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02-10091 Issue Bonds(First Published in The Salina Journal August 2002) C d,[,d.SO,, Gilmore & Bell, P.C. Document No. K 105 675.04\OrdFinal ORDINANCE NO. 02-10091 AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF WATER AND SEWAGE SYSTEM REVENUE REFUNDING BONDS, SERIES 2002-A, OF THE CITY OF SALINA, KANSAS, FOR THE PURPOSE OF PROVIDING FUNDS TO REFUND A PORTION OF THE CITY'S OUTSTANDING COMBINED WATER AND SEWAGE SYSTEM REVENUE REFUNDING BONDS; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH. WHEREAS, the City of Salina, Kansas (the "City") is a city of the first class, duly created, organized and existing under the Constitution and laws of the State; and WHEREAS, the City of Salina, Kansas (the "City"), has heretofore combined the waterworks system and the sewage disposal system of said City, as said systems are defined and referred to in K.S.A. 12-856 to 12-868, inclusive, as amended and said combined water and sewage system (the "Water and Sewage Utility" or the "combined water and sewage system") has thenceforth been operated and financed in accordance with the provisions of the Act (hereinafter defined), and WHEREAS, the City heretofore issued and has outstanding Combined Water and Sewage System Revenue Refunding Bonds, Series 1994, dated January 1, 1994 (the "Series 1994 Bonds") and is authorized by K.S.A. 10-116a to issue refunding revenue bonds of the City for the purpose of refunding all or a portion of the Series 1994 Bonds; and WHEREAS, in order to achieve interest cost savings, to restructure the City's current debt repayment schedule and to provide an orderly plan of finance for the City, it has become desirable and in the best interest of the City and its inhabitants to refund the Series 1994 Bonds maturing in the years 2003 to 2012, inclusive, in the aggregate principal amount of $9,945,000 (the "Refunded Bonds"); and WHEREAS, the City hereby finds and determines that it is necessary to authorize the issuance of the Bonds for the purposes set forth herein. NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF SALINA, KANSAS, AS FOLLOWS: Section 1. Definitions of Words and Terms. In addition to words and terms defined elsewhere herein, the following words and terms in this Ordinance shall have the following meaning: "Act" means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, K.S.A. 10-116a et seq. and K.S.A. 12-856 to 12-868, inclusive, all as amended and supplemented. "Additional Bonds" means any bonds hereinafter issued pursuant to the Bond Resolution. "Bond Resolution" means the resolution to be adopted by the governing body of the City prescribing the terms and details of the Bonds and making covenants with respect thereto. "Bonds" means the City's Water and Sewage System Revenue Refunding Bonds, Series 2002-A, in the aggregate principal amount set forth in the Bond Resolution, and dated August 15, 2002, authorized by this Ordinance. "City" means the City of Salina, Kansas. "Clerk" means the duly appointed and acting Clerk of the City or, in the Clerk's absence, the duly appointed Deputy Clerk or Acting Clerk. "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury. "Mayor" means the duly elected and acting Mayor or, in the Mayor's absence, the duly appointed and/or elected Vice Mayor or Acting Mayor of the City. "Net Revenues" means the Revenues less that portion of the Revenues expended for operating and maintaining the Water and Sewage Utility (excluding depreciation, amortization, interest chargeable to the income account and other similar payments or charges pursuant to Section 16 of the Bond Resolution). co�seuoe�eo-seone "Operating Expenses" shall mean the City's expenses of operating and maintaining the Water and Sewage Utility and keeping the same in good repair and working order, including all costs due under any type of contractual arrangement with respect to purchases of water and ordinary costs of operation, maintenance, production, transmission, distribution, repairs, replacements, engineering, drilling wells, transportation, materials and supplies, salaries, wages, audit, legal, financial, pension, retirement, health, hospitalization, insurance, taxes and administrative and general expenses and other expenses actually paid or accrued, including without limitation any expenses of the City applicable to the Water and Sewage Utility as recorded on its books pursuant to standard accounting practices. Operating Expenses shall not include any costs or expenses for extending or enlarging the Water and Sewage Utility, charges for depreciation, or payment of debt service on any bonds. "Ordinance" means this Ordinance authorizing the issuance of the Bonds. "Parity Bonds" means any Additional Bonds or other obligations hereafter issued or incurred pursuant to the Bond Resolution and standing on a parity and equality with the Bonds with respect to the payment of principal and interest out of the Net Revenues of the Water and Sewage Utility. "Parity Resolution" means the ordinances and/or resolutions under which any additional Parity Bonds are hereafter issued pursuant to the Bond Resolution. "Refunded Bond Ordinance" means the Series 1994 Bond Ordinance which authorized the Refunded Bonds. "Refunded Bonds" means the Series 1994 Bonds maturing in the years 2003 to 2012, inclusive, in the aggregate principal amount of $9,945,000. "Revenues" shall mean all revenues, income and rents accrued by the City from the ownership and operation of the Water and Sewage Utility and the proceeds of any insurance covering business interruption loss relating to the Water and Sewage Utility. "Series 1994 Bonds" means the City's Combined Water and Sewage System Revenue Refunding Bonds, Series 1994, dated January 1, 1994. "State" means the State of Kansas. "Surplus Account" means the fund by that name previously established and reconfirmed by the Bond Resolution. "Water and Sewage Fund" means the fund by that name previously established and reconfirmed by the Bond Resolution. "Water and Sewage Utility" or the "combined water and sewage system" means the combined water and sewage system of the City including all extensions, enlargements and improvements thereto hereafter constructed or acquired by the City. Section 2. Authorization for the Bonds. There shall be issued and hereby are authorized and directed to be issued the Water and Sewage System Revenue Refunding Bonds, Series 2002-A, of the City in the principal amount set forth in the Bond Resolution, for the purpose of providing funds to refund the Refunded Bonds. Section 3. Security for the Bonds. The Bonds shall be special obligations of the City, and the principal of, premium, if any, and interest on the Bonds shall be payable solely from the Net Revenues of the combined water and sewage system and not from any other fund or source, and the City hereby pledges said Net Revenues to the payment of the principal of and interest on the Bonds. The Bonds constitute a lien on the Net Revenues. The taxing power of the City is not pledged to the payment of the Bonds either as to principal or interest. The Bonds shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction. The covenants and agreements of the City contained herein and in the Bonds shall be for the equal benefit, protection, and security of the legal owners of any or all of the Bonds, all of which Bonds shall be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in the Resolution. The Bonds shall stand on a parity and be equally and ratably secured with respect to the payment of principal and interest from the Net Revenues derived from the operation of the Water and Sewage Utility and in all other respects with any Parity Bonds. The Bonds shall not have any priority with respect to the payment of principal or interest from said Net 2 coosmmai IS"a Revenues or otherwise over the Parity Bonds and the Parity Bonds shall not have any priority with respect to the payment of principal or interest from said Net Revenues or otherwise over the Bonds. Section 4. Terms, Details and Conditions of the Bonds. The Bonds shall be dated and bear interest, shall mature and be payable at such times, shall be in such forms, shall be subject to redemption and payment prior to the maturity thereof, and shall be issued and delivered in the manner prescribed and subject to the provisions, covenants and agreements set forth in the Bond Resolution hereinafter adopted by the governing body of the City. Section 5. Rate Covenant. The City will fix, establish and maintain rates, fees and other charges for the sale of water and sewage services and commodities of the Water and Sewage Utility as shall be required to provide Revenues at least sufficient in each fiscal year to pay: (i) operation and maintenance expenses during such fiscal year, including reserves, if any, provided for in the annual budget for such fiscal year; (ii) an amount equal to at least 125% of the amount required to be paid in the current fiscal year on account of principal of and interest on all obligations payable from the Revenues at the time outstanding (except to the extent any such principal and interest is to be paid from moneys held in trust for the specific purpose of making such payments); (iii) an amount, if any, to be paid during such fiscal year into the Series 2002-A Reserve Account; and (iv) any and all charges or liens whatsoever payable out of Revenues during such fiscal year. Section 6. Tax Covenants. The City covenants and agrees that (a) it will comply with all applicable provisions of the Code, including Sections 103 and 141 through 150, necessary to maintain the exclusion from federal gross income of the interest on the Bonds; and (b) it will not use or permit the use of any proceeds of Bonds or any other funds of the City, nor take or permit any other action, or fail to take any action, which would adversely affect the exclusion from federal gross income of the interest on the Bonds. The City will also adopt such other ordinances or resolutions and take such other actions as may be necessary to comply with the Code and with other applicable future law, in order to ensure that the interest on the Bonds will remain excluded from federal gross income, to the extent any such actions can be taken by the City. Section 7. Further Authority. The Mayor, Clerk and other City officials are hereby further authorized and directed to execute any and all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of the Ordinance to make alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. Section 8. Governing Law. The Ordinance and the Bonds shall be governed exclusively by and construed in accordance with the applicable laws of the State. Section 9. Effective Date. This Ordinance shall take effect and be in full force from and after its passage by the governing body of the City and publication in the official City newspaper. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] coo.Iiie-se�ine PASSED by the governing body of the City on August 12, 2002 and signed by the Mayor. (SEAL) ATTEST: Clerk ayor