10-26-09 Common Council Meeting Agenda & Packet

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(15) days prior written notice of any such intended transfer from the Reserve Account. In the event additional bonds payable from the Net Revenues of the Sewage Works are hereafter issued on a parity with the Bonds, the Reserve Requirement shall be proportionately increased to equal maximum annual debt service on the Bonds, any Prior Bonds payable from the Reserve Account, and all bonds hereafter issued on a parity therewith; provided, that, if nationally recognized bond counsel is unable to provide an opinion that interest on such proposed additional parity bonds is excludable from gross income for federal income tax purposes as a result of the determination of the Reserve Requirement in the manner pro~~ided in this paragraph, then the City may, in order to allow such opinion to be issued, establish a separate reasonably required reserve fund that secures only the proposed parity bonds and shall expressly provide in the authorizing ordinance for such proposed parity bonds that the moneys deposited in the Reserve Account hereby as a margin of safety for the payment of principal of and interest on the Bonds do not secure such proposed parity bonds. The City may at any time and from time to time fund all or any part of the Reserve Account by depositing in the Reserve Account one or more debt service reserve surety bonds or insurance policies (each, a Reserve Account Credit Instrument"), each of which is issued by an insurance company rated at the time of deposit in the highest rating category by Standard & Poor's Corporation and Moody's Investors Service. As long as any Reserve Account Credit Instrument is in full force and effect; any valuation of the Reserve Account shall treat the maximum amount available under such Reserve Account Credit Instrument as its value. If the Reserve Account Credit Instrument is provided subsequent to the initial cash contribution to the .Reserve Fund, and the Bonds are purchased by the Authority, notice of the purchase of the Reserve Account Credit Instrument shall be given to the Authority. Prior to applying any funds held in any debt service reserve accounts securing any obligations payable out of the revenues of the sewage works of the City to the payment of such obligation, the City shall cause all funds held in the Sewage Works Sinking Fund (or any like fund or account from which debt service has been structured to be paid) to be applied in full before any such reserve accounts are so applied. (c) Depository Agreements. The Sinking Fund, containing the Bond and Interest Account and the Reserve Account, and/or the Construction Account may be held by a financial institution acceptable to the Authority, pursuant to terms acceptable to the Authority. If the Sinking Fund and the accounts therein are held intrust, the City shall transfer the monthly required amounts of Net Revenues to the Bond and Interest Account and the Reserve Account, and the financial institution holding such funds in trust shall be instructed to pay the required payments in accordance with the payment schedules for the City's outstanding bonds. The Common Council hereby authorizes the Mayor and Controller to execute and deliver an agreement with a financial institution to reflect this trust arrangement for the Sinking Fund and/or the Construction Account. -13- BDDBOl 5863445v1