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2223ORDINANCE NO. 2223 COUNCIL MEMBER RYAN INTRODUCED THE FOLLOWING RESOLUTION: AN ORDINANCE AUTHORIZING THE ISSUANCE OF A SEWER SYSTEM REVENUE BOND, SERIES 2011/12, OF THE CITY OF BLAIR, NEBRASKA, IN THE PRINCIPAL AMOUNT OF NINE HUNDRED SEVENTY THOUSAND DOLLARS ($970,000), 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 AND AMENDMENT THERETO; 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 AND AMENDMENT 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) and also engineering and construction of a new 24 inch replacement sanitary trunk sewer by horizontal boring under Highway 30 and Union Pacific Railroad tracks west of the intersection of Hwy 30 and Marina Drive and connecting to an existing trunk sewer in Fairview Drive (approximately 1,500 linear feet total) 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 $970,000 (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 2011/12 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 "Existing NDEQ Contract "), as amended by an amendment entitled "Amendment Number One to Contract for Loan between Nebraska Department of Environmental Quality and Blair, Nebraska Project No. C317638" (the "Amendment" and together with the Existing NDEQ Contract, 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 $500,000 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 "); and Sewer System Revenue Bond, Series 2011, dated April 1, 2011, issued pursuant to Ordinance No. 2200 of the City (the "2011 Ordinance ") drawable in the stated principal amount of $400,000, issued to NDEQ under the terms of the Existing NDEQ Contract and which is to be incorporated into the Series 2011/12 Bond (the "Series 2011 Bond "). The 2004 Ordinance, the 2010 Ordinance and the 2011 Ordinance are referred to in this Ordinance as the "Outstanding Parity Bond Ordinances ". The Series 2004 Bonds, the Series 2010 Bonds and the Series 2011 Bond 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, Section 13 of the Series 2010 Ordinance and Section 6 of the 2011 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 2004 Ordinance, the 2010 Ordinance and the 2011 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 2011/12 Bond (as the proposed Additional Bonds to be issued); and (ii) The "Net Revenues" of the Sewer System as defined in the Outstanding Parity Bond Ordinances, as shown in the City's audit report as conducted by independent certified public accountants for the fiscal year ended September 30, 2011, were not less than $282,000. (iii) The "Average Annual Debt Service Requirements" of the Series 2004 Bonds, Series 2010 Bonds and the Series 2011/12 Bond (including and incorporating the indebtedness represented by the Series 2011 Bond) are not more than $207,000; (iv) Said "Net Revenues" exceed 1.25 times said "Average Annual Debt Service Requirements" of the Series 2004 Bonds, the Series 2010 Bonds and the Series 2011/12 Bond (including and incorporating the indebtedness represented by the Series 2011 Bond) and this Ordinance provides for additional deposits to be made to the Bond Payment Account sufficient to pay when due the principal and interest of the proposed Series 2011/12 Bond. (v) All conditions required by Section 13 of the 2004 Ordinance, Section 13 of the 2010 Ordinance and Section 6 of the 2011 Ordinance precedent to the issuance of the Series 2011/12 Bond as an "Additional Bond" under the terms of the Outstanding Parity Bond Ordinances of equal priority and on a parity with the Series 2004 Bonds, the Series 2010 Bonds and the Series 2011 Bond do exist and have happened. (e) In connection with the NDEQ Loan, as evidenced by the Series 2011/12 Bond, it is necessary and advisable for the City to approve the execution and delivery of the Amendment and a promissory note (the "2012 NDEQ Note ") evidencing the revised principal amount combining the principal amount evidenced by the Series 2011 Bond with the added principal amount for the NDEQ Loan, 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 2011/12 Bond as an Additional Bond of equal lien and standing with the Series 2004 Bonds and the Series 2010 Bonds and as provided for in the Outstanding Parity Bond Ordinances 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 2011/12 Bond, 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 2011/12 Bond, in the form of and evidenced by a single promissory note (sometimes referred to in this Ordinance, according to the context, as the "2012 NDEQ Note" and sometimes as the "Series 2011/12 Bond") in the principal amount of Nine Hundred Seventy Thousand Dollars ($970,000), replacing and incorporating the principal amount drawn and/or drawable under the note evidencing the Series 2011 Bond, with such 2012 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 2012 NDEQ Note, the City shall also enter into the Amendment 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 2012 NDEQ Note and the Amendment are hereby approved and the Mayor and the City Clerk are hereby authorized to execute and deliver the 2012 NDEQ Note and the Amendment 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 2011/12 Bond, the Series 2010 Bonds, the Series 2004 Bonds and any Additional Bonds as authorized by this Ordinance and interest on such Series 2011/12 Bond, Series 2010 Bonds, Series 2004 Bonds and Additional Bonds and the City does hereby agree with the holders of said Series 2011/12 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 July, 2012, the following amounts: (1) during the period from July 1, 2012, 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 Existing 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 2012 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 2012 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 Existing NDEQ Contract or the Amendment and the 2012 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 2012 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 2012 NDEQ Note; (3) During such periods and in such amounts, all such payments are as required under the terms of the 2004 Ordinance and the 2010 Ordinance with respect to the principal and interest on the Series 2004 Bonds and the Series 2010 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, if any, 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 2011/12 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 2011/12 Bond, the Series 2004 Bonds and the Series 2010 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 Existing NDEQ Contract and the Amendment, it is hereby determined that no sub - account shall be established for the Series 2011/12 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 (for which a reserve sub - account has been or is to be established) 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 $0.00), 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 2011/12 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 2011/12 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 2011/12 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 2011/12 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 NDEQ 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 2011/12 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 those Additional Bonds issued for refunding purposes (if any) 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 2011/12 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 2011/12 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 2011/12 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 2011/12 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 of: (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 2011/12 Bond, 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 2011/12 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 2011/12 Bond, any Series 2010 Bonds, Series 2004 Bonds or Additional Bonds then outstanding, provided, that if any such Series 2011/12 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 (as an alternative to issuance of refunding bonds under the first paragraph of this Section 7 or an issuance permitted under the terms of Section 6 of this Ordinance) issue refunding bonds which shall qualify as Additional Bonds of equal lien to refund any Series 2011/12 Bond, Series 2010 Bonds, Series 2004 Bonds or Additional Bonds then outstanding provided, that, if any such Series 2011/12 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 2011/12 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 2011/12 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 2011/12 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 2011/12 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 2011/12 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 2011/12 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 2011/12 Bond unless the Series 2011/12 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 2011/12 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 2011/12 Bond. The holder of the Series 2011/12 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 2011/12 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 2011/12 Bond and all registered owners of the Series 2004 Bonds, the Series 2010 Bonds and any Additional Bonds outstanding and neither the holder of the Series 2011/12 Bond nor any registered owners of any of the Series 2004 Bonds, the Series 2010 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 2011/12 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 2011/12 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 2011/12 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. Section 15. This Ordinance shall be published in pamphlet form and take effect as provided by law. PASSED AND APPROVED this 22ND day of May, 2012. CITY OF BLAIR, NEBRASKA BYQ)�, �---- ICJ - \ S REALPH, MAYOR ATTEST: A LI, BRENDA R. WHEELER, CITY CLERK (SEAL) STATE OF NEBRASKA ) ):ss: WASHINGTON COUNTY ) 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 Resolution was passed and adopted at a regular meeting of the Mayor and City Council of said City held on the 22nd day of May, 2012. BRENDA R. WHEELER, CITY CLERK EXHIBIT "A" PROMISSORY NOTE OF THE 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 $970,000 to the extent disbursed pursuant to Section 2.01 and Section 2.04 of the Contract for Loan dated as of April 1, 2011, as amended by Amendment Number One dated June 29, 2012, (together, the "Loan Contract ") with interest on the separate portions of such amount until paid, as provided in Section 2.03 of the Loan Contract between NDEQ and the Municipality. The principal sum of $400,000 included under this Note represents a renewal and incorporation of the prior related Note dated April 1, 2011. 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 Ordinances Nos. 2200 and of the City of Blair, Nebraska (the "Ordinances "), 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 Ordinances 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. 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 29th day of June, 2012. [SEAL] CITY OF BLAIR, NEBRASKA Attest: Title 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 Attest: By Title Director Date NEBRASKA INVESTMENT FINANCE AUTHORITY By Title Date EXHIBIT "B" AMENDMENT NUMBER ONE TO CONTRACT FOR LOAN BETWEEN NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY AND BLAIR, NEBRASKA Project No. C317638 This Amendment Number One to Contract for Loan, dated this 29th day of June, 2012, 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 "). 1. The Contract for Loan (Project No. C317638) (hereinafter "Loan Contract ") between NDEQ and the Municipality dated April 1, 2011, and signed by Michael J. Linder, Director of NDEQ, and R. James Realph, Mayor of the Municipality, is hereby acknowledged and incorporated by this reference as if fully set out herein. 2. Pursuant to Section 6.03 of the Loan Contract, the parties hereby amend the project description at the top of page 2, Section 2.01 of the Loan Contract and Section 2.03 of the Loan Contract so that the Sections read respectively as follows: 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 engineering and construction of a new 24 inch replacement sanitary trunk sewer by horizontal boring under Highway 30 and Union Pacific Railroad tracks west of the intersection of Hwy 30 and Marina Drive and connecting to an existing trunk sewer in Fairview Drive approximately 1,500 linear feet total. The new trunk sewer replaces a failed existing trunk sewer. 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 nine hundred seventy thousand dollars ($970,000) to the Municipality to pay a portion of the Project Costs described in Attachment B hereto. Principal Forgiveness provided is 9.63% of the disbursed Loan Amount up to ninety three thousand three hundred eighty five dollars ($93,385). 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 2.03. 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) with respect to $400,000 of the borrowed amount as the originally agreed to principal amount and, with respect to the additional amount of $570,000 added by amendment, 2.0 percent (2.0%) per annum (calculated on the basis of a year equaling 360 days made up of 12 months of 30 days each) for the increased loan amount of Amendment Number One, all to be paid as set out in Attachment A. The blended interest rate for the amended Loan Contract total from Amendment Number One is 2.10% per annum. For the purposes of this paragraph "construction" shall mean the period between the date of this Loan and the date of Initiation of Operation. 3. Pursuant to Section 6.03 of the Loan Contract, the parties hereby amend the following attachments attached hereto: Attachment A, Loan Amortization Schedule; Attachment B, Project Costs and Projected Outlay Schedule; Attachment E, Municipality's Counsel's Opinion; Attachment F, Promissory Note, and Attachment H, Principal Forgiveness Document in accordance with the terms and conditions set forth in this Amendment Number One to the Loan Contract. 4. Except as specifically modified herein, all terms and conditions of the original Loan Contract remain in full force and effect. 5. The amendment or modification made herein shall become effective on the latter of the two dates signed. BLAIR, NEBRASKA BY: TITLE: DATE: NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY TITLE: DATE: BY: ATTACHMENT A LOAN REPAYMENT SCHEDULE Interest accruing before December 15, 2013, 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. Interest accruing on any principal amounts drawn after the billing date are to be paid as an addition to the billing for the next interest payment period. ATTACHMENT B Project Costs A/E Fees $100,000 Inspection Fees 100,000 College Drive Sewer Construction 300,000 Hwy 30 Trunk Sewer Construction 375,000 Contingencies, 95,000 TOTAL ESTIMATED PROJECT COST $970,000 SOURCE OF FU NDS NDEQ CWSRF Original Loan $324,000 NDEQ CWSRF Amendment No. 1 552,615 NDEQ CWSRF Original Principal Forgiveness 76 NDEQ CWSRF Amendment No. 1 Principal Forgiveness 17,385 TOTAL ASSISTANCE $970,000 Projected Outlay Schedule October 2011 $ 13,945 Nov 2011 13,777 May 2012 140,000 June 2012 100,000 July 2012 80,000 August 2012 20,000 April 2013 50,000 May 2013 150,000 June 2013 150,000 July 2013 150,000 August 2013 102,278 TOTAL $970,000 4 ATTACHMENT E FORM OF MUNICIPALITY'S COUNSEL OPINION [USE MUNICIPALITY 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 Ladies and Gentlemen: [I/We] 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 April 1, 2011 as amended by Amendment Number One dated June 29, 2012, (collectively the "Loan Contract ") each 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, which replaces the prior promissory note dated April 1, 2011 previously executed and delivered by the Municipality to evidence its payment obligation under the Loan Contract. 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 THE AMENDED LOAN CONTRACT AND AMENDED NOTE ARE TO BE ENTERED INTO]; (b) An executed counterpart of the Loan Contract (including as a part thereof said Amendment Number One); (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 set forth in the Loan Contract, the certified proceedings and other certifications of public officials furnished to [me /us] 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 "Loan 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 Loan 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 Sections-1 8-1803 through 18 -1805, R.R.S. Neb. 2007, the Ordinance and the Loan Contract, which it authorizes and incorporates, create a valid lien on the revenues 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 revenues. 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 Loan Amount pursuant to the Loan Contract and the Note. Very truly yours, ATTACHMENT F PROMISSORY NOTE OF THE 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 $970,000 to the extent disbursed pursuant to Section 2.01 and Section 2.04 of the Contract for Loan dated as of April 1, 2011, as amended by Amendment Number One dated June 29, 2012, (together, the "Loan Contract ") with interest on the separate portions of such amount until paid, as provided in Section 2.03 of the Loan Contract between NDEQ and the Municipality. The principal sum of $400,000 included under this Note represents a renewal and incorporation of the prior related Note dated April 1, 2011. 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 Ordinances Nos. 2200 and of the City of Blair, Nebraska (the "Ordinances "), 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 Ordinances 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. 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 29th day of June, 2012. [SEAL] Attest: CITY OF BLAIR, NEBRASKA By Title 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 :jr Attest: Title Director Date NEBRASKA INVESTMENT FINANCE AUTHORITY By Title Date ATTACHMENT H STATE OF NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY WASTEWATER FACILITIES CONSTRUCTION ASSISTANCE PROGRAM Program 523 Program Fiscal Year: SFY2012 Authorized Representative & Title: James Realph, Mayor Applicant: City of Blair Address: 218 South 16 Street Blair, NE 68008 -1674 PART I: 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 $93,385 to Blair, Nebraska, available concurrent with loan funds under the Wastewater Treatment Facilities Construction Loan Fund Project No. C317834 for the construction of the eligible sewer separation project described therein, in accordance with Neb. Rev. Stat. §81- 15,147 et. seq. (Reissue 2008), 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 City of Blair certifies that as a condition of receipt of state allocations under this agreement, the following stipulations apply: 1. The "2010 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 for the original loan as reported by the "2000 Census of Population" and median household income of $56,422 for amendment no. one as reported by the "2005 - 2009 American Community Survey, U.S Census Bureau ". 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 for this project is $970,000. 7. The City of Blair is eligible for principal forgiveness of 19% of the original loan amount of $400,000, as determined by the procedures of the Nebraska Department of Environmental Quality SFY2011 Intended Use Plan and 3.05% of amendment no. one loan amount of $570,000 as determined by the procedures of NDEQ SFY2012 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. C317834 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 (Reissue 2008), and any rules and regulations or procedures developed pursuant to the statutes, and that acceptance of any payments constitutes an agreement by the 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 10