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Ordinance 03-084 Provide for Bonds for Capital Facilities & Street Improvements ORDINANCE NO.03-084 AN ORDINANCE OF THE CITY OF SPOKANE VALLEY, OF SPOKANE COUNTY, WASHINGTON, PROVIDING FOR THE ISSUANCE OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED$9,430,000 IN ORDER TO OBTAIN FUNDS TO PAY PART OF THE COSTS OF ACQUISITION AND CONSTRUCTION OF A REGIONAL CENTER, RELATED CAPITAL FACILITIES AND STREET IMPROVEMENTS; PROVIDING FOR THE SALE OF THE BONDS TO LEIIMAN BROTHERS,OF SEATTLE, WASHINGTON; PROVIDING FOR THE REGISTRATION OF SAID BONDS; CREATING CERTAIN FUNDS FOR SAID BONDS; FIXING THE INTEREST RATE, MATURITIES, FORM, TERMS AND COVENANTS OF SAID BONDS; PROVIDING CERTAIN COVENANTS WITH RESPECT TO FEDERAL TAX LAW; PROVIDING FOR THE PURCHASE OF MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN COVENANTS WITH RESPECT TO ON-GOING DISCLOSURE; PROVIDING FOR THE EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO CITY OF SPOKANE VALLEY Spokane County,Washington LIMITED TAX GENERAL OBLIGATION BONDS,2003 Principal Amount of$9,430,000 BE IT ORDAINED by the Mayor and the Members of the City Council of the City of Spokane Valley, of Spokane County, Washington, as follows: WHEREAS, the City of Spokane Valley (the "City"), of Spokane County, Washington, is a duly incorporated and existing municipal corporation organized and operating under the Constitution and laws of the State of Washington; WHEREAS, the City is authorized and empowered by RCW 35A.40, 35.37 and 39.46 to authorize, sell and deliver general obligation bonds to finance the acquisition, construction and installation of improvements and betterments to City facilities; WHEREAS, the City Council of the City (the "Council") has determined that it is in the best interests of the residents of the City to construct and equip a community center at Mirabeau Point, to be called CenterPlace and has already approved and executed an Interlocal Agreement (the "Agreement") with Spokane County and the Spokane Public Facilities District; WHEREAS, the Council has determined that there are certain road improvements that are important to the City and should be completed; and WHEREAS, Lehman Brothers, Inc., of Seattle, Washington, (the "Underwriter") has offered to purchase the City's limited tax general obligation bonds in an amount of not to exceed $9,430,000 under the terms hereinafter set forth; and Bond Ordinance()3-084 Page 1 of 19 WHEREAS, the City has been advised by the Underwriter that the purchase of bond insurance will achieve more desirable interest rates on the bonds and the Council desires to authorize purchase of a policy of municipal bond insurance; and WHEREAS, the City wishes to designate the Washington State Fiscal Agent as the Bond Registrar for the City on this series of bonds; NOW, THEREFORE, IT IS HEREBY FOUND,DETERMINED AND ORDERED as follows: Section 1: DEFINITIONS As used in this Ordinance, capitalized terms shall have the meanings provided in this Section. Words of the masculine gender shall he deemed and construed to include correlative words of the feminine and neuter genders, and vice versa. Words imparting the singular number shall include the plural numbers and vice versa, unless the context shall otherwise indicate. Acquire, Acquiring or Acquisition includes the opening, laying out, establishment, purchase, construction, securing, installation, reconstruction, lease, gift, grant from the federal government, the State of Washington, any public body therein or any person or entity, the condemnation, transfer, option to purchase, other contract, or other acquirement, or any combination thereof. Agreement shall mean the Interlocal Agreement by and between the City, Spokane County and the Spokane Public Facilities District in July of 2003. Bond Fund shall mean the "City of Spokane Valley Limited Tax General Obligation Bond Debt Service Fund" created by this Ordinance. Bond Insurance Policy shall mean a policy of municipal bond insurance that insures payment of the principal of and interest on part or all of the bonds. Bond Purchase Contract means the written bond purchase contract between the Underwriter and the City to purchase the Bonds from the City. Bond Register shall mean the registration records of the City, maintained by the Bond Registrar, on which shall appear the names and addresses of the Registered Owner of the Bonds. Bond Registrar shall mean either of the Washington State Fiscal Agencies or their successors in functions, as now or hereafter designated for the Bonds. Bond Year means each one-year period that ends on the date selected by the City. The first and last Bonds Years may be short periods. If no day is selected by the City before the earlier of the final maturity date of the Bonds or the date that is five(5) years after the date of issuance of the Bonds, Bonds Years end on each anniversary of the date of issue and on the final maturity date of the Bonds. Bonds shall mean the hereinafter authorized limited tax general obligation bonds in the aggregate principal amount of not to exceed 59,430,000. City shall mean the City of Spokane Valley, of Spokane County, Washington, a duly incorporated and existing City organized and operating under the laws of the State of Washington acting by and through its employees, officers and City Council. Bond Ordinance 03-0K4 Page 2 of 19 City Clerk or Clerk shall mean the de facto or de jure City Clerk, or other officer of the City who is the custodian of the seal of the City and of the records of the proceedings of the City, or his/her successor in function, if any. City Manager shall mean the Chief Administrative Officer of the City, appointed by the Council, or his/her successor in function, if any. Code shall mean the Internal Revenue Code of 1986, as amended, and any Treasury Regulations promulgated thereunder. Commission shall mean the Securities& Exchange Commission. Cost of the Project or Costs of the Project or any phrase of similar import, shall mean all or any part designated by the City of the costs of the Project, or interest therein, which costs, at the option of the City, may include all or any part of the incidental costs pertaining to the Acquisition of the Project, including, without limitation: (1) Preliminary expenses advanced by the City from funds available for the use therefor, or advanced by the state, county or federal governments, or from any other source, with approval of the Council, or any combination thereof; (2) The costs of making surveys, audits, preliminary plans, other plans, specifications, estimates of costs and other preliminaries; (3) The costs of appraising, printing, estimates, advice, services of engineers, architects, financial consultants, attorneys at law,clerical help, or other agents or employees; (4) The costs of contingencies; (5) The costs of issuance of Bonds; (6) The costs of funding and short-term financing, revenue warrants, bonds anticipation bonds or other temporary loans appertaining to the Project, and of the incidental expenses incurred in connection with such loans; (7) The Acquisition costs of any properties, rights, easements, or other interest in properties, or any licenses, privileges, agreements and franchises; and (8) All other expenses necessary or desirable and appertaining to the Project, as estimated or otherwise ascertained by the City. DTC means The Depository Trust Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Bonds, or any successor or substitute depository for the Bonds. Finance Director shall mean the Director of Finance and Administrative Services of the City, or his or his/her successor in functions, if any. Financial Advisor means Seattle-Northwest Securities Corporation,of Seattle, Washington. Bond Ordinance 03-084 Page 3 of 19 Improvement(s) includes the buildings, structures and appurtenances constructed and equipped with the proceeds of the Bonds. Insurer means the issuer of any Bond Insurance Policy. Mayor shall mean the de facto or de jure Mayor of the City, or any presiding officer or titular head of the City or his/her successor in functions, if any. Mirabeau Point Capital Projects Fund shall mean the "City of Spokane Valley Mirabeau Point Capital Projects Fund" created by this Ordinance for the purpose of paying a portion of the Costs of the Project associated with CenterPlace, as defined in Section 2 hereof. MSRB means the Municipal Securities Rulemaking Board or any successor to its functions. Net Proceeds when used with reference to the Bonds, shall mean the face amount of the Bonds, plus accrued interest, if any, and original issue premium, if any, and less original issue discount, if any. NRMSIR means a nationally recognized municipal securities information repository. Operating Reserve Account shall mean the "City of Spokane Valley CenterPlace Operating Reserve Account"created by this Ordinance. Preliminary Official Statement shall mean the document of that name dated October 23, 2003 and declared"final"in Section 14 herein. Project shall mean the undertaking or undertakings of Acquiring the Improvements described herein. Registered Owner or Registered Owners shall mean the person or persons whose names and addresses shall appear on the Bond Register maintained by the Bond Registrar, as the owner or owners of the Bonds. Reimbursement Resolution shall mean the Resolution adopted by City Council on June 24, 2003, authorizing reimbursement with Bond Proceeds certain expenses incurred in relation to CenterPlace. Rule means the Commission's Rule 15c2-12 under the Securities& Exchange Act of 1934, as the same may be amended from time to time. SID means the State information depository for the State of Washington. Street Capital Projects Fund shall mean the "City of Spokane Valley Street Capital Projects Fund"created by this Ordinance for the purpose of paying a portion of the Costs of the Project associated with road and street construction projects set forth in Section 2 herein. Term Bonds, if any, shall he any term bond, subject to mandatory redemption payments identified in the Bond Purchase Contract. Underwriter means Lehman Brothers Inc., Seattle,Washington as Underwriter. Section 2: THE PROJECT Bond Ordinance 03-084 Page 4 of 19 The City will acquire, contract and install the following improvements, (collectively the "Project"): (1) The construction of a new regional and community center, CenterPlace at Mirabeau Point, ("CenterPlace") to house a large regional meeting room, a conference center for community and cultural activities and a senior center, including furnishings, appurtenances, equipment and other costs incurred in the several undertakings of the City to accomplish obligations under the Agreement and other expenses incurred and authorized to be reimbursed by the Reimbursement Resolution; (2) The Acquisition and installation of road improvements, including: (a) 16th Avenue (Dishman-Mica Road to Pines Road); (b) Park Road (8th Avenue to Appleway Avenue); (c) Evergreen Road (16t Avenue to 2°d Avenue); and (d) Other road construction and improvement projects as set forth in the Capital Improvement Plan of the City. (3) Payment of engineering fees, administrative costs, legal fees and all other costs incidental thereto, together with the purchase of all appurtenances and machinery necessary or useful for said Project. Section 3: COSTS OF THE PROJECT The total cost of CenterPlace is estimated to be approximately $10,000,000, of which not to exceed S7,000,000 will be financed by the proceeds of the Bonds. The total cost of the street improvements is estimated to be $20,386,700, of which not to exceed S2,430,000 will be financed by the proceeds of the Bonds. Any additional costs of the Project will be paid from other legally available funds, including private donations, loan and grant funds and other legally available funds of the City. Section 4: PLEDGE OF FAITH AND CREDIT; TAX LEVIES The Bonds arc limited tax general obligations of the City and, as such, the full faith and credit of the City are hereby pledged for their payment, within the appropriate Constitutional and statutory limitations pertaining to non-voted general obligations. The officers now or hereafter charged by law with the duty of levying taxes for the payment of said Bonds and the interest thereon shall, in the manner provided by law, make annual tax levies upon all of the taxable property within the City sufficient, together with other legally available funds, to meet the payments of principal and interest maturing and accruing as set forth herein, having always in mind the Constitutional and statutory tax limitations pertaining to non-voted general obligations. Section 5: REGISTRATION, PLACE AND MANNER OF PAYMENT (a) Registrar/Bond Register. The City hereby appoints the Washington State Fiscal Agencies as Bond Registrar and requests that the Bond Registrar adopt the system of registration approved by the Washington State Finance Committee. The City shall cause a Bond Register to be maintained by the Bond Ordinance 03-054 Page 5 of 19 Bond Registrar. So long as any portion of the Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of the Bonds at its principal office. The Bond Registrar shall keep,or cause to be kept,at its principal corporate trust office, sufficient records for the registration and transfer of the Bonds which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bonds, transferred or exchanged in accordance with the provisions of such Bonds and this Ordinance, and to carry out all of the Bond Registrar's powers and duties under this Ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of the Bonds as the absolute owner thereof for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such Bonds shall be made only as described herein, but such registration may be transferred as herein provided. All such payments made as described herein shall be valid and shall satisfy and discharge the liability of the City upon such Bonds to the extent they treat the person in whose name any Bonds is registered as the absolute owner thereof for all purposes of this Ordinance and any applicable laws, notwithstanding any notice to the contrary received by the Bond Registrar or the City. (c) DTC Acceptance/Letter of Representations. The Bonds initially issued shall be held in fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City shall execute and deliver to DTC (or has heretofore executed and delivered to DTC)a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds in respect to the accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or any DTC participant of any amount in respect of the principal of or interest on Bonds, any notice that is permitted or required to be given to Registered Owners under this Ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC), the selection by DTC or any DTC participant of any person to receive payment in the event of a partial redemption of the Bonds, or any consent given or other action taken by DTC as the Registered Owner. For so long as any Bonds is held in fully immobilized form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC or its nominee and shall not mean the owners of any beneficial interest in such Bonds. (d) Use of Depository. (i) The Bonds shall be registered initially in the name of Cede& Co., as nominee of DTC, with one Bonds for each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Bonds, or any portions thereof, may not hereafter be transferred except (A) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any substitute depository appointed by the City pursuant to subsection (ii) below or such substitute depository's successor, or(C)to any person as provided in subsection(iv)below. (ii) Upon the resignation of DTC or its successor(or any substitute depository or its successor) from its functions as depository, or a determination by the City to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the City may appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. Bond Ordinance 03-084 Page 6 of 19 (iii) In the case of any transfer pursuant to clause (A) or (B) of subsection (i) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf of the City, issue a single new Bonds for each maturity then outstanding, registered in the name of such successor or such substitute depository, or its nominee, as the case may be, all as specified in such written request of the City. (iv) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (B) the City determines that it is in the best interests of the beneficial owners of the Bonds that such owners be able to obtain Bonds in certificated form, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held in fully immobilized form. The City shall deliver a written request to the Bond Registrar together with a supply of definitive Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the City to the Bond Registrar, new Bonds shall be issued in such denominations and registered in the names of such persons as are requested in such written request. (e) Transfer or Exchange of Registered Ownership Change in Denominations. The registered ownership of any Bonds may be transferred or exchanged, but no transfer of any such Bonds shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing on such Bonds duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered Bonds and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Bonds (or Bonds at the option of the new Registered Owner) or the same date, maturity and interest rate and for the same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bonds, in exchange for such surrendered and canceled Bonds. Any Bonds may be surrendered to the Bond Registrar and exchanged, without charge, for any equal aggregate principal amount of Bonds of the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to transfer or exchange any Bonds during the 15 days preceding any interest payment or principal payment date. (f) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. For so long as all Bonds are in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Letter to Representations. In the event that the Bonds are no longer in fully immobilized form, interest on the Bonds shall he paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. Section 6: REDEMPTION OF BONDS PRIOR TO MATURITY A. Optional and Mandatory Redemption of Bonds. The Bonds are subject to redemption as set forth in the Bond Purchase Contract. B. Notice of Redemption. Notice of any such redemption shall be sent by the Bond Registrar by first-class mail, postage prepaid, not less than thirty(30) nor more than sixty(60) days prior Bond Ordinance 03-084 Page 7 of 19 to the date fixed for redemption, to the Registered Owner of each Bond to be redeemed at the address shown on the Bond Register. So long as the Bonds are in book-entry form, notice of redemption shall be given as provided in the Letter of Representations. This requirement shall he deemed to be complied with when notice is mailed as herein provided, regardless of whether or not it is actually received by the Registered Owner of any Bond to be redeemed. In addition, such redemption notice shall be mailed within the same period, postage prepaid, by first-class mail, to the Underwriter or its successor, and to Moody's Investors Service, in New York, New York, or its successor, if any, but such mailing shall not he a condition precedent to the redemption of such Bonds. The City shall also cause the Bond Registrar to provide notice of redemption (at least thirty (30) days) to each NRMSIR and SID, if any, in accordance herewith. C. Selection of Bonds for Redemption. For as long as the Bonds are held in fully immobilized form, the selection of particular Bonds within a maturity to he redeemed shall be made in accordance with the operational arrangements then in effect at DTC. In all other cases, if the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of$5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of$5,000 as is obtained by dividing the actual principal amount of such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. D. Effect of Redemption. When so called for redemption, such Bonds shall cease to accrue interest on the specified redemption date, provided funds for redemption are on deposit at the place of payment at that time, and such Bonds shall not be deemed to he outstanding as of such redemption date. E. Purchase on Open Market. The City reserves the right to purchase any of the Bonds on the open market at any time at any price. To the extent the City purposes Term Bonds on the open market , the City may reduce, at its discretion, the amount of any mandatory sinking fund deposit or deposits by an aggregate principal amount equal to the principal amount of the Term Bonds so purchased. Any Bonds so purchased or redeemed shall be cancelled. Section 7: BOND FUND There is hereby created, and shall be maintained by the Finance Director, a fund known as the "City of Spokane Valley Limited Tax General Obligation Bond - Debt Service Fund" (the "Bond Fund") which shall be drawn upon for the sole purpose of paying the principal of and interest on the Bonds. Money on deposit in the Bond Fund not immediately needed to pay such interest or principal may be temporarily deposited in such institutions or invested in any obligations which are legal investments for City funds. Any interest earnings from the investment of such money shall be deposited into the Bond Fund. Section 8: PROJECT FUNDS There is hereby created, and shall he maintained by the Finance Director, two funds, the "City of Spokane Valley Mirabeau Point Capital Projects Fund" ("Mirabeau Point Fund") and the "City of Bond Ordinance 03-084 Page 8 of 19 Spokane Valley Street Capital Projects Fund" ("Street Fund"), (collectively called the "Project Funds"), into which shall be deposited the proceeds of the sale of the Bonds. Moneys in the Mirabeau Point Fund shall be used for the payment of part of the cost and expense of the Acquisition and installation of CenterPlace. Moneys in the Street Fund shall be used to complete the road and street projects identified in Section 2.B of this Ordinance. . All interest earnings on moneys invested from the Project Funds shall be deposited into that respective Project Fund. the City's share of any liquidated damages or other moneys paid by defaulting contractors or their sureties will he deposited into said Project Fund to assure the Acquisition and completion of the Project. When the Street Projects have been completed and all costs related thereto, including all principal of and interest on the Bonds is paid in full, any moneys remaining in the Street Fund may be deposited in the Bond Fund, created hereafter, or used for other capital projects of the City. When CenterPlace is complete, all money remaining in the Mirabeau Point Fund shall he used for other lawful purposes associated with CenterPlace. Section 9: OPERATING RESERVE ACCOUNT There is hereby created and shall be maintained by the Finance Director a fund known as the "City of Spokane Valley CenterPlace Operating Reserve Account" (herein called the "Operating Reserve Account"), into which shall be deposited (from funds other than proceeds of the Bonds), the sum of $100,000 in 2004. The City covenants to increase the balance of the Operating Reserve Account to $300,000 by the end of 2009. Moneys in the Operating Reserve Account shall be available for use in the payment of expenses associated with CenterPlace, including but not limited to operation and maintenance expenses, debt service and capital repairs. If the City makes a draw on the funds in the Operating Reserve Account, it shall at the same time file a plan for the replenishment of the funds withdrawn. The City covenants to use all reasonable efforts to follow such a plan for replenishment. Section 10: PROVISION FOR DEFEASANCE OF THE BONDS In the event that money and/or direct obligations of or obligations guaranteed by the United States (hereinafter referred to as "government obligations") as provided by Section 39.53 RCW, as it now reads or is hereafter amended, maturing or having guaranteed redemption prices, at such time or times and hearing interest to be earned thereon in such amounts as are sufficient (together with any resulting cash balances) to redeem and retire part or all of the Bonds in accordance with their terms, are hereafter irrevocably set aside in a special account and pledged to effect such redemption and retirement, then no further payments need be made into the Bond Fund for the payment of the principal of and interest on the Bonds so provided for and such Bonds shall then cease to be entitled to any lien,benefit or security of this Ordinance, except the right to receive the funds so set aside and pledged, and such Bonds shall no longer be deemed to be outstanding hereunder. Section 11: EXECUTION OF THE BONDS Without unreasonable delay the City shall cause the Bonds to be prepared, executed and delivered, which Bonds shall be typed, lithographed or printed with steel engraved or lithographed borders. Each Bond shall be executed on behalf of the City by the Mayor and shall be attested by the Clerk (both of which signatures shall be by manual signature). Each Bond shall be substantially in the form as set forth in Exhibit "A"attached hereto and made a part hereof. Bond Ordinance 03-084 Pagc 9 of 19 The Bonds shall then be delivered to the Registrar for registration and delivery. Only such Bonds as shall bear thereon a Registration Certificate in the form hereinafter recited, manually executed by the Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Ordinance, and such Registration Certificate shall he conclusive evidence that the Bonds so registered have been duly executed and delivered hereunder and are entitled to the benefits of this Ordinance. Section 12: SALE OF BONDS The City hereby authorizes and approves the sale of the Bonds to the Underwriter in accordance with the terms and conditions set forth in the Bond Purchase Contract. The City hereby delegates to the City Manager the authority to execute the Bond Purchase Contract on behalf of the City in substantially the form filed with the City, subject to the following limitations: (a) The principal amount of the Bonds does not exceed$9,430,000; (b) The interest rate on the Bonds does not exceed a total interest cost (TIC)of 6.0%; (c) The Bond Purchase Contract is reviewed and approved by the Financial Advisor for the City; and (d) The Bond Purchase Contract is executed prior to November 5, 2003 and the closing of the Bonds shall occur on or before November 26, 2003. The City Manager, the Clerk, the Finance and Administrative Services Director and Preston Gates& Ellis LIP, bond counsel, are hereby further authorized to do everything necessary for the prompt execution and delivery of the Bonds to the Underwriter and for the proper application and use of the proceeds of the sale thereof, including: (i) Accepting the final Official Statement regarding the Bonds; (ii) executing such certificates and receipts as may be necessary to properly document the issuance of all the Bonds; and (iii)disbursing the proceeds of the Bonds. Section 13: TAX COVENANTS; SPECIAL DESIGNATION A. Tax Covenants: The City hereby covenants that it will not make any use of the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of such Bonds pursuant to Section 148 of the Code which will cause the Bonds to be "arbitrage bonds" within the meaning of said section and said regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bonds) throughout the term of the Bonds. The City hereby further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute "private activity bonds" under Section 141 of the Code. B. Special Designation: The Bonds are hereby designated as "Qualified Tax Exempt Obligations" for purposes of Section 265(b) of the Code. The City covenants not to issue tax-exempt obligations in an aggregate principal amount in excess of S 10,000,000 during the 2003 calendar year. Section 14: PRELIMINARY OFFICIAL STATEMENT DECLARATION The Mayor is hereby authorized to execute a certificate deeming the preliminary official statement dated October 23, 2003 "final" for purposes of Rule 15c2-12 of the Securities and Exchange Commission and other certificates required by the securities laws of various states and the United States of America. Bond Ordinance 03-084 Page 10 of 19 Section 15: UNDERTAIDNG TO PROVIDE ON-GOING DISCLOSURE (a) Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the Bonds as required by Section(b)(5) of the Rule. (h) Financial Statements/Operating Data. The City agrees to provide or cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the SEC in accordance with the Rule, the following annual financial information and operating data for the prior fiscal year (commencing in 2004 for the fiscal year ended December 31, 2003): 1. Annual financial statements, which statements may or may not be audited, showing ending fund balances for the City's general fund prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any successor statute) and generally of the type included in the Preliminary Official Statement for the Bonds under the heading "City of Spokane Valley Budgeting"; and"Appendix E—`2004 City General Fund Budget—. 2. The assessed valuation of taxable property in the City; 3. Ad valorem taxes due and percentage of taxes collected; 4. Property tax levy rate per$1,000 of assessed valuation; and 5. Outstanding general obligation debt of the City. Items 2-5 shall he required only to the extent that such information is not included in the annual financial statements. The information and data described above shall be provided on or before nine months after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to each then existing NRMSIR and the SID, if any. In lieu of providing such annual financial information and operating data, the City may cross-reference to other documents provided to the NRMSIR, the SID or to the SEC and, if such document is a final official statement within the meaning of the Rule, available from the MSRB. If not provided as part of the annual financial information discussed above, the City shall provide the City's audited annual financial statement prepared in accordance with the Budgeting Accounting and Reporting System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 and RCW 43.09.200 (or any successor statutes) when and if available to each then existing NRMSIR and the SID, if any. (c) Material Events. The City agrees to provide or cause to be provided, in a timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: • Principal and interest payment delinquencies; • Non-payment related defaults; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; Bond Ordinance 03-084 Page 11 of 19 • Adverse tax opinions or events affecting the tax-exempt status of the Bonds; • Modifications to the rights of Bond owners; • Bond calls (optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34-23856): • Defeasances; • Release, substitution or sale of property securing repayment of the Bonds; and • Rating changers_ Solely for purposes of disclosure, and not intending to modify this undertaking. the City advises that no debt service reserves or property secure payment of the Bonds. (d) Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if any, notice of its failure to provide the annual financial information described in Subsection (h) above on or prior to the date set forth in Subsection (h) above. (c) Termination/Modification. The City's obligations to provide annual financial information and notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. Any provision of this section shall he null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Bonds and(2) notifies each NRMSIR and the SID, if any,of such opinion and the cancellation of this section. The City may amend this section with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in the next annual report, and shall include, a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i)notice of such change shall be given in the same manner as for a material event under Subsection(c), and (ii)the annual report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. (f) Bond Owner's Remedies Under This Section. The right of any bondowner or beneficial owner of Bonds to enforce the provisions of this section shall he limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. For purposes of this section, "beneficial owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including persons holding Bonds through nominees or depositories. Section 16: BOND INSURANCE The City has determined to purchase Bond insurance for all or part of the Bonds. The City Council hereby approves the commitments of the Insurer to provide a bond insurance policy guaranteeing the payment when due of principal of and interest on the Bonds (the "Bond Insurance Policy") and authorizes and directs all proper officers, agents, attorneys and employees of the City to cooperate with the Insurere in preparing such additional agreements, certificates, and other documentation on behalf of Bond Ordinance 03.084 Pagc 12 of 19 the City as shall be necessary or advisable in providing for the Bond Insurance Policy. The City agrees to abide by the commitments made to the Insurer Section 17: SEVERABILITY If any one or more of the covenants or agreements provided in this Ordinance to he perfom'ied on the part of the City shall be declared by any court of competent jurisdiction to he contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements in this Ordinance and shall in no way affect the validity of the other provisions of this Ordinance or of the Bonds. Section 18: RATIFICATION All actions (not inconsistent with the provisions of this Ordinance) heretofore taken by the City, and its employees, with respect to the Acquisition of the Improvements, and the issuance, sale and delivery of the Bonds, are hereby in all respects ratified, approved, and confirmed. Section 19: REPEALER All ordinances or parts thereof in conflict herewith, to the extent of such conflict, are hereby repealed. Section 20: EFFECTIVE DATE This Ordinance shall be in effect from and after its adoption and publication of the title hereof, substantially in the form attached hereto as Exhibit"A", incorporated herein by reference, as provided by RCW 35A.12.120. FIRST READING: October 14, 2003. SECOND READING: October 28, 2003. PASSED AND ADOPTED by the City Council of the City of Spokane Valley, Spokane County Washington, at a regular meeting this 28th day of October, 2003. CITY OF SPOKANE VALLEY, Spokane County,Washington Michael DeVleming, Ma4ir ATTES . 1A-%;) X-^A 15OLP/ /ir Christine Bainbridge,City Clerk ( SEAL. ) itvCCRPORA1£0 With 31,2003 Bond Ordinance 03-084 •.. Ale/-ON Page l 3 of 19 . . CERTIFICATION I, the undersigned City Clerk of the City of Spokane Valley, of Spokane County, Washington, HEREBY CERTIFY that the foregoing Ordinance is a full, true and correct copy of an Ordinance duly adopted at a regular meeting of the City Council of said City, duly and regularly held at the regular meeting place thereof'on October 28, 2003, of which meeting all members of said City Council had due notice and at which a majority thereof were present; and that at said meeting said Ordinance was adopted by the following vote: AYES, and in favor thereof, Councilmembers: NOES,Councilmembers: ABSENT,Councilmembers: ABSTAIN, Councilmembers: I FURTHER CERTIFY that I have carefully compared the same with the original Ordinance on tile and of record in my office; that said Ordinance is a full, true and correct copy of the original Ordinance adopted at said meeting; and that said Ordinance has not been amended, modified or rescinded since the date of its adoption, and is now in full force and effect. IN WITNESS WHEREOF, I have set my hand and affixed the official seal of said City on October 28, 2003. CITY OF SPOKANE VALLEY Christine Bainbridge,City Clerk ( SEAL ) Bond Ordinance 03-084 Page 14 of 19 [Form of Bonds] UNITED STATES OF AMERICA STATE OF WASHINGTON COUNTY OF SPOKANE CITY OF SPOKANE VALLEY LIMITED TAX GENERAL OBLIGATION BOND, 2003 (The City has designated the Bonds of this Series as"Qualified Tax-Exempt Obligations") See Reverse Side for Additional Provisions Principal Amount Interest Rate Maturity Date The CITY OF SPOKANE VALLEY, of Spokane County, Washington, (the "City"), a duly incorporated and existing city under and by virtue of the laws of the State of Washington, hereby acknowledges itself indebted and for value received promises to pay to Cede& Co. on or before the Maturity Date indicated above, the principal sum set forth above, and to pay interest thereon from the City of Spokane Valley Limited Tax General Obligation Bond — Debt Service Fund from November , 2003, or the most recent date to which interest has been paid or duly provided for, at the rate per annum specified above, payable at maturity or any date of prior redemption of the Bonds. Interest shall be calculated on the basis of a 360-day year. Both principal of and interest on this Bonds are payable in lawful money of the United States of America. For so long as the Bonds of this issue is in fully immobilized form, payment of principal and interest thereon shall be made as provided in accordance with the operational arrangements of DTC referred to in the Blanket Letter of Representations from the City to The Depository Trust Company. In the event that the Bonds of this issue arc no longer in fully immobilized form, both principal and interest on this Bonds shall be paid by check or draft mailed to the Registered Owner at the address appearing on the Bond Register on the first day of the month preceding the maturity date, upon presentation and surrender of this Bonds by the Registered Owner at the principal office of the Bond Registrar. Reference is hereby made to additional provisions of this Bonds set forth on the reverse side hereof and such additional provisions shall for all purposes have the same effect as if set forth in this space. This Bonds shall not be valid or become obligatory for any purpose or he entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by the Bond Registrar. EXHIBIT "A" - Page 1 IT IS HEREBY CERTIFIED AND DECLARED that this Bonds is issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and ordinances and resolutions of the City, specifically the Ordinance No. 03-084 of the City, adopted on October 28, 2003, (the "Bond Ordinance"), and that all acts, conditions and things required to be done precedent to and in the issuance of this Bonds have happened, been done and performed. IN WITNESS WHEREOF, the City has caused this Bonds to be executed by the manual signature of its Mayor, and attested by the manual signature of its Clerk, with the official seal of the City impressed hereon this 18th day of November, 2003. CiTY OF SPOKANE VALLEY, Spokane County,Washington [Manual Signaturel Mayor ATTEST: [Manual Signature] City Clerk ( SEAL ) [ Reverse Side of Bonds ] ADDITIONAL PROVISIONS This Bond is issued pursuant to and in full compliance with the Constitution and laws of the State of Washington, and also pursuant to all proceedings duly adopted and authorized by the City, more particularly the Bond Ordinance. Capitalized terms used herein shall have the meanings given to them by the Bond Ordinance. The City has reserved the right and option to redeem and call the Bonds maturing on and after December 1, 20 at any time on or after December 1, 20 , in whole or in part (maturities to be selected by the City and by lot within a maturity in such manner as the Bond Registrar or DTC shall determine), at the price of par plus accrued interest, if any, to the date of redemption. Unless waived by the Registered Owner of any Bonds to be redeemed, notice of any such redemption will be given not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption by first-class mail, postage prepaid,to the address appearing on the Bond Register. The Bonds are issued by the City in the aggregate principal amount of not to exceed S9,430,000 for the purpose of constructing, acquiring and equipping City facilities. To provide for the payment of the Bonds, the City has pledged its full faith and credit for the payment of the Bonds, within the appropriate Constitutional and statutory limitations pertaining to non- voted general obligations. The City shall make annual tax levies upon all of the taxable property within the City sufficient, together with other legally available funds, to meet the payments of principal and interest maturing and accruing as set forth herein, having always in mind the Constitutional and statutory tax limitations pertaining to non-voted general obligations. Reference is hereby made to the Bond Ordinance for a description of the covenants and conditions under which this Bond is issued. The City hereby covenants and agrees with the Registered EXHIBIT"A" - Page 2 Owner of this Bond that it will keep and perform all of the covenants of this Bond and of the Bond Ordinance to be kept and performed by the City. This Bond is transferable by the Registered Owner hereof in person, or by his attorney duly authorized in writing, upon presentation and surrender of this Bond at the principal office of the Registrar. Upon such transfer, a new fully registered Bond of the same denomination, maturity and interest rate will be issued to the transferee, in exchange therefor. LEGAL OPINION 1, the undersigned City Clerk of the City of Spokane Valley, of Spokane County, Washington, DO HEREBY CERTIFY that the legal opinion of Preston Gates & Ellis LLP, of Seattle, Washington, which opinion was dated the date of delivery of the Bonds described therein, was delivered to me on said date, and is now part of the permanent records of the City. CITY OF SPOKANE VALLEY, Spokane County, Washington [Manual Signature] _ ('Ierk CERTIFICATE OF AUTHENTICATION Date of Authentication: This Bond is one of the City of Spokane Valley Limited Tax General Obligation Bonds, 2003. dated as of November , 2003, and described in the within-mentioned Bond Ordinance. WASIIINGTON STATE FISCAL AGENCY, as Bond Registrar By Imanual signature] Authorized Officer EXHIBIT"A" -Page 3 [Summary for Publication] CITY OF SPOKANE VALLEY Spokane County,Washington GENERAL OBLIGATION BONDS-$9,430,000 The Title of Ordinance No. 03-084,adopted by the City Council of the City of Spokane Valley on October 28,2003, is as follows: AN ORDINANCE OF THE CITY OF SPOKANE VALLEY, OF SPOKANE COUNTY, WASHINGTON, PROVIDING FOR THE ISSUANCE OF LIMITED TAX GENERAL OBLIGATION BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $9,430,000 IN ORDER TO OBTAIN FUNDS TO PAY PART OF THE COSTS OF ACQUISITION AND CONSTRUCTION OF A REGIONAL CENTER, RELATED CAPITAL FACILITIES AND STREET IMPROVEMENTS; PROVIDING FOR THE SALE OF THE BONDS TO LEHMAN BROTHERS, OF SEATTLE, WASHINGTON; PROVIDING FOR THE REGISTRATION OF SAID BONDS; CREATING CERTAIN FUNDS FOR SAID BONDS; FIXING THE INTEREST RATE, MATURITIES, FORM, TERMS AND COVENANTS OF SAID BONDS; PROVIDING CERTAIN COVENANTS WITH RESPECT TO FEDERAL TAX LAW; PROVIDING FOR THE PURCHASE OF MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN COVENANTS WITH RESPECT TO ON-GOING DISCLOSURE; PROVIDING FOR THE EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO A copy of the entire Ordinance is on file with the City Clerk and available for review during normal office hours. CITY OF SPOKANE VALLEY, Spokane nty, Washington 41V ristine Bainbridge,City Clerk / 5,0 AN 't, ( SEAL) O��`� p /l/ `,� _ '° SEAL��" : U • INCORPORATED • Match 31,2003 .,, �a...... c/ ,i//1111111��� ..u� /V-3/-4.3 CERTIFICATION OF BOND COUNSEI. I, the undersigned bond counsel to the City of Spokane Valley, of Spokane County, Washington, hereby certify that I have read the attached Summary of Ordinance No. 03-084 and that the same is true and complete and provides adequate notice to the public of the contents of said Ordinance. DATED this 28th day of October, 2003, By (^ Michael C.' EXHIBIT"B" -Page