10118-11 Authorizing Sewage Works Revenue Bonds

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credited to the Bond and Interest Account any amount necessary to pay the bank fiscal agency charges, if any, for paying the principal of and interest on outstanding bonds of the Sewage Works as the same become payable. The City shall, from the sums deposited in the Sinking Fund and credited to the Bond and Interest Account, remit promptly to the registered owners of the outstanding bonds of the Sewage Works or to the bank fiscal agency sufficient moneys to pay the principal and interest on the due dates thereof together with the amount of any bank fiscal agency charges. (c) Reserve Account. On the date of delivery of the 2011 Bonds or any other bonds payable from the Reserve Account, funds on hand of the Sewage Works, proceeds of the 2011 Bonds or such other bonds or a combination thereof may be deposited into the Reserve Account. Except as otherwise required by the Prior Ordinances, the balance to be maintained in the Reserve Account shall equal but not exceed an amount (the "Reserve Requirement") equal to the least of(i) the maximum annual debt service on the 2011 Bonds and any other bonds payable from the Reserve Account, (ii) one hundred twenty-five percent (125%) of average annual debt service on the 2011 Bonds and any other bonds payable from the Reserve Account, or (iii) ten percent (10%) of the proceeds of the 2011 Bonds and any other bonds payable from the Reserve Account, plus if and to the extent the amount set forth above is less than maximum annual debt service on the 2011 Bonds and any other bonds payable from the Reserve Account, a minor portion of the proceeds thereof under Section 148(e) of the Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding such Reserve Requirement, certain of the Prior Ordinances require a Reserve Requirement in an amount equal to the maximum annual debt service on the sewage works revenue bonds payable from the Reserve Account (including the 2011 Bonds and the Prior Bonds) so long as the Prior Bonds with such a Reserve Requirement are outstanding. If the initial deposit into the Reserve Account does not equal the Reserve Requirement, or if no deposit is made, the City shall deposit a sum of Net Revenues into the Reserve Account on the last day of each calendar month until the balance equals the Reserve Requirement. The monthly deposits shall be equal in amount and sufficient to accumulate the Reserve Requirement within five (5) years of the date of delivery of the 2011 Bonds. The Reserve Account shall constitute the maxgin for safety and protection against default in the payment of principal of and interest on the 2011 Bonds and any other bonds payable from the Reserve Account, and the moneys in the Reserve Account shall be used to pay current principal and interest on the 2011 Bonds and any other bonds payable from the Reserve Account to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. Any deficiency in the balance maintained in the Reserve Account shall be made up from the next available Net Revenues remaining after credits into the Bond and Interest Account. Any moneys in the Reserve Account in excess of the Reserve Requirement shall either be transferred to the Sewage Works Improvement Fund (as described herein) or be used for the purchase of outstanding bonds or installments of principal of fully registered bonds at a price not exceeding par and accrued interest, and redemption premium, if any. As an alternative to holding cash funds in the Reserve Account, the City, with the advice of the Financial Advisor and the City's bond counsel, may satisfy all or any part of its obligation to maintain any amount in the Reserve Account by depositing a Credit Facility (as defined below) therein, provided that such deposit does not adversely affect any then existing rating on - 13 -