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Home My WebLink AboutAuthorizing Issuance of Revenue Bonds concerning construction of Improvements to Waterworks, not to exceed $2,050,000ORDINANCE No. so~~ss Passed by the Common Council of the City of South Bend, Indiana August 23, 19 99 Attest: Attest: City Clerk Presented by me to the Mayor of the City of South Bend, Indiana President of Common Council August 24, 19 99 City Clerk Approved and signed by me August 2 4 . 19 A g Mayor ORDINANCE NO. ~~-1'~ An Ordinance of the Common Council of the City of South Bend, Indiana, Concerning the Construction of Improvements to the Municipal Waterworks of the City of South Bend, Indiana; Authorizing the Issuance of Revenue Bonds for such Purpose in the Principal Amount not to exceed Two Million Fifty Thousand Dollars ($2,050,000); Addressing Other Matters Connected Therewith, Including the Issuance of Notes in Anticipation of Bonds; and Repealing Ordinances Inconsistent Herewith STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana (the "City") has heretofore established, constructed and financed a municipal waterworks and now owns and operates said works pursuant to I.C. 8-1.5, as amended, and other applicable laws (together, the "Act"). The City's Municipal Waterworks Utility is subject to the authority and regulation of the Indiana Utility Regulatory Commission ("IURC") and has not withdrawn from the ICTRC's authority and regulation. The City will receive IURC approval prior to issuance of the 1999 Bonds (as hereinafter defined). The Common Council of the City (the "Council") now finds that certain improvements to said works are necessary; and that plans, specifications and estimates have been prepared and filed by the engineers employed by the City for the acquisition and construction of said improvements (as described more fully on in Exhibit A) (the "Project"), which plans and specifications or other pertinent information have been or in a timely fashion will be submitted to all government authorities having jurisdiction, particularly the Indiana Department of Environmental Management ("IDEM"), if and to the extent IDEM approval is required under Indiana law, and have been or will be approved by the aforesaid government authorities and are hereby incorporated herein by reference and open for inspection at the office of the clerk of the City as required by law. The City has obtained engineer's estimates of the costs for the construction of the Project, and on the basis of said estimates, the estimated cost of the Project, including incidental expenses, will not exceed the amount of $1,970,000. The Council finds that there are not available sufficient funds of the works to construct the Project, and that revenue bonds shall be issued to pay for costs of the Proj ect, including incidental expenses. The Council finds that there are now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 1997" dated December 1,1997 (the "1997 Bonds") originally issued in the amount of $22,500,000 authorized by Ordinance No. 8801-97 adopted by the Council on June 23, 1997 (the "1997 Ordinance"), now outstanding in the amount of $21,380,000. The Council finds that there are also now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 1993" dated November 1, 1993 (the "1993 Bonds") (the 1997 Bonds and the 1993 Bonds together, the "Prior Bonds"), originally issued in the amount of $5,100,000 authorized by Ordinance No. 8318-92 adopted by the Council on November 23, 1992, as amended by Ordinance No. 8419-93 adopted by the Council on September 27,1993 (the "1993 Ordinance") (the 1997 Ordinance and the 1993 Ordinance together, the "Prior Ordinances"), now outstanding in the amount of $3, 920,000. The Prior Bonds constitute a first charge upon the Net Revenues (as hereinafter defined). The Prior Ordinances provide that the City may authorize and issue additional bonds payable out of the Net Revenues ranking on a parity with the Prior Bonds for the purpose of financing the cost of future additions, extensions and improvements to the works subject to the provisions of Section 19 of the 1993 Ordinance and Section 20 of the 1997 Ordinance. The conditions precedent to the issuance of additional Prior Ordinances set forth in the Prior Ordinances, as described above, have been satisfied. The City intends to make application to the State Revolving Loan Fund for the State of Indiana for a low interest loan in connection with the Project. The City will enter into a Financial Assistance Agreement (as hereinafter defined) with the State of Indiana, pertaining to the Project and the financing thereof. The City desires to authorize the issuance of a bond anticipation note or notes hereunder, if necessary, payable from the proceeds of the revenue bonds authorized herein (the "BANS"), and to authorize the refunding of said BANS, if issued. The Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of revenue bonds and BANS have been complied with in accordance with the applicable provisions of the Act. NOW THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: SECTION 1. Project. The City shall proceed with the Proj ect in accordance with the cost estimates, and the plans and specifications heretofore prepared and filed by the consulting engineers employed by the City, which cost estimates, plans and specifications are hereby approved -2- and are hereby incorporated by reference as if set forth in full at this place, two copies of which are on file and available for public inspection in the office of the City Clerk pursuant to I.C. §36-1-5-4. The actions of the Board of Directors of the Department of Waterworks (the "Board") of the City taken in connection with the Proj ect are hereby approved, ratified, and confirmed. The Proj ect shall be constructed and the bonds herein authorized shall be issued pursuant to and in accordance with the Act. The terms "works" and "utility" and other like terms where used in this Ordinance shall be construed to mean the Drinking Water System, as defined in the Financial Assistance Agreement and includes all structures and property of the City's waterworks utility. SECTION 2. Authorization of Obli atg_ions. (a) The City shall issue its "Waterworks Revenue Bonds of 1999" (the "1999 Bonds"), in one or more series, in an original principal amount not to exceed Two Million Fifty Thousand Dollars ($2,050,000) (the "Authorized Amount"), as negotiable, fully registered bonds, for the purpose of procuring funds to be applied to the costs of the Project, including without limitation reimbursement ofpreliminary expenses related thereto and all incidental expenses incurred in connection therewith (all of which are deemed to be a part of the Project), and the costs of selling and issuing the 1999 Bonds and funding a debt service reserve as described herein. The 1999 Bonds shall rank on a parity for all purposes with the Prior Bonds. The 1999 Bonds shall be issued in denominations of One Dollar ($1.00) or integral multiple thereof, numbered consecutively from 1 upward, and dated as of the first day of the month in which they are sold, or the date of delivery if sold to the State of Indiana or Indiana Bond Bank, and shall bear interest at a rate or rates not to exceed 2.90% per annum (the exact rate or rates to be determined by bidding or through negotiation with the Indiana B and B ank). Interest shall be payable semiannually on January 1 and July 1 in each year, beginning on the first interest payment date after 2 years from the date of issuance of the 1999 Bonds if the 1999 Bonds are sold to the Indiana Bond Bank or the State of Indiana, as set forth in the Financial Assistance Agreement to be entered into between the City and the State of Indiana (the "Financial Assistance Agreement") in substantially the form attached hereto as Exhibit B. In the event the 1999 Bonds are sold by public sale pursuant to I.C. 5-1-11, the first interest payment date shall be the first January 1 or July 1 following the date of issuance of the 1999 Bonds. Interest on the BANS and the 1999 Bonds shall be calculated according to a 360-day calendar year containing twelve 30-day months. The 1999 Bonds shall mature beginning the first January 1 following the date of substantial completion ofthe Project, and on January 1 of each year thereafter over a period ending no later than 20 years after substantial completion of the Project and in such amounts that will produce as level annual debt service as practicable, substantially as set forth on the schedule on Exhibit C, with such changes as are finally determined by the Mayor as the executive of the City (the "Executive") and the Controller as the fiscal officer of the City (the "Fiscal Officer"), as evidenced by delivery of the executed initial issue of the 1999 Bonds to the Registrar for authentication. All or a portion of the 1999 Bonds may be aggregated into and issued as one or more term bonds. The term bonds will be subj ect to mandatory sinking fund redemption with sinking fund payments and final maturities corresponding to the serial maturities described above. Sinking fund payments shall be applied to retire a portion of the term bonds as though it were a redemption of -3- serial bonds, and, if more than one term bond of any maturity is outstanding, redemption of such maturity shall be made by lot. Sinking fund redemption payments shall be made in a principal amount equal to such serial maturities, plus accrued interest to the redemption date, but without premium or penalty. For all purposes of this Ordinance, such mandatory sinking fund redemption payments shall be deemed to be required payments of principal which mature on the date of such sinking fund payments. Appropriate changes shall be made in the definitive form of 1999 Bonds, relative to the form of 1999 Bonds contained in this Ordinance, to reflect any mandatory sinking fund redemption terms. (b) The City shall issue, if necessary, BANS for the purpose of procuring interim financing for the Project. Any such issuance shall be in accord with the provisions of Section 25 of this Ordinance. SECTION 3. Pledge ofNet Revenues• Payment ofPrincipal and Interest. The 1999 Bonds, and any bonds ranking on a parity therewith, including the Prior Bonds, as to principal, premium, if any, and interest, shall be payable solely from and are hereby secured by an irrevocable pledge of and shall constitute a charge upon all the net revenues (defined as gross revenues of the works after deduction only for the payment of the reasonable expenses of operation, repair and maintenance) of the works (the "Net Revenues"). The City shall not be obligated to pay the 1999 Bonds or the interest thereon except from the Net Revenues, and the 1999 Bonds shall not constitute an indebtedness of the City within the meaning of the provisions and limitations of the constitution of the State of Indiana. Except as set forth in the following paragraph, all payments of interest on the 1999 Bonds shall be paid by check mailed one business day prior to the interest payment date to the registered owners thereof as of the fifteenth (15th) day of the month preceding the interest payment date (the "Record Date") at the addresses as they appear on the registration and transfer books of the City kept for that purpose by the Registrar (the "Registration Record") or at such other address as is provided to the Paying Agent in writing by such registered owner. Each registered owner of $1,000,000 or more in principal amount of 1999 Bonds shall be entitled to receive interest payments by wire transfer by providing written wire instructions to the Paying Agent before the Record Date for any payment. All principal payments and premium payments, if any, on the 1999 Bonds shall be made upon surrender thereof at the principal office of the Paying Agent, in any U.S. coin or currency which on the date of such payment shall be legal tender for the payment of public and private debts, or in the case of a registered owner of $1,000,000 or more in principal amount of 1999 Bonds, by wire transfer on the due date upon written direction of such owner provided at least fifteen (15) days prior to the maturity date or redemption date. If the 1999 Bonds or BANS, are registered in the name of the State of Indiana or the Indiana Bond Bank, the principal of and interest thereon shall be paid by wire transfer to such financial institution if and as directed by the State on the due date of such payment or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date. So long as the State of Indiana or the Indiana Bond Bank is the owner of said 1999 Bonds or BANs, such 1999 Bonds and BANS shall be presented for payment as directed by the State. -4- Interest on 1999 Bonds sold to the State of Indiana or the Indiana Bond Bank to finance Eligible Costs (as defined in the Financial Assistance Agreement) shall be paid from the date which is 2 years after the date of delivery of the 1999 Bonds. Interest on 1999 Bonds issued to finance all other costs shall be payable from the interest payment date to which interest has been paid next preceding the authentication date thereof unless such 1999 Bonds are authenticated after the Record Date for an interest payment date and on or before such interest payment date in which case they shall bear interest from such interest payment date, or unless authenticated on or before the Record Date for the first interest payment date, in which case they shall bear interest from the original date, until the principal shall be fully paid. SECTION 4. Transfer and Exchange of Bonds. Each 1999 Bond shall be transferable or exchangeable only upon the Registration Record, by the registered owner thereof in writing, or by the registered owner's attorney duly authorized in writing, upon surrender of such 1999 Bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner or such attorney, and thereupon a new fully registered 1999 Bond or Bonds in the same aggregate principal amount, and of the same maturity, shall be executed and delivered in the names of the transferee or transferees or the registered owner, as the case may be, in exchange therefor. The costs of such transfer or exchange shall be borne by the City except for any tax or governmental charge required to be paid with respect to the transfer or exchange, which taxes or governmental charges are payable by the person requesting such transfer or exchange. The City, the Registrar and the Paying Agent may treat and consider the persons in whose names such 1999 Bonds are registered as the absolute owners thereof for all purposes including for the purpose of receiving payment of, or on account of, the principal thereof and interest and premium, if any, due thereon. In the event any 1999 Bond is mutilated, lost, stolen or destroyed, the City may execute and the Registrar may authenticate a new bond of like date, maturity and denomination as that mutilated, lost, stolen or destroyed, which new bond shall be marked in a manner to distinguish it from the bond for which it was issued, provided that, in the case of any mutilated bond, such mutilated bond shall first be surrendered to the Registrar, and in the case of any lost, stolen or destroyed bond there shall be first furnished to the Registrar evidence of such loss, theft or destruction satisfactory to the Fiscal Officer and the Registrar, together with indemnity satisfactory to them. In the event any such bond shall have matured, instead of issuing a duplicate bond, the City and the Registrar may, upon receiving indemnity satisfactory to them, pay the same without surrender thereof. The City and the Registrar may charge the owner of such 1999 Bond with their reasonable fees and expenses in this connection. Any 1999 Bond issued pursuant to this paragraph shall be deemed an original, substitute contractual obligation of the City, whether or not the lost, stolen or destroyed 1999 Bond shall be found at any time, and shall be entitled to all the benefits of this Ordinance, equally and proportionately with any and all other 1999 Bonds issued hereunder. SECTION 5. Registrar and Paving Agent. The Fiscal Officer is hereby authorized to appoint a qualified financial institution to serve as Registrar and Paying Agent for the 1999 Bonds (together with any successor, the "Registrar" or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the 1999 Bonds, and shall keep and maintain the Registration Record at its office. The Fiscal Officer is hereby authorized to enter into such -5- agreements or understandings with such institution as will enable the institution to perform the services required of a Registrar and Paying Agent. The Fiscal Officer is further authorized to pay such fees and the institution may charge for the services its provides as Registrar and Paying Agent and such fees may be paid from the Sinking Fund established to pay the principal of and interest on the 1999 Bonds as fiscal agency charges. The Registrar and Paying Agent may at any time resign as Registrar and Paying Agent by giving thirty (30) days written notice to the City and by first-class mail to each registered owner of the 1999 Bonds then outstanding, and such resignation will take effect at the end of such thirty (30) days or upon the earlier appointment of a successor Registrar and Paying Agent by the City. Such notice to the City may be served personally orsent byfirst-class or registered mail. The Registrar and Paying Agent may be removed at any time as Registrar and Paying Agent by the City, in which event the City may appoint a successor Registrar and Paying Agent. The City shall notify each registered owner of the 1999 Bonds then outstanding by first-class mail of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 1999 Bonds shall be deemed to be given when mailed by first-class mail to the addresses of such registered owners as they appear on the Registration Record. Any predecessor Registrar and Paying Agent shall deliver all the 1999 Bonds, cash or investments related thereto in its possession and the Registration Record to the successor Registrar and Paying Agent. As to the BANS and the 1999 Bonds, if registered in the name of the State of Indiana, the Indiana Bond Bank or any other purchaser that does not object to such designation, the Fiscal Officer shall serve as Registrar and Paying Agent and is hereby charged with the duties of Registrar and Paying Agent. SECTION 6. Terms of Redem tp ion. The 1999 Bonds may be made redeemable at the option of the City, but no earlier than January 1, 2010 or any date thereafter, on sixty (60) days' notice, in whole or in part, in inverse order of maturity and by lot within a maturity, on dates and with premiums and other terms substantially as set forth in the form of 1999 Bonds in Section 9, as finally determined by the Executive and Fiscal Officer with the advice of the City's financial advisor, as evidenced by delivery of the executed initial issue of the 1999 Bonds to the Registrar for authentication. Notice of redemption shall be mailed by first-class mail to the address of each registered owner of a 1999 Bond to be redeemed as shown on the Registration Record not less than sixty (60) days prior to the date fixed for redemption except to the extent such redemption notice is waived by owners of 1999 Bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any 1999 Bond shall not affect the validity of any proceedings for the redemption of any other 1999 Bonds. The notice shall specify the date and place of redemption, the redemption price and the CUSIP numbers of the 1999 Bonds called for redemption. The place of redemption may be determined by the City. Interest on the 1999 Bonds so called for redemption shall cease on the redemption date fixed in such notice if sufficient funds are available at the place of redemption to pay the redemption price on the date so named, and thereafter, such 1999 Bonds shall no longer be protected by this Ordinance and shall not be deemed -6- to be outstanding hereunder, and the holders thereof shall have the right only to receive the redemption price. All 1999 Bonds which have been redeemed shall be canceled and shall not be reissued; provided, however, that one or more new registered bonds shall be issued for the unredeemed portion of any 1999 Bond without charge to the holder thereof. No later than the date fixed for redemption, funds shall be deposited with the Paying Agent or another paying agent to pay, and such agent is hereby authorized and directed to apply such funds to the payment of, the 1999 Bonds or portions thereof called for redemption, including accrued interest thereon to the redemption date. No payment shall be made upon any 1999 Bond or portion thereof called for redemption until such 1999 Bond shall have been delivered for payment or cancellation or the Registrar shall have received the items required by this Ordinance with respect to any mutilated, lost, stolen or destroyed bond. The BANs are prepayable by the City, in whole or in part, at any time upon seven (7) days' notice to the owner of the BANS, without any premium. SECTION 7. Execution and NegotiabilitX. The 1999 Bonds shall be signed in the name of the City by the manual or facsimile signature of the Executive, countersigned by the manual or facsimile signature of the Fiscal Officer, and attested by the manual or facsimile signature of the City Clerk, who also shall affix the seal of the City manually or shall have the seal imprinted or impressed thereon by facsimile or other means. In case any officer whose signature or facsimile signature appears thereon shall cease to be such officer before the delivery of the 1999 Bonds, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery. The 1999 Bonds shall also be authenticated by the manual signature of the Registrar, and no 1997 Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. The 1997 Bonds shall have all ofthe qualities and incidents ofnegotiable instruments under the laws of the State of Indiana, subject to the provisions for registration herein. SECTION 8. Authorization for Book-Entry, sue. The 1999 Bonds may, in compliance with all applicable laws, initially be issued and held inbook-entry form on the books of the central depository system, The Depository Trust Company, its successors, or any successor central depository system appointed by the City from time to time (the "Clearing Agency"), without physical distribution of bonds to the purchasers. The following provisions of this Section apply in such event. One definitive 1999 Bond of each maturity shall be delivered to the Clearing Agency (or its agent) and held in its custody. The City and Registrar may, in connection herewith, do or perform or cause to be done or performed any acts or things not adverse to the rights of the holders -7- of the 1997 Bonds as are necessary or appropriate to accomplish or recognize such book-entry form 1997 Bonds. During any time that the 1999 Bonds are held inbook-entry form on the books of a Clearing Agency, (1) any such 1999 Bond may be registered upon Registration Record in the name of such Clearing Agency, or any nominee thereof, including Cede & Co.; (2) the Clearing Agency in whose name such 1999 Bond is so registered shall be, and the City and the Registrar and Paying Agent may deem and treat such Clearing Agency as, the absolute owner and holder of such 1999 Bond for all purposes of this Ordinance, including, without limitation, the receiving of payment of the principal of and interest and premium, if any, on such 1997 Bond, the receiving of notice and the giving of consent; (3) neither the City nor the Registrar or Paying Agent shall have any responsibility or obligation hereunder to any direct or indirect participant, within the meaning of Section 17A of the Securities Exchange Act of 1934, as amended, of such Clearing Agency, or any person on behalf of which, or otherwise in respect of which, any such participant holds any interest in any 1997 Bond, including, without limitation, any responsibility or obligation hereunder to maintain accurate records of any interest in any 1997 Bond or any responsibility or obligation hereunder with respect to the receiving of payment of principal of or interest or premium, if any, on any 1997 Bond, the receiving of notice or the giving of consent; and (4) the Clearing Agency is not required to present any 1997 Bond called for partial redemption, if any, prior to receiving payment so long as the Registrar and Paying Agent and the Clearing Agency have agreed to the method for noting such partial redemption. If either the City receives notice from the Clearing Agency which is currently the registered owner of the 1999 Bonds to the effect that such Clearing Agency is unable or unwilling to discharge its responsibility as a Clearing Agency for the 1999 Bonds, or the City elects to discontinue its use of such Clearing Agency as a Clearing Agency for the 1999 Bonds, then the City and the Registrar and Paying Agent each shall do or perform or cause to be done or performed all acts or things, not adverse to the rights of the holders of the 1999 Bonds, as are necessary or appropriate to discontinue use of such Clearing Agency as a Clearing Agency for the 1999 Bonds and to transfer the ownership of each of the 1999 Bonds to such person or persons, including any other Clearing Agency, as the holder of the 1999 Bonds may direct in accordance with this Ordinance. Any expenses of such discontinuance and transfer, including expenses of printing new certificates to evidence the 1999 Bonds, shall be paid by the City. During any time that the 1999 Bonds are held inbook-entry form on the books of a Clearing Agency, the Registrar shall be entitled to request and rely upon a certificate or other written representation from the Clearing Agency or any participant or indirect participant with respect to the identity of any beneficial owner of the 1999 Bonds as of a record date selected by the Registrar. For purposes of determining whether the consent, advice, direction or demand of a registered owner of a 1997 Bond has been obtained, the Registrar shall be entitled to treat the beneficial owners of the 1999 Bonds as the bondholders and any consent, request, direction, approval, objection or other instrument of such beneficial owner maybe obtained in the fashion described in this Ordinance. During any time that the 1999 Bonds are held inbook-entry form on the books of a Clearing Agency, the Executive, the Fiscal Officer and/or the Registrar are authorized to execute and -8- deliver a Letter of Representations agreement with the Clearing Agency, or a Blanket Issuer Letter of Representations, and the provisions of any such Letter of Representations or any successor agreement shall control on the matters set forth therein. The Registrar, by accepting the duties of Registrar under this Ordinance, agrees that it will (i) undertake the duties of agent required thereby and that those duties to be undertaken by either the agent or the issuer shall be the responsibility of the Registrar, and (ii) comply with all requirements of the Clearing Agency, including without limitation same day funds settlement payment procedures. Further, during any time that the 1999 Bonds are held inbook-entry form, the provisions of Section 8 ofthis Ordinance shall control over conflicting provisions in any other section ofthis Ordinance. SECTION 9. Form of 1999 Bonds. The form and tenor of the 1999 Bonds shall be substantially as follows, all blanks to be filled in properly and all necessary additions and deletions to be made prior to delivery: R- UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF ST. JOSEPH CITY OF SOUTH BEND, INDIANA WATERWORKS REVENUE BOND OF 1999 Interest Maturity Original Authentication Rate Date Date Date CUSIP 0% until January 1, 200_, and then 2.9% REGISTERED OWNER: PRINCIPAL SUM: 1999 Dollars ($ ) The City of South Bend, in St. Joseph, County, State of Indiana (the "City"), for value received, hereby promises to pay to the Registered Owner set forth above, solely out of the special revenue fund hereinafter referred to, the Principal Sum set forth above [or so much thereof as may be advanced from time to time and be outstanding as evidenced by the records of the registered owner making payment for this Bond, or its assigns,] on [the Maturity Date set forth above] or [on January 1 in the years and in the amounts set forth on Exhibit A attached hereto] (unless this bond be subject to and be called for redemption prior to maturity as hereafter provided), and to pay interest thereon until the Principal Sum shall be fully paid at the Interest Rate per annum specified above from [ , 200_] or [the interest payment date to which interest has been paid next preceding the Authentication Date ofthis -9- bond unless this bond is authenticated after the fifteenth day of the month preceding the interest payment date (the "Record Date") and on or before such interest payment date in which case it shall bear interest from such interest payment date, or unless this bond is authenticated on or before December 15, 1999, in which case it shall bear interest from the Original Date,] which interest is payable semiannually on January 1 and July 1 of each year, beginning on , 200_. Interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. [The principal of and premium, if any, on this bond are payable at the principal office of (the "Registrar" or "Paying Agent"), in ,Indiana.] All payments of [principal of and] interest on this bond shall be paid by [check mailed one business day prior to the interest payment date] or [wire transfer for deposit to a financial institution as directed by the State of Indiana on the due date or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date] to the Registered Owner as of the Record Date at the address as it appears on the registration books kept by [the Fiscal Officer of the City (the "Registrar and Paying Agent") in the City of South Bend, Indiana] or [the Registrar] or at such other address as is provided to the Paying Agent in writing by the Registered Owner. Each Registered Owner of $1,000,000 or more in principal amount of bonds shall be entitled to receive interest payments by wire transfer by providing written wire instructions to the Paying Agent before the Record Date for any payment. All payments of principal of, and premium, if any, on this bond shall be made upon surrender thereof at the principal office of the Paying Agent, in any U.S. coin or currency which on the date of such payment shall be legal tender for the payment of public and private debts, or in the case of a Registered Owner of $1,000,000 or more in principal amount of the Bonds (as hereinafter defined), by wire transfer on the due date upon written direction of such owner provided at least fifteen (15) days prior to the maturity date or redemption date. THE CITY SHALL NOT BE OBLIGATED TO PAY THIS BOND OR THE INTEREST HEREON EXCEPT FROM THE HEREINAFTER DESCRIBED SPECIAL FUND, AND NEITHER THIS BOND NOR THE ISSUE OF WHICH IT IS A PART SHALL IN ANY RESPECT CONSTITUTE A CORPORATE INDEBTEDNESS OF THE CITY WITHIN THE PROVISIONS AND LIMITATIONS OF THE CONSTITUTION OF THE STATE OF INDIANA. It is hereby certified and recited that all acts, conditions and things required to be done precedent to and in the execution, issuance and delivery of this bond have been done and performed in regular and due form as provided by law. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by an authorized representative of the Registrar. -10- The terms and provisions of this bond are continued below and such terms and provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the City of South Bend, in St. Joseph County, Indiana, has caused this bond to be executed in its corporate name by the manual or facsimile signature of the Mayor, countersigned by the manual or facsimile signature of the Controller, and its corporate seal to be hereunto affixed, imprinted or impressed by any means and attested manually or by facsimile by its Clerk. By: CITY OF SOUTH BEND, INDIANA Mayor Countersigned: (SEAL) Controller ATTEST: Clerk REGISTRAR'S CERTIFICATE OF AUTHENTICATION It is hereby certified that this bond is one of the bonds described in the within- mentioned Ordinance duly authenticated by the Registrar. as Registrar By Authorized Representative This bond is one of an authorized issue of bonds of the City of South Bend, Indiana, of like date, tenor and effect, except as to denomination, numbering, rates of interest, redemption terms and dates of maturity, aggregating Dollars ($ ),numbered consecutively from 1 upward (the "Bonds"), issued for the purpose of providing funds to be applied on the cost of improvements to the City's waterworks (the "Project"), to refund interim notes issued in anticipation of the Bonds, to fund a debt service reserve, and to pay incidental expenses and costs of issuance of the Bonds. This bond is issued pursuant to an ordinance adopted by the Common Council of said City on the 9th day of August,1999, entitled "An Ordinance of the Common Council -11- of the City of South Bend, Indiana concerning the construction of improvements to the municipal waterworks of the City of South Bend, Indiana; authorizing the issuance of revenue bonds for such purpose in the principal amount not to exceed two million fifty thousand dollars ($2,050,000); addressing other matters connected therewith, including the issuance of notes in anticipation of bonds; and repealing ordinances inconsistent herewith" (the "Ordinance"), and in accordance with the provisions of Indiana law, including without limitation Indiana Code 8-1.5, and other applicable laws, as amended (the "Act"), all as more particularly described in the Ordinance. The owner of this bond, by the acceptance hereof, agrees to all the terms and provisions contained in the Ordinance and the Act. Reference is hereby made to the Financial Assistance Agreement between the City and the State of Indiana as to certain terms and covenants pertaining to the waterworks project and this Bond (the "Financial Assistance Agreement"). Pursuant to the provisions of the Act and the Ordinance, the principal of and interest on this bond and all other bonds of said issue, the Prior Bonds (as hereinafter defined), and any bonds hereafter issued on a parity therewith are payable solely from the Sinking Fund (the "Sinking Fund") maintained under the Ordinance to be provided from the Net Revenues (defined as the gross revenues of the works remaining after the payment of the reasonable expenses of operation, repair and maintenance) of the works, including all additions and improvements thereto and replacements thereof subsequently constructed or acquired. The City irrevocably pledges the entire Net Revenues of the works to the prompt payment of the principal of and interest on the Bonds and any bonds ranking on a parity therewith, including the Waterworks Revenue Bonds of 1997 and the Waterworks Revenue Bonds of 1993 (together, the "Prior Bonds") each authorized by ordinance of the City, to the extent necessary for such purposes, and covenants that it will establish proper rates and charges for services rendered by the utility as are sufficient in each year for the payment of the proper and reasonable expenses of Operation and Maintenance (as defined in the Financial Assistance Agreement) of the works and for the payment of the sums required to be paid into the Sinking Fund under the provisions of the Act and the Ordinance. If the City or the proper officers thereof shall fail or refuse to so fix and collect such rates or charges, or if there be a default in the payment of the interest on or principal of this bond, the owner of this bond shall have all of the rights and remedies provided for in the Act. The City covenants that for so long as the Bonds and any bonds issued on a parity therewith, including the Prior Bonds, remain outstanding it will set aside and pay into the Sinking Fund a sufficient amount of the Net Revenues for the payment of (a) the principal of and interest on all bonds which by their terms are payable from the Net Revenues, as such principal and interest shall fall due, (b) the necessary fiscal agency charges for paying bonds and (c) an additional amount to maintain the reserve required by the Ordinance. Such required payments shall constitute a first charge -12- upon all the Net Revenues. Reference is made to the Ordinance for a more complete statement of the revenues from which and conditions under which this bond is payable, a statement of the conditions on which obligations may hereafter be issued on parity with this bond, the manner in which the Ordinance maybe amended and the general covenants and provisions pursuant to which this bond has been issued. The bonds of this issue maturing on and after January 1, 2011 are redeemable at the option of the City on January 1, 2010, or any date thereafter, on sixty (60) days' notice, in whole or in part, in inverse order of maturity and by lot within a maturity, at 100% of face value, together with the following premiums: 102% if redeemed on January 1, 2010 or thereafter before January 1, 2011; and 101% if redeemed on January 1, 2011, or thereafter before January 1, 2012; and 100% if redeemed on January 1, 2012, or thereafter prior to maturity; plus accrued interest to the date fixed for redemption. Each minimum authorized denomination in principal amount shall be considered a separate bond for purposes of partial redemption. Notice of such redemption shall be mailed by first-class mail not less than sixty (60) days prior to the date fixed for redemption to the address of the registered owner of each bond to be redeemed as shown on the registration record of the City except to the extent such redemption notice is waived by owners of the bond or bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any bond shall not affect the validity of any proceedings for the redemption of any other bonds. The notice shall specify the date and place of redemption, the redemption price and the CUSIP numbers of the bonds called for redemption. The place of redemption may be determined by the City. Interest on the bonds so called for redemption shall cease on the redemption date fixed in such notice if sufficient funds are available at the place of redemption to pay the redemption price on the date so named, and thereafter, such bonds shall no longer be protected by the Ordinance and shall not be deemed to be outstanding thereunder. This bond is subject to defeasance prior to payment or redemption as provided in the Ordinance. If this bond shall not be presented for payment or redemption on the date fixed therefor, the City may deposit in trust with the Paying Agent or another paying agent, an amount sufficient to pay such bond or the redemption price, as the case may be, and thereafter the Registered Owner shall look only to the funds so deposited in trust for payment and the City shall have no further obligation or liability in respect thereto. -13- This bond is transferable or exchangeable only upon the registration record kept for that purpose at the office of the Registrar by the Registered Owner in person, or by his attorney duly authorized in writing, upon surrender of this bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the Registered Owner or such attorney, and thereupon a new fully registered bond or bonds in the same aggregate principal amount, and of the same maturity, shall be executed and delivered in the name of the transferee or transferees or the Registered Owner, as the case maybe, in exchange therefor. This bond may be transferred or exchanged without cost to the Registered Owner except for any tax or governmental charge required to be paid with respect to the transferor exchange. The City, the Registrar, the Paying Agent and any other registrar or paying agent for this bond may treat and consider the person in whose name this bond is registered as the absolute owner hereof for all purposes including for the purpose of receiving payment of, or on account of, the principal hereof and interest and premium, if any, due hereon. The City of South Bend has designated the bonds as qualified tax-exempt obligations to qualify the Bonds for the $10,000,000 exception from the provisions of Section 265(b) of the Internal Revenue Code of 1986 relating to the disallowance of 100% of the deduction for interest expense allocable to tax-exempt obligations. The bonds maturing on any maturity date are issuable only in the denomination of $1 or any integral multiple thereof. A Continuing Disclosure Contract from the City to each registered owner or holder of any bond, dated as of the date of initial issuance of the Bonds (the "Contract"), has been executed by the City, a copy of which is available from the City and the terms of which are incorporated herein by this reference. The Contract contains certain promises of the City to each registered owner or holder of any Bond, including a promise to provide certain continuing disclosure. By its payment for and acceptance of this bond, the registered owner or holder of this bond assents to the Contract and to the exchange of such payment and acceptance for such promises. [LEGAL OPINION] The following abbreviations, when used in the inscription of the face of this bond, shall be construed as through they were written out in full according to applicable laws or regulations: TEN. COM. as tenants in common TEN. ENT. as tenants by the entireties JT. TEN. as joint tenants with right of survivorship and not as tenants in common -14- UNIF. TRAN. MIN. ACT Custodian (Gust.) (Minor) under Uniform Transfer to Minors Act of (State) Additional abbreviations may also be used although not in the above list. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please Print or Typewrite Name and Address and Social Security or Other Identifying Number) $ principal amount (must be a multiple of $5,000) of the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints ,attorney to transfer the within bond on the books kept for the registration thereof with full power of substitution in the premises. Dated: NOTICE: The Signature to this assignment must correspond with the name as it appears on the face of the within bond in every particular, without alteration or enlargement or any change whatsoever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a Securities Transfer Association recognized signature guarantee program. SECTION 10. Sale of Bonds. (a)(i) Except as provided in Section 10(a)(ii), the 1999 Bonds shall be sold in a competitive sale. The Fiscal Officer shall cause to be published either (I) a notice of sale once each -15- week for two consecutive weeks in accordance with I.C.§5-3-1-2, in which case the date fixed for the sale shall not be earlier than fifteen (15) days after the first of such publications and not earlier than three (3) days after the second of such publications, or (ii) a notice of intent to sell bonds once each week for two weeks in accordance with I.C. §5-1-11-2 and I.C. §5-3-1-4 and in a newspaper of general circulation published in the State capital, in which case bids may not be received more than ninety (90) days after the first of such publications. Said sale notice shall state the time and place of sale, the purpose for which the 1999 Bonds are being issued, the total amount thereof, the amount and date of each maturity, the maximum rate or rates of interest thereon, their denominations, the time and place of payment, the terms and conditions upon which bids will be received and the sale made and such other information as is required by law or as the Fiscal Officer shall deem necessary. The Fiscal Officer is designated as the officer responsible for the sale of the 1999 Bonds, and shall provide or cause to be provided all notices required by law. All bids for the 1999 Bonds shall be sealed and shall be presented to the Fiscal Officer in accord with the terms set forth in the sale notice. Bidders for the 1999 Bonds shall be required to name the rate or rates of interest which the 1999 Bonds are to bear, which shall be the same for all 1999 Bonds maturing on the same date and the interest rate bid on any maturity of 1999 Bonds must be no less than the interest rate bid on any and all prior maturities, not exceeding seven percent (7%) per annum, and such interest rate or rates shall be in multiples of one hundredth of one percent. The Fiscal Officer shall award the 1999 Bonds to the bidder who offers the lowest interest cost, to be determined by computing the total interest on all the 1999 Bonds to their maturities and deducting therefrom the premium bid, if any, or adding thereto the amount of the discount, if any. No bid for less than ninety-nine percent (99%) of the par value of the 1999 Bonds, plus accrued interest, shall be considered. The Fiscal Officer may require that all bids be accompanied by certified or cashier's checks payable to the order of the City, or a surety bond, in an amount not to exceed one percent of the aggregate principal amount of the 1999 Bonds as a guaranty of the performance of said bid, should it be accepted. In the event no satisfactory bids are received on the day named in the sale notice, the sale maybe continued from day to day thereafter for a period of thirty (30) days without readvertisement; provided, however, that if said sale is continued, no bid shall be accepted which offers an interest cost which is equal to or higher than the best bid received at the time fixed for sale in the bond sale notice. The Fiscal Officer shall have full right to reject any and all bids. (ii) As an alternative to public sale, the Fiscal Officer may negotiate the sale of the 1999 Bonds to the State of Indiana or the Indiana Bond Bank at an interest rate or rates not exceeding 2.9% per annum. The Mayor and the Fiscal Officer are hereby authorized to (A) submit an application to the State of Indiana and the Indiana Bond Bank, (B) execute a purchase agreement with the Indiana Bond Bank, and (C) sell such bonds upon such terms as are acceptable to the Mayor and the Fiscal Officer consistent with the terms of this Ordinance. The Financial Assistance Agreement for the 1999 Bonds and the Project shall be executed by the City and the State of Indiana. The substantially final form of Financial Assistance Agreement attached hereto as Exhibit B and incorporated herein by reference is hereby approved by the Council, and the Mayor and Fiscal Officer are hereby authorized to execute and deliver the same, -16- and to approve any changes in form or substance to the Financial Assistance Agreement, such approval to be conclusively evidenced by its execution. (b) The 1999 Bonds, when fully paid for and delivered to the purchaser shall be the binding special revenue obligations of the City, payable out of the Net Revenues. The proper officers of the City are hereby directed to sell the 1999 Bonds to the purchaser, to draw all proper and necessary warrants, and to do whatever acts and things which may be necessary to carry out the provisions of this Ordinance. After the 1999 Bonds have been properly sold and executed, except to the extent otherwise required by I.C. §36-4-6-19(f), the Fiscal Officer shall receive from the purchasers payment for the 1999 Bonds and shall provide for delivery of the 1999 Bonds to the purchasers. The City may receive payment for the 1999 Bonds in installments. (c) The Executive and the Fiscal Officer each are hereby authorized to deem final an official statement with respect to the 1999 Bonds, as of its date, in accordance with the provisions of Rule 15c2-12 of the U.S. Securities and Exchange Commission, as amended (the "SEC Rule"), subject to completion as permitted by the SEC Rule, and the City further authorizes the distribution of the deemed final official statement, and the execution, delivery and distribution of such document as further modified and amended with the approval of the Executive or the Fiscal Officer in the form of a final official statement. In order to assist any underwriter of the 1999 Bonds in complying with paragraph (b)(5) of the SEC Rule by undertaking to make available appropriate disclosure about the City and the 1999 Bonds to participants in the municipal securities market, the City hereby covenants, agrees and undertakes, in accordance with the SEC Rule, unless excluded from the applicability of the SEC Rule or otherwise exempted from the provisions of paragraph (b)(5) of the SEC Rule, that it will comply with and carry out all of the provisions of the continuing disclosure contract. "Continuing disclosure contract" shall mean that certain continuing disclosure contract executed by the City and dated the date of issuance of the 1999 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. The execution and delivery by the City of the continuing disclosure contract, and the performance by the City of its obligations thereunder by or through any employee or agent of the City, are hereby approved, and the City shall comply with and carry out the terms thereof. (d) The Fiscal Officer is hereby authorized and directed to obtain a legal opinion as to the validity of the 1999 Bonds from Barnes & Thornburg, and to furnish such opinion to the purchasers of the 1999 Bonds or to cause a copy of said legal opinion to be printed on each 1997 Bond. The cost of such opinion shall be paid out of the proceeds of the 1999 Bonds. (e) In connection with the sale of the 1999 Bonds, the Executive and the Fiscal Officer each are authorized to take such actions and to execute and deliver such agreements and instruments as they deem advisable to obtain a rating and/or to obtain bond insurance for the 1999 Bonds, and the taking of such actions and the execution and delivery of such agreements and instruments are hereby approved. -17- SECTION 11. Use of Proceeds. The accrued interest received at the time of delivery of the 1999 Bonds, if any, and premium, if any, shall be deposited in the Bond and Interest Account of the Sinking Fund (as hereafter defined) and applied to payments on the 1999 Bonds on the first interest payment date. An amount of proceeds from the sale of the 1999 Bonds equal to the amount described in Section 14(b) will be deposited to the Debt Service Reserve Account and applied as described below. The remaining proceeds from the sale of the 1999 Bonds, to the extent not used to refund BANS issued pursuant to this Ordinance, shall be deposited in a fund of the utility hereby created and designated as "City of South Bend, Indiana Waterworks 1999 Bond Construction Fund" (the "Construction Fund"). The proceeds deposited in the Construction Fund, together with all investment earnings thereon, shall be expended only for the purpose of paying the costs of the Project and the costs of selling and issuing the 1999 Bonds, including the premium for any bond insurance obtained for the 1999 Bonds. Any balance remaining in the Construction Fund after the completion of the Project which is not required to meet unpaid obligations incurred in connection therewith and on account of the sale and issuance of the 1999 Bonds shall be paid into the Principal and Interest Account of the Sinking Fund and used solely for the purposes of such Account or used for the same purpose or type ofproject for which the 1999 Bonds were originally issued, all in accordance with I.C. 5-1-13, as amended or as otherwise permitted by law. With respect to any 1999 Bonds sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, to the extent that the total principal amount of such 1999 Bonds is not paid by the purchaser or drawn down by the City, the City shall reduce the principal amounts of the 1999 Bond maturities to effect such reduction in a manner that will still achieve as level annual debt service as practicable as described in Section 2(a). SECTION 12. Revenue Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Revenue Fund (the "Revenue Fund"). All income and revenues of the works shall be paid into the Revenue Fund for application as described below. SECTION 13. O,~eration and Maintenance Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Operation and Maintenance Fund (the "Operation and Maintenance Fund") (also shown on the books of the utility as the Operating Fund). There shall be transferred from the Revenue Fund and credited to the Operation and Maintenance Fund, on the last day of each calendar month, a sufficient amount so that the balance in this Fund shall be sufficient to pay the expenses of operation, repair and maintenance for the then next succeeding two calendar months. The moneys credited to this Fund shall be used for the payment of the reasonable and proper operation, repair and maintenance expenses of the works on a day-to-day basis, but none ofthe moneys in the Operation and Maintenance Fund shall be used for depreciation, replacements, improvements, extensions or additions. Any balance in Operation and Maintenance Fund in excess of the expected expenses of operation, repair and maintenance for the next succeeding two calendar months may be transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of or interest on the outstanding bonds of the works. -18- SECTION 14. Sinking Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Sinking Fund (the "Sinking Fund"), to be used for the payment of the principal of and interest on bonds which by their terms are payable from the Net Revenues, and for the payment of any fiscal agency charges in connection with such payment. The Sinking Fund is divided into two accounts designated as the Bond and Interest Account and the Debt Service Reserve Account, which are pledged for the purposes set forth below. There shall be set aside and deposited in the Sinking Fund, as available, and as hereinafter provided, a sufficient amount of the Net Revenues to meet the requirements of the Bond and Interest Account (also shown on the books of the utility as the Bond Sinking Fund) and of the Debt Service Reserve Account. Such payments shall continue until the balance in the Bond and Interest Account, plus the balance in the Debt Service Reserve Account, equals the amount needed to redeem all of the then outstanding bonds. (a) Principal and Interest Account. There shall be transferred, on the last day of each calendar month, from the Revenue Fund and credited to the Bond and Interest Account an amount equal to the sum ofone-twelfth (1/12) of the principal and one-sixth (1/6) of the interest on all then outstanding bonds payable from Net Revenues on the next succeeding principal and interest payment dates, until the amount so credited shall equal the principal payable during the next succeeding twelve (12) calendar months and the interest payable during the next succeeding six (6) calendar months. There shall similarly be credited to the account any amount necessary to pay when due the bank fiscal agency charges for paying principal of and interest on the bonds 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 bank fiscal agency sufficient moneys to pay the principal and interest on the due dates thereof together with the amount of bank fiscal agency charges. (b) Debt Service Reserve Account. There shall be transferred, on the last day of each calendar month, from the Revenue Fund and credited to the Debt Service Reserve Account equal amounts sufficient to accumulate the Reserve Requirement within five (5) years of the date of delivery of the 1999 Bonds which amount shall constitute an appropriate reserve to facilitate the marketing of the 1999 Bonds, which reserve amount shall equal the lesser of (i) the maximum annual debt service on the 1999 Bonds, (ii) 125% of the average annual debt service on the 1999 Bonds, or (iii) ten percent (10%) of the proceeds of the 1999 Bonds. After this five (5) year period, the City shall maintain the balance in the Debt Service Reserve Account in an amount equal to the Reserve Requirement. For these purposes, "Reserve Requirement" means the lesser of (i) the maximum annual debt service on the 1999 Bonds issued hereunder and any bonds ranking on a parity therewith (including the Prior Bonds) which are now outstanding or issued in the future by the City and which are payable from the net revenues of the waterworks (the "Parity Bonds"), (ii)125% of the average annual debt service on the 1999 Bonds issued hereunder and any Parity Bonds, or (iii) ten percent (10%) of the proceeds of the 1999 Bonds issued hereunder and any Parity Bonds. The Debt Service Reserve Account shall constitute the margin for safety and as protection against default in the payment of principal of and interest on the 1999 Bonds and such Parity Bonds and the moneys in the Debt Service Reserve Account shall be used to pay current principal and interest on the 1999 Bonds and such Panty Bonds to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. Any deficiency in the balance maintained in the Debt Service Reserve -19- Account shall be promptly made up from the next available Net Revenues after credits into the Bond and Interest Account. Any moneys in the Debt Service Reserve Account in excess of the Reserve Requirement maybe used for the prepayment of installments of principal on the then outstanding 1999 Bonds and Parity Bonds which are then callable or prepayable, or for the purchase of outstanding 1999 Bonds or Parity Bonds or installments of principal of the 1999 Bonds or Parity Bonds at a price not exceeding par and accrued interest, or may be transferred to the Improvement Fund. SECTION 15. Improvement Fund. After meeting the requirements of the Operation and Maintenance Fund and the Sinking Fund, any excess revenues may be transferred from the Revenue Fund and credited to the special utility fund hereby continued which was created and designated in the Prior Ordinances as the "Waterworks Improvement Fund" (the "Improvement Fund") (also shown on the books of the utility as the Depreciation Fund), and said Fund shall be used for improvements, replacements, additions and extensions of the works. Moneys in the Improvement Fund shall be transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of and interest on the then outstanding bonds or, if necessary, to eliminate any deficiencies in credits to or minimum balance in the Debt Service Reserve Account of the Sinking Fund, or may be transferred to the Operation and Maintenance Fund to meet unforeseen contingencies in the operation and maintenance of the works. SECTION 16. Investment of Funds. The Revenue Fund and the Sinking Fund each shall be deposited in and maintained as a separate bank account or accounts from all other bank accounts of the City. The Operation and Maintenance Fund and the Improvement Fund may be maintained in a single bank account or accounts, but such bank account or accounts shall likewise be maintained separate and apart from the Revenue Fund and all other bank accounts of the City and apart from the Revenue Fund and the Sinking Fund bank accounts. All moneys deposited in the bank accounts shall be deposited, held and secured as public funds in accordance with the public depository laws of the State of Indiana; provided, that moneys therein may be invested in obligations in accordance with the applicable laws, including particularly Indiana Code, Title 5, Article 13, Chapter 9 as amended or supplemented, and in the event of such investment the income therefrom shall become a part of the funds invested and shall be used only as provided in this Ordinance. SECTION 17. Financial Records and Accounts. The City shall keep proper records and books of account, separate from all of its other records and accounts, in which complete and correct entries shall be made showing all revenues received on account of the operation of the utility and all disbursements made therefrom and all transactions relating to the utility. The City shall maintain on file the audited financial statements of the utility prepared by the State Board of Accounts. There shall be furnished, upon written request, to any owner of the 1999 Bonds, the most recent copy of the audited financial statements of the utility prepared by the State Board of Accounts. Copies of all such statements and reports shall be kept on file in the office of the Fiscal Officer. If the Bonds are sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, the City shall establish and maintain the books and other financial records of the Project (including the establishment of a separate account or subaccount for the Project) and the waterworks in accordance with (i) generally accepted govermnental accounting standards for -20- utilities, on an accrual basis, as promulgated by the Government Accounting Standards Board and (ii) the rules, regulations and guidance of the State Board of Accounts. SECTION 18. Rate Covenant. The City, by and through the Board and to the fullest extent permitted by law, shall establish, fix, maintain and collect reasonable and just rates and charges for the use of and the services rendered by the works so that such rates and charges shall produce revenues at least sufficient in each year to provide for the proper Operation and Maintenance (as defined in the Financial Assistance Agreement) of the waterworks, to comply with and satisfy all covenants contained in this ordinance and the Financial Assistance Agreement and to pay obligations of the waterworks and of the City with respect to the waterworks. Such rates and charges shall, if necessary, be changed and readjusted from time to time so that the revenues therefrom shall always be sufficient to meet the expenses of Operation and Maintenance of the waterworks and the requirements of the Sinking Fund. The rates and charges so established shall apply to any and all use of such works by and service rendered to the City, and shall be paid by the City as the charges accrue. So long as any of the 1999 Bonds are outstanding, none of the facilities and services afforded by the works shall be furnished without a reasonable and just charge being made therefor. SECTION 19. Defeasance. If, when the 1999 Bonds or a portion thereof shall have become due and payable in accordance with their terms or shall have been duly called for redemption or irrevocable instructions to call the 1999 Bonds or a portion thereof for redemption shall have been given, and the whole amount of the principal, premium, if any, and the interest so due and payable upon such 1999 Bonds or any portion thereof then outstanding shall be paid, or (I) cash, (ii) direct non-callable obligations of (including obligations issued or held in book-entry form on the books of) the U.S. Department of the Treasury, the principal of and the interest on which when due without reinvestment will provide sufficient money, or (iii) any combination of the foregoing, shall be held irrevocably in trust for such purpose, and provision shall also be made for paying all fees and expenses for the payment, then and in that case the 1999 Bonds or such designated portion thereof shall no longer be deemed outstanding or secured by this Ordinance or entitled to the pledge of the Net Revenues. SECTION 20. Additional Bonds. The City reserves the right to issue additional bonds payable out of the Net Revenues ranking on a parity with the 1999 Bonds for the purpose of financing the cost of future additions, extensions and improvements to the works, or after the Prior Bonds are no longer outstanding to provide for a complete orpartial refunding of obligations,subject to the following conditions precedent: (a) The interest on and principal of all bonds payable from the Net Revenues shall have been paid to date in accordance with the terms thereof, and all required payments into the Sinking Fund required by this Ordinance shall have been made. The Reserve Requirement shall be satisfied for the additional Parity Bonds either at the time of delivery of the additional Parity Bonds or over afive-year or shorter period, in a manner which is commensurate with the requirements established in Section 14 of this Ordinance. -21- (b) The Net Revenues in the fiscal year immediately preceding the issuance of any such bonds ranking on a parity with the 1999 Bonds shall be not less than one hundred twenty-five percent (125%) of the maximum annual principal and interest requirements of the then outstanding bonds (including the 1999 Bonds and the Prior Bonds) and the additional Parity Bonds proposed to be issued; or, prior to the issuance of the additional Parity Bonds, the water rates and charges shall be increased sufficiently so that the increased rates and charges applied to the previous fiscal year's operations would have produced Net Revenues for the year equal to not less than one hundred twenty-f ve percent (125%) of the maximum annual principal and interest requirements of the then outstanding bonds and the additional Parity Bonds proposed to be issued. For purposes of this subsection, the records of the works shall be analyzed and all showings shall be prepared by an independent certified public accountant employed by the City for that purpose. (c) To the extent required by law, the issuance of the proposed additional Parity Bonds and any necessary increase in water rates and charges shall have been approved by the Indiana Utility Regulatory Commission, or any successor body vested by law with authority to approve bonds and water rates and charges of municipal waterworks. (d) The principal of said additional Parity Bonds shall be payable on January 1 and the interest shall be payable on January 1 and July 1 during the periods such principal and interest are payable. (e) If the Bonds are sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, (i) the City obtains the consent of the State of Indiana, (ii) the City has faithfully performed and is in compliance with each of its obligations, agreements and covenants contained in the Financial Assistance Agreement and this Ordinance, and (iii) the city is in compliance with its waterworks permits, except for non-compliance for which purpose the 1999 Bonds are issued, including refunding bonds issued prior to, but part of the overall plan to eliminate such non-compliance. Unless the Prior Ordinances require otherwise, in the event available moneys are insufficient to pay debt service on the 1999 Bonds and any Parity Bonds when due, available moneys shall be applied, after payment of all costs and expenses associated therewith, to the 1999 Bonds and any Parity Bonds as follows: to the payment to the persons entitled thereto of all unpaid installments of interest then due on, and the unpaid principal of, the 1999 Bonds and any Parity Bonds, including interest on any past due principal of any 1999 Bond or Parity Bonds at the rate borne by such 1999 Bond or Parity Bonds, in the order of the maturity of the installments of such interest and the due dates of such principal and, if the amount available shall not be sufficient to pay in full any particular installment of interest or maturity of principal, then to such payment ratably, according to the amounts so due, to the persons entitled thereto, without any discrimination or privilege or any preference of or priority of interest over principal or principal over interest. -22- During the continuance of any default in the payment of either principal of or interest or premium on any 1999 Bonds or Parity Bonds, no payment shall be made with respect to any subordinate obligations issued pursuant to Section 21(e). Moneys available for payment to holders of such subordinate obligations shall, in the event of an insufficient amount being available to pay all debt service with respect to the subordinate obligations when due, be applied to the subordinate obligations in accordance with the sequence and other terms set forth above with respect to payments regarding 1999 Bonds and Parity Bonds unless otherwise provided in the ordinance authorizing the subordinate obligations. SECTION 21. Further Covenants of the City. For the purpose of further safeguarding the interests of the owners of the 1999 Bonds, it is hereby specifically provided as follows: (a) The City, through the Board, shall at all times maintain the works in good condition, and operate the same in an efficient manner and at a reasonable cost. (b) So long as any of the 1999 Bonds are outstanding, the City, through the Board, shall maintain insurance on the insurable parts of the works, acceptable to the State of Indiana including fidelity bonds, of a kind and in an amount such as would normally be carried by private entities engaged in a similar type of business. All insurance shall be placed with responsible insurance companies qualified to do business under the laws of the State of Indiana. Insurance proceeds shall be used in replacing or repairing the property destroyed or damaged, or if not used for that purpose, shall be treated and applied as Net Revenues. (c) So long as any of the 1999 Bonds are outstanding, the City shall not mortgage, pledge or otherwise encumber the works, or any part thereof, and shall not sell, lease or otherwise dispose of any part of the same, excepting only such machinery, equipment or other property as maybe replaced, or shall no longer be necessary for use in connection with said utility; provided, the foregoing restrictions shall not apply to the extent approved otherwise by the owners of all 1999 Bonds then outstanding if the City receives an opinion of nationally recognized bond counsel to the effect that the transaction will not cause the interest on the 1999 Bonds to be included in gross income for federal income tax purposes, or the City receives the prior written consent of the State of Indiana, if such 1999 Bonds aze sold to the State of Indiana. (d) If the 1999 Bonds are sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, the City shall not borrow any money, enter into any contract or agreement or incur any other liabilities in connection with the waterworks, other than for normal operating expenditures, without the prior written consent of the State of Indiana if such undertaking would involve, commit or use the revenues of the waterworks. -23- (e) Except as otherwise specifically provided in Section 20 of this Ordinance and in the Prior Ordinances, so long as any of the 1999 Bonds are outstanding, no additional bonds or other obligations pledging any portion of the revenues of the works shall be issued by the City, except such as shall be made junior and subordinate in all respects to the 1999 Bonds, unless all of the 1999 Bonds are defeased, redeemed or retired coincidentally with the delivery of such additional bonds or other obligations. Such subordinate obligations shall be subject to the provisions of Section 20(d). (f) The provisions of this Ordinance shall constitute a contract by and between the City and the owners of the 1999 Bonds, all the terms of which shall be enforceable by any such owner by any and all appropriate proceedings in law or in equity. After the issuance of the 1999 Bonds and so long as any of the principal thereof or interest or premium, if any, thereon remains unpaid, except as expressly provided herein, this Ordinance shall not be repealed or amended in any respect which will adversely affect the rights of such owners, nor shall the Council or any other body of the City adopt any law, ordinance or resolution which in any way adversely affects the rights of such owners; provided, however, that if the 1999 Bonds are sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, the City shall obtain the prior written consent of the State of Indiana prior to any amendment of this Ordinance. (g) The provisions of this Ordinance shall be construed to create a trust in the proceeds of the sale of the 1999 Bonds for the uses and purposes herein set forth, and the owners ofthe 1999 Bonds shall retain a lien on such proceeds until the same are applied in accordance with the provisions of this Ordinance and the Act. The provisions of this Ordinance shall also be construed to create a trust in the Net Revenues herein directed to be set apart and paid into the Sinking Fund for the uses and purposes of that Fund as set forth in this Ordinance. The owners of the 1999 Bonds shall have all the rights, remedies and privileges set forth in the Act. SECTION 22. Amendments With Consent ofBondholders. Subject to the terms and provisions contained in this section and Sections 21 and 23, the owners ofnot less than sixty-six and two-thirds percent (66 2/3%) in aggregate principal amount of the 1999 Bonds and then outstanding shall have the right, from time to time, to consent to and approve the adoption by the Council of such ordinance or ordinances supplemental hereto, as shall be deemed necessary or desirable by the City for the purpose of amending in any particular any of the terms or provisions contained in this Ordinance, or in any supplemental Ordinance; provided, however, that if the 1999 Bonds are sold to the State of Indiana or the Indiana Bond Bank to finance Eligible Costs, the City shall obtain the prior written consent of the State of Indiana; provided, further, that nothing herein contained shall permit or be construed as permitting: (a) An extension of the maturity of the principal of or interest or premium, if any, on any 1999 Bond or an advancement of the earliest redemption -24- date on any 1999 Bond, without the consent of the holder of each 1999 Bond so affected; or (b) A reduction in the principal amount of any 1999 Bond or the redemption premium or the rate of interest thereon, or a change in the monetary medium in which such amounts are payable, without the consent of the holder of each 1999 Bond so affected; or (c) The creation of a lien upon or a pledge of the Net Revenues ranking prior to the pledge thereof created by this Ordinance, without the consent of the holders of all 1999 Bonds then outstanding; or (d) A preference or priority of any 1999 Bond over any other 1999 Bond, without the consent of the holders of all 1999 Bonds then outstanding; or (e) A reduction in the aggregate principal amount of the 1999 Bonds required for consent to such supplemental ordinance, without the consent of the holders of all 1999 Bonds then outstanding. If the City shall desire to obtain any such consent, it shall cause the Registrar to mail a notice, postage prepaid, to the addresses appearing on the Registration Record. Such notice shall briefly set forth the nature of the proposed supplemental ordinance and shall state that a copy thereof is on file at the office of the Registrar for inspection by all owners of the 1999 Bonds. The Registrar shall not, however, be subject to any liability to any owners of the 1999 Bonds by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental ordinance when consented to and approved as herein provided. Whenever at any time within one year after the date of the mailing of such notice, the City shall receive any instrument or instruments purporting to be executed by the owners of the 1999 Bonds of not less than sixty-six andtwo-thirds per cent (66-2/3%) in aggregate principal amount of the 1999 Bonds then outstanding, which instrument or instruments shall refer to the proposed supplemental ordinance described in such notice, and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice as on file with the Registrar, thereupon, but not otherwise, the City may adopt such supplemental ordinance in substantially such form, without liability or responsibility to any owners of the 1999 Bonds, whether or not such owners shall have consented thereto. No owner of any 1999 Bond shall have any right to object to the adoption of such supplemental ordinance or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Council from adopting the same, or from taking any action pursuant to the provisions thereof. Upon the adoption of any supplemental ordinance pursuant to the provisions of his section, this Ordinance shall be, and shall be deemed, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Ordinance of the City and all owners of 1999 -25- Bonds then outstanding shall thereafter be determined, exercised and enforced in accordance with this Ordinance, subject in all respects to such modifications and amendments. Notwithstanding anything contained in the foregoing provisions of this Ordinance, the rights and obligations of the City and of the owners of the 1999 Bonds, and the terms and provisions of the 1999 Bonds and this Ordinance, or any supplemental ordinance, may be modified or amended in any respect with the consent of the City and the consent of the owners of all the 1999 Bonds then outstanding. SECTION 23. Amendments Without Consent of Bondholders. The Council may, from time to time and at any time, and without notice to or consent of the owners of the 1999 Bonds, adopt such ordinances supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental ordinances shall thereafter form a part hereof): (a) To cure any ambiguity or formal defect or omission in this Ordinance or in any supplemental ordinance; (b) To grant to or confer upon the owners of the 1999 Bonds any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the owners of the 1999 Bonds; (c) To procure a rating on the 1999 Bonds from a nationally recognized securities rating agency designated in such supplemental ordinance, if such supplemental ordinance will not adversely affect the owners of the 1999 Bonds; (d) To obtain or maintain bond insurance with respect to the 1999 Bonds; (e) To provide for the refunding or advance refunding of the 1999 Bonds; (f) To provide for the issuance of additional bonds as provided in Section 20 hereof; or (g) To make any other change which, in the determination of the Council in its sole discretion, is not to the prejudice of the owners of the 1999 Bonds. SECTION 24. Tax Matters. In order to preserve the exclusion of interest on the 1999 Bonds from gross income for federal income tax purposes and as an inducement to purchasers of the 1999 Bonds, the City represents, covenants and agrees that: (a) No person or entity, other than the City or another state or local governmental City, will use proceeds of the 1999 Bonds or property financed by the 1999 Bond proceeds other than as a member of the general public. No person or entity other than the City or another state or local governmental City will own property financed by 1999 Bond proceeds or will have actual or beneficial use of such property pursuant to a lease, a management or incentive payment contract, an -26- arrangement such astake-or-pay or output contract, or any other type of arrangement that differentiates that person's or entity's use of such property from the use by the public at large. (b) No 1999 Bond proceeds will be loaned to any entity or person other than a state or local governmental City. No 1999 Bond proceeds will be transferred, directly or indirectly, or deemed transferred to anon-governmental person in any manner that would in substance constitute a loan of the 1999 Bond proceeds. (c) The City will not take any action or fail to take any action with respect to the 1999 Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the 1999 Bonds pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder as applicable to the 1999 Bonds, including, without limitation, the taking of such action as is necessary to rebate or cause to be rebated arbitrage profits on 1999 Bond proceeds or other monies treated as 1999 Bond proceeds to the federal government as provided in Section 148 of the Code, and will set aside such monies, which may be paid from investment income on funds and accounts notwithstanding anything else to the contrary herein, in trust for such purposes. (d) The City will file an information report on Form 8038-G with the Internal Revenue Service as required by Section 149 of the Code. (e) The City will not make any investment or do any other act or thing during the period that any 1999 Bond is outstanding hereunder which would cause any 1999 Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code and the regulations thereunder as applicable to the 1999 Bonds. (f) The City represents that: (1) The 1999 Bonds and BANS are not private activity bonds as defined in Section 141 of the Code; (2) The City hereby designates the 1999 Bonds and BANS as qualified tax-exempt obligations for purposes of Section 265(b) of the Code; (3) The reasonably anticipated amount of qualified tax- exemptobligations (including qualified 501(c)(3) obligations and tax- exemptleases but excluding other private activity bonds) which will be issued by the City, and all entities subordinate to the City during 1999 does not exceed $10,000,000; and (4) The City will not designate more than $10,000,000 of qualified tax-exempt obligations during 1999. -27- Therefore, the 1999 Bonds and BANS qualify for the exception in the Code from the disallowance of 100% of the deduction by financial institutions of interest expense allocable to newly acquired tax-exempt obligations. Notwithstanding any otherprovisions ofthis Ordinance, the foregoing covenants and authorizations (the "Tax Sections") which are designed to preserve the exclusion of interest on the 1999 Bonds from gross income under federal law (the "Tax Exemption")need not be complied with to the extent the City receives an opinion of nationally recognized bond counsel that compliance with such Tax Section is unnecessary to preserve the Tax Exemption. SECTION 25. Issuance of BANS; Other Actions. (a) The City, having satisfied all the statutory requirements for the issuance of the 1999 Bonds, has the authority to elect to issue a bond anticipation note or notes, repayable from the proceeds received from the sale of the 1999 Bonds (defined herein as the "BANs"). This Council hereby authorizes the issuance and sale of the BANS pursuant to I.C. §5-1-14-5 in one or more series, ranking on a parity with each other, in original aggregate principal amount not to exceed Two Million Fifty Thousand Dollars ($2,050,000) to provide interim financing until permanent financing becomes available and to pay for costs of issuing the BANS, and the BANS also may fund capitalized interest thereon. The designation of the BANs shall be "City of South Bend, Indiana Waterworks Bond Anticipation Note of 1999". The BANs shall be issued in fully registered form in denominations of One Dollar ($1.00) or integral multiples thereof, shall be originally dated the date of delivery, shall be numbered consecutively from 1 upward, shall mature not more than two (2) years from the date of issuance, may be renewed or extended from time to time, over a period not exceeding five (5) years from the date of the original issuance of the BANS, shall be prepayable on seven (7) days' notice in whole or in part in any authorized denomination without premium or penalty, shall bear interest at a rate not exceeding two and nine-tenths percent (2.9%) per annum (the exact rate or rates to be determined through negotiations with the purchaser of the BANs), and shall be sold at a discount not exceeding one percent (1 %) of the principal amount thereof. Interest on the BANS shall be payable at maturity. The BANS shall be issued pursuant to I.C. 13-18-13 if sold to the State of Indiana, pursuant to I.C. 5-1.5-8-6.1 if sold to the Indiana Bond Bank or pursuant to I.C. 5-1-14-5 if sold to a financial institution or any other purchaser. It shall not be necessary for the City to repeat the procedures for the issuance of the 1999 Bonds as the procedures followed before the issuance of the BANS are for all purposes sufficient to authorize the issuance of the 1999 Bonds and to use proceeds thereof to repay the BANS. The principal of the BANS herein authorized is payable solely from proceeds received from the sale of the 1999 Bonds, and the interest thereon may be paid from such proceeds or from the Net Revenues or a combination thereof, and the proceeds received by the City from the sale of the 1999 Bonds and such Net Revenues are hereby irrevocably pledged to the payment of the principal of and interest on the BANS. The Executive is hereby authorized to determine the form of the BANS and to execute the BANS, the Fiscal Officer is hereby authorized to have the BANS prepared, and to attest to the BANS and affix the seal the City or cause a facsimile of the seal of the City to be imprinted or impressed on the BANS. The Fiscal Officer is hereby authorized and directed to obtain the legal opinion as to the validity of the BANS from Barnes & Thornburg. After the BANs -28- shall have been properly executed, the Fiscal Officer shall be authorized to receive from the purchaser thereof payment for the BANs and to provide for delivery of the BANS to the purchaser. Proceeds received from the sale of the BANS shall be deposited in the Construction Fund referred to in Sec. 11 of this Ordinance. The City may receive payments for the BANs in installments. The Fiscal Officer is authorized to sell the BANs to a financial institution, the Indiana Bond Bank, the State of Indiana, or to any other purchaser pursuant to a Bond Anticipation Note Agreement (the "Bond Anticipation Note Agreement") to be entered into between the City and the purchaser, and to work with the purchaser to facilitate the sale of the BANS, provided, any BAN in principal amount of less than One Million Dollars ($1,000,000) must be sold to a financial institution. If the BANs are sold to the State of Indiana, the Financial Assistance Agreement shall serve as the Bond Anticipation Note Agreement. The Executive and the Fiscal Officer are hereby authorized and directed to execute a Bond Anticipation Note Agreement or Financial Assistance Agreement (and any amendments made from time to time) in such form as they shall approve acting upon the advice of counsel. In any case any officer whose signature or a facsimile signature appears on the BANs shall cease to be such officer before delivery of the BANS, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until delivery of the BANs. Upon execution of the BANS by the Executive and the attestation thereof by the Fiscal Officer, the BANS shall constitute the legal, valid and binding obligations of the City. No action shall be taken that would impair the exclusion from gross income of interest on the BANS provided by the Code (as defined in Section 24). In furtherance of the foregoing, the provisions of Section 24 of this Ordinance shall apply to the BANS in the same manner as they apply to the 1999 Bonds. The BANS shall be subject to transfer or exchange in the same manner as the 1999 Bonds, as described in Section 4, and to amendment in the same manner as the 1999 Bonds, as described in Sections 22 and 23. (b) The Executive and the Fiscal Officer may take such other actions or deliver such other certificates and documents needed for the Proj ect or the financing as they deem necessary or desirable in connection therewith. SECTION 26. Rate Ordinance. The rates and charges of the works are set forth or described in an ordinance adopted by the Council on the date of adoption of this Ordinance. Such ordinance is hereby incorporated by reference as if set forth in full at this place, two copies of which are on file and available for public inspection in the office of the City Clerk pursuant to I.C. §36-1-5- 4. SECTION 27. Non-Business Davs. Upon the written consent of the State of Indiana, if the date of making any payment or the last date for performance of any act or the exercising of any right, as provided in this Ordinance, shall be a legal holiday or a day on which banking institutions in the City or the jurisdiction in which the Registrar or Paying Agent is located are typically closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are typically closed, with the same force -29- and effect as if done on the nominal date provided in this Ordinance, and no interest shall accrue for the period after such nominal date. SECTION 28. No Conflict. The Council hereby finds and determines that the adoption of this Ordinance and the issuance of the 1999 Bonds is in compliance with the Prior Ordinances. The Prior Ordinances shall remain in full force and effect. All ordinances and resolutions and parts thereof in conflict herewith, except the Prior Ordinances, are to the extent of such conflict hereby repealed. None of the provisions of this Ordinance shall be construed to adversely affect the rights of the owners of the Prior Bonds. SECTION 29. Severability. If any section, paragraph or provision of this Ordinance shall beheld to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 30. Interpretation. Unless the context or laws clearly require otherwise, references herein to statutes or other laws include the same as modified, supplemented or superseded from time to time. SECTION 31. Effectiveness. This Ordinance shall be in full force and effect from and after its passage and compliance with the procedures required by law. Member, South Bend Common Council 1st READING ~-~'°~~ PUBLIC HEARWG S-Z3``1Q 3 rd READING ~..'e..3-`~ `~ NOT APPROVED -30- ~; ~ ? ~ 0 ~~ 1999 REFERRED PASSED ~ -L3-5`~ COMMITTEE REPORT TO THE COMMON COUNCIL OF THE CITY OF SOUTH BEND: Your Committee of the Whole, to whom was referred: BILL NO. 65-99 PUBLIC HEARING ON A BILL OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, CONCERNING THE CONSTRUCTION OF IMPROVEMENTS TO THE MUNICIPAL WATERWORKS OF THE CITY OF SOUTH BEND, INDIANA; AUTHORIZING THE ISSUANCE OF REVENUE BONDS FOR SUCH PURPOSE IN THE PRINCIPAL AMOUNT NOT TO EXCEED TWO MILLION FIFTY THOUSAND DOLLARS ($2,050,000); ADDRESSING OTHER MATTERS CONNECTED THEREWITH, INCLUDING THE ISSUANCE OF NOTES IN ANTICIPATION OF BONDS; AND REPEALING ORDINANCES INCONSISTENT HEREWITH Respectfully report that they have examined the matter and that in their opinion, this bill is being recommended to the full Council with a favorable recommendation. Charlotte Pfeifer Chairman Exhibit A PROJECT DESCRIPTION The Project consists of the second phase of a three-part improvement to the Olive Water Treatment Plant on Olive Street in South Bend, Indiana. The Project consists of the construction and equipping of a 6,500 square foot slab-on-grade building, six additional GAC units and all associated process piping for the treatment plant. The Proj ect will increase the Olive Water Treatment Plant's total treatment capacity to 12,000,000 gallons of water per day. The construction of the building will also allow the treatment system to be operated all year, as opposed to closing during the winter months as is currently necessary. The Project will also involve reconditioning of wells located at the Project site. Finally, the Project will involve improvements that will facilitate the construction of an additional iron and manganese filtration plant in the future. s a i <` ~ ~'~ 0 4 i9J9 ~ y Y-0 ..-..__-....._..a...._...~....__.__-~... _....._...._.... Exhibit B FINANCIAL ASSISTANCE AGREEMENT See attached. STATE OF INDIANA DRINKING WATER REVOLVING LOAN PROGRAM FINANCIAL ASSISTANCE AGREEMENT made as of this _ day of , 1999 by and between the State of Indiana (the "State")acting by and through the State Budget Agency (the "Budget Agency") and the City of South Bend, Indiana (the "Qualified Entity"), a political subdivision as defined in I.C. 13-11-2-164, operating its water utility under I.C. 8- 1.5 et seq. , witnesseth: WHEREAS, the State's Drinking Water Revolving Loan Program (the "Drinking Water SRF Program")has been established in accordance with the federal Safe Drinking Water Act and any regulations promulgated thereunder, and pursuant to I.C. 13-18-21 (the "Drinking Water SRF Act" ), which Drinking Water SRF Act also establishes the drinking water revolving loan fund (the "Drinking Water SRF Fund"); and WHEREAS, the State is authorized pursuant to the Drinking Water SRF Act to fund the Drinking Water SRF Program with federal capitalization grants, together with required State matching funds, therefor; and WHEREAS, the Indiana Bond Bank (the "Bond Bank")has had a longstanding commitment to finance water quality and drinking water projects for qualified entities by issuing its bonds, pursuant to I.C. 5-1.5 (the "Bond Bank Act") for the purpose of buying securities of such qualified entities; and WHEREAS, in keeping with its public purpose under the Bond Bank Act, the Bond Bank intends to cooperate with the State in financing the Drinking Water SRF Program, including the required State matching funds, and the political subdivisions' drinking water projects and, to that end, the State intends to cooperate with the Bond Bank; and WHEREAS, to fmance the Drinking Water SRF Program, including the required State matching funds, the Bond Bank has previously and will issue from time to time one or more series of its State Revolving Fund Program Bonds; and WHEREAS, the Qualified Entity is a duly existing political subdivision of the State, lawfully empowered to undertake all transactions and execute all documents mentioned or contemplated herein; and WHEREAS, the Qualified Entity has previously entered into a Financial Assistance Agreement with the State, dated as of December 30, 1998 (the "Prior Agreement"), to borrow money fi•om the Wastewater SRF Program to construct and acquire a separate project (as described and defined in the Prior Agreement); and WHEREAS, the Qualified Entity has determined to undertake a drinking water system project (as more fully described herein, the "Project") and to borrow money from the Drinking Water SRF Program to construct and acquire the Project; and WHEREAS, the State and the Qualified Entity desire to set forth the terms of such financial assistance as hereinafter provided. NOW THEREFORE, in consideration of the mutual covenants herein set forth, the State and the Qualified Entity agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. The following terms shall, for all purposes of this Agreement, have the following meaning: "Anency" shall mean the United States Environmental Protection Agency or its successor. "Authorizing Instrument(sl" shall mean the separate trust indenture(s) of the Qualified Entity entered into with a corporate trustee or the detailed resolution(s) or ordinance(s) of the governing body of the Qualified Entity pursuant to which the Bonds are issued in accordance with State law. "Authorized Representative" shall mean the Controller of the Qualified Entity or such other officer, official, or representative of the Qualified Entity duly authorized to act for and on behalf of the Qualified Entity as provided for herein. "Bond" or "Bonds" shall mean the instrument(s) which evidence(s) the Loan, as authorized by the Authorizing Instrument and containing the terms set forth in Section 2.02 of this Agreement. "Bond Bank Bonds" shall mean any Indiana Bond Bank Drinking Water State Revolving Fund Program Bonds issued as a part of the Drinking Water SRF Program. "Bond Fund" shall mean the separate and segregated fund or account established and created by the Political Subdivision pursuant to the Authorizing Instrument from which payment of the principal of and interest on the Bonds is required to be made by the Qualified Entity. "Budget Agency" shall mean the State Budget Agency created under I.C. 4-12-1-3 or its successor. 430848 2 "Business Dav" shall mean any day other than a Saturday, Sunday or State legal holiday or any other day on which financial institutions in the State are authorized by law to close and to remain closed. "Code" shall mean the Internal Revenue Code of 1986, as amended and supplemented from time to time, together with the regulations related thereto. "Commission" shall mean the Indiana Utility Regulatory Commission created under I.C. 8-1-1-2 or its successor. "Department" shall mean the Indiana Department of Environmental Management created under I.C. 13-13-1-1 or its successor. "Disbursement Request" shall mean a request for a disbursement of the Loan made by an Authorized Representative in the form of Exhibit A to this Agreement, with appropriate attachments, or in such other forms as the State may from time to time prescribe. "Drinking Water SRF Fund" shall mean the drinking water revolving loan fund as established by I.C. 13-18-21-2. "Drinking Water SRF Indenture" shall mean the Drinking Water SRF Trust Indenture, dated as of September 1, 1998 between the State and the Trustee, as amended and supplemented from time to time. "Drinking Water SRF Program Director" shall mean the person designated by the Department and the Budget Agency as authorized to act as the Drinking Water SRF Program Director for purposes of this Agreement. "Drinking Water SRF Program Representative" shall mean the person designated by the Department and the Budget Agency as authorized to act as the Drinking Water SRF Program Representative. "Drinking Water System" shall mean all, or any part of, the system for the provision to the public of water for human consumption through pipes and other constructed conveyances that: (1) has at least fifteen (15) service connections; or (2) regularly serves at least twenty-five (25) individuals; and as further defined and described in I.C. 13-11-2-177:3, 85 I.A:C. 2-2-26 and 327 I.A.C. 14-2-28, each as amended and supplemented from time to time. 430848 "Eligible Cost" shall mean and include, whether incurred before or after the date of this Agreement, all costs which have been incurred and qualify for Financial Assistance, including engineering, financing and legal costs related thereto. "Financial Assistance" shall mean the financial assistance authorized by the Safe Drinking Water Act, including the Loan. "Loan" shall mean the purchase of the Bonds by the State to finance the planning, designing, constructing, renovating, improving and expanding of the Qualified Entity's Drinking Water System or refinance an existing debt obligation where such debt was incurred and building of such systems began after July 1, 1993, but does not mean the provision of other Financial Assistance. "Operation and Maintenance" shall mean the activities required to assure the continuing dependable and economic function of the Drinking Water System, including maintaining compliance with primary and secondary drinking water standards, as follows: (1) Operation shall mean the control and management of the unit processes and equipment which make up the Drinking Water System, including financial and personnel management, records, reporting, laboratory control, process control, safety and emergency operation planning and operating activities. (2) Maintenance shall mean the preservation of the functional integrity and efficiency of equipment and structures by implementing systems of preventive and corrective maintenance. "Plans and Specifications" shall mean the detailed written descriptions of the work to be done in undertaking and completing the Project, including the written descriptions of the work to be performed and the drawings, cross-sections, profiles and the like which show the location, dimensions and details of the work to be performed. "Preliminary Engineering Report" shall mean the information submitted by the Qualified Entity that is necessary for the Department to determine the technical, economic and environmental adequacy of the proposed Project. "Project" shall mean the activities or tasks identified and described in Exhibit B to this Agreement, as amended or supplemented by the Qualified Entity and consented to by the State, for which the Qualified Entity may expend the Loan. "Purchase Account" shall mean the account by that name created by the Drinking Water SRF Indenture and held as part of the Drinking Water SRF Fund. 430543 [l "Safe Drinking Water Act" shall mean the Safe Drinking Water Act, 42 U.S.C. 3 300f et seq. and other laws supplemental thereto, as amended and supplemented from time to time. " fate" shall mean the State of Indiana, acting through the Department and the Budget Agency. "Substantial Completion of Construction" shall mean the day on which the Department determines that all but minor components of the Project have been built, all equipment is operational and the Project is capable of functioning as designed. "Trustee" shall mean Bank One Trust Company, NA, Indianapolis, Indiana, in its capacity as trustee or its successor under the Drinking Water SRF Indenture. (End of Article I) 430848 ARTICLE II PURPOSE OF BORROWING AND LOAN TERMS Section 2.01. Amount; Purpose. The State agrees to Loan an amount not to exceed Two Million Fifty Thousand Dollars ($2,050,000) in aggregate principal amount to the Qualified Entity as Financial Assistance to pay for the Eligible Costs, as hereinafter described, of the Project on, and subject to, the terms and conditions contained herein. The Loan shall be used only to pay the following Eligible Costs: (a) eligible planning services for the production of a Preliminary Engineering Report ("Planning"), (b) eligible design services for the production of Plans and Specifications ("Design") and (c) eligible construction costs, including financing and legal costs ("Construction" ). The Loan shall be funded solely from available proceeds of the Bond Bank Bonds contained in the Purchase Account or from other sources the State, in its sole discretion, may designate. The Loan is evidenced by the Bonds executed and delivered by the Qualified Entity contemporaneously herewith. The Bonds shall be in fully registered form, with the Bond Bank registered as the registered owner. Pursuant to certain agreements between the State and the Bond Bank, so long as the Bond Bank is the registered owner, the principal of and redemption premium, if any, and interest on the Bonds shall be paid to the Trustee by a wire transfer referenced as follows: Bank One Trust Company, NA, Indianapolis, Indiana; ABA No. 074 000 052; BNF: Corporate Trust Department; GL Account No: 325614. The Qualified Entity agrees to undertake and complete the Project and to receive and expend the Loan proceeds in accordance with this Agreement. Section 2.02. The Bonds. (a) The Bonds will not bear interest for the two year period from the date of this Agreement and thereafter will bear interest at the per annum rate of two and nine-tenths percent (2.9 %) (calculated on the basis of a 360-day year comprised of twelve 30-day months) until paid, as provided in I.C. 13-18-21-10 and -15. Interest, if any, on the Bonds will be payable on January 1 and July 1 of each year, commencing January 1, 2002. The Bonds will be in the aggregate principal amount of Two Million Fifty Thousand Dollars ($2,050,000). Subject to Section 2.05 herein, the Bonds will mature on January 1 of each of the years set forth in, and at the principal amount set opposite each such month and year set forth in, the schedule contained in Exhibit C to this Agreement; provided, however, notwithstanding the foregoing or the terms of the Bonds to the contrary, no maturity of Bonds shall extend beyond the date which is twenty (20) years after Substantial Completion of Construction. If the maturity date for any Bonds is beyond such date, unless otherwise agreed to, such Bonds, together with accrued and unpaid interest thereon, will be due and payable on such date. (b) The Bonds will be subject to redemption by the Qualified Entity as provided in the Authorizing Instrument. a3osas 6 (c) The form and other terms of the Bonds will be in conformity with the Authorizing Instrument. Section 2.03. Disbursement Conditions. Each of the following shall be a condition precedent to the disbursement of the Loan or any portion thereof: (a) (1) With respect to procurement of professional services related to the Project to be paid from Loan proceeds, the Qualified Entity shall have complied with 85 I.A.C. 2-2-26 and 327 I.A.C. 14-10-1. (2) With respect to procurement of all other goods and services related to the Project to be paid from Loan proceeds, the Qualified Entity shall have complied with I.C. 36-1-12. (b) No representation, warranty or covenant of the Qualified Entity contained in this Agreement or in any paper executed and delivered in connection with the transactions contemplated by this Agreement shall be false or inaccurate in any material respect. (c) The Qualified Entity shall undertake and faithfully perform each of its obligations, agreements and covenants contained in this Agreement, the Authorizing Instrument and the Bonds. (d) There shall be available to the State uncommitted funds in an amount sufficient to satisfy the State's obligations hereunder from the proceeds of Bond Bank Bonds in the Purchase Account. (e) The Qualified Entity shall have undertaken all actions necessary to comply with and satisfied the conditions and requirements for a Loan secured with money made available from the Drinking Water SRF Fund as set forth in federal and State statutes, rules and regulations, including I.C. 13-18-21, 85 I.A.C. 2, 327 I.A.C. 14, the Safe Drinking Water Act. Section 2.04. Disbursement Procedures. Loan proceeds shall be disbursed to the Qualified Entity by the Trustee for actual Eligible Costs incurred with respect to the Project. The State may, in its discretion, cause Loan disbursements to be made (a) directly to the person or entity identified in the Disbursement Request to whom payment is due, or (b) if advised in writing by the Qualified Entity that I.C. 36-1-12-14 or a similar law applies to the Project, to the Qualified Entity for purposes of collecting retainage, or some combination thereof. Any Loan proceeds in excess of the amount subject to retainage controlled by the Qualified Entity will be immediately remitted to the person or entity to whom payment is due, no later than three (3) Business Days after receipt or the date such Loan proceeds are no longer subject to retainage. Loan disbursements shall not be made more frequently than monthly and shall only be made following the submission of a Disbursement Request to the State. Disbursement Requests shall be approved by the Department and the Drinking Water SRF 430848 '] Program Representative prior to submission to the Trustee for a Loan disbursement. Disbursement Requests shall be numbered sequentially, beginning with the number 1. Section 2.05. Effect of Disbursements. Loan disbursements made to or for the benefit of the Qualified Entity shall be deemed to be a purchase of the Bonds in such amounts and with such maturities as achieves as level a debt service as practicable, and with no maturity longer than the original maturity schedule; provided that any principal payments originally scheduled under Section 2.02 herein as being due prior to one year after Substantial Completion of Construction shall first be deemed to be a purchase of the Bonds in order of maturity. Interest on the Loan commences on the day that the State approves a Disbursement Request and forwards such Disbursement Request to the Trustee for payment. In the event any Loan disbursement is made in excess of Eligible Costs, such excess disbursements shall be immediately paid by the Qualified Entity to the Trustee and may, subject to the terms and conditions set forth in this Agreement, be borrowed by the Qualified Entity. Section 2.06. Acknowledgment of Amount of Loan; Final Disbursement. Within 30 days after any request by the State from time to time, the Qualified Entity shall execute and deliver to the State an acknowledgment in the form prescribed by the State which acknowledges the outstanding principal of and interest on the Bonds. Unless the State consents in writing, no Loan disbursement shall be made more than one year after Substantial Completion of Construction. After Substantial Completion of Construction, upon the request of the State, the Qualified Entity shall replace, at its expense, the Bonds with substitutes issued pursuant to the Authorizing Instrument to evidence the outstanding principal under the Loan. (End of Article II) 430848 g ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE QUALIFIED ENTITY Section 3.01. Planning, Design and Construction Covenants. The Qualified Entity hereby covenants and agrees with the State that the Qualified Entity will: (a) Provide information as requested by the State to determine the need for, or to complete any necessary, environmental review or analysis. (b) Comply with the procurement procedures and affirmative action requirements contained in 85 I.A.C. 2-10 and 327 I.A.C. 14-10 in the Planning, Design and Construction of the Project to the extent that such are to be paid from Loan proceeds. (c) With respect to prime and first tier contract awards, report minority and women business enterprise utilization in the Planning, Design and Construction of the Project, to the extent that such are to be paid from Loan proceeds, by executing and delivering Agency Form SF 5700-528-5-96 to the Department whenever any agreements or subagreements are awarded. (These reports must be submitted by the 15th day of each January, April, .July and October after which such agreement or subagreement is awarded). (d) Comply with all applicable federal, State and local statutes, rules and regulations relating to the acquisition and construction of the Drinking Water System. (e) In the event Construction is to be paid from Loan proceeds, prior to an award of any contract for Construction of the Project, obtain a construction permit from the Department and receive the written approval of the Department of the Preliminary Engineering Report. (f) Obtain the property rights necessary to construct the Drinking Water System and, in procuring any such rights comply with federal and State law. (g) In the event Construction is to be paid from Loan proceeds, comply with the federal Davis-Bacon Act, codified at 40 U.S.C. 276a-276a-5. (h) In the event Construction is to be paid from Loan proceeds, execute and deliver to the Department Agency Form 4700-4 ("Pre-award Compliance Review Report for Wastewater Treatment Construction Grants") and Agency Form 5700-49 ("Certification Regarding the Debarment, Suspension, and Other Responsibility Matters" ). 430848 (~ (i) In the event Construction is to be paid from Loan proceeds, follow guidance issued by the Department in procuring contracts for Construction, including (1) submission to the Department of Project change orders, (2) obtaining approval from the Drinking Water SRF Program Director and the Drinking Water SRF Program Representative of any Project change order which significantly changes the scope or Design of the Project or, when taking into account other change orders and contracts, are reasonably expected to result in expenditures in an amount greater than the Loan, (3) receiving approval from the Drinking Water SRF Program Director prior to the award of any contract for Construction and (4) receiving authorization from the Drinking Water SRF Program Director prior to initiating procurement of construction of the Project. (j) In the event Construction is to be paid from Loan proceeds, before awarding Construction contracts, receive approval of the Drinking Water SRF Program Director for any interlocal agreement associated with the Project. (k) In the event Construction is to be paid from Loan proceeds, cause the Project to be constructed in accordance with the Preliminary Engineering Report and the Plans and Specifications, using approved contract papers. (1) Permit the State and its agents to inspect from time to time (1) the Project, (2) the Drinking Water System and (3) the books and other financial records of the Drinking Water System, including the inspections described in 85 I.A.C. 2-11-7, 85 I.A.C. 2-12-1, 327 I.A.C. 14-11-7 and 327 I.A.C. 14-12-1. Construction contracts shall provide that the State or its agents will have access to the Project and the work related thereto and that the Qualified Entity's contractor will provide proper facilities for such access and inspection. All files and records pertaining to the Project shall be retained by the Qualified Entity for at least six years after Substantial Completion of Construction. (m) Upon Substantial Completion of Construction and when requested by the State, provide audited reports to the State to permit the State to determine that the Loan proceeds have been used in compliance with this Agreement. (n) In the event Construction is to be paid from Loan proceeds, within one year of Substantial Completion of Construction, provide as-built plans for the Project to the Department. Section 3.02. General Covenants. The Qualified Entity hereby covenants and agrees with the State that the Qualified Entity will: (a) Comply with all applicable federal, State and local statutes, rules and regulations relating to Operation and Maintenance. 430848 1 ~ (b) (1) Own, operate and maintain the Project and the Drinking Water System for their useful life, or cause them to be operated and maintained for their useful life; (2) at all times maintain the Drinking Water System in good condition and operate it in an efficient manner and at a reasonable cost; and (3) not sell, transfer, lease or otherwise encumber the Drinking Water System or any portion thereof or any interest therein without the prior written consent of the State. (c) Obtain and maintain the property rights necessary to operate and maintain the Drinking Water System, and in procuring any such rights, comply with federal and State law. (d) Acquire and maintain insurance coverage acceptable to the State, including fidelity bonds, to protect the Drinking Water System and its operations. All insurance shall be placed with responsible insurance companies qualified to do business under State law. Insurance proceeds and condemnation awards shall be used to replace or repair the Drinking Water System unless the State consents to a different use of such proceeds or awards. (e) Establish and maintain the books and other financial records of the Project (including the establishment of a separate account or subaccount for the Project) and the Drinking Water System in accordance with (1) generally accepted governmental accounting principles, as promulgated by the Government Accounting Standards Board and (2) the rules, regulations and guidance of the State Board of Accounts. (f) Provide to the State such periodic financial and environmental reports as it may request from time to time, including (1) annual operating and capital budgets and (2) such other information requested or required of the State or the Qualified Entity by the Agency. (g) Provide notice to the Department under the circumstances contemplated, and undertake inspections as required, by 85 I.A.C. 2-11-7 and 327 I.A.C. 14-11-7. (h) (1) Establish and maintain just and equitable rates and charges for the use of and the service rendered by the Drinking Water System, to be paid by the owner of each and every lot, parcel of real estate or building that is connected with and uses the Drinking Water System, or that in any way uses or is served by the Drinking Water System, (2) establish, adjust and maintain rates and charges at a level adequate to produce and maintain sufficient revenue (including user and other charges, fees, income or revenues available to the Qualified Entity) to provide for the proper Operation and Maintenance of the Drinking Water System, to comply with and satisfy all covenants contained herein-and to pay all obligations of the Drinking Water System and of the Qualified Entity with respect thereto, and (3) if and to the extent Bonds are payable from property taxes, levy each year a special ad valorem tax upon all property located 430848 1 1 in the boundaries of the Qualified Entity, to pay all obligations of the Qualified Entity with respect thereto. (i) If the Bonds are payable from the revenues of the Drinking Water System, not borrow any money, enter into any contract or agreement or incur any other liabilities in connection with the Drinking Water System without the prior written consent of the State if such undertaking would involve, commit or use the revenues of the Drinking Water System; provided that the Qualified Entity may authorize and issue additional obligations, payable out of the revenues of its Drinking Water System, ranking on a parity with the Bonds for the purpose of financing the cost of future additions, extensions and improvements to the Drinking Water System, or to refund obligations of the Drinking Water System, subject to the conditions, if any, in the Authorizing Instrument. (j) Comply with the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000d et sec ., the Age Discrimination Act, as amended, Public Law 94-135, Section 504 of the Rehabilitation Act of 1973, as amended (including Executive Orders 11914 and 11250), 29 U.S.C. Section 794, Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Public Law 92-500, Executive Order 11246 regarding equal employment opportunity, and Executive Orders 11625 and 12138. (k) Undertake all actions necessary to investigate all potential, material claims which the Qualified Entity may have against other persons with respect to the Drinking Water System and the Project and take whatever action is necessary or appropriate to (1) recover on any actionable, material claims related to the Project or the Planning, Design or Construction thereof, (2) meet applicable Project performance standards and (3) otherwise operate the Drinking Water System in accordance with applicable federal, State and local law. (1) Not modify, alter, amend, add to or rescind any provision of the Authorizing Instrument without the prior written consent of the State. Section 3.03. Representations and Warranties of the Qualified EntitX. After due investigation and inquiry, the Qualified Entity hereby represents and warrants to the State that: (a) The Qualified Entity is duly organized and existing under state law, and constitutes a "political subdivision" within the meaning of I.C. 13-11-2-164. The Project and the Drinking Water System are subject to I.C. 8-1.5 et seq. (b) The Qualified Entity and its Drinking Water System are subject to the jurisdiction of the Commission under I.C. 8-1-2 and the Project and the Bonds are subject to the Commission's review and approval requirements. If the Qualified Entity or its Drinking Water System is subject to the jurisdiction of the Commission under I.C. 8-1-2 or any other applicable law, the Commission has reviewed and approved the a3osas 12 Project and the issuance of the Bonds and no additional approvals or consents are required to be obtained from the Commission related thereto. (c) The Qualified Entity has full power and authority to adopt the Authorizing Instrument, enter into this Agreement and issue the Bonds and perform its obligations hereunder and thereunder. (d) By all required action, the Qualified Entity has duly adopted the Authorizing Instrument and authorized the execution and delivery of this Agreement, the Bonds and all other papers delivered in connection herewith. (e) Neither the execution of, nor the consummation of the transaction contemplated by, this Agreement nor the compliance with the terms and conditions of any other paper referred to herein, shall conflict with, result in a breach of or constitute a default under, any indenture, mortgage, lease, agreement or instrument to which the Qualified Entity is a party or by which the Qualified Entity or its property, including the Drinking Water System, is bound or any law, regulation, order, writ, injunction or decree of any court or governmental agency or instrumentality having jurisdiction. (f) There is no litigation pending or, to the knowledge of the Qualified Entity, upon investigation, threatened that (1) challenges or questions the validity or binding effect of this Agreement, the Authorizing Instrument or the Bonds or the authority or ability of the Qualified Entity to execute and deliver this Agreement or the Bonds and perform its obligations hereunder or thereunder or (2) would, if adversely determined, have a significant adverse effect on the ability of the Qualified Entity to meet its obligations under this Agreement, the Authorizing Instrument or the Bonds. (g) The Qualified Entity has not at any time failed to pay when due interest or principal on, and it is not now in default under, any warrant or other evidence of obligation or indebtedness of the Qualified Entity. (h) All information furnished by the Qualified Entity to the State or any of the persons representing the State in connection with the Loan or the Project is accurate and complete in all material respects. (i) The Qualified Entity has taken or will take all proceedings required by law to enable it to issue and sell the Bonds as contemplated by this Agreement. Each of the foregoing representations and warranties will be deemed to have been made by the Qualified Entity as of the date of this Agreement and as of the date of any disbursement of Loan proceeds. Each of the foregoing representations and warranties shall survive the Loan disbursements regardless of any investigation or investigations the State may have undertaken. Section 3.04. Covenants Regarding Assignment. The Qualified Entity acknowledges that the State may direct the Bond Bank to sell or assign the Bonds, and certain of its rights 430848 13 related thereto, as permitted pursuant to Section 5.02 herein. The Qualified Entity covenants and agrees to cooperate with and assist in, at its expense, any such assignment. Within 30 days following a request by the State, the Qualified Entity- covenants and agrees with the State that the Qualified Entity will, at its expense, furnish any information, financial or otherwise, with respect to the Qualified Entity, this Agreement, the Authorizing Instrument and the Bonds and the Drinking Water System as the State reasonably requests in writing to facilitate the sale or assignment of the Bonds. Section 3.05. Nature of Information. All information furnished by the Qualified Entity to the State or any person representing the State in connection with the Loan or the Project may be furnished to any other person the State, in its judgment, deems necessary or desirable in its operation and administration of the Drinking Water SRF Program. Section 3.06. Tax Covenants. The Qualified Entity hereby covenants that it will not take, or cause or permit to be taken by it or by any party under its control, or fail to take or cause to permit to be taken by it or by any party under its control, any action that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Bonds pursuant to Section 103 of the Code. The Qualified Entity further covenants that it will not do any act or thing that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code or "arbitrage bonds" within the meaning of Section 148 of the Code. In furtherance and not in limitation of the foregoing, the Qualified Entity shall take all action necessary and appropriate to comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable to the Qualified Entity or the Bonds, including accounting for and making provision for the payment of any and all amounts that may be required to be paid to the United States of America from time to time pursuant to Section 148 of the Code. Section 3.07. Non-Discrimination Covenant. Pursuant to and with the force and effect set forth in I.C. 22-9-1-10, the Qualified Entity hereby covenants that the Qualified Entity, and its contractor and subcontractor for the Project, shall not discriminate against any employee or applicant for employment, to be employed in the performance of this Agreement, with respect to the hire, tenure, terms, conditions or privileges of employment, or any matter directly or indirectly related to employment, because of race, color, religion, sex, disability, national origin or ancestry. (End of Article III) 430848 14. ARTICLE IV DEFAULTS Section 4.01. Remedies. The State's obligation to make a disbursement under the Loan to the Qualified Entity hereunder may be terminated at the option of the State, without giving any prior notice to the Qualified Entity, in the event: (a) the Qualified Entity fails to undertake or perform in a timely manner any of its agreements, covenants, terms or conditions set forth herein or in any paper entered into or delivered in connection herewith; or (b) any representation or warranty made by the Qualified Entity as set forth herein or in any paper entered into or delivered in connection herewith is materially false or misleading. Any such event shall constitute an event of default. If an event of default occurs, the State without giving any prior notice, may declare the entire outstanding principal amount of the Loan, together with accrued interest thereon, immediately due and payable. Section 4.02. Effect of Default. Failure on the part of the State in any instance or under any circumstance to observe or perform fully any obligation assumed by or imposed upon the State by this Agreement or by law shall not make the State liable in damages to the Qualified Entity or relieve the Qualified Entity from paying any Bond or fully performing any other obligation required of it under this Agreement or the Authorizing Instrument; provided, however, that the Qualified Entity may have and pursue any and all other remedies provided by law for compelling performance by the State of such obligation assumed by or imposed upon the State. The obligations of the State hereunder do not create a debt or a liability of the State under the constitution of the State or a pledge of the faith or credit of the State and do not directly, indirectly or contingently, obligate the State to levy any form of taxation for the payment thereof or to make any appropriation for their payment. Neither the State nor any agent, attorney, member or employee of the State shall in any event be liable for damages, if any, for the nonperformance of any obligation or agreement of any kind whatsoever set forth in this Agreement. Section 4.03. Defaults under other Financial Assistance Agreements. The Qualified Entity and the State agree that any event of default occurring under the Prior Agreement shall constitute an event of default under this Agreement. Similarly, the Qualified Entity and the State agree that any event of default under this Agreement, or under any subsequent financial assistance agreement enter into between the Qualified Entity and the State, shall constitute an event of default under the Prior Agreement and the subsequent financial assistance agreement, if any, as the case may be. (End of Article IV) 430848 15 ARTICLE V MISCELLANEOUS Section 5.01. Citations. Any reference to a part, provision, section or other reference description of a federal or State statute, rule or regulation contained herein shall include any amendments, replacements or supplements to such statutes, rules or regulation as may be made effective from time to time. Section 5.02. Assignment. Neither this Agreement, nor the Loan or the proceeds thereof may be assigned by the Qualified Entity without the prior written consent of the State and any attempt at such an assignment without such consent shall be void. The State may at its option sell or assign all or a portion of its rights and obligations under this Agreement, the Authorizing Instrument, and the Bonds to an agency of the State or to a separate body corporate and politic of the State or to a trustee under trust instrument to which the State or any assignee is a beneficiary or party. The State may at its option assign all yr a portion of its rights under this Agreement to any person. The Qualified Entity hereby consents to any such assignment by the State. This Agreement shall be binding upon and inure to the benefit of any permitted successor and assign. Section 5.03. No Waiver. Neither the failure of the State nor the delay of the State to exercise any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other further exercise of any other right, power or privilege. Section 5.04. Modifications. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. Section 5.05. Entire Agreement. This Agreement contains the entire agreement between the parties hereto and there are no promises, agreements, conditions, undertakings, warranties and representations, either written or oral, expressed or implied between the parties hereto other than as herein set forth or as may be made in the Authorizing Instrument and the other papers delivered in connection herewith. In the event there is a conflict between the terms of this Agreement and the Authorizing Instrument, the terms of this Agreement shall control. It is expressly understood and agreed that except as otherwise provided herein this Agreement represents an integration of any and all prior and contemporaneous promises, agreements, conditions, undertakings, warranties and representations between the parties hereto. This Agreement shall not be deemed to be a merger or integration of the existing terms under the Prior Agreement except as expressly set forth in Section 4.03 herein. Section 5.06. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be executed by the State and the Qualified Entity, and all of which shall be regarded for all purposes as one original and shall constitute one and the same instrument. 430848 16 Section 5.07. Severability of Invalid Provisions. If any one or more of the covenants or agreements provided in this Agreement on the part of the State or the Qualified Entity to be performed shall be deemed by a court of competent jurisdiction to be contrary to law or cause the Bonds to be invalid as determined by a court of competent jurisdiction, then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining covenants and agreements and waived and shall in no way affect the validity of the other provisions of this Agreement. Section 5.08. Notices. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally or sent or transmitted to the appropriate destination as set forth below in the manner provided for herein. Notice to the State shall be given by providing such notice to both the Budget Agency and the Department as follows: State of Indiana Department of Environmental Management 100 North Senate, 12th Floor Post Office Box 6015 Indianapolis, Indiana 46206-6015 Attention: Drinking Water SRF Program Director State of Indiana State Budget Agency 212 State House Indianapolis, Indiana 46204 Attention: Drinking Water SRF Program Representative or at such other address(es) or number(s) and to the attention of such other person(s) as the State may designate by notice to the Qualified Entity. Notices to the Qualified entity shall be addressed to: City of South Bend City Hall City-County Building 227 W. Jefferson Boulevard South Bend, IN 46601-1830 Attention: Controller or at such other address(es) or number(s) and to the attention of such other person(s) as the Qualified Entity may designate by notice to the State. Any notice hereunder shall be deemed to have been served or given as of (a) the date such notice is personally delivered, (b) three (3) Business Days after it is mailed U.S. mail, First Class postage prepaid, (c) one (1) Business Day after it is sent on such terms by Federal Express or similar next-day courier, or (d) the 430848 1'] same day as it is sent by facsimile transmission with telephonic confirmation of receipt by the person to whom it is sent. Section 5.09. Expenses. The Qualified Entity covenants and agrees to pay (a) the fees, costs and expenses in connection with making the Loan, including issuing the Bonds and providing the necessary certificates, documents and opinions required to be delivered therewith; (b) the fees, costs and expenses in connection with making and administering the Loan; (c) the costs and expenses of complying with its covenants made herein; and (d) any and all costs and expenses, including attorneys' fees, incurred by the State in connection with the enforcement of this Agreement, the Authorizing Instrument and the Bonds in the event of the breach by the Qualified Entity of or a default under this Agreement, the Authorizing Instrument or the Bonds. Notwithstanding clause (b) above, the Qualified Entity shall not be obligated to pay any of the fees, costs and expenses in connection with administering the Loan except as follows: (1) the State may request and the Qualified Entity shall promptly pay, an annual administrative fee in connection with the Loan in an amount determined by the State, but not exceeding $1,000; (2) for so long as the State or the Bond Bank is the registered owner of the Bonds, at the direction of the State, the interest rate on the Bonds may be adjusted to lower the interest rate on the Bonds, and the difference between the amount payable as the original rate on the Bonds and the lower rate shall be deemed an additional administrative fee in connection with the Drinking Water SRF Program; and (3) the Qualified Entity shall only be obligated to pay fees, costs and expenses of the State's counsel and financial advisers in connection with making the Loan up to $5,000. Section 5.10. Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Indiana. Section 5.11. Term. This Agreement shall terminate at such time as the Qualified Entity has fully met and discharged all of its obligations hereunder, which term may extend beyond the final payment of the Bonds or provision for the payment of the Bonds pursuant to the Authorizing Instrument. (End of Article V) 430848 1$ IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers or officials, ali as of the date first above written. Attest: CITY OF SOUTH BEND, INDIANA "Qualified Entity" By: Printed: Title: 430848 19 STATE BUDGET AGENCY By: Peggy Boehm, State Budget Director "Budget Agency" Approved: DEPARTMENT OF ADMII~TISTRATION By: Approved as to form and legality: Betty Cockrum, Commissioner ATTORNEY GENERAL OF THE STATE OF INDIANA By:. ~ r to 430848 2,Q ~,~~6.7 0 ~~ 13~~ Cis`; ~t°r4„ ~~i. ...+.. ,itil 1: EXHIBIT A State of Indiana STATE DRINKING WATER REVOLVING LOAN {SRF) PROGRAM 100 North Senate Avenue P. O. Box 6015 Indianapolis, Indiana 46206-6015 (317) 232-8631 REQUEST FOR A DISBURSEMENT The undersigned Authorized Representative of the Qualified Entity named in this Request, on behalf of such Qualified Entity, hereby (i) requests that the State make a Disbursement, or cause a Disbursement to be made, in accordance with this Request and (ii) directs that the State mail, or cause to be mailed, the Disbursement to the Qualified Entity or the Contractor named in this Request. Instructions 1. This Request is applicable only to costs of the Qualified Entity's drinking water project eligible for financing from the State Drinking Water Revolving Loan Fund (the "SRF") 2. Combine multiple bills from a single contractor on one request form. 3. Attach a copy of the claim (a bill, an invoice or a statement) underlying this Request. 4. Complete the required information and please answer all questions. S. Indicate on this Request if the Qualified Entity has paid all or part of the Contractor's claim and is seeking reimbursement. Attach evidence that such payment was made and the date on which it was made. 6. Inquires related to the status of a Disbursement request must be directed to the Qualified Entity. The Qualified Entity can then contact this office for the information. Please contact your contractors about this policy. 7. Requested amounts must be rounded to the nearest whole dollaz. 8. The Request must be typed. 430848 A-1 ~:c~c~ o ~ 199 i M1 .~..~ C:t ~i~isP 4 ~..~ ~,~~4~$. DISBURSEMENT REQUEST INFORMATION Community: Mailing Address: Project No.: CS Request No.:_ Contact Person: Contact Phone No.: ( ) Community's Authorized Representative: Authorized Representative's Phone No.: Description of Work for which claim is being made (service, fees, type of, etc.): contractor ddress Original Loan Amount ................................................................... Total Amount of Previous Disbursements ....................................... Amount of this Request ................................................................. Balance Available after this Disbursement ........................................... amount Requested Is a portion of the claim underlying this Request subject to retainage under I.C. 36-1-12- 14 or a similar law? YES NO If yes the retainage amount is .......................................................... $ Has the Qualified Entity paid the request and seeking reimbursement? YES _ NO The undersigned hereby certifies that this Request is true and correct, that the claim underlying this Request is legally due (and is payable from the SRF) in accordance with the Financial Assistance Agreement with the State. DATE: SIGNATORY SIGNATURE ! ~..__. _.~.~..~..__ ~_____. _...~m__. _ .. _ ° ~~;~;~=y 0 la 1999 ~ ..~ 430848 A-2 ~ -°. "`- {(9 /w } ~ t ~ Y9 i ~ ~ ... u. . .. ~ Y STATE AUTHORIZATION The Department of Environmental Management finds $ of the claim underlying this Request to be eligible SRF Costs to be disbursed as directed below. The Program Representative hereby (i) authorizes Bank One Trust Company, NA, as trustee, to disburse the amount stated in the preceding sentence and (ii) directs that such amount be mailed to: $ the Contractor at the address identified on page 2. the Qualified Entity at the address identified on page 2. DEPARTMENT OF ENVIRONMENTAL PROGRAM REPRESENTATIVE MANAGEMENT By: By: _ Date: Date: Trustee Certification The undersigned, on behalf of Bank One Trust Company, NA, as trustee, hereby certifies that a Disbursement in the amount authorized by the State, together with a completed copy of this Request, was mailed on , 199_ to the party stated under "State Authorization" above. Further, a copy of this completed Request has been mailed to the Qualified Entity and the Department of Environmental Management. Bank One Trust Company, NA, as Trustee Date: By: Authorized Officer F ~',.'.':, 4 1~ 199 k .° r 430848 A-3 ~ ~_ -..._.i ~,.._.._ ~, ,. ~_..,,. .,.,,.R__~, v.. EXHIBIT B [Subject to State's approval, this information is to be supplied by the Department prior to Closing.] The Project is more fully described in, and shall be in accordance with, the Preliminary Engineering Report and the Plans and Specifications approved by the Department. 430848 EXHIBIT C Principal Payment Schedule Date Principal Amount 1/1/2002 $ 88,345 1/1/2003 90,908 1/1/2004 93,544 1/1/2005 96,257 1/1/2006 99,048 1 / 1 /2007 101,920 1!1/2008 104,876 1 / 1 /2009 107,918 1/1/2010 111,047 1 /1 /2011 114,268 1/112012 117,581 1 / 1 /2013 120,991 1 / 1 /2014 124,500 1/1/2015 128,110 1!1!2016 131,826 1 / 1 /2017 135,649 1/1/2018 139,582 1/1/2019 143,630 Total $2,050,000.00 430848 Exhibit C MATURITY SCHEDULE Proposed Principal payable annually, on January 1 in the following years: Year Approximate Principal Amount SBDS02 PXF 180756 2002 $ 88,345 2003 90,908 2004 93,544 2005 96,257 2006 99,048 2007 101,920 2008 104,876 2009 107,918 2010 111,047 2011 114,268 2012 117,581 2013 120,991 2014 124,500 2015 128,110 2016 131,826 2017 135,649 2018 139,582 2019 143,630 ~ - 5q ~ . i COUNTY-CITY BUILDING 227 W. JEFFERSON BOULEVARD SOUTH BEND, INDIANA 46601-1830 PHONE 219/235-9251 Fax 219/235-9171 TDD 219/235-5567 CITY OF SOUTH BEND STEPHEN J. LUECKE~ MAYOR DEPARTMENT OF PUBLIC WORKS LEWIS N. POWELL DIRECTOR OF PUBLIC WORKS August 3, 1999 Mr. Sean Coleman Reply to: Water Works South Bend Common Council 235-5646 4th Floor, County-City Building South Bend, Indiana 46601 RE: Bond Ordinance for x'2,050,000 Water Works Revenue Bonds of 1999 Dear Mr. Coleman: Enclosed for first reading before the South Bend Common Council on August 9, 1999, is the above-referenced Ordinance. The Ordinance provides approval for the second phase of a three- part improvement to the Olive Water Treatment Plant on Olive Street in South Bend, Indiana, which will increase the Olive Water Treatment Plant's total treatment capacity to 12 million gallons of water per day. The project consists of the construction and equipping of a 6,500 square foot slab-on-grade building, six additional GAC units and all associated process piping for the treatment plant. Construction of the building is projected to begin in the spring of 2000. We request that the first reading of this Ordinance be placed on the agenda for the Common Council for Monday, August 9, 1999. Thank you. Sincerely, Jo an i Director enclosure ENGINEERING ENVIRONMENTAL SERVICES CENTRAL SERVICES CARL LITTRELL, P.E. JOHN J. DILLON, PH.D. MATT CHLEBOWSKi 219/235-9251 219/277-8515 219/235-9316 FAx 219/235-9171 FAx 219/277-8980 FAx 219/235-9007 3 ` `-~ ~~ r -~ ~.° '~ ~ I°~: ' a;A s,-;~,, tip. ,~ ' ~.~ __._,-~I P:~, ~ 0 4 1999 -- ._ n_.~._,._._ STREETS SAM HENSLEY 219/235-9244 Fax 219/235-9272 WATER WORKS JOHN F. STANCATI 219/235-9322 FAx 219/235-9728