HomeMy WebLinkAbout2005-009 Water System Improvements
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RESOLUTION NO. r:-y;; (J ~
9-2005
BY THE COUNCIL:
A RESOLUTION AUTHORIZING AND CONFIRMING THE
FINANCING OF WATER SYSTEM IMPROVEMENTS THROUGH THE
STATE OF IDAHO DEPARTMENT OF ENVIRONMENTAL QUALITY
AND IN PARTICULAR AUTHORIZING A PROMISSORY NOTE, LOAN
OFFER, ACCEPTANCE AND CONTRACT AND RELATED
DOCUMENTS WITH THE DEPARTMENT OF ENVIRONMENTAL
QUALITY IN AN AMOUNT UP TO $360,630 TO FINANCE SAID WATER
SYSTEM IMPROVEMENTS, AUTHORIZING A RESERVE FUND AND
AUTHORIZING RELATED MATTERS PROCEEDINGS AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, various City officials have previously determined that it is necessary to
make certain improvements (the "Project") to its water system facilities and related facilities to
provide sufficient capacity to meet applicable standards; and
WHEREAS, the City Public Works Director and City Treasurer have recommended that
the permanent financing of said Project be accomplished by a Promissory Note and a Loan Offer,
Acceptance and Contract with the State ofIdaho, Department of Environmental Quality ("DEQ")
and related documents in an aggregate amount of up to $360,630 (the "Financing Documents");
and
WHEREAS, the authority to enter into the Financing Documents has been judicially
confirmed by the District Court for the Sixth Judicial District of the State ofIdaho on August 22,
2005; and
WHEREAS, on September 14, 2005, the City did enter into a Loan Offer, Acceptance
and Contract for a Drinking Water Treatment Design and Construction with DEQ providing for
the financing of the Project.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE
CITY OF CHUBBUCK, IDAHO:
Section 1. Definitions. The terms defined in this Section, except where the context requires
otherwise, shall have the following meanings:
"City" means the City of Chubbuck, Idaho and its successors.
"Consulting Engineer" means Keller Associates, or any other qualified registered or
licensed professional engineer practicing under the laws of the State of Idaho.
"DEQ" means the State ofIdaho Department of Environmental Quality.
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"Financing Documents" means the documents as defined in the second WHEREAS
clause above.
"Fiscal Year" means the twelve (12) months commencing October 1 of any year and
ending September 30 of the following year or such other fiscal year as may subsequently be
required by state law.
"Gross Income", "Gross Revenues", "Income" or "Revenues" means all income and
revenue derived by the City from any rates, fees, tolls and charges for the services furnished by,
or the use of, the System as the same may at any time exist to serve customers within or outside
the municipal limits, whether resulting from improvements or otherwise.
"Holder" means the registered owner ofthe Note, initially the DEQ.
"Loan" means the loan by DEQ to the City evidenced by the Loan Agreement
"Loan Agreement" means the Loan Offer, Acceptance and Contract for Drinking Water
Treatment Design and Construction between the City and DEQ dated September 14, 2005, as
amended.
"Net Income" or "Net Revenues" means the remaining revenues of the System after
deducting Operation and Maintenance Expenses.
"Note" means the Promissory Note to DEQ evidencing the Loan for the Project.
"Operation and Maintenance Expenses" means all reasonable and necessary current
expenses of the municipality, paid or accrued, for operating, maintaining and repairing the
System, including legal and overhead expenses of the municipality directly related to the
administration of the System, insurance premiums, audits, charges of depository banks and
paying agents, professional services, salaries, administrative expenses, labor, and the cost of
materials and supplies for current operation, but not including depreciation, legal liabilities not
based on contract, the cost of improvements to the System, or charges for the accumulation of
reserves.
"Paying Agent" means the City.
"Prior Obligations" means the City's obligations under its Installment Purchase and
Trust Agreement dated as of April 1, 1995, between the City and First Security Bank of Idaho,
N.A., now Wells Fargo Bank, National Association, as Trustee, for financing of earlier upgrades
and improvements to the System through the issuance of the City's Water Revenue Certificates
of Participation, Series 1995.
"Project" means the water system improvement and construction program financed in
part by the Note and described in the Financing Documents.
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"Reserve Fund" means the "2005 Water System Promissory Note Reserve Fund".
"System" means all of the City's water system, and its water facilities and properties
now owned or hereafter acquired, whether situated within or without the City boundaries.
Section 2. Ratification. All consistent action taken previously by the Council and the
municipal officers directed toward the Project and toward the issuance of its revenue obligations
for that purpose is ratified, approved and confirmed.
Section 3. Authorization of Financing Documents and Sale Thereof. For the purpose of
providing funds to pay costs ofthe Project, the Note in the principal amount of $360,630 shall be
issued and be payable both as to principal and interest, solely from the Net Revenues of the
System, and the City shall pledge irrevocably such Net Revenues to the payment of said Note
and the interest thereon, the proceeds thereof to be used solely for the aforesaid purpose and shall
execute all of the Financing Documents in connection therewith. The issuance of the Note to the
DEQ to evidence the obligations of the City under the Loan Agreement is hereby accepted and
confirmed. The Mayor, Clerk-Treasurer and Public Works Director are hereby authorized to
execute such documents as may be necessary to effect the sale of the Note.
Section 4. Description of Note. The Note shall be dated not later than December 28, 2005, or
the date of closing and delivery of the Note, shall consist of one Note in the denomination of
$360,630 shall bear interest from the date of delivery at a rate of three and one-quarter percent
(3.25%) per annum, and together with equally amortized payments of principal, shall be payable
to the Holder over twenty (20) years as provided in the Note and the Note shall be substantially
in the form set forth in Exhibit "A" attached hereto and by this reference incorporated herein.
Section 5. Payment of Notes; Pledge of Net Revenues.
a) The principal of and interest on the Note are payable in lawful money of the
United States of America to the Holder thereof, without deduction for exchange or
collection charges, whose name and address shall appear on the registration records of the
City (the "Note Register") maintained by the Note Registrar.
b) The Note, upon the surrender thereof at the Office of the City Clerk for the City of
Chubbuck, Idaho, with a written instrument of transfer duly executed by the registered
owner or its duly authorized attorney, may, at the option of the registered owner and at its
expense, be exchanged for serial Notes, in registered form, in the aggregate principal
amount then remaining unpaid, bearing the same interest rate, and payable as to
remaining principal as provided in the original Note and dated as of the year during
which the surrender and exchange is effected.
c) The City hereby pledges the Net Revenues to the punctual payment of the Note,
on a parity with the payment of any qualified additional obligations, and subordinate to
the payment of the Prior Obligations.
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Section 6. Prior Redemption and Prepayment. The Note shall be subject to prepayment upon
the prior written approval ofDEQ or a successor Holder.
Section 7. Note Registration. The Note shall be registered for payment as to both principal and
interest. The City Clerk of the City of Chubbuck, Idaho, is appointed Note registrar (herein the
"Registrar" or "Note Registrar") and shall maintain books for the registration, transfer and
conversion of the Note, and do all things authorized by the Idaho Registered Public Obligations
Act, Chapter 9, Title 57, Idaho Code, as amended. The Registrar shall register or permit to be
transferred or discharged from registration the Note presented for such purpose subject to said
Act and such reasonable regulations as the Registrar may prescribe and after the City is
reimbursed for any tax or governmental charge payable in connection therewith. For the
purposes of said Registered Public Obligations Act, this Resolution shall constitute a "system of
registration" within the meaning, and for all purposes, of said Act.
The Note may be transferred only upon the books for the registration and transfer of
Notes, upon the surrender thereof at the office of the Note Registrar, together with a form of
transfer duly executed by the registered owner or his attorney duly authorized in writing,
substantially in the form of Note set forth in Exhibit "A". Upon the transfer of the Note, there
shall be issued in the name of the transferee or transferees a new fully registered Note or Notes of
any authorized denomination or denominations and of the same maturity and interest rate, and of
the same aggregate principal amount as the surrendered Note. The new Note or Notes shall be
dated as of the year during which the surrender and exchange is effected, and shall bear interest
from the immediately preceding interest payment date to which interest has been paid or duly
provided for.
The Note Registrar shall not be required to exchange or transfer the Note within fifteen
(15) days of an interest payment date or, in the case of any redemption of the Note, within fifteen
(15) days of the redemption date.
Section 8. Ownership of Note. The City and its officers shall treat the person in whose name
the Note is registered as the absolute owner, whether or not such Note shall be overdue. All
payments made as provided in this Resolution shall be valid and effectual to discharge the
liability upon the Note to the extent of the amount so paid.
Section 9. Execution of Note. If their facsimile signatures are to be printed on the Note, the
Mayor and Clerk shall file their manual signatures with the Secretary of State. Without
reasonable delay, the City shall cause the definitive Note to be prepared, executed, and delivered,
which Note may be typewritten, lithographed or printed with engraved or lithographed borders at
the option of Purchaser. The Note shall be signed by the manual or facsimile signature of the
Mayor, which signature shall be attested by the manual or facsimile signature of the Clerk-
Treasurer, and the seal of the City or a facsimile thereof shall be imprinted thereon.
In case any of the officers who shall have signed or countersigned the Note shall cease to
be such officer or officers of the City before the Note so signed or countersigned shall have been
delivered or issued by the City, such Note may nevertheless be delivered and issued and, upon
such delivery and issue, shall be as binding upon the City as though those who signed and
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countersigned the same had continued to be such officers of the City. The Note may also be
signed and countersigned on behalf of the City by such persons as at the actual date of execution
of such note shall be the proper officers of the City although at the original date of such note any
such person shall not have been such officer ofthe City.
Section 10. Special Obligations. Principal of and interest on the Note shall be payable solely
out of the Net Revenues of the System. The Net Revenues of the System are pledged for that
purpose. The Holder may not look to any general or other fund for the payment of Note
principal or interest, except any special funds pledged therefor. The Note shall not constitute an
indebtedness nor a debt within the meaning of any constitutional or statutory provision or
limitation and shall not be considered general obligations of the City. The Note shall constitute
the City's special obligation.
Section 11. Period of Facilities' Usefulness. The facilities to be acquired with Note proceeds
will be useful for at least twenty (20) years.
Section 12. Note Preparation, Execution and Delivery. The Mayor, Clerk and Treasurer are
directed to prepare and execute the Note. Thereafter, the Treasurer shall deliver them to the DEQ
on receipt of the agreed purchase price.
Section 13. Disposition of Note Proceeds. The Note shall evidence the Loan of DEQ for
construction of the Project and any costs of issuance or other costs of the Project.
Section 14. Fiscal Year. For the purpose ofthis Resolution the System shall be operated upon a
fiscal year commencing October 1 in each year and ending on September 30 of the following
year or such other fiscal year as may subsequently be required by state law.
Section 15. Income Fund. A special fund shall be maintained separate and distinct from all
other funds and accounts of the City, which shall be the City's Water System Enterprise Fund, to
be known for purposes of this Resolution as the "Income Fund." So long as any Bonds shall be
outstanding all income and revenues derived from the operation of the System less amounts due
in connection with the Prior Obligations shall be deposited into the Income Fund.
Section 16. Administration of Income Fund. The following payments shall be made from the
Income Fund:
A. Operation and Maintenance Expenses. Firstly, there shall be set aside each month
such reasonable percentage of the Income Fund as the City shall determine to be
reasonable and necessary for the proper operation and maintenance of the System. Any
surplus remaining at the end of the fiscal year and not used for operation and maintenance
purposes shall be transferred back to the Income Fund.
B. Note Fund Payments. Secondly, from any moneys remaining in the Income Fund
there shall be deposited into a separate account known as the "2005 Water System
Promissory Note Fund" (herein the "Note Fund"), the following:
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(I) Commencing on the first day of the month immediately following delivery
of the Note, an amount, in monthly installments, which, with other monies
available therefor, will be equal to at least one-sixth (116) of the principal and
interest to become due on the next principal and interest payment date on the
Note. The monies allocated shall be used solely to pay currently maturing
installments of principal of and interest on the Note.
(2) If serial notes have been substituted for the Note, then
(a) Commencing on the first day of the month immediately following
such substitution, an amount in equal monthly installments which, with
other monies available therefor, will be equal to at least one-sixth (1/6) of
the next installment of interest on the outstanding Note, and on the first of
each and every month thereafter, one-sixth (1/6) of the amount necessary
to pay the next maturing installment of interest on the outstanding Note.
(b) Commencing on the first day of the month immediately following
such substitution, an amount in equal monthly installments which, with
other monies available therefor, will be sufficient to pay the next
semi-annual installment of principal of the outstanding Note, and on the
first of each and every month thereafter, one-sixth (1/6) of the amount
necessary to pay the next maturing installment of principal on the
outstanding Note.
(3) If the City for any reason shall fail to make such monthly deposits, then an
amount equal to the deficiency shall be set apart and deposited in the Note Fund
out of the Net Revenues in the ensuing month or months, which amount shall be
in addition to the regular monthly deposit required during such succeeding month
or months.
C. Debt Service Reserve Fund. There is hereby created a separate account in the
Note Fund known as the "2005 Water System Promissory Note Reserve Fund," (herein
the "Reserve Fund"), which shall be maintained by the Treasurer.
(1) Deposits. Concurrently with the above payments into the Note Fund,
commencing on the first day of January, 2007 and January 1 of each year
thereafter through January 1, 2011, at least $4,932.66 shall be deposited into the
Reserve Fund until an amount not less than $24,663.28 (herein "Minimum
Reserve") has been accumulated. The City may deposit the full amount of the
Minimum Reserve at any time. After the Minimum Reserve has been
accumulated, within thirty (30) days of using any such monies from the Reserve
Fund, an amount shall be deposited from the Income Fund into the Reserve Fund
to the extent needed to maintain said Reserve Fund in an amount not less than the
Minimum Reserve.
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(2) Deficiencies or Withdrawals. Whenever any monies are withdrawn from
the Reserve Fund to pay the principal of or interest on the Note, or if a deficiency
exists in such Reserve Fund, then the Treasurer shall, within thirty (30) days of
using any such monies from the Reserve Fund, deposit from the Income Fund into
the Reserve Fund an amount sufficient to restore the amount withdrawn or the
amount of the deficiency.
(3) Refunding. In the event refunding bonds are ever issued, the amount set
aside into the Reserve Fund to secure the payment of the Note shall be used to
retire the Note.
(4) Investments. Subject to the limitations set forth in the Tax Certificate of
the City with respect to the Note, all monies in the Reserve Fund may be kept in
cash or deposited in institutions permitted by law in an amount in each institution
not greater than the amount insured by any department or agency of the United
States government, or may be invested and reinvested in any legal investment
permitted for City monies maturing not later than the last maturity date of any
outstanding Note. Interest earned on any such investment shall be deposited into
the Note Fund.
D. Payment for Additional Obligations. After making the above payments, any
balance in the Income Fund may be used for the payment of principal and interest on
additional obligations including reasonable reserves therefor. The lien of additional
obligations on Net Revenues shall be on a parity with, or subordinate to, the lien and
pledge of the Note and of the Prior Obligations (and in accordance with their terms). Any
payments in respect of additional parity obligations shall be made concurrently with those
required by this Section.
E. Use of Surplus Revenues. After making the above payments, the remaining Net
Revenues shall be applied for any of the following purposes:
(1) The additional improvement, extension and betterment of the System;
(2) The payment of debt service on other obligations incurred in the
acquisition, construction or improvement of the System;
(3) The redemption or prepayment, in whole or in part of the Note, or
purchase in the open market or prior redemption of any Notes or bonds payable
from Net Revenues at the best reasonable price obtainable;
(4) Any other lawful purpose.
Section 17. General Administration of Funds. The funds and accounts hereof shall be
administered as follows:
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A. Places and Times of Deposits or Transfers of Funds. The above accounts and
funds shall be separately maintained and deposited in one or more bank accounts in a
Federally Insured Bank or Banks. Each account shall be continuously secured to the
extent required by law and shall be irrevocable and not withdrawable by anyone for any
other purpose. Payments shall be made into the proper account on the first day of the
month or year, as the case may be, except when the first day shall be a Sunday or legal
holiday, then payment shall be made on the preceding secular day. At least five (5) days
prior to any principal and interest payment date, monies sufficient to pay interest and
principal then due shall be transferred to the Paying Agent. Nothing in this Resolution
shall prevent the City from establishing one bank account for any of the funds required by
this Resolution.
B. Investment of Monies. Monies in any fund not immediately needed may be
invested as provided by state and applicable federal statutes and regulations, provided
that the City shall take no step or make any investment which would imperil the
exemption ofthe interest on the Note from income taxation under any federal law now in
force or hereafter existing.
Section 18. Lien of the Note. The Note constitutes an irrevocable lien upon the Revenues,
subject to the payment of all necessary and reasonable Operation and Maintenance Expenses and
subject to the lien ofthe Prior Obligations, if any.
Section 19. Additional Obligations. This Resolution shall not prevent the issuance of
additional obligations on a parity with the Note in accordance with the following conditions.
Before any such additional parity obligations are actually issued, it must be determined that:
A. The City is not, and has not been in default of this Resolution during the Fiscal
Year immediately preceding the issuance of such additional obligations, or if the Note has
not been outstanding for a full Fiscal Year, then for the longest period of time the Note
has been outstanding; and
B. A report of the Consulting Engineer shows that Net Revenues of the System
projected for the life of the additional obligations will be at least equal to 125% of the
maximum annual principal and interest requirements on the outstanding obligations
constituting a lien upon Net Revenues and on the obligations proposed to be issued
(excluding reserves) or the Net Revenue derived from the operation of the System for the
fiscal year immediately preceding the date of the ordinance or resolution authorizing the
issuance of any such parity lien obligations shall have been sufficient to pay an amount
representing 125% of the maximum annual principal and interest requirements on the
outstanding Note and any other outstanding parity obligations constituting a lien upon
Net Revenues, and on the obligations proposed to be issued (excluding reserves). As
used in this Section, "maximum annual principal and interest requirements" shall be the
largest amount of principal and interest coming due on the then outstanding Note, any
other outstanding parity obligations and the proposed parity lien obligations during any
subsequent fiscal year.
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C. A written certificate by an independent Consulting Engineer that Net Revenue is
sufficient shall conclusively determine the right of the City to issue additional parity
obligations. The Consulting Engineer may utilize the results of any annual audit to the
extent it covers the applicable period.
D. In determining whether additional parity obligations may be issued, the
Consulting Engineer shall consider any probable increase (but not reduction) in Operation
and Maintenance Expenses.
E. The City may issue obligations having a lien on Net Revenues subordinate to the
lien of the Note.
Section 20. Protective Covenants. The City covenants and agrees with each and every
Holder that:
A. Use of Note Proceeds. The proceeds of the Note shall be used to finance
construction ofthe Project in accordance with this Resolution.
B. Payment of Notes Herein Authorized. The City will pay Note principal and
interest at the place, on the dates, and in the manner specified according to the true intent
and meaning thereof.
C. Use Charges. Rates for services rendered by the System shall be reasonable and
just, taking into account the cost and value of the System, operation and maintenance
expenses, possible delinquencies, proper allowances for depreciation, contingencies, and
the amounts necessary to retire the Note payable from Net Revenues, and the reserves
therefor. There shall be charged against all users, including the State and its subdivisions,
rates and amounts sufficient to produce revenues to pay the annual operation and
maintenance charges, and the annual principal of and interest on the Note and other
obligations payable from Net Revenues, including reserves. No free service shall be
furnished by the City. Any use of the System by the City will be paid for from the City's
general fund at the reasonable value of the use so made. Income so derived from the City
shall be treated in the same manner as any other System income.
D. Levy of Charges. Prior to the delivery of the Note, the City will establish and
levy the required rates and charges. No reduction in any initial rate schedule may be
made unless:
(1) The City has complied with Section 19B for at least two (2) fiscal years
immediately preceding such reduction; and,
(2) The audits for the full two (2) fiscal years immediately preceding such
reduction disclose that the estimated revenues resulting from the proposed rate
schedule will be sufficient to meet the requirements of paragraph C of this Section
20.
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E. Efficient Operation. The City shall make such improvements and repairs to the
System as may be necessary to insure its economical and efficient operation and its
ability to meet demands for service.
F. Records. Separate records will be kept showing complete and corrected entries of
all transactions relating to the System. Such records shall include monthly entries
showing:
(1) The number of customers;
(2) The revenues received; and
(3) A detailed statement of expenses.
G. Right to Inspect. The DEQ, any other Holder, or their duly authorized agents,
shall have the right at all reasonable times to inspect the System, and all records,
accounts, and data relating thereto.
H. Audits. The City agrees that it will, within one hundred twenty (120) days
following the close of each fiscal year, furnish to the Holder an audit made by an
Independent Accountant. Each such audit, in addition to matters thought proper by the
accountant, shall include:
(1) A statement for the fiscal year just closed, of the income and expenditures
of the System, including gross revenues, net revenues, the amount of any capital
expenditures and profit or loss;
(2) A balance sheet as of the end of such fiscal year, including all funds
created by proceedings authorizing obligations payable from System revenues;
(3) The accountant's comment regarding the City's methods of operation and
accounting practice;
(4) A list of the insurance policies in force, setting out the amount of each
policy, the risks covered, the name ofthe insurer, and the expiration date;
(5) A recapitulation of each fund or account created by the various
proceedings showing deposits and withdrawals for said fiscal year. Any Holder
shall have the right to discuss the contents with any person making the audit.
(6) The accountant's statement that to the best of his knowledge the City is in
compliance with the provisions of this Resolution, or if the City is not in
compliance, specifying where and how the City has failed to comply with this
Resolution.
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1. Budgets. The City agrees that it will comply with State budget laws in preparing
annual budgets and in keeping accounts and records. The City will establish an
acceptable method of bookkeeping for the System and the City will prepare an annual
operating budget for the System.
J. Billing Procedure and Discontinuance of Service. All bills shall be sent out on a
regularly established day of each month in advance or after service is rendered. Bills
shall be due within twenty (20) days from date, or such lesser time prescribed by City
resolution. In lieu of monthly billings the City may require by resolution that rates and
charges established by the City shall be paid by the 20th of each month, or such lesser
time prescribed by City resolution. Ifbills are not paid sixty (60) days after such date or
such lesser time prescribed by City resolution, they shall be collected in any lawful
manner, including the denial or discontinuance of service.
K. Use of Note and Reserve Funds. The Note Fund and the Reserve Fund shall be
used solely and only, and said funds are hereby pledged, for the purposes set forth above.
L. Charges and Liens Upon System. The City will pay all taxes and governmental
charges lawfully levied in respect of the System when due. The City will comply with all
valid requirements of any governmental authority relative to the System. It will not
create or permit to be created any lien or charge upon the System or the Revenues except
as permitted herein. The City will satisfy all claims and demands within sixty (60) days
after the same shall accrue which might by law become a lien upon the System or upon
the Revenues unless the validity thereof is being contested in good faith by appropriate
legal proceedings.
M. Construction Contract and Bond. The City has required or will require each
person, firm or corporation with whom it may contract for labor or materials to furnish a
performance and payment bond in the full amount of any contract. Any such contract
will meet the reasonable requirements of the Purchaser as are not inconsistent with state
law.
N. Insurance. Fire and extended coverage insurance on the System will be in such
minimum amounts as are reasonable and prevalent for similar municipalities and systems
in the State of Idaho and under such other terms and conditions as determined with the
assistance of the Project Engineer, provided that such coverage amount shall not be less
than the replacement cost of the system. The City will maintain liability insurance
coverage of not less than $500,000/$1,000,000 with regard to personal injury and not less
than $500,000 with regard to property damage. The City will carry worker's
compensation coverage on all full-time employees in accordance with applicable state
laws.
O. Competing System or Works. The City shall not grant any franchise or license to
a competing System, or permit any person or organization to sell water service within the
City.
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P. Alienating System. The City will not sell, lease, mortgage, pledge, or otherwise
alienate, the System, or any part thereof, except any portion which shall have been
replaced by other property of at least equal value or which shall cease to be necessary for
the efficient operation of the System. In the event of any sale as aforesaid, the proceeds
of such sale shall be distributed as Net Revenues.
Q. Extension of Interest Payments. The City will not extend or be a party to the
extension of the time for paying any claim for interest. Any installment of interest so
extended shall not be entitled in case of default hereunder to the benefit or security of this
Resolution except subject to the prior payment in full of the principal of the Note and
interest which has not been extended.
R. Management of the System. If an "event of default" shall occur or if the Net
Revenues in any fiscal year fail to equal principal, interest and reserves for the Note
payable from Net Revenues, the City shall retain a Consulting Engineer to assist the
management of the System so long as such default continues or the Net Revenues are less
than the amount designated.
S. System Operation and Maintenance. The City has adopted or will adopt adequate
Rules and Regulations for the operation of the System. The City has prepared or will
prepare an Operation and Maintenance Manual for the System and will provide a
summary of the training provided or to be provided to System employees in the operation
and maintenance of the System.
T. Compliance with Loan Agreement. The City shall comply with all of the terms
and provisions of the Loan Agreement and in the event of a conflict between the terms of
this Resolution and the Loan Agreement, the terms of the Loan Agreement shall prevail.
U. Indemnification. So long as DEQ is the Holder of the Note, the City will
indemnify DEQ for any payments made or losses suffered by DEQ on behalf of the City.
Such indemnification shall be payable from Revenues or from any other legally
permissible source.
V. City's Existence. The City will maintain its corporate identity and existence so
long as the Note remains outstanding, unless another political subdivision by operation of
law succeeds to the liabilities and rights of the City, without adversely affecting to any
substantial degree the privileges and rights of any Holder.
Section 21. Non-Arbitrage. The proceeds of the sale of the Note shall not be used directly or
indirectly to acquire any securities or obligations, the acquisition of which would cause the Bond
to be an arbitrage bond within the meaning of Section 148 of the Internal Revenue Code of 1986,
as amended (the "Code"). The City shall also comply with all terms of the Tax Certificate
furnished by the City at closing of the Note and shall take such measures as needed in order to
assure that interest on the Note is excluded from federal income tax under Section 103 of the
Code.
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Section 22. [Reserved.]
Section 23. [Reserved.]
Section 24. Events of Default. It is an "event of default" if:
A. Non-Payment of Principal. Payment of principal of the Note is not made when
due at maturity or upon prior redemption.
B. Non-Payment ofInterest. Payment of interest is not made when due.
C. Incapable to Perform. The City is not capable of fulfilling its obligations
hereunder.
D. Default of any Provision. The City defaults in the punctual performance of its
covenants hereunder for sixty (60) days after written notice shall have been given by the
Holders of25% or more of the outstanding Note.
Section 25. Remedies of Defaults. Upon the happening of any event of default, the Holder or
Holders of not less than 25% in principal amount of the outstanding Notes, or any trustee
therefor, may protect and enforce the rights of any Holder by proper legal or equitable remedy
deemed most effectual, including mandamus, specific performance of any covenant, the
appointment of a receiver (the consent to such appointment being hereby granted), injunctive
relief, or requiring the governing body of the City to act as if it were the trustee of an express
trust, or any combination of such remedies. All proceedings shall be maintained for the equal
benefit of all Holders. Any receiver appointed to protect the rights of the Holders may take
possession and operate and maintain the System in the same manner as the City itself might do.
The failure of any Holder to proceed does not relieve the City or any person of any liability for
failure to perform any duty hereunder. The foregoing rights are in addition to any other right and
the exercise of any right by any Holder shall not be deemed a waiver of any other right.
Section 26. Duties Upon Default. Upon the happening of any event of default, the City will
perform all proper acts to protect and preserve the security created for the prompt payment of the
principal of and interest on the Note(s). The Holder or Holders of not less than 25% in principal
amount of the outstanding Notes, after written demand, may proceed to protect and enforce the
rights provided by this Section.
Section 27. Prior Charge Upon Lower Rates. If any commission or authority lawfully
prescribes a lower schedule of rates than that contemplated by this Resolution, then the payment
of principal and of interest on the Note, and any parity obligations, shall constitute a first and
prior charge on Revenues of the System, subject to the prior lien of any parity obligations issued
in accordance with this Resolution, and also subject to the prior lien ofthe Prior Obligations.
Section 28. Amendment of Resolution. This Resolution may be amended, without receipt
by the City of any additional consideration, but with the written consent of the Holders of
three-fourths (3/4) of the Notes then outstanding (not including Note(s) which may be held for
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the account of the City); but no resolution adopted without the written consent of the Holders of
all outstanding Notes shall have the effect of permitting:
(1) An extension of the maturity ofthe Note; or
(2) A reduction in the principal amount or interest rate of the Note(s); or
(3) The creation of a lien upon revenues ranking prior to the lien or pledge created by
this Resolution; or
(4) A reduction of the principal amount of Notes required for consent to such
amendatory resolution; or
(5) The establishment of priorities as between Notes issued and outstanding under the
provisions of this Resolution; or
(6) The modification of or otherwise affecting the rights of the Holders ofless than all
ofthe outstanding Notes.
Section 29. Resolution Irrepealable. After the Note is issued, this Resolution shall be
irrepealable until the principal of and interest on all outstanding Notes has been paid in full.
Section 30. Severability Clause. The invalidity or unenforceability of any provision of this
Resolution shall not affect the remaining provisions.
Section 31. Effective Date. This Resolution shall be in full force and effect from and after its
passage and approval.
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PASSED by the City Council of the City of Chubbuck, Idaho, this 20th day of
December, 2005.
APPROVED by the Mayor of the City of Chubbuck, Idaho, this 20th day of December,
2005.
~)~t
AYOR
::TE~ ~
CITY CLERK
(SEAL)
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EXHIBIT "A" TO RESOLUTION
FORM OF PROMISSORY NOTE
DEQ Loan #DW-9926
PROMISSORY NOTE
DRINKING WATER LOAN ACCOUNT
This Promissory Note is executed in conformance with and pursuant to the Drinking
Water Treatment Loan Contract entered into between the City of Chubbuck and the State of
Idaho, Department of Environmental Quality, (herein called the "State") on September 14, 2005
which is attached as Appendix A; the Record of Disbursements prepared by the State dated
December 28,2005 which is attached as Appendix B; and the Judicial Confirmation Findings of
Fact, Conclusions of Law and Judgment which is attached as Appendix C. Appendices A, Band
C are hereby incorporated by reference.
For value received, the City of Chubbuck (herein called the "Borrower") promises to pay
to the State the principal amount of three hundred sixty thousand six hundred thirty dollars
($360,630), plus interest on the unpaid balance at the rate of three and one-quarter percent
(3.25%) per annum. The principal and interest of this note shall be repaid in accordance with the
Loan Repayment Schedule, which is attached as Appendix D and hereby incorporated by
reference. The Borrower has authorized this Note by its Resolution No. 9-2005 adopted on
December 20, 2005 (the "Resolution"). In addition, the Borrower pledges revenue and income of
the Borrower's drinking water treatment facilities, whether collected or uncollected, in an
amount sufficient to repay all principal and interest and pledges to maintain a reserve account
equal to twenty four thousand six hundred sixty-three and 28/100ths dollars ($24,663.28) of
principal and interest, subordinate to the Prior Obligations as defined in the Resolution. The
reserve account may be established over a five-year period with a minimum of twenty percent
(20%) put in the account each year.
Every payment made on any indebtedness evidenced by this note shall be applied first to
interest computed to the effective date of the payment and then to principal. Prepayments of
scheduled installments, or any portion thereof, may be made only with prior written permission
of the State. Refunds and extra payments, after payment of interest, will be applied to the
installments last to become due under this note and shall not affect the obligation of the
Borrower to pay the remaining installments as scheduled herein.
If the State at any time assigns this note and insures the payment thereof, the Borrower
shall continue to make payments to the State as collection agent for the holder. No assignment
of this note shall be effective unless the Borrower is notified in writing of the name and address
of the assignee. The Borrower shall thereupon duly note in its records the occurrence of such
assignment, together with the name and address of the assignee.
Any amount advanced or expended by the State for the collection hereof or to preserve or
protect any security hereto, or otherwise under the terms of any security or other instrument
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