort Claims Act, Neb.Rev.Stat. § §13 -901 to 13 -926, or other similar future law. (j) Continuing Representations The representations of the Municipality contained herein shall be true at the time of the execution of this Loan Contract and at all times during the term of this Loan Contract. (k) Notice of Material Adverse Change The Municipality shall promptly notify NDEQ of any material adverse change in the activities, prospects or condition (financial or otherwise) of the Municipality's Sewer System, or in the ability of the Municipality to make all Loan Repayments and otherwise observe and perform its duties, covenants, obligations and agreements under this Loan Contract. (1) Additional Covenants and Requirements If necessary in connection with the making of the Loan, additional covenants and requirements have been included. The Municipality agrees to observe and comply with each such additional covenant and requirement, if any. (m) Project Sign The Municipality agrees to display the project sign provided by NDEQ. The sign will remain the property of NDEQ and will be retrieved about one year after project completion. The Municipality will remove the sign for NDEQ when requested. (n) Employment Under Public Contracts, LB403 The Municipality agrees to comply with the provisions of 1-13403, approved by the Governor April 8, 2009. The following language is required and will be included in all contracts made with contractors and is a pass through requirement for his or her subcontractors. "The Contractor is required and herby agrees to use a federal immigration verification system to determine the work eligibility status of new employees physically performing services within the State of Nebraska. A federal immigration verification system means the electronic verification of the work authorization program authorized by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, 8 U.S.C. 1324a, known as the E- Verify Program, or an equivalent federal program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work eligibility status of a newly hired employee. If the contractor is an individual or sole proprietorship, the following applies: 1. The Contractor must complete the United States Citizenship Attestation Form, available on the Department of Administrative Services website at www.das.state.ne.us; 2. If the Contractor indicates on such attestation form that he or she is a qualified alien, the contractor agrees to provide the US citizenship and Immigration Services documentation required to verify the Contractor's lawful presence in the United States using the Systematic Alien Verification for Entitlements (SAVE) Program; and, 3. The contractor understands and agrees that lawful presence in the United States is required and the contractor may be disqualified or the contract terminated if such lawful presence cannot be verified as required by Neb. Rev. Stat. §4- 108." (o) Prevailing Wage All laborers and mechanics employed by contractors and sub contractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to the Public Law 111 -88 shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code. With respect to the labor standards specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C.App.) and section 3145 of title 40, United States Code. The Municipality is responsible to insure compliance with the prevailing wage requirements and will include the following information in. the contract documents: Contractors and subcontractors on USEPA federally assisted construction projects are required to pay their laborers and mechanics not less than those established by the U.S. Department of Labor. A current wage 12 decision containing the appropriate building and /or heavy type rates shall be included in the specifications. in addition, labor standard provisions, Davis Bacon and Related Acts, for federally assisted contracts shall be placed in the federal assurances of project specifications. If an areawide decision or classification does not exist for the type of work to be performed, building or heavy, a decision or request for authorization of additional classification and rate must be requested from the Labor Department using the Standard Form 1444, Request for Authorization of Additional Classification and Rate available on the web and can be completed on line at: http: / /www.wdol.gov /docs /sfl444.pdf. These types of decisions or classifications are project specific, i.e. they are applicable only to the project for which they are requested and may not be used on any other project. Project decisions generally have an expiration date of 180 days after the date of issuance. Modifications or reissued decisions are applicable to a project if received by NDEQ not less than 10 days prior to bid opening. Modifications to classification and wage rates after bid opening shall be paid to all workers performing work in the new or modified classification from the first day on which work is performed in the additional classification as approved by the Administrator of the Wage and Hour Division, Employment Standards Administration, US Department of Labor. Weekly Payrolls shall be submitted by the contractor to the Municipality or the Municipality's representative utilizing the Department of Labor Form WH -347. A web form which can be completed on -line is found at www.dol.gov /whd /forms /wh347.pdf instructions are also found on -line. The Municipality may also be required to submit copies of the Weekly Payrolls to NDEQ. As to each payroll copy received, the Municipality shall provide written confirmation on a form supplied by NDEQ indicating whether or not the project is in compliance with the requirements of 29 CFR 5.5(a)(1) based on the most recent payroll copies for the specified week. The Municipality or the Municipality's representative _s-h all periodically interview a sufficient number of the contractor's or subcontractor's employees entitled to Davis Bacon prevailing wages to verify that contractors or subcontractors are paying the appropriate wage rates. As provided in 29 CFR 5.6(a)(6), all interviews must be conducted in confidence. The Municipality must use Standard Form 1445 or equivalent documentation to memorialize the interviews. Copies of the SF 1445 form are available at http: / /www.gsa.gov At a minimum, the Municipality or the Municipality's representative should conduct interviews with a representative group of covered employees within two weeks of each contractor or subcontractor's submission of its initial weekly payroll data and two weeks prior to the estimated completion date for the contract or subcontract. ARTICLE IV ASSIGNMENT Section 4.01. Assignment and Transfer by NDEQ The Municipality hereby approves and consents to any assignment or transfer of this Loan Contract that NDEQ deems necessary in connection with the operation and administration of the Fund. The Municipality hereby specifically approves the assignment and pledging of the interest portion of the Loan Repayments to NIFA. Section 4.02. Assignment by the Municipality This Loan Contract may not be assigned by the Municipality for any reason, unless the following conditions shall be satisfied: (a) NDEQ shall have approved said assignment in writing; (b) the assignee is a city, town, village, district, association, county or other public body created by or pursuant to State law of the State of Nebraska or any combination thereof, that has legal responsibility to treat wastewater and deliver potable water; (c) the assignee shall have expressly assumed in writing the full and faithful observance and performance of the Municipality's duties, covenants, and obligations under this Loan Contract; 13 provided, however, such assignment shall not relieve the Municipality of Its duties, covenants, and obligations under this Loan Contract; (d) the assignment will not adversely impact NDEQ's ability to meet its duties, covenants and obligations under the Pledge Agreement nor may the assignment endanger the exclusion from gross income for federal tax purposes of the interest on any bonds issued by NIFA to fund deposits into the Fund; and (e) the Municipality shall provide NDEQ with an opinion of a nationally recognized bond counsel that each of the conditions set forth in subparagraphs (b), (c), and (d) hereof have been met. ARTICLE V Section 5.01. Events of Default and Remedies (a) Violation or noncompliance of any of the provisions of this Loan or of Ordinance No. ___ by the Municipality or failure of the Municipality to complete and maintain the Project in the manner proposed by the Municipality and approved by the NDEQ may result in a cancellation of this Loan and a demand that any outstanding balance of principal and interest be paid immediately. (b) In the event that the Municipality makes a late payment pursuant to the Loan repayment schedule in Attachment A, the NDEQ may assess a penalty. Late payments will subject the Municipality to a 5 percent administrative penalty on the delinquent amount. Penalty interest shall accrue at the rate of 1 percent per month of the amount of the late payment from and after the due date until it is paid. (c) If the Municipality fails to make any payment of principal and interest, late fee, and penalty interest imposed pursuant to this Loan within sixty days of the due dates specified in Section 2.05, the payment shall be deducted from the amount of aid to municipalities to which the Municipality is entitled under Neb. Rev. Stat. § §77- 27,136 to 77- 27,137.01. Such amount shall be paid directly to the Wastewater Treatment Facilities Construction Loan Fund. (d) To the extent that NDEQ's right to receive Loan Repayments is on a parity of lien basis with the lien of other outstanding revenue bonds payable from the revenues of the Sewer System, revenues of the Sewer System payable to NDEQ shall be paid to NDEQ pro rata with such other bonds in accordance with the respective outstanding principal amounts. Any acceleration of amounts owing to NDEQ under this Loan Contract shall not increase NDEQ's pro rata share from such revenues but NDEQ may apply other amounts available to it, including amounts described in Subsection 5.01(c). NDEQ shall not have any right to receive application of amounts held in any debt service reserve account provided for the securing of any such other outstanding revenue bonds. Section 5.02. Notice of Default Before any action is taken under this Article, the NDEQ shall give thirty days written notice of the NDEQ's intent to the Municipality. The Municipality shall have the thirty day time period to comply with the violated contractual term. If compliance is achieved the Loan shall revert to good standing. ARTICLE VI MISCELLANEOUS Section 6.01. Hold Harmless Agreement The State of Nebraska and the NDEQ, and the officers, agents, and employees of each, shall have no responsibility or liability for the construction, operation and maintenance of the Project. 14 Section 6.02. Waivers. Any waiver at any time of rights or duties under this Loan Contract shall not be deemed to be a waiver of any subsequent right or duty under this Loan Contract. Section 6.03. Amendments, Supplements and Modifications This Loan Contract may not be amended, supplemented or modified without the prior written consent of NIFA; provided, however, the consent of NIFA is not required to revise Attachment A and Attachment C hereto. An executed copy of any amendment to this Loan Contract including revision of Attachments shall be immediately provided to NIFA. Section 6.04. Notices All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when hand delivered or mailed by registered or certified mail, postage prepaid, to the Municipality, to NDEQ and to NIFA at the following addresses: (a) Municipality: City of Blair, Nebraska 218 South 16 Street Blair, NE 68008 -1674 Attention: City Administrator (b) NDEQ: Department of Environmental Quality Suite 400 1200 "N" Street, The Atrium P.O. Box 98922 Lincoln, NE 68509 -8922 (c) NIFA: Nebraska Investment Finance Authority 200 Commerce Court 1230 "0" Street Lincoln, NE 68508 All notices given by registered or certified mail as aforesaid shall be deemed duly given as of the date they are so mailed. Any of the foregoing parties may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent, by notice in writing given to the others. Section 6.05, Severability In the event any provision of this Loan Contract shall be held illegal, invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate, render unenforceable or otherwise affect any other provision hereof. Section 6.06. Binding Effect This Loan Contract shall inure to the benefit of and shall be binding upon NDEQ and the Municipality and their respective successors and assigns. Section 6.07. Execution in Counterparts This Loan Contract may be executed in several counterparts, each of which shall be deemed to be an original and all of which shall constitute but one and the same instrument. Section 6.08. Governing Law and Regulations This Loan Contract shall be governed by and construed in accordance with the laws of the State of Nebraska, including the Act and the Regulations which Regulations are, by this reference thereto, incorporated herein as a part of this Loan Contract. 15 Section 6.09. Consents and Approvals Whenever the written consent or approval of the State shall be required under the provisions of this Loan Contract, such consent or approval may only be given by NDEQ. Section 6.10. Further Assurances The Municipality shall, at the request of NDEQ, authorize, execute, acknowledge and deliver such further resolutions, conveyances, transfers, assurances, financing statements and other instruments as may be necessary or desirable for better assuring, conveying, granting, assigning and confirming the rights, security interests and agreements granted or intended to be granted by this Loan Contract. IN WITNESS THEREOF, the parties hereto have caused this Loan Contract to be executed and delivered as of the date set forth below. CITY OF BLAIR, NEBRASKA NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY Title By Title Director Date Date 16 INDEX OF ATTACHMENTS Attachment A - Projected Loan Repayment Schedule Attachment B - Project Costs and Projected Outlay Schedule Attachment C - Financial Analysis Attachment D - List of Federal Laws and Authorities Attachment E - Municipality's Counsel's Opinion Attachment F - Promissory Note Attachment G ® Certificate Attachment H -- Other Documents 17 ATTACHMENT A PROJECTED LOAN REPAYMENT SCHEDULE Interest accruing before December 15, 2012, which is not reflected on the following amortization schedule shall be billed and paid in accordance with NDEQ's procedures as in effect from time to time. Interest shall accrue at the applicable rate (set forth in Section 2.03 of the Contract for Loan) as to the amount drawn and outstanding from time to time during the payment period, with payments due on June 15 and December 15 of each year, commencing June 15, 2011. Amounts due will be billed on or about May 15 and November 15 of each year for each six -month payment period ending on the set interest payment date. 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CO CANIQegIR MCOtAOfD T Wtn Z rt r U) d OMrCO1�M(�InOTh000TT(OfDM ate M�- �tNttsMh tOCOCOQ1�01C0007 Cn HW W Mr00tQCV00 cf CA d CT)C)1� r y tpCJ)OCV MMMMCVT�t�rhMCOC•Ml�rd e h�CATIVM �t LO O Z ti C OD.( 00„t NDta)to N��V�Vr�MMMNN��eN000�� CO Cf) 'CLC�NI'�C t V MNq Irl ti T T T r T T T T T T r T T �= 0 0 0 0 0 0 0 000 0 0 0 0 0 0 0 0 0 Q a > CL r T r T r T T r r T 5UmC Q ��HLL ~ O IL (L — j CL �,• U T Z F- Nr• a• � r• � r• � � � � � � � r• o-• � � � r � • c .. �. �. r , � �. C.. C..�. �..a• r�•a• Z c w w w W w w w w w w W w w w w W w w w w w w w w w w W w w w w w w w w w w w 111 T It -u � v, CL O U ATTACHMENT B Project Costs A/E Fees $ 50,000 Inspection Fees 50,000 Construction 300,000 TOTAL ESTIMATED PROJECT COST $400,000 SOURCE OF FUNDS NDEQ CWSRF Loan $324,000 NDEQ CWSRF Principal Forgiveness 76,000 TOTAL ASSISTANCE $400,000 Projected Outlay Schedule June 2011 $ 10,000 July 2011 20,000 August 2011 10,000 September 2011 10,000 January 2012 10,000 May 2012 140,000 June 2012 100,000 July 2012 80,000 August 2012 20,000 TOTAL $400,000 19 ATTACHMENT C FINANCIAL CAPABILITIES ANALYSIS FOR BLAIR, NEBRASKA 20 ATTACHMENT D LIST OF FEDERAL LAWS AND AUTHORITIES ENVIRONMENTAL - Archeological and Historic Preservation Act of 1974, Pub. L. 93 -291 - Clean Air Act, 42 U.S.C. 7506(c) - Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq. - Coastal Zone Management Act of 1972, Pub. L. 92 -583, as amended - Endangered Species Act, 16 U.S.C. 1531 et seq. - Executive Order 11593, Protection and Enhancement of Cultural Environment - Executive Order 11988, Floodplain Management - Executive Order 11990, Protection of Wetlands - Farmland Protection Policy Act, 7 U.S.C. 4201 et seq - Fish and Wildlife Coordination Act, Pub. L. 85 -624, as amended - National Historic Preservation Act of 1966, Pub. L. 89 -665, as amended - Safe Drinking Water Act, Pub. L. 92 -523, as amended - Wild and Scenic Rivers Act, Pub. L. 90 -542, as amended ECONOMIC - Demonstration Cities and Metropolitan Development Act of 1966, Pub, L. 89 -754, as amended - Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans SOCIAL LEGISLATION: - Age Discrimination Act of 1975, Pub. L. 94 -135 - Title VI of the Civil Rights Act of 1964, Pub. L. 88 -352 - Section 13 of Pub. L. 92 -500, Prohibition against sex discrimination under the Federal Water Pollution Control Act - Equal Employment Opportunity, Executive Order 11246 - Women's and Minority Business Enterprise, Executive Orders 11625 and 12138 - Section 504 of the Rehabilitation Act of 1973, Pub. L. 93 -112, (including Executive Orders 11914 and 11250) MISCELLANEOUS AUTHORITY - Uniform Relocation and Real Property Acquisition Policies Act of 1970, Pub. L. 91 -646 - Executive Order 12549 - Debarment and Suspension 21 ATTACHMENT E Form of Opinion of Municipality's Counsel [USE MUNICIPALITY'S OR COUNSEL'S LETTERHEAD] [Date of Loan Closing] [NOTE: Any of the opinions given below may be given in reliance upon the opinion of another Bond Counsel, and one Bond Counsel may give some of the opinions and another Bond Counsel may give others.] Nebraska Investment Finance Authority 200 Commerce Court 1230 O Street Lincoln, NE 68508 Attention: Executive Director Nebraska Department of Environmental Quality Suite 400 1200 N Street, The Atrium Post Office Box 98922 Lincoln, NE 68509 -8922 Attention: Wastewater Facilities Section Water Quality Division Trustee Ladies and Gentlemen: [IMIe] have acted as [Bond] Counsel in connection with the execution and delivery by [NAME OF MUNICIPALITY], a [TYPE OF ENTITY] (the "Municipality "), of a Contract for Loan dated as of [ (the "Loan Contract ") between the Municipality and the Nebraska Department of Environmental Quality ( "NDEQ ") and the issuance of a promissory note dated the date hereof (the "Note ") by the Municipality to NDEQ. All terms used in this opinion letter and not defined shall have the meanings given to them in the Loan Contract. In this connection, [1/we] have examined the following: (a) Certified copies of the [DESCRIBE RESOLUTION AND /OR ORDINANCE PURSUANT TO WHICH LOAN AGREEMENT AND NOTE ARE TO BE ENTERED INTO]; (b) An executed counterpart of the Loan Contract; (c) The executed Note; and (d) Such other documents as [1/we] deemed relevant and necessary in rendering this opinion. As to questions of fact material to [my /our] opinion, [1 /we] have relied upon the covenants and representations set forth in the Loan Contract, the certified proceedings and other certifications of public officials furnished to [melus] without undertaking to verify the same by independent investigation. Based upon the foregoing [I am /we are] of the opinion that: 1. The Municipality is a [CITY, VILLAGE, SID OR OTHER] duly organized and validly existing under the laws of the State of Nebraska. 2. The Municipality is a governmental unit, as such term is used in Section 141(b)(6) of the Internal Revenue Code of 1986, as amended. 3. The Municipality has the power and authority to enter into the Loan Contract, to issue the Note, to borrow the entire principal amount provided for in Section 2.01 of the Loan Contract (the "Principal Amount ") and to perform its obligations under the Loan Contract and the Note. 4. The Loan Contract and the Note have been duly authorized, executed and delivered by the Municipality and are, and would be if the entire Principal Amount were advanced to the Municipality pursuant to the Loan Contract on the date of this opinion, valid and legally binding special obligations of the Municipality, payable solely from the sources provided therefor in the Loan Contract, enforceable in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by laws relating to bankruptcy, insolvency or other similar laws affecting creditors' rights generally and general principles of equity. 5. Pursuant to §18 -1803 through 18 -1805, R.R.S. Neb. 2007, the Ordinance of the Municipality and the Loan Contract which the Ordinance incorporates by reference create a valid lien on the funds pledged by the Municipality pursuant to Section 3.02 of the Loan Contract for the security of the Loan Contract and the Note and no other debt of the Municipality is secured by a superior lien on such funds. 6. The Municipality has obtained or made all approvals, authorizations, consents or other actions of, and filings, registrations or qualifications with, the Municipality or any other government authority which are legally required, as of the date hereof, to.allow the Municipality to enter into and perform its obligations under the Loan Contract and the Note and borrow the full Principal Amount pursuant to the Loan Contract and the Note. Very truly yours, 23 ATTACHMENT F PROMISSORY NOTE OF THE CITY OF BLAIR, NEBRASKA FOR VALUE RECEIVED, the undersigned (the "Municipality") promises to pay, but solely from the sources described herein, to the order of the Nebraska Department of Environmental Quality ( "NDEQ "), or its successors and assigns, the principal sum of not to exceed $400,000 to the extent disbursed pursuant to Section 2.04 of the Loan Contract dated as of March , 2011 ( "the Loan Contract "), with interest on each such amount until paid, as provided in Section 2.03 of the Loan Contract between NDEQ and the Municipality. In addition, the Municipality shall pay an Administrative Fee on the outstanding principal amount of this Note at the rate of 1.0 percent per annum as provided in the Loan Contract. The said principal and interest and Administrative Fee shall be payable in semiannual installments each payable on December 15 and June 15 of each year in accordance with Section 2.05 of the Loan Contract. Each installment shall be in the amount set forth opposite its due date in Attachment A to the Loan Contract. All payments under this Note shall be payable at the offices of NDEQ in Lincoln, Nebraska, and upon the assignment of this Note to.NIFA, at the principal corporate trust office of a Trustee designated by NIFA, or such other place as NDEQ may designate in writing. This Note is issued pursuant to and is secured by the Loan Contract and Ordinance No. of the City of Blair, Nebraska (the "Ordinance "), the terms and provisions of which are incorporated herein by reference. All payments of principal of and interest on this Note and other payment obligations of the Municipality hereunder shall be limited obligations of the Municipality payable solely out of the Wastewater User Charge (as defined in the Loan Contract) on a parity with revenue bonds, presently outstanding or hereafter issued pursuant to Ordinances Nos. 2017 and 2190 of the Municipality and pursuant to the Ordinance and shall not be payable out of any other revenues of the Municipality. The obligations of the Municipality under this Note shall never constitute or give rise to a charge against its general credit or taxing power. This note shall not be a debt of the Municipality within the meaning of any constitutional, statutory or charter limitation upon the creation of general obligation indebtedness of the Municipality. If default be made in the payment of any installment due under this Note or by the occurrence of any one or more of the Events of Default specified in Article V of the Loan Contract, and if such Event of Default is not remedied as therein provided, or by failure to comply with any provision of the Ordinance, NDEQ then, or at any time thereafter, may give notice to the Municipality that all unpaid amounts of this Note then outstanding, together with all other unpaid amounts outstanding under the Loan Contract, are due and payable immediately, and thereupon, without further notice or demand, all such amounts shall become and be immediately due and payable. Failure to exercise this option shall not constitute a waiver of the right to exercise the same at any time in the event of any continuing or subsequent default. The Municipality hereby waives presentment for payment, demand, protest, notice of protest and notice of dishonor. 24 This Note and all instruments securing the same are to be construed according to the laws of the State of Nebraska. Signed and sealed this day of March, 2011. [SEAL] CITY OF BLAIR, NEBRASKA Attest: By Title Complete this section upon assignment of this Note to NIFA. Pursuant to the Pledge Agreement dated as of as amended (the "Pledge Agreement "), by and between NDEQ and the Nebraska Investment Finance Authority ( "NIFA "), and the Master Trust Indenture dated as of , as supplemented and amended, by and between NIFA , as trustee, NDEQ hereby assigns, grants and conveys any and all of NDEQ's rights, title and interest in this Note to NIFA, except as provided in the Pledge Agreement, and NIFA hereby assigns such rights, title and interest to the Trustee and any successor Trustee. NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY By Title Director Date NEBRASKA INVESTMENT FINANCE AUTHORITY Attest: By Title Date 25 ATTACHMENT G CERTIFICATE OF THE CITY OF BLAIR, NEBRASKA The following certifications are made in connection with the Contract for Loan, dated as of March 2011 (the "Loan Contract ") between the Nebraska Department of Environmental Quality ( "NDEQ ") and the City of Blair, Nebraska (the "Municipality") for the purpose of establishing compliance by the Municipality with requirements for the maintenance of any bonds (the "Bonds ") which may be from time to time issued by the Nebraska Investment Finance Authority ( "NIFA ") to provide funds for deposit in the Loan Fund (as defined in the Loan Contract). WHEREFORE, the undersigned hereby certifies on behalf of the Municipality to NDEQ, NIFA and any trustee for the Bonds, as follows: 1. The undersigned is authorized to make the following certifications on behalf of the Municipality. 2. The Municipality represents that it reasonably expects that the design and construction of the Project, as defined in the Loan Contract, will commence within six months from the execution of the Loan Contract and that the design and construction of the Project will proceed with due diligence thereafter to completion. 3. The proceeds of the loan pursuant to the Loan Contract will be used to construct a facility that will be owned and operated by the Municipality. There will be no contracts for the use of the facility other than contracts on a rate scale basis. Specifically, the Municipality represents that there will be no contracts for use of the Project that will require a non - governmental unit to make payments to the Municipality without regard to actual use of the Project. Dated this day of March, 2011. CITY OF BLAIR, NEBRASKA Title: K1 ATTACHMENT H OTHER DOCUMENTS DOCS/1021802.2 27 STATE OF NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY WASTEWATER FACILITIES CONSTRUCTION ASSISTANCE PROGRAM Program 523 Program Fiscal Year: SFY2011 Authorized Representative & Title: Applicant: Address: James Realph, Mayor City of Blair, Nebraska 218 South 16 Street Blair, NE 68008 -1674 PART is PRINCIPAL FORGIVENESS In accordance with Neb. Rev. Stat. §81- 15,153(9) (Cum. Supp. 1996), the State of Nebraska, Department of Environmental Quality, hereby offers principal forgiveness in the amount of $76,000 to Blair, Nebraska, available concurrent with loan funds under the Wastewater Treatment Facilities Construction Loan Fund Project No. C317638 for the construction of the eligible wastewater treatment facilities project described therein, in accordance with Neb. Rev. Stat. §81- 15,147 et. seq. (Reissue 1994), The Wastewater Treatment Facilities Construction Assistance Act, and in compliance with Title 131, Nebraska Department of Environmental Quality, Rules and Regulations for the Wastewater Treatment Facilities Construction Assistance Program and the procedures developed in the Intended Use Plan to determine the principal forgiveness amount based on the community's median household income as an indication of financial hardship. PART II: CERTIFICATION The grantee certifies that as a condition of receipt of state allocations under this agreement, the following stipulations apply: 1. The "2000 Census of Population" reports a population of 7,512, which qualifies the City of Blair, Nebraska, for principal forgiveness consideration as a municipality with a population of 10,000 inhabitants or less. 2. The City of Blair, Nebraska, qualifies for financial hardship consideration as evidenced by a median household income of $41,214 as reported by the "2000 Census of Population ". 3. Construction will not be initiated until authorized by the Nebraska Department of Environmental Quality. 4. State allocation payments under principal forgiveness will routinely be made simultaneously with loan payments. Payment of the amount allocated is conditional upon the availability of appropriated funds. 5. System Records and General Accounts pursuant to Article III, Section 3.02(g) of the Loan Contract shall be made available for inspection by the Nebraska Department of Environmental Quality at any reasonable time. 6. The eligible project amount for combined loan and principal forgiveness is $400,000. -1- 7. The principal forgiveness amount of $76,000 is 19.0 percent of the eligible SRF project loan amount of $400,000, as determined by the procedures of the Nebraska Department of Environmental Quality SFY2011 Intended Use Plan. 8. The principal forgiveness amount may be changed by the Nebraska Department of Environmental Quality if the eligible project amount is changed due to the actual construction bid price, construction change orders, or other circumstances which would affect the project costs. 9. This principal forgiveness will automatically be considered null and void if the loan contract is not executed within 180 days of the date this principal forgiveness offer is signed by the Director of the Nebraska Department of Environmental Quality. 10. Cancellation of the City of Blair, Nebraska Loan Contract, Project No. C317638 pursuant to Article V, Section 5.01(a) of the Loan Contract, shall result in annulment of this principal forgiveness and a demand that any disbursed principal forgiveness funds be returned to the State of Nebraska immediately. 11. Notice of annulment of this principal forgiveness shall be by registered mail, return receipt requested. 12. Additional changes to this principal forgiveness not specified in the above stipulations, shall be by amendment signed by both parties. PART III: ACCEPTANCE In accepting this award, (1) the undersigned represents that he /she is duly authorized to act on behalf of the City, (2) the recipient agrees that the award is subject to the applicable provisions of §81- 15,153(9), Nebraska Revised Statutes, (Cum. Supp. 1996), and any rules and regulations or procedures developed pursuant to the statutes, and that acceptance of any payments constitutes an agreement by the. grantee that the amounts, if any, found by the state to have been overpaid, shall be refunded or credited in full to the State of Nebraska. CITY OF BLAIR, NEBRASKA NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY By By Title Mayor Title Director Date Date DOCS /1021801.1 -2-