Gilmore & Bell, P

(PUBLISHED IN THE LAWRENCE DAILY JOURNAL-WORLD ON ______________, 2005)

ORDINANCE NO. 7909

AN ORDINANCE AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF $_________ PRINCIPAL AMOUNT OF WATER AND SEWAGE SYSTEM REFUNDING AND IMPROVEMENT REVENUE BONDS, SERIES 2005, OF THE CITY OF LAWRENCE, KANSAS; MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH.

WHEREAS, the City is a city of the first class, duly created, organized and existing under the Constitution and laws of the State; and

WHEREAS, the City is authorized under the provisions of the Act, to issue and sell revenue bonds for the purpose of paying all or part of the cost of the acquisition, construction, reconstruction, alteration, repair, improvement, extension or enlargement of the System, provided that the principal of and interest on such revenue bonds shall be payable solely from the Net Revenues derived by the City from the operation of the System; and

WHEREAS, the governing body of the City has pursuant to Resolution No. 6586 declared its intention under the Act to acquire, construct, reconstruct, alter, repair, improve, extend or enlarge the System (the "Project") at an estimated cost of $ 17,500,000, and to issue water and sewage system revenue bonds in an amount of not to exceed $21,000,000; notice of such intention was published one time in the official newspaper of the City and no sufficient written protest thereto was filed with the Clerk within fifteen (15) days after said publication date all as set forth in the Act; and

WHEREAS, none of such revenue bonds so authorized have heretofore been issued and the City proposes to issue $_________ of the revenue bonds so authorized to pay the costs of the Project and financing costs; and

WHEREAS, the governing body of the City has caused plans and specifications for the Project and an estimate of the cost thereof to be made by the Consulting Engineer, which have previously been accepted and approved and placed on file in the office of the Clerk; and

WHEREAS, the City heretofore issued and has Outstanding the Refunded Bonds and is authorized by K.S.A. 10-116a to issue refunding revenue bonds of the City for the purpose of refunding the Refunded Bonds; and

WHEREAS, in order to achieve interest cost savings through early redemption of the Refunded Bonds, to reduce debt service requirements of the City for certain years, to release the Issuer from certain burdensome covenants and restrictions relating to the Refunded Bonds, to restructure the debt payments on the Refunded Bonds and to provide an orderly plan of finance for the City, it has become desirable and in the best interest of the City and the System to refund the Refunded Bonds; and

WHEREAS, the Issuer does not have Outstanding any System Indebtedness other than the Refunded Bonds and the KDHE Loans.

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF LAWRENCE, KANSAS, AS FOLLOWS:

Section 1. Definitions of Words and Terms. In addition to words and terms defined elsewhere herein, the following words and terms in this Ordinance shall have the meanings hereinafter set forth. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including public bodies, as well as natural persons.

"Act" means the Constitution and statutes of the State including K.S.A. 10-101 to 10-125, inclusive, (specifically including K.S.A. 10-116a), K.S.A. 10-620 et seq. and K.S.A. 10-1201 et seq., all as amended and supplemented from time to time.

"Additional Bonds" means any bonds secured by the Revenues hereafter issued pursuant to the Bond Resolution.

"Additional Obligations" means the KDHE Loans and any leases or other obligations of the Issuer payable from the Revenues, other than the Bonds.

"Bond Resolution" means the resolution to be adopted by the governing body of the City prescribing the terms and details of the Series 2005 Bonds and making covenants with respect thereto.

"Bonds" means the Series 2005 Bonds and any Additional Bonds.

"City" means the City of Lawrence, Kansas.

"Clerk" means the duly appointed and acting Clerk of the Issuer or, in the Clerk's absence, the duly appointed Deputy Clerk or Acting Clerk.

"Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations proposed or promulgated thereunder of the United States Department of the Treasury.

"Expenses" means all reasonable and necessary expenses of operation, maintenance and repair of the System and keeping the System in good repair and working order (other than interest paid on System Indebtedness and depreciation and amortization charges during the period of determination), determined in accordance with generally accepted accounting principles, including without limiting the generality of the foregoing, current maintenance charges, expenses of reasonable upkeep and repairs, salaries, wages, employee’s health, hospitalization, pension and retirement benefits, costs of materials and supplies, paying agent fees and expenses, annual audits, periodic Consultant's reports, properly allocated share of charges for insurance, the cost of purchased water, gas and power, if any, for System operation, obligations (other than for borrowed money or for rents payable under capital leases) incurred in the ordinary course of business, liabilities incurred by endorsement for collection or deposit of checks or drafts received in the ordinary course of business, short-term obligations incurred and payable within a particular Fiscal Year, other obligations or indebtedness incurred for the purpose of leasing (pursuant to a true or operating lease) equipment, fixtures, inventory or other personal property, and all other expenses incident to the operation of the System, but shall exclude all general administrative expenses of the City not related to the operation of the System and transfers into the Debt Service Reserve Account and Depreciation and Emergency Account provided for in the Bond Resolution.

"Fiscal Year means the twelve month period ending on December 31.

"KDHE Loans" means jointly (a) the Loan Agreement between the Kansas Department of Health and Environment, acting on behalf of the State of Kansas (“KDHE”), and the City, effective as of November 29, 1999, as amended by a First Amendment to the Loan Agreement between KDHE and the City, effective as of August 11, 2000, (b) the Loan Agreement between KDHE and the City, effective as of July 18, 2001 and (c) the Loan Agreement between KDHE and the City, effective as of March 11, 2002.

"Mayor" means the duly elected and acting Mayor or, in the Mayor's absence, the duly appointed and/or elected Vice Mayor or Acting Mayor of the City.

"Net Revenues" means, for the period of determination, all Revenues less all Expenses.

"Ordinance" means this Ordinance authorizing the issuance of the Bonds.

"Parity Bonds" means the Series 2005 Bonds, and any Additional Bonds hereafter issued pursuant to the Bond Resolution and standing on a parity and equality with the Series 2005 Bonds with respect to the lien on the Net Revenues.

"Parity Obligations" means any Additional Obligations hereafter issued or incurred pursuant to the Bond Resolution and standing on a parity and equality with the Series 2005 Bonds with respect to the lien on the Net Revenues.

"Parity Resolution" means the Bond Resolution and the ordinances and/or resolutions under which any Additional Bonds which constitute Parity Bonds are hereafter issued.

"Project" means the acquisition, construction, reconstruction, alterations, repair, improvements, extensions or enlargements of the System described in Resolution No. 6586 of the City and referred to in the Preamble to this Ordinance.

"Refunded Bonds" means jointly (a) the Series 1996 Bonds maturing in the years 2005 to 2015, inclusive, in the aggregate principal amount of $4,170,000; and (b) the Series 1997 Bonds maturing in the years 2005 to 2016, inclusive, in the aggregate principal amount of $4,765,000.

"Refunded Bonds Resolution" means each ordinance and resolution which authorized the Refunded Bonds.

"Revenue Fund" means the Water and Sewage System Revenue Fund referred to in the Bond Resolution.

"Revenues" means all income and revenues derived and collected by the City from the operation and ownership of the System, including investment and rental income, net proceeds from business interruption insurance and any amounts deposited in escrow in connection with the acquisition, construction, remodeling, renovation and equipping of facilities to be applied during the period of determination to pay interest on System Indebtedness, but excluding any profits or losses on the early extinguishment of debt or on the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets.

"Series 2005 Bonds" means the Issuer's Water and Sewage System Refunding and Improvement Revenue Bonds, Series 2005, authorized by this Ordinance.

"Series 1996 Bonds" means the Issuer's Water and Sewage System Revenue Bonds, Series 1996, dated July 1, 1996.

"Series 1997 Bonds" means the Issuer's Water and Sewage System Revenue Bonds, Series 1997, dated July 1, 1996.

"Series 1996 Supplemental Indenture" means the Fourth Supplemental Indenture of Trust between the City and The Trust Company of Kansas, which authorized the Series 1996 Bonds.

"Series 1997 Supplemental Indenture" means the Fifth Supplemental Indenture of Trust between the City and The Trust Company of Kansas, which authorized the Series 1997 Bonds.

"State" means the State of Kansas.

"System" means the entire combined waterworks plant and system and sewerage plant and system owned and operated by the City for the production, storage, treatment and distribution of water, and for the collection, treatment and disposal of sewage, to serve the needs of the City and its inhabitants and others, including all appurtenances and facilities connected therewith or relating thereto, together with all extensions, improvements, additions and enlargements thereto hereafter made or acquired by the City.

"System Indebtedness" means collectively all Bonds and all Additional Obligations.

Section 2. Authorization of the Series 2005 Bonds. There shall be issued and are hereby authorized and directed to be issued the Water and Sewage System Refunding and Improvement Revenue Bonds, Series 2005, of the City in the aggregate principal amount of $_________ for the purpose of providing funds to: (a) pay the costs of the Project; (b) provide a portion of the funds to refund the Refunded Bonds; and (c) pay costs of issuance of the Series 2005 Bonds.

Section 3. Security for the Series 2005 Bonds. The Series 2005 Bonds shall be special obligations of the City payable solely from, and secured as to the payment of principal and interest by a pledge of, the Net Revenues, and the City hereby pledges said Net Revenues to the payment of the principal of and interest on the Series 2005 Bonds. The Series 2005 Bonds shall not be or constitute a general obligation of the City, nor shall they constitute an indebtedness of the City within the meaning of any constitutional, statutory or charter provision, limitation or restriction, and the taxing power of the City is not pledged to the payment of the Series 2005 Bonds, either as to principal or interest.

The covenants and agreements of the City contained herein and in the Series 2005 Bonds shall be for the equal benefit, protection and security of the legal owners of any or all of the Series 2005 Bonds, all of which Series 2005 Bonds shall be of equal rank and without preference or priority of one Bond over any other Bond in the application of the funds herein pledged to the payment of the principal of and the interest on the Series 2005 Bonds, or otherwise, except as to rate of interest, date of maturity and right of prior redemption as provided in this Ordinance. The Series 2005 Bonds shall stand on a parity and be equally and ratably secured with respect to the payment of principal and interest from the Net Revenues with any Parity Bonds. The Series 2005 Bonds shall not have any priority with respect to the payment of principal or interest from said Net Revenues or otherwise over the Parity Bonds and Parity Obligations; and the Parity Bonds and Parity Obligations shall not have any priority with respect to the payment of principal or interest from said Net Revenues or otherwise over the Series 2005 Bonds.

Section 4. Terms, Details and Conditions of the Series 2005 Bonds. The Series 2005 Bonds shall be dated and bear interest, shall mature and be payable at such times, shall be in such forms, shall be subject to redemption and payment prior to the maturity thereof, and shall be issued and delivered in the manner prescribed and subject to the provisions, covenants and agreements set forth in the Bond Resolution.

Section 5. Rate Covenant. The City will fix, establish, maintain and collect such rates, fees and charges for the use and services furnished by or through the System, including all repairs, alterations, extensions, reconstructions, enlargements or improvements thereto hereafter constructed or acquired by the City, as will produce Revenues sufficient to (a) pay Expenses; (b) pay the principal of and interest on the Bonds as and when the same become due; and (c) provide reasonable and adequate reserves for the payment of the Parity Bonds and the interest thereon and for the protection and benefit of the System as provided in this Ordinance and the Bond Resolution. The Bond Resolution may establish requirements in excess of the requirements set forth herein.

Section 6. Tax Covenants. The City covenants and agrees that (a) it will comply with all applicable provisions of the Code, including Code § 103 and 141 through 150, necessary to maintain the exclusion from federal gross income of the interest on the Series 2005 Bonds; and (b) it will not use or permit the use of any proceeds of Series 2005 Bonds or any other funds of the City, nor take or permit any other action, or fail to take any action, which would adversely affect the exclusion from federal gross income of the interest on the Series 2005 Bonds. The City will also adopt such other ordinances or resolutions and take such other actions as may be necessary to comply with the Code and with other applicable future law, in order to ensure that the interest on the Series 2005 Bonds will remain excluded from federal gross income, to the extent any such actions can be taken by the City.

Section 7. Further Authority. The Mayor, Clerk and other City officials are hereby further authorized and directed to execute any and all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of the Ordinance to make alterations, changes or additions in the foregoing agreements, statements, instruments and other documents herein approved, authorized and confirmed which they may approve and the execution or taking of such action shall be conclusive evidence of such necessity or advisability.

Section 8. Governing Law. This Ordinance and the Series 2005 Bonds shall be governed exclusively by and construed in accordance with the applicable laws of the State.

Section 9. Effective Date. This Ordinance shall take effect and be in full force from and after its passage by the governing body of the City and publication in the official City newspaper.

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PASSED by the governing body of the City on July 26, 2005 and signed by the Mayor.

(SEAL)

Mayor

ATTEST:

Clerk

[APPROVED AS TO FORM ONLY.

City Attorney]

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CERTIFICATE

I hereby certify that the foregoing is a true and correct copy of the original Ordinance No. 7909; that said Ordinance was passed on July 26, 2005, and that it was published in The Lawrence Daily Journal-World on __________, 2005.

DATED: .

Clerk

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