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2065ORDINANCE NO. 2065 AN ORDINANCE AUTHORIZING THE ISSUANCE OF A WATER SYSTEM REVENUE BOND, SERIES 2006, OF THE CITY OF BLAIR, NEBRASKA, IN THE PRINCIPAL AMOUNT NOT TO EXCEED TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS ($2,700,000) FOR THE PURPOSE OF EVIDENCING THE PAYMENT OBLIGATIONS OF THE CITY TO THE PAPIO MISSOURI RIVER NATURAL RESOURCES DISTRICT UNDER AN INTERLOCAL COOPERATION ACT AGREEMENT; MAKING DETERMINATIONS WITH RESPECT TO THE ISSUANCE OF SAID BOND; PRESCRIBING THE FORM, TERMS AND DETAILS OF SAID BOND; PLEDGING AND HYPOTHECATING THE REVENUE AND EARNINGS OF THE WATERWORKS PLANT AND WATER SYSTEM OF SAID CITY FOR THE PAYMENT OF SAID BOND AND INTEREST THEREON; PROVIDING FOR THE COLLECTION, SEGREGATION AND APPLICATION OF THE REVENUES OF SAID WATERWORKS PLANT AND WATER SYSTEM; ENTERING INTO A CONTRACT ON BEHALF OF THE CITY WITH THE HOLDER OF SAID BOND; AND PROVIDING FOR PUBLICATION OF THIS ORDINANCE IN PAMPHLET FORM. BE IT ORDAINED BY THE MAYOR AND THE CITY COUNCIL OF THE CITY OF BLAIR, NEBRASKA: Section 1. The Mayor and Council of the City of Blair hereby find and determine: (a) The City owns and operates a waterworks plant and system (which plant and system, together with any additions, extensions and improvements thereto hereafter made are hereinafter referred to as the "Water System ") which represents a revenue - producing undertaking of the City; (b) 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 Water System (collectively, the "Outstanding Bonds "): (i) Water System Revenue Refunding Bonds, Series 2000, Date of Original Issue — September 22, 2000, issued pursuant to Ordinance No. 1909 of the City (the "Series 2000 Ordinance "), in the original principal amount of $3,395,000 (the "Series 2000 Bonds "), of which bonds in the principal amount of $1,535,000 presently remain outstanding and unpaid; and (ii) Water System Revenue Bond, Series 2000B, dated September 8, 2000, issued pursuant to Ordinance No. 1907 of the City (the "Series 2000B Ordinance "), in the original principal 1 amount of $6,815,700 (the "Series 2000B Bond "), issued to evidence a loan from the Nebraska Department of Environmental Quality of which the remaining balance for principal is approximately $6,515,700. The Outstanding Bonds constitute the only presently outstanding indebtedness of the City payable from the revenues of the Water System; (c) The Mayor and Council have previously approved and there has been executed and delivered on behalf of the City an agreement entitled "Interlocal Cooperation Act Agreement" (the "Interlocal Agreement ") by and among, the City, the Papio - Missouri River Natural Resources District (the "District ") and The County of Washington in the State of Nebraska (the "County ") under the terms of which the City has made arrangements for the construction of water supply facilities to serve anticipated development to the south of the City including a new water tower and a second emergency supply source for water for the City (the "Project") as a part of and in cooperation with the District and the County relating to the development of Washington County Rural Water Project No. 2 ( "WC Project No. 2"); and the Project is to be owned by the District and served and operated in part by the City. (d) In order to meet the funding requirements on the part of the City required under the terms of the Interlocal Agreement, it is necessary and advisable for the City to issue its Water System Revenue Bond, Series 2006, in a principal amount not to exceed $2,700,000; (e) Under the terms of the Series 2000 Ordinance and the Series 2000B Ordinance (together, the "Outstanding Bond Ordinances ") the City is authorized to issue revenue bonds payable from the revenues of the Water System so long as the Net Revenues (as defined in the Outstanding Bond Ordinances) have been at least 1.30 times the Average Annual Debt Service Requirements (as defined in the Outstanding Bond Ordinances) of the Series 2000 Bonds, the Series 2000B Bond and the Additional Bonds (as defined in the Outstanding Bond Ordinances and, so far as this Ordinance is concerned, the bond herein authorized). (f) Such Net Revenues for the fiscal year ended September 30, 2005 were not less than $1,880,905. Such Average Annual Debt Service based upon the terms of the Outstanding Bond Ordinances and this Ordinance will not exceed $1,440,000. (g) To satisfy the funding requirements described in this Section 1, it is necessary for the City to issue its Water System Revenue Bond, Series 2006, in a total principal amount not to exceed $2,700,000 (the "Series 2006 Bond ") 2 pursuant to Sections 18 -1803 to 18 -1805 R.R.S. Neb. 1997. All conditions, acts and things required by law to exist or to be done precedent to the issuance of the Series 2006 Bond as an "Additional Bond" under the terms of the Outstanding Bond Ordinances and as provided for in this ordinance (the "Ordinance ") do exist and have been done and performed in regular and due time and form 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: "Additional Bonds" shall mean any and all bonds hereafter issued by the City pursuant to the terms of this Ordinance and the Outstanding Bond Ordinances which are equal in lien to the Series 2000 Bonds, the Series 2000B Bond and the Series 2006 Bond including any such bonds issued pursuant to Section 13 hereof and refunding bonds issued pursuant to Section 14 hereof (and the similar provisions of the Outstanding Bond Ordinances), as and when such bonds become equal in lien to the Series 2000 Bonds, the Series 2000B bond and the Series 2006 Bond, according to their terms and the terms of said Sections 13 and 14. "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. "Bond Year" shall mean for the District and the District Bonds that period commencing on June 15 of each calendar year and ending on and including the June 14 of the following calendar year. "Deposit Securities" shall mean direct obligations of or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. "District Bonds" shall mean the District's Water Project Revenue Bonds (Washington County Rural Water Project No. 2), Series 2006A, issued in the original principal amount of $3,400,000 and the District's Junior Lien Water Project Revenue Bond, Series 2006B, issued in the original principal amount of 3 $1,150,000, (referred to separately as the "District's 2006B Bond ") each as issued by the District to pay costs of the Project, and including any bonds or other indebtedness issued by the District to refund or refinance any of the District Bonds. "Match Rate" shall mean that rate of interest calculated for the Series 2006 Bond in accordance with the terms of the Interlocal Agreement. Under such tem.'s, the rate of interest on the Series 2006 Bond is to be determined for each Bond Year in advance by determining the weighted (in accordance with the total principal amount scheduled to be outstanding during such Bond Year, without regard to any optional redemptions, whether or not expected to occur) average interest rate which applies to those of the District Bonds outstanding which have maturities prior to June 15, 2016. The Match Rate shall be calculated by the District for each such Bond Year, subject to review of calculations on the part of the City. The Match Rate for any day or days prior to June 1, 2006 shall be the same as the Match Rate determined for the Bond Year ending June 14, 2007. For purposes of calculating the Match Rate, (a) the District's 2006B Bond shall be treated as being outstanding for the entire Bond Year in its principal amount outstanding as of the first day of such Bond Year regardless of the possibility or likelihood of any redemptions; (b) as of the beginning of the Bond Year commencing June 15, 2010, the District's 2006B Bond shall be deemed to remain outstanding in the principal amount outstanding as of the beginning of such Bond Year for the entirety of such Bond Year; and (c) for the Bond Year commencing June 15, 2011, any bond or other indebtedness incurred by the District to refund or refinance the District's 2006B Bond shall be considered a part of the District Bonds and the terms relating to interest for such bond or other indebtedness shall be considered in calculating the Match Rate. "Maximum Annual Debt Service Requirements" shall mean the maximum aggregate amount of payments of principal and interest due with respect to the bonds for which such computation is required in any one fiscal year with respect to the Water System. In making such computations the principal of any bonds for which mandatory redemptions are scheduled shall be treated as maturing in accordance with such schedule of mandatory redemptions. "Net Revenues" shall mean the gross revenues derived by the City from the ownership or operation of the Water System, including investment income, but not including any income from sale or disposition of any property belonging to or forming a part of the Water System, less the ordinary expenses to the City of operating and maintaining the Water System _payable from the Operation and Maintenance Account described in Section 11 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 4 shall be shown by an audit for the fiscal year in question as conducted by independent certified public accountants. For purposes of this ordinance, whether or not in accordance with applicable accounting principles, there shall not be included in revenues or expenses, for purposes of determining Net Revenues, gain or loss from the early extinguishment of indebtedness, investment income from any securities deposited in escrow for the defeasance of prior outstanding bonds of the City or unrealized gain or loss on securities held by the City's Water System. "Paying Agent and Registrar" shall mean the City Treasurer of the City of Blair, Nebraska, as appointed to act as the combined paying agent and bond registrar for the Series 2006 Bond pursuant to Section 4 hereof. Section3. For the purposes described in Section 1 hereof, there shall be and there is hereby ordered issued the negotiable bond of the City of Blair, Nebraska, to be known as "Water System Revenue Bond, Series 2006" (the "Series 2006 Bond "), in the principal amount not to exceed Two Million Seven Hundred Thousand Dollars ($2,700,000), with the principal of such Series 2006 Bond bearing interest at the Match Rate as determined from year to year. The principal of the Series 2006 Bond shall fall due in accordance with the following maturity schedule: Maturity Date Principal Maturity Amount June 1, 2007 $300,000 June 1, 2008 300,000 June 1, 2009 300,000 June 1, 2010 300,000 June 1, 2011 300,000 June 1, 2012 300,000 June 1, 2013 300,000 June 1, 2014 300,000 June 1, 2015 300,000 The principal amount of the Series 2006 Bond and the principal maturity amount for each maturity may be reduced prior to the issuance of the Series 2006 Bond to such total principal and such principal maturity amounts (uniform as to each maturity amount) as the Mayor and City 5 Administrator shall determine appropriate consistent with the terms of the Interlocal Agreement and acceptable to the District at the time of issuance. The Series 2006 Bond shall be issued in fully registered form evidenced by a single bond certificate in the denomination equal to the initial principal amount of the Series 2006 Bond. The date of original issue for the Series 2006 Bond shall be the date of delivery thereof. The Series 2006 Bond shall bear such interest from the date of original issue to maturity on the unpaid principal balance. Interest on the unpaid principal balance shall fall due annually on the same date as principal matures (each an "Installment Payment Date "). Payments shall be applied first to accrued interest and then to principal. Interest shall be simple interest computed on the basis of a 360 -day year consisting of twelve 30 -day months. The principal and interest due on each Installment Payment Date shall be payable to the District as the registered owner of record as of the close of business on the business day immediately preceding the Installment Payment Date (the "Record Date "), subject to the provisions of Section 5 hereof. The Series 2006 Bond shall be numbered R -1. Payment of installments of principal and interest due prior to maturity or earlier redemption of the Series 2006 Bond shall be made by the Paying Agent and Registrar, as designated pursuant to Section 4 hereof, by mailing a check or draft in the amount due for such principal and interest on each Installment Payment Date to the registered owner of the Series 2006 Bond, as of the Record Date for such Installment Payment Date, to such owner's registered address as shown on the books of registration as required to be maintained in Section 4 hereof. Payments of principal and unpaid accrued interest thereon due at final maturity shall be made by said Paying Agent and Registrar to the registered owners upon presentation and surrender of the Series 2006 Bond to said Paying Agent and Registrar. The City and said Paying Agent and Registrar may treat the registered 6 owner of the Series 2006 Bond as the absolute owner of such bond for the purpose of making payments thereon and for all other purposes and neither the City nor the Paying Agent and Registrar shall be affected by any notice or knowledge to the contrary, whether such bond or any installment of interest due thereon shall be overdue or not. All payments on account of interest or principal made to the registered owner of the Series 2006 Bond in accordance with the terms of this Ordinance shall be valid and effectual and shall be a discharge of the City and said Paying Agent and Registrar, in respect of the liability upon the Series 2006 Bond or claims for interest to the extent of the sum or sums so paid. Section 4. The City Treasurer is hereby designated as the Paying Agent and Registrar for the Series 2006 Bond. The Paying Agent and Registrar shall keep and maintain for the City books for the registration and transfer of the Series 2006 Bond at the City's Offices, in Blair, Nebraska. The name and registered address of the registered owner of the Series 2006 Bond shall at all times be recorded in such books. The Series 2006 Bond is issued to evidence the payment obligations of the City under the Interlocal Agreement and may not be transferred by the District. Section 5. In the event that payments of principal and interest due on the Series 2006 Bond on an Installment Payment Date are not timely made, such principal and interest shall be payable to the registered owner of the Series 2006 Bond as of a special date of record for payment of such defaulted principal and interest as shall be designated by the Paying Agent and Registrar whenever monies for the purpose of paying such defaulted principal and interest become available. 7 Section 6. If the date for payment of the principal of and interest on the Series 2006 Bond shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of Blair, Nebraska, are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such day shall have the same force and effect as if made on the nominal date of payment. Section 7. Series 2006 Bond shall not be subject to redemption prior to maturity, except by mutual agreement of the District as registered owner and the City as obligor. Section 8. The Series 2006 Bond shall be in substantially the following form: 8 No. R -1 Principal Amount: Interest Rate Match Rate UNITED STATES OF AMERICA STATE OF NEBRASKA COUNTY OF WASHINGTON CITY OF BLAIR WATER SYSTEM REVENUE BOND, SERIES 2006 Maturity Date Date of Original Issue June 1, 2015 May _, 2006 Registered Owner: Papio - Missouri River Natural Resources District June 1, 2007 $300,000 June 1, 2008 300,000 June 1, 2009 300,000 June 1, 2010 300,000 June 1, 2011 300,000 June 1, 2012 300,000 June 1, 2013 300,000 June 1, 2014 300,000 June 1, 2015 300,000 9 Thousand Dollars ($ 1 KNOW ALL PERSONS BY THESE PRESENTS: That the City of Blair, in the County of Washington, in the State of Nebraska, hereby acknowledges itself to owe and for value received promises to pay, but only from the special sources hereinafter described, to the registered owner specified above, or registered assigns, the principal amount specified above in lawful money of the United States of America on the date of maturity specified above with interest thereon to maturity (or earlier redemption) from the date of original issue or most recent Installment Payment Date, whichever is later, at the Match Rate (as calculated from year to year in accordance with the teems of the Ordinance authorizing this bond (the "Ordinance ")) (said interest to be computed on the basis of a 360 -day year consisting of twelve 30 -day months). Principal due on this bond shall be payable nine equal installments of principal in accordance with the following maturity schedule: Maturity Date Principal Maturity Amount (each of said dates an "Installment Payment Date "), provided that all outstanding principal of this bond together with all accrued and unpaid interest thereon shall become due on June 1, 2015 (the "Final Maturity Date "). Interest shall be paid on each Installment Payment Date, including the Final Maturity Date. Payments of principal and interest on this bond shall be made by the City Treasurer of the City of Blair, as Paying Agent and Registrar, to the registered owner in accordance with the terms of the Ordinance. Payments shall be applied first to interest accrued and then to principal. The principal hereof and unpaid accrued interest hereon due on the Maturity Date are payable upon presentation and surrender of this bond at the office of City Treasurer of the City of Blair, Nebraska, the Paying Agent and Registrar, in Blair, Nebraska. Installments of principal and interest on this bond due prior to the Maturity Date will be paid on each Installment Payment Date by a check or draft mailed by the Paying Agent and Registrar to the registered owner of this bond, as shown on the books of record maintained by the Paying Agent and Registrar, at the close of business on the business day immediately preceding the Installment Payment Date, to such owner's address as shown on such books and records. This bond is the single bond of its issue in fully registered form in the principal amount of Thousand Dollars ($ ) which is issued by the City to evidence its payment obligations under that Interlocal Cooperation Agreement executed by the City on January 13, 2004, by and among the City, the Papio - Missouri River Natural Resources District (the "District ") and The County of Washington in the State of Nebraska relating to the District's Washington County Rural Water Project No. 2 and is issued in pursuance of Sections 18 -1803 to 18 -1805, R.R.S. Neb. 1997, and has been duly authorized by the Ordinance, legally passed, approved and published and by proceedings duly had by the Mayor and Council of said City. This bond is not redeemable prior to maturity and is not transferable by the District as registered owner. The City, the Paying Agent and Registrar and any other person may treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment due hereunder and for all purposes and shall not be affected by any notice to the contrary, whether this bond be overdue or not. If the date for payment of the principal of or interest on this bond shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the City of Blair, Nebraska, are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such day shall have the same force and effect as if made on the nominal date of payment. The revenue and earnings of the waterworks plant and water system of the City of Blair (as now owned or hereafter acquired, the "Water System ") are pledged and hypothecated, equally and ratably for the payment of this bond, the City's Combined Utilities Revenue Bonds, Series 2000B, with principal to be drawn up to a maximum amount of $6,815,700 issued to evidence a loan from the Nebraska Department of Environmental Quality (said bonds being referred to herein as the "DWSRF Loan ") and the City's Water System Revenue Refunding Bonds, Series 2000, issued in the original principal amount of $3,395,000 and presently 10 outstanding in the principal amount of $1,535,000 (the "Series 2000 Bonds ") and any additional bonds of equal priority to this bond, the DWSRF Loan and the Series 2000 Bonds issued in accordance with the Ordinance. This bond is a lien only upon said revenue and earnings of the Water System and is not a general obligation of the City of Blair, Nebraska. The Ordinance sets forth the covenants and obligations of the City with respect to the Water System and the application of the revenues to be derived therefrom, which revenues are by the terms of the Ordinance to be deposited into the `Blair Water System Fund" and disbursed to make payments of principal and interest on this bond, the DWSRF Loan and the Series 2000 Bonds, to pay costs of operation and maintenance, and make other payments as specified in said Ordinance. Said Ordinance also designates the terms and conditions on which additional bonds of equal lien to this bond, the DWSRF Loan and the Series 2000 Bonds may be issued. The City also reserves the right to issue bonds junior in lien to this bond, the principal and interest of which are payable from moneys in the "Retained Revenues Account" of the Blair Water System Fund as described in the Ordinance. Said Ordinance also designates the terms and conditions on which this bond shall cease to be entitled to any lien, benefit or security under such Ordinance and all covenants, agreements and obligations of the City under such Ordinance may be discharged and satisfied at or prior to the maturity or redemption of this bond if monies or certain specified securities shall have been deposited with a designated fiduciary. This bond shall not be valid and binding on the City until authenticated by the Paying Agent and Registrar. IT IS HEREBY CERTIFIED AND WARRANTED that all conditions, acts and things required by law to exist or to be done precedent to and in the issuance of this bond did exist, did happen and were done and performed in regular and due foam and time as required by law. IN WITNESS WHEREOF, the Mayor and Council of the City of Blair, Nebraska, have caused this bond to be executed on behalf of the City with the manual or facsimile signatures of the Mayor and the City Clerk and by causing the official seal of the City to be imprinted hereon, all as of the date of original issue specified above. ATTEST: City Clerk (SEAL) 11 CITY OF BLAIR, NEBRASKA Mayor CERTI ICATE OF AUTHENTICATION AND REGISTRATION This bond is the sole bond of the series designated therein and has been registered to the owner named in said bond and the name of such owner has been recorded in the books of record maintained by the undersigned as Paying Agent and Registrar for said bond. 12 City Treasurer, Paying Agent and Registrar for the City of Blair, Nebraska Section 9. The Series 2006 Bond shall be executed on behalf of the City with the manual or facsimile signatures of the Mayor and the City Clerk and shall have imprinted thereon the City's seal. The Series 2006 Bond shall not be valid and binding on the City until authenticated by the Paying Agent and Registrar. Upon execution, registration and authentication of the Series 2006 Bond, it shall be delivered to the City Treasurer, who is authorized to deliver it to the District in accordance with the teuus of the Interlocal Agreement. The City Clerk shall make and certify one or more transcripts of the proceedings of the Mayor and Council with respect to the Series 2006 Bond which shall be delivered to the District and to such other person or persons as the District may designate in connection with its own issuance of bonds to pay costs of the Project. Section 10. [Reserved] Section 11. The revenues and earnings of the Water System are hereby pledged and hypothecated for the payment of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds and interest on such Series 2006 Bond, Series 2000 Bonds, Series 2000B Bond and any such Additional Bonds, and the City does hereby agree with the holders of said Series 2006 Bond, Series 2000 Bonds, Series 2000B Bond and Additional Bonds as follows: (a) BLAIR WATER SYSTEM FUND - The entire gross revenues and income derived from the operation of the Water System, including pledges and appropriations from other sources, shall be set aside as collected and deposited in a separate fund designated as the "Blair Water System Fund" (previously established and hereby confirmed). For purposes of allocating the monies in the Blair Water System Fund, the City shall maintain the following accounts: (1) Bond Payment Account; (2) Operation and Maintenance Account; (3) Debt Service Reserve Account (with sub - accounts therein); and (4) Retained Revenues Account. (b) BOND PAYMENT ACCOUNT - Out of the Blair Water System Fund there shall be credited monthly on or before the first day of each month to 13 the Bond Payment Account, starting with the month of June, 2006, the following amounts: 1) during the period from and including June 1, 2006 to and including the Maturity Date an amount equal to one - twelfth of the installment payment amount falling due on the next Installment Payment Date on the Series 2006 Bond; (2) During such periods and in such amounts, all such payments as are required under the terms of the Outstanding Bond Ordinances with respect to the Series 2000 Bonds and the Series 2000B Bond. 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 (as and to the extent that amounts are available in a sub - account therein designated in the authorizing ordinance for each issue) and next from the Retained Revenues Account, an amount sufficient to pay, when due, the principal of and interest on the Series 2006 Bond, Series 2000 Bonds, the Series 2000B Bond or any Additional Bonds and to transfer the appropriate amounts due to the direct payee for the Series 2000B Bond, the respective paying agent or direct payee for the Series 2000 Bonds and any issues of Additional Bonds and the Paying Agent and Registrar for the Series 2006 Bond, 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. (c) OPERATION AND MAINTENANCE ACCOUNT - After any credits required to be made by the foregoing subparagraph (b) have been made in full, out of the Blair Water 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 Water System, and the City may withdraw funds credited to the Operation and Maintenance Account as necessary from time to time to pay such expenses. As an operational expense the City shall pay any and all administrative fees required to be paid in connection with the Series 2000B Bond. (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 from the revenues of the Water System with the Series 2006 Bond, the Series 2000 Bonds and the Series 2000B Bond, as shall 14 be deemed appropriate by the Mayor and Council in connection with each such issue. The Mayor and Council hereby determine that no sub - account for the Series 2006 Bond shall be established under this Ordinance. No sub - account for the Series 2000B Bond has been or is to be established under the Series 2000B Ordinance based upon determinations previously made by the Mayor and Council. For the Series 2000 Bonds there has been ordered established under the teiiiis of the Series 2000 Ordinance, the Series 2000 Debt Service Reserve Sub - account which shall be maintained in accordance with the terms of the Series 2000 Ordinance. The Series 2000 Debt Service Reserve Sub- account has been established with respect to and shall be maintained for the security of the Series 2000 Bonds only. In the event of any withdrawal from the Series 2000 Debt Service Reserve Sub- account but subject to allocation among other sub - accounts in the Debt Service Reserve Account as described below, there shall be credited to the Series 2000 Debt Service Reserve Sub - account in the month following such withdrawal all monies in the Blair Water System Fund remaining after making the payments required to be made in such month to the Bond Payment Account and the Operation and Maintenance Account and each month thereafter all such remaining monies shall be credited to the Series 2000 Debt Service Reserve Sub - account until such sub - account has been restored to the required balance. In issuing any series of Additional Bonds a separate sub - account in the Debt Service Reserve Account may be established for such series of Additional Bonds but is not required under the terms of this Ordinance. The balance in any such additional sub - account may be funded from monies on hand or from periodic deposits from revenues in the Blair Water System Fund or from the proceeds of such Additional Bonds. Each sub - account in the Debt Service Reserve Account shall be of equal standing with each other sub - account in the Debt Service Reserve Account and available monies from the Blair Water System Fund required to be credited to each such sub - account at any time shall be allocated on a pro rata basis between sub - accounts then requiring credits in accordance with the respective unpaid principal amounts then outstanding for each such issue for which there is a sub - account requiring credits. Each sub - account in the Debt Service Reserve Account shall constitute a separate fund held in trust by the City Treasurer for the separate benefit of the issue of bonds for which it is established. Anything in this Subsection 11(d) to the contrary notwithstanding, the amount required to be maintained in the Debt Service Reserve Account or any sub - account therein shall not at any time exceed the maximum amount permitted to be invested without yield restriction under Section 148 of the Code or any successor provision or related statutory limitation and applicable regulations of the United States Treasury Department. (e) RETAINED REVENUES ACCOUNT Monies in the Blair Water System Fund remaining after the credits required in the foregoing Subsections (b), (c) and (d) shall be credited to the Retained Revenues Account. Monies in the Retained Revenues Account may be used to make up any deficiencies in any 15 of the preceding Accounts, to retire any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bonds or any Additional Bonds prior to their maturity, to pay principal of and interest on any junior lien water system revenue bonds or notes or to provide for any other lawful purpose of the City as directed by the Mayor and City Council. The provisions of this Section 11 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. Except as specified below for the Debt Service Reserve Account, the City shall not be required to establish separate bank or investment accounts for said Accounts. Monies credited to the Debt Service Reserve Account or any sub - account therein shall, if maintained in a demand or time deposit account, be kept in a separate account and not commingled with other City or Water System funds. If invested, monies credited to the Debt Service Reserve Account or any sub - account therein may be commingled with other City funds, including Water System funds, 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 specific sub - account therein. Monies in any of said Accounts except the Debt Service Reserve Account may be invested in per' iissible investments for a City of the class to which the City of Blair belongs as of the time of such investment. Monies in the Debt Service Reserve Account or any sub - account therein may be invested in Deposit Securities or in certificates of deposit, savings accounts or other interest bearing accounts in banks which are members of the Federal Deposit Insurance Corporation, except that whenever the amount so deposited exceeds the amount of the F.D.I.C. insurance available thereon, the excess shall be secured in the manner required by Section 16 -715 R.R.S. Neb. 1997. Investments made from or attributable, in whole or in part, to the Debt Service Reserve Account shall mature or be 16 redeemable at the option of the holder, without penalty, in not more than ten years. Investments made from or attributable to the Bond Payment Account shall mature or be redeemable at the option of the holder by no later than the time monies are required for payments due from such account. Income from or profit realized from investment for any Account shall be credited to such Account until such Account contains any amount then required to be therein, and thereafter such income or profit shall be transferred to the Blair Water System Fund and treated as other revenues from the operation of the Water System. Section 12. So long as any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond 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 water and water service furnished from the Water 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 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds issued pursuant to this Ordinance. (b) To pay all proper and necessary costs of operation and maintenance of the Water System and to pay for the necessary and proper repairs, replacements, enlargements, extensions and improvements to the Water System, including payment as the same fall due of any administrative fees related to the Series 2000B Bond. (c) To provide funds sufficient to make the credits into the Accounts and at the times and in the amounts required by Section 11 of this Ordinance (d) To maintain Net Revenues in each fiscal year adopted by the City for the Water 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 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds issued pursuant to this Ordinance. 17 Section 13. To provide funds for any purpose related to the Water System, the City may issue Additional Bonds (other than Additional Bonds issued for refunding purposes which are governed by Section 14 of this Ordinance) payable from the revenues of the Water System having equal priority and on a parity with the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond 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 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds then outstanding and the proposed Additional Bonds. (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 Water System for the fiscal year next preceding the issuance of the Additional Bonds shall have been at least equal to 1.30 times the Average Annual Debt Service Requirements of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond 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, or by a certified public account or thin of certified public accounts (either one of which shall be recognized as having experience and expertise in municipal utility systems) projecting that the Net Revenues of the Water System in each of the three full fiscal years after the issuance of such Additional Bonds will be at least equal to 1.35 times the Average Annual Debt Service Requirements of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds, all as then outstanding, and of the proposed Additional Bonds. In making such projection, the consulting engineer or accountant shall use as a basis the Net 18 Revenues of the Water 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 fiscal year for which the audit was made, (B) to reflect such engineer's or accountant's estimate of the net increase over or net decrease under the Net Revenues of the Water System for the fiscal 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; (v) anticipated receipts from service to any additional customer or customers for the Water System; and (vi) such other factors affecting the projections of revenues and expenses as the consulting engineer or accountant deems reasonable and proper. Annual debt service on any proposed Additional Bonds to be issued may be estimated by the consulting engineer or certified public accountant 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 or certified public accountant in any fmal projections furnished to the City. If the City shall find it desirable it shall also have the right when issuing Additional Bonds to combine with its Water System any other utilities of the City authorized to be combined under Sections 19 -1305 through 19 -1308 or 18 -1803 through 18 -1805 R.R.S. Neb. 1997, and to cause all of the revenues of such combined utilities systems to be paid into the Blair Water System Fund, which fund may be appropriately redesignated, and to provide that all of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds previously 19 issued, all as then outstanding, and the proposed issue of Additional Bonds shall be payable from the revenues of such combined utilities and shall stand on a parity and in equality as to security and payment, provided, however, no utility shall be combined with the Water System as contemplated in this paragraph unless the conditions of subsection 13(a) shall have been satisfied and the Net Revenues of the combined utilities systems shall satisfy one or the other of the requirements for Additional Bonds provided in subsection 13(b) above. For purposes of meeting such requirements, the definition of Net Revenues shall be altered to include the gross revenues of the additional utility or utilities and to take into consideration ordinary expenses of operating and maintaining the additional utility or utilities. In making any projections the consulting engineer or certified public accountant shall take into consideration the factors described in 13(b)(2) above with respect to such additional utility or utilities. Net Revenues of the additional utility or utilities shall be based upon the report or reports of independent certified public accountants in the same manner as is required under subsection 13(b) above. Section 14. The City may issue refunding bonds, which shall qualify as Additional Bonds . ander this Section 14, to refund any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond or Additional Bonds without compliance with the provisions of subsection 13(b) above, provided that, if any such Series 2006 Bond, Series 2000 Bonds, Series 2000B Bond 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. The City may also issue refunding bonds which shall qualify as Additional Bonds of equal lien to 20 refund any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond or Additional Bonds then outstanding, provided, that if any such Series 2006 Bond, Series 2000 Bonds, Series 2000B Bond or Additional Bonds then outstanding 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 13(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 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond 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 Water System, such as bond proceeds or investment earnings on bond proceeds, or from monies in the Retained Revenues 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 14, 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. 1997 (or 21 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 15. The City hereby covenants and agrees that so long as any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds are outstanding, it will not issue any bonds or notes payable from the revenues of the Water 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 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any such Additional Bonds with the principal and interest of such bonds or notes to be payable from monies credited to the Retained Revenues Account as provided in Subsection 11(e). The term "Additional Bonds" as used in this ordinance refers only to such bonds as are payable from the revenues of the Water System on a parity with the Series 2006 Bond, the Series 2000 Bonds and the Series 2000B Bond and are issued in accordance with the terms of said Sections 13 and 14. Section 16. So long as any of the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond or Additional Bonds are outstanding, the City hereby covenants and agrees as follows: (a) The City will maintain the Water System in good condition and will continuously operate the same in a reasonable and efficient manner, and the City will punctually perfolin 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 Water System so long as the revenues derived from the City's ownership of the properties constituting the Water System shall be sufficient to fulfill this City's obligations under Section 12 of this Ordinance 22 (b) The City will not grant any franchise or right to any person, firm or corporation to own or operate a water system in competition with that owned by the City. (c) The City will maintain insurance on the property constituting the Water System (other than such portions of the system as are not normally insured against loss by casualty) in the amounts and against the 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 Water System operable in an efficient and proper manner to carry out the City's obligations under this Ordinance. The Mayor and Council shall annually, within one month after the end of each fiscal year adopted by the City for the Water System examine the amount of insurance carried with respect to the Water 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 Water System operable in an efficient and proper manner, and any amount of insurance proceeds not so used shall be credited to the Retained Revenues 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. The City agrees to obtain and maintain so long as any of the Series 2006 Bond or the Series 2000 Bonds are outstanding, as and to the extent available from insurance carriers authorized to provide insurance in the State of Nebraska, business interruption insurance or loss of earnings insurance providing a monthly coverage amount of not less than $150,000 for a covered period of not less than six months (subject to actual loss experience) (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 Water System. The City will have its operating and financial statements relating to the Water System audited annually by a certified public accountant or firm of certified public accountants. The City will famish to the District as the original purchaser of the Series 2006 Bonds and to the original purchaser or purchasers of each series of Additional Bonds issued hereunder, within four months after the end of each fiscal year of the Water System, a copy of the financial statements of the Water 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 Water System Fund to be bonded by an insurance company licensed to do business in Nebraska in an amount or amounts deemed sufficient to cover at all 23 times the maximum amount of money belonging to the Water System in the possession or control of any 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. (f) So long as the City is current with all payments or credits required to be made under Section 11 hereof and is also in compliance with the covenants of Section 12 hereof, the City may pay for water service used by it at such rate or rates as shall be determined by the Mayor and Council. In the event that the City is not in compliance with the provisions of said Sections 11 and 12 hereof, the City shall be required to pay for water service used by it at the rate or rates applicable to such usage as fixed by the City's water rate ordinances then in effect. (g) The City covenants and agrees for the benefit of the registered owners of the Series 2006 Bond and the Series 2000 Bonds that it will observe all contractual obligations provided for in the Series 2000B Ordinance and any agreement or agreements relating to the Series 2000B Bond. Section 17. 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 2006 Bond issued pursuant to this Ordinance and such bond shall no longer be deemed outstanding hereunder if such bond shall have 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 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. Any such money so deposited with a bank or trust company may be invested and reinvested in Deposit Securities at the direction of the City, and all interest and 24 income from such Deposit Securities in the hands of such 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 17, any Deposit Securities shall be non - callable or callable only at the option of the holder. Section 18. The terms and provisions of this Ordinance do and shall constitute a contract between the City of Blair and the registered owner of the Series 2006 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 registered owner of the Series 2006 Bond. The registered owner of the Series 2006 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 Water System and operate the same and apply the earnings thereof to the payment of the principal of and interest on the Series 2006 Bond, the Series 2000 Bonds, the Series 2000B Bond and any Additional Bonds in accordance with the provisions hereof, the provisions of the Outstanding Bond Ordinances and any ordinance authorizing Additional Bonds. Section 19. 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 2006 Bond as contemplated by this Ordinance. 25 Section 20. The City hereby covenants and agrees with the District and for the benefit of the owners of the District Bonds that the City will not take any action which would cause the District Bonds to be arbitrage bonds within the meaning of Sections 103(b) and 148 of the Internal Revenue Code of 1986, as amended (the "Code "), and further covenants to comply with said Sections 103(b) and 148 and all applicable regulations thereunder throughout the term of the Series 2006 Bond. The City, as and to the extent that any such matters are within the power or control of the City, hereby covenants and agrees that it will not take any action which would cause the interest on the District Bonds to become subject to federal income tax under the terms of the Code. The officers of the City (or any one or more of them) are hereby authorized to make any allocations, certifications, elections and filings deemed necessary in connection with the issuance of the District Bonds and maintaining the status of interest on the District Bonds as excludable from gross income under the Code. Section 21. The City hereby agrees to cooperate with the District in providing any information (including the City's annual audit report) as may be deemed necessary for the District to comply with its undertaking as to compliance with the requirements of Rule 15c2 -12 promulgated by the Securities and Exchange Commission, with respect to the District Bonds. Section 22. 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 23. The Mayor and City Administrator are hereby authorized to approve on behalf of the City information concerning the City in any preliminary or final official statement with respect to the District Bonds. 26 Section 24. This Ordinance hereby determined to be a measure necessary to carry out the City's obligations under the Interlocal Agreement, shall be published in pamphlet foam and shall be in force and take effect from and after its passage, approval and publication according to law. ATTEST: City Clerk (SEAL) PASSED AND APPROVED this 9th day of May, 2006. 27