Water Revenue Capital Loan NotesTHE CITY OF
DUB E
Masterpiece on the Mississippi
MEMORANDUM
September 25, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Procedure to Complete Action on Issuance of $1,037,000 Water Revenue
Capital Loan Notes (Drinking Water State Revolving Fund Loan)
Finance Director Ken TeKippe is recommending completion of the procedures to
complete the action required on the Water Revenue Capital Loan Notes in the amount
of $1,037,000 from the Iowa Drinking Water State Revolving Loan Fund Program. The
loan funds will be used for the rehabilitation of the walls, floors and concrete covers of
two clear well reservoirs at Eagle Point Water Plant. The City Council approved
applying for the loan at the February 20, 2007 meeting.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
/.,
~~ ~ /~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Ken TeKippe, Finance Director
THE CITY OF
DuB E
~-~-~
MEMORANDUM
TO: Michael C. Van Milligen, City Manager ~--~
V~ ~'{~
FROM: Kenneth J. TeKippe, Finance Director ~-
SUBJECT: Procedure to Complete Action on Issuance of $1,037,000 Water Revenue
Capital Loan Notes (Drinking Water State Revolving Fund Loan)
DATE: September 20, 2007
The purpose of this memorandum is to provide suggested proceedings to complete
action required on the Water Revenue Capital Loan Notes from the Iowa Drinking Water
State Revolving Fund Program (DWSRF).
The loan funds will be used for the rehabilitation of the walls, floors and concrete covers
of two clear well reservoirs at Eagle Point Water Plant. The City Council approved
applying for the DWSRF loan at the February 20, 2007 meeting. The public hearing for
the loan was held at the August 6, 2007 meeting.
The resolution approves and authorizes the form of Loan and Disbursement Agreement
and authorizes the issuance of the Note to the Iowa Finance authority. The resolution
also incorporates by reference the form of the Tax Exemption Certificate and Loan and
Disbursement Agreement, copies of which are on file in the office of the City Clerk. The
Tax Exemption Certificate sets out in detail a number of facts, promises and obligations
which must be met and agreed to by the City in order to maintain this Note as tax
exempt. The Loan and Disbursement Agreement also sets forth a number of covenants
and agreements on the part of the City with respect to the repayment on the Loan.
This is the final City Council action required on Water Revenue Capital Loan Note. A
letter from Attorney William Noth detailing information on the loan is enclosed.
KT/jg
Enclosures
cc: Barry Lindahl, City Attorney
Jenny Larson, Budget Director
Jeanne Schneider, City Clerk
AHLERS COON~Y, P.C.
100 COURT AVENUE. SUITE 600
DES MOINES. IOWA 50309-2231
PHONE: 515-243-7611
FAX: 515-243-2149
WWW.AHLERSLAW.COM
WILLIAM J. NOTH
wnoth@ahlerslaw.com
September 11, 2007
Mr. Ken TeKippe
Finance Officer
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001-4864
RE: $1,037,000 Water Revenue Capital Loan Notes
(Drinking Water State Revolving Fund Loan)
Dear Mr. TeKippe:
Direct Dial:
(515) 246-0332
With this letter I am enclosing a resolution approving and authorizing the form of
Loan and Disbursement Agreement and authorizing the issuance of the above Note to the
Iowa Finance Authority (the "Authority"). The resolution also incorporates by reference
the form of the Tax Exemption Certificate and Loan and Disbursement Agreement,
copies of which are enclosed for filing in your office. The Tax Exemption Certificate sets
out in detail a number of facts, promises and obligations which must be met and agreed to
by the City in order to maintain this Note as tax exempt. The Loan and Disbursement
Agreement also sets forth a number of covenants and agreements on the part of the City
with respect to the repayment of the Loan.
Extra copies of the proceedings are enclosed to be completed as the original and
certified back to our office.
I am also enclosing the final closing certificates. The Transcript Certificate can be
completed and dated as soon as final action has been taken. The Delivery Certificate and
the Tax Exemption Certificate should be executed but left undated. Similarly, all copies
of the Loan and Disbursement Agreement should be signed and sealed but left undated.
The dates will be added pursuant to authorization from the City at the time of final
closing and delivery of the Note to the Authority. Please return these certificates and all
WISHARD & BAILY - 1888; GUERNSEY & GAILY - 1693; GAILY & STIPP - 1901: STIPP, PERRY. BANNISTER & STARZINGER - 1914; BANNISTER. CARPENTER,
AHLERS & GOONEY - 1950; AHLERS, GOONEY, DORWEILER, ALLBEE, HAYNIE & SMITH - 1974: AHLERS, GOONEY. DORWEILER, HAYNIE, SMITH &ALLBEE. P.C. - 1990
September 11, 2007
Page 2
copies of the Agreement to me for holding and review before the closing arrangements
are made.
An original form of Note R-1 is enclosed as well. The Note should be manually
signed by the Mayor and City Clerk on the lines indicated on page 3, the seal of the City
should be impressed as indicated and the City Clerk should manually execute as the
Registrar where indicated. The date of authentication and date of delivery are not known
at this time and should be left blank; both dates will be inserted as of the actual closing
date of the Loan. The completed Note also should be returned to us for holding prior to
closing. A highlighted copy of the Note is enclosed to illustrate the various spaces where
a signature or seal is needed.
The Tax Exemption Certificate is an important document and contains important
information concerning the calculated yield on the Notes and a number of covenants and
obligations on the part of the City. This certificate should be retained as a part of your
permanent records. I will not attempt to summarize all of the matters which are included
in this certificate but I do want to point out some important ones.
Tax exemption is based in part upon the fact that the use of the facilities to be
acquired by the City with the proceeds of the Loan will be for the benefit of the public
and will not be used in the private trade or business of any business or non-tax-exempt
entity. The properties acquired with the proceeds must not be sold or diverted to any
private or nonpublic use unless the significance of that action is reviewed by bond
counsel.
We understand that the proceeds of the loan will be used for the purpose of paying
costs of construction of certain improvements and extensions to the Municipal Water
Utility of the City. All of the financed facilities are expected to be owned by the City and
used by the public generally, including commercial and industrial users. We understand
that there are no contractual arrangements or agreements of any sort between the City and
any commercial or industrial user of the municipal utility with respect to rates or use of
any part of the Utility. We recognize that larger customers of the Utility may be subject
to charges or rates that are different from the current residential charges, depending on the
volume of the water they purchase. However, any such charges must be imposed by
virtue of City ordinances and apply to all entities meeting the standards set forth therein.
No other charges or payments should be imposed or paid to the City by any commercial
or industrial user for water services or Project-related construction and acquisition
activities beyond those mandated by ordinance for certain classes of users. These
September 11, 2007
Page 3
understandings are reflected in the Tax Exemption Certificate, so please let me know
immediately if our understandings are not correct in any respect.
In addition, the Tax Exemption Certificate sets forth the best knowledge and belief
which the City has as of today concerning the timely expenditure of the proceeds as the
City reasonably expects expenditures to occur. If for any reason the City finds it will be
prevented from expending the proceeds fully within three years, that matter should be
referred to us.
This Note also is issued under the expectation that the City will be exempt from
the requirement to rebate arbitrage earnings to the United States Government since you
intend to spend the proceeds of the Note for construction purposes within two (2) years of
issuance and meet the other requirements of the two-year expenditure exemption from the
rebate regulations.
There are a number of other general promises and commitments by the City to take
or refrain from action, which are necessary to maintain the tax exemption of this Note.
You should recognize that these promises and commitments are required of the City on an
ongoing basis and that the possibility of some additional future action does exist.
Also enclosed is IRS Form 8038-G -- Information Return for Tax Exempt
Governmental Bond Issues. Please fill in No. 2 under Part I, sign, do not date and return
to our office for completion. We will send you a completed copy for your file at closing.
If any questions arise, please don't hesitate to call.
Yours very truly,
William J. Noth
WJN:dc
encl.
cc: Barry Lindahl (w/encl.)
Jeanne Schneider (w/originals) DCORNELL\553081.1\WP\1042279
or~~~r~
~~
(This Notice to e posted)
NOTICE AND CALL OF PUBLIC MEETING
Governmental Body: The City Council of Dubuque, Iowa.
Date of Meeting: O c t o b e r l , 2007
Time of Meeting: 5 ' 3 0 o'clock P .M.
Place of Meeting: Historic Federal Building, 350 West 6th Street, Dubuque,
Iowa.
PUBLIC NOTICE IS HEREBY GIVEN that the above mentioned governmental
body will meet at the date, time and place above set out. The tentative agenda for said
meeting is as follows:
$1,037,000 Water Revenue Capital Loan Notes, Series 2007.
Approve form of Tax Exemption Certificate.
Resolution approving and authorizing a form of Loan and Disbursement
Agreement by and between the City of Dubuque, Iowa Finance Authority,
Iowa Department of Natural Resources and Wells Fargo Bank, N.A. and
authorizing and providing for the issuance and securing the payment of
$1,037,000 Water Revenue Capital Loan Notes, Series 2007, of the City of
Dubuque, Iowa, under the provisions of the Code of Iowa, and providing
for a method of payment of said Notes.
Such additional matters as are set forth on the additional
hereto.
9
(number)
page(s) attached
This notice is given at the direction of the Mayor pursuant to Chapter 21, Code of
Iowa, and the local rules of said governmental body.
.r ~^ ~,
/,~' i ~C
ity Clerk, Dubuque, Iowa
October 2 ,2007
The City Council of Dubuque, Iowa, met in R e g u 1 a r session, in the
Historic Federal Building, 350 West 6th Street, Dubuque, Iowa, at 6:30 o'clock
P .M., on the above date. There were present Mayor
Roy n . Buo1 , in the chair, and the following named Council
Members:
Karla Braig, Patricia Cline, Joyce
Connors, Ric Jones, Kevin Lynch, Ann Michalski
Absent: None
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Council Member Patricia c 1 i n e moved that the form of Tax
Exemption Certificate and Loan and Disbursement Agreement be placed on file and
approved. Council Member Karla Braig seconded the motion and the
roll being called thereon, the vote was as follows:
AYES: Braig, Buol, Cline, Connors
Jones, Lynch, Michalski
NAYS: None
Council Member Patricia Cline introduced the following
Resolution entitled "A RESOLUTION APPROVING AND AUTHORIZING A FORM
OF LOAN AND DISBURSEMENT AGREEMENT BY AND BETWEEN THE CITY
OF DUBUQUE, IOWA FINANCE AUTHORITY, IOWA DEPARTMENT OF
NATURAL RESOURCES AND WELLS FARGO BANK, N.A., AND AUTHORIZING
AND PROVIDING FOR THE ISSUANCE AND SECURING THE PAYMENT OF
$1,037,000 WATER REVENUE CAPITAL LOAN NOTES, SERIES 2007, OF THE
CITY OF DUBUQUE, IOWA, UNDER THE PROVISIONS OF THE CODE OF IOWA,
AND PROVIDING FOR A METHOD OF PAYMENT OF SAID NOTES", and moved
its adoption. Council Member Ka r 1 a Braig seconded the motion to
adopt. The roll was called and the vote was:
AYES: Braig, Buol, Cline, Connors,
Jones, Lynch, Michalski
NAYS: None
Whereupon the Mayor declared the following Resolution duly adopted:
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Resolution No. 490-07
A RESOLUTION APPROVING AND AUTHORIZING A FORM OF
LOAN AND DISBURSEMENT AGREEMENT BY AND BETWEEN
THE CITY OF DUBUQUE, IOWA FINANCE AUTHORITY, IOWA
DEPARTMENT OF NATURAL RESOURCES AND WELLS FARGO
BANK, N.A., AND AUTHORIZING AND PROVIDING FOR THE
ISSUANCE AND SECURING THE PAYMENT OF $1,037,000 WATER
REVENUE CAPITAL LOAN NOTES, SERIES 2007, OF THE CITY OF
DUBUQUE, IOWA, UNDER THE PROVISIONS OF THE CODE OF
IOWA, AND PROVIDING FOR A METHOD OF PAYMENT OF SAID
NOTES
WHEREAS, the City Council of the City of Dubuque, Iowa, sometimes hereinafter
referred to as the "Issuer", has heretofore established charges, rates and rentals for
services which are and will continue to be collected as system revenues of the municipal
water system, sometimes hereinafter referred to as the "System", and said revenues have
not been pledged and are available for the payment of Water Revenue Capital Loan
Notes, Series 2007, subject to the following premises; and
WHEREAS, Issuer proposes to issue its Water Revenue Capital Loan Notes,
Series 2007, to the extent of $1,037,000, for the purpose of defraying the costs of the
Project as set forth in Section 1 of this Resolution; and, it is deemed necessary and
advisable and in the best interests of the City that a form of Loan and Disbursement
Agreement by and between the City, the Iowa Finance Authority, the Iowa Department of
Natural Resources and Wells Fargo Bank, N.A., be approved and authorized; and
WHEREAS, the notice of intention of Issuer to take action for the issuance of
$1,037,000 Water Revenue Capital Loan Notes, Series 2007, has heretofore been duly
published and no objections to such proposed action have been filed.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF DUBUQUE, IN THE COUNTY OF DUBUQUE, STATE OF IOWA:
Section 1. Definitions. The following terms shall have the following meanings
in this Resolution unless the text expressly or by necessary implication requires
otherwise:
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• "Additional Bonds" shall mean any water revenue bonds or notes or
other obligations issued on a parity with the Notes in accordance with the
provisions of Section 21 hereof.
• "Agreement" shall mean a Loan and Disbursement Agreement dated
as of the Closing between and among the City, the Original Purchaser, the
Department and the Trustee relating to the Loan made to the City under the
Program;
• "City Clerk" shall mean the City Clerk or such other officer of the
successor Governing Body as shall be charged with substantially the same duties
and responsibilities;
• "Closing" shall mean the date of delivery of the Note to the Original
Purchaser and the funding of the Loan by the Trustee;
• "Corporate Seal" shall mean the official seal of Issuer adopted by the
Governing Body;
• "Department" shall mean the Iowa Department of Natural Resources;
• "Fiscal Year" shall mean the twelve months' period beginning on
July 1 of each year and ending on the last day of June of the following year, or any
other consecutive twelve-month period adopted by the Governing Body or by law
as the official accounting period of the System; provided, that the requirements of
a fiscal year as expressed in this Resolution shall exclude any payment of principal
or interest falling due on the first day of the fiscal year and include any payment of
principal or interest falling due on the first day of the succeeding fiscal year;
• "Governing Body" shall mean the Council of the City, or its
successor in function with respect to the operation and control of the System;
• "Independent Auditor" shall mean an independent firm of certified
public accountants or the Auditor of State;
• "Issuer" and "City" shall mean the City of Dubuque, Iowa;
• "Loan" shall mean the principal amount allocated by the Department
to the City under the Program, equal in amount to the principal amount of the
Notes;
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• "Net Revenues" shall mean gross earnings of the System after
deduction of Current Expenses; "Current Expenses" shall mean and include the
reasonable and necessary cost of operating, maintaining, repairing and insuring the
System, including purchases at wholesale, if any, salaries, wages, and costs of
materials and supplies, but excluding depreciation and principal of and interest on
the Notes and any Parity Obligations or payments to the various funds established
herein; capital costs, depreciation and interest or principal payments are not
System expenses;
Loan Notes, Series 2007, authorized to be issued by this Resolution;
• "Original Purchaser" shall mean the Iowa Finance Authority, as the
purchaser of the Notes from Issuer at the time of their original issuance;
• "Parity Obligations" shall mean notes or bonds payable solely from
the Net Revenues of the System on an equal basis with the Notes herein authorized
to be issued and shall include Additional Bonds as authorized to be issued under
the terms of this Resolution;
• "Paying Agent" shall be the City Treasurer, or such successor as may
be approved by Issuer as provided herein and who shall carry out the duties
prescribed herein as Issuer's agent to provide for the payment of principal of and
interest on the Notes as the same shall become due;
• "Permitted Investments" shall mean:
• direct obligations of (including obligations issued or held in
book entry form on the books of) the Department of the Treasury of the
United States of America;
• cash (insured at all times by the Federal Deposit Insurance
Corporation or otherwise collateralized with obligations described in the
above paragraph);
• obligations of any of the following federal agencies which
obligations represent full faith and credit of the United States of America,
including:
Export -Import Bank
"Notes" or "Note" shall mean $1,037,000 Water Revenue Capital
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- Farm Credit System Financial Assistance Corporation
- USDA -Rural Development
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development
(PHA's)
- Federal Housing Administration
• repurchase agreements whose underlying collateral consists of
the investments set out above if the Issuer takes delivery of the collateral
either directly or through an authorized custodian. Repurchase agreements
do not include reverse repurchase agreements;
• senior debt obligations rated "AAA" by Standard & Poor's
Corporation (S&P) or "Aaa" by Moody's Investors Service Inc. (Moody's)
issued by the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation;
• U. S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which have a rating
on their short-term certificates of deposit on the date of purchase of "A-1 "
or "A- l+" by S&P or "P-1 " by Moody's and maturing no more than 360
days after the date of purchase (ratings on holding companies are not
considered as the rating of the bank);
• commercial paper which is rated at the time of purchase in the
single highest classification, "A-1+" by S&P or "P-1" by Moody's and
which matures not more than 270 days after the date of purchase;
• investments in a money market fund rated "AAAm" or
"AAAm-G" or better by S&P;
• pre-refunded Municipal Obligations, defined as any bonds or
other obligations of any state of the United States of America or of any
agency, instrumentality or local governmental unit of any such state which
are not callable at the option of the obligor prior to maturity or as to which
irrevocable instructions have been given by the obligor to call on the date
specified in the notice; and (a} which are rated, based on an irrevocable
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escrow account or fund (the "escrow"), in the highest rating category of
S&P or Moody's or any successors thereto; or (b)(i) which are fully secured
as to principal and interest and redemption premium, if any, by an escrow
consisting only of cash or direct obligations of the Department of the
Treasury of the United States of America, which escrow may be applied
only to the payment of such principal of and interest and redemption
premium, if any, on such bonds or other obligations on the maturity date or
dates thereof or the specified redemption date or dates pursuant to such
irrevocable instructions, as appropriate; and (ii) which escrow is sufficient,
as verified by a nationally recognized independent certified public
accountant, to pay principal of and interest and redemption premium, if any,
on the bonds or other obligations described in this paragraph on the
maturity date or dates specified in the irrevocable instructions referred to
above, as appropriate;
• tax exempt bonds as defined and permitted by section 148 of
the Internal Revenue Code and applicable regulations and only if rated
within the two highest classifications as established by at least one of the
standard rating services approved by the superintendent of banking by rule
adopted pursuant to chapter 17A Code of Iowa;
• an investment contract rated within the two highest
classifications as established by at least one of the standard rating services
approved by the superintendent of banking by rule adopted pursuant to
chapter 17A Code of Iowa; and
Iowa Public Agency Investment Trust.
• "Program" shall mean the Iowa Drinking Water State Revolving
Fund Program undertaken jointly by the Original Purchaser and the Department;
• "Project" shall mean the costs of acquisition, construction,
reconstruction, extending, remodeling, improving, repairing and equipping of the
System, including restoration of two deteriorating concrete clear well storage
reservoirs;
• "Project Fund" shall mean the Loan Account maintained by the
Trustee under the Program for the benefit of the Issuer, into which the proceeds of
the Loan and the Note shall be allocated and held until disbursed to pay Project
costs;
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• "Rebate Fund" shall mean the fund so defined in and established
pursuant to the Tax Exemption Certificate;
• "Registrar" shall be the City Treasurer, or such successor as may be
approved by Issuer as provided herein and who shall carry out the duties
prescribed herein with respect to maintaining a register of the owners of the Notes.
Unless otherwise specified, the Registrar shall also act as Transfer Agent for the
Notes;
• "System" shall mean the municipal water utility of the Issuer and all
properties of every nature hereinafter owned by the Issuer comprising part of or
used as a part of the System, including all water treatment facilities, storage
facilities, pumping stations and all related property and improvements and
extensions made by Issuer while any of the Notes or Parity Obligations remain
outstanding; all real and personal property; and all appurtenances, contracts, leases,
franchises and other intangibles;
• "Tax Exemption Certificate" shall mean the Tax Exemption
Certificate executed by the Treasurer and delivered at the time of issuance and
delivery of the Notes; and
• "Treasurer" shall mean the City Treasurer or such other officer as
shall succeed to the same duties and responsibilities with respect to the recording
and payment of the Notes issued hereunder.
• "Trustee" shall mean Wells Fargo Bank, National Association, with
its principal office located in the City of Des Moines, Iowa, and its successors and
any corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee under the Program.
• "Yield Restricted" shall mean required to be invested at a yield that
is not materially higher than the yield on the Notes under Section 148(a) of the
Internal Revenue Code or regulations issued thereunder.
Section 2. Authori .The Agreement and the Notes authorized by this
Resolution shall be issued pursuant to Sections 384.24A and 384.83 of the Code of Iowa,
and in compliance with all applicable provisions of the Constitution and laws of the State
of Iowa. The Agreement shall be substantially in the form attached to this Resolution and
is authorized to be executed and issued on behalf of the Issuer by the Mayor and attested
by the City Clerk.
-9-
Section 3. Authorization and Purpose. There are hereby authorized to be
issued, negotiable, serial, fully registered Revenue Notes of the City of Dubuque, in the
County of Dubuque, State of Iowa, each to be designated as "Water Revenue Capital
Loan Note, Series 2007", in the aggregate amount of $1,037,000, for the purpose of
paying costs of the Project. The City Council, pursuant to Section 384.83 of the Code of
Iowa, hereby finds and determines that it is necessary and advisable to issue said Notes
authorized by the Agreement and this Resolution.
Section 4. Source of Pa. ment. The Notes herein authorized and Parity
Obligations and the interest thereon shall be payable solely and only out of the net
earnings of the System and shall be a first lien on the future Net Revenues of the System.
The Notes shall not be general obligations of the Issuer nor shall they be payable in any
manner by taxation and the Issuer shall be in no manner liable by reason of the failure of
the said Net Revenues to be sufficient for the payment of the Notes.
Section 5. Note Details. Water Revenue Capital Loan Notes, Series 2007, of
the City in the amount of $1,037,000, shall be issued to evidence the obligations of the
Issuer under the Agreement pursuant to the provisions of Section 384.83 of the Code of
Iowa for the aforesaid purpose. The Notes shall be designated "WATER REVENUE
CAPITAL LOAN NOTE, SERIES 2007", be dated the date of delivery, and bear interest
at the rate of 3.0% per annum from the date of each advancement made under the
Agreement, until payment thereof, at the office of the Paying Agent, said interest payable
on December 1, 2007, and semi-annually thereafter on the 1st day of June and December
in each year until maturity as set forth on the Debt Service Schedule attached to the
Agreement as Exhibit B and incorporated herein by this reference. As set forth on said
Debt Service Schedule, principal shall be payable on June 1, 2009 and annually thereafter
on the 1st day of June in the amounts set forth therein until principal and interest are fully
paid, except that the final installment of the entire balance of principal and interest, if not
sooner paid, shall become due and payable on June 1, 2028. Notwithstanding the
foregoing or any other provision hereof, principal and interest shall be payable as shown
on said Debt Service Schedule until completion of the Project, at which time the final
Debt Service Schedule shall be determined by the Trustee based upon actual
advancements, final costs and completion of the Project, all as provided in 567 Iowa
Administrative Code, Chapter 92. Payment of principal and interest on the Notes shall at
all times conform to said Debt Service Schedule and the rules of the Drinking Water State
Revolving Fund Program.
The Notes shall be executed by the manual or facsimile signature of the Mayor and
attested by the manual or facsimile signature of the Clerk, and impressed or imprinted
with the seal of the City and shall be fully registered as to both principal and interest as
-10-
provided in this Resolution; principal, interest and premium, if any, shall be payable at the
office of the Paying Agent by mailing of a check, wire transfer or automated clearing
house system transfer to the registered owner of the Note. The Notes may be in the
denomination of $1,000 or multiples thereof and shall at the request of the Original
Purchaser be initially issued as a single Note in the denomination of $1,037,000 and
numbered R-1.
Section 6. Initiation Fee and Servicing Fee. In addition to the payment of
principal of and interest on the Notes, the Issuer also agrees to pay the Initiation Fee and
the Servicing Fee as defined and in accordance with the terms of the Agreement.
Section 7. Redemption. The Notes are subject to optional redemption at a price
of par plus accrued interest (i) on any interest payment date after the ten (10) year
anniversary date of the Agreement or (ii) in the event that all or substantially all of the
Project is damaged or destroyed. Any optional redemption of the Notes may be made
from any funds regardless of source, in whole or from time to time in part, in inverse
order of maturity, by giving not less than thirty (30) days notice of redemption by certified
or registered mail to the Original Purchaser (or any other registered owner of the Note).
The terms of redemption shall be par, plus accrued interest to date of call. The Notes are
also subject to mandatory redemption as set forth in Section 5 of the Agreement.
Section 8. Registration of Notes; Appointment of Registrar Transfer
Ownership; Delivery; and Cancellation.
(a) Registration. The ownership of Notes may be transferred only by the
making of an entry upon the books kept for the registration and transfer of
ownership of the Notes, and in no other way. The City Treasurer is hereby
appointed as Note Registrar under the terms of this Resolution. Registrar shall
maintain the books of the Issuer for the registration of ownership of the Notes for
the payment of principal of and interest on the Notes as provided in this
Resolution. All Notes shall be negotiable as provided in Article 8 of the Uniform
Commercial Code subject to the provisions for registration and transfer contained
in the Notes and in this Resolution.
(b) Transfer. The ownership of any Note may be transferred only upon
the Registration Books kept for the registration and transfer of Notes and only
upon surrender thereof at the office of the Registrar together with an assignment
duly executed by the holder or his duly authorized attorney in fact in such form as
shall be satisfactory to the Registrar, along with the address and social security
number or federal employer identification number of such transferee (or, if
-11-
registration is to be made in the name of multiple individuals, of all such
transferees). In the event that the address of the registered owner of a Note (other
than a registered owner which is the nominee of the broker or dealer in question) is
that of a broker or dealer, there must be disclosed on the Registration Books the
information pertaining to the registered owner required above. Upon the transfer
of any such Note, a new fully registered Note, of any denomination or
denominations permitted by this Resolution in aggregate principal amount equal to
the unmatured and unredeemed principal amount of such transferred fully
registered Note, and bearing interest at the same rate and maturing on the same
date or dates shall be delivered by the Registrar.
(c) Registration of Transferred Notes. In all cases of the transfer of the
Notes, the Registrar shall register, at the earliest practicable time, on the
Registration Books, the Notes, in accordance with the provisions of this
Resolution.
(d) Ownership. As to any Note, the person in whose name the
ownership of the same shall be registered on the Registration Books of the
Registrar shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such Notes and the
premium, if any, and interest thereon shall be made only to or upon the order of the
registered owner thereof or his legal representative. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Note, including
the interest thereon, to the extent of the sum or sums so paid.
(e) Cancellation. All Notes which have been redeemed shall not be
reissued but shall be cancelled by the Registrar. All Notes which are cancelled by
the Registrar shall be destroyed and a Certificate of the destruction thereof shall be
furnished promptly to the Issuer; provided that if the Issuer shall so direct, the
Registrar shall forward the cancelled Notes to the Issuer.
(f) Non-Presentment of Notes. In the event any payment check
representing payment of principal of or interest on the Notes is returned to the
Paying Agent or if any note is not presented for payment of principal at the
maturity or redemption date, if funds sufficient to pay such principal of or interest
on Notes shall have been made available to the Paying Agent for the benefit of the
owner thereof, all liability of the Issuer to the owner thereof for such interest or
payment of such Notes shall forthwith cease, terminate and be completely
discharged, and thereupon it shall be the duty of the Paying Agent to hold such
funds, without liability for interest thereon, for the benefit of the owner of such
-12-
Notes who shall thereafter be restricted exclusively to such funds for any claim of
whatever nature on his part under this Resolution or on, or with respect to, such
interest or Notes. The Paying Agent's obligation to hold such funds shall continue
for a period equal to two years and six months following the date on which such
interest or principal became due, whether at maturity, or at the date fixed for
redemption thereof, or otherwise, at which time the Paying Agent, shall surrender
any remaining funds so held to the Issuer, whereupon any claim under this
Resolution by the Owners of such interest or Notes of whatever nature shall be
made upon the Issuer.
Section 9. Reissuance of Mutilated, Destroyed, Stolen or Lost Notes. In case
any outstanding Note shall become mutilated or be destroyed, stolen or lost, the Issuer
shall at the request of Registrar authenticate and deliver a new Note of like tenor and
amount as the Note so mutilated, destroyed, stolen or lost, in exchange and substitution
for such mutilated Note to Registrar, upon surrender of such mutilated Note, or in lieu of
and substitution for the Note destroyed, stolen or lost, upon filing with the Registrar
evidence satisfactory to the Registrar and Issuer that such Note has been destroyed, stolen
or lost and proof of ownership thereof, and upon furnishing the Registrar and Issuer with
satisfactory indemnity and complying with such other reasonable regulations as the Issuer
or its agent may prescribe and paying such expenses as the Issuer may incur in connection
therewith.
Section 10. Record Date. Payments of principal and interest, otherwise than
upon full redemption, made in respect of any Note, shall be made to the registered holder
thereof or to their designated Agent as the same appear on the books of the Registrar on
the 15th day of the month preceding the payment date. All such payments shall fully
discharge the obligations of the Issuer in respect of such Notes to the extent of the
payments so made.
Section 11. Execution, Authentication and Delivery of the Notes. Upon the
adoption of this Resolution, the Mayor and City Clerk shall execute and deliver the Notes
to the Registrar, who shall authenticate the Notes and deliver the same to or upon order of
the Original Purchaser. No Note shall be valid or obligatory for any purpose or shall be
entitled to any right or benefit hereunder unless the Registrar shall duly endorse and
execute on such Note a Certificate of Authentication substantially in the form of the
Certificate herein set forth. Such Certificate upon any Note executed on behalf of the
Issuer shall be conclusive evidence that the Note so authenticated has been duly issued
under this Resolution and that the holder thereof is entitled to the benefits of this
Resolution.
-13-
Section 12. Right to Name Substitute PaXin~Agent or Registrar. Issuer reserves
the right to name a substitute, successor Registrar or Paying Agent upon giving prompt
written notice to each registered noteholder.
-14-
Section I3. Form of Note. Notes shall be printed in substantial compliance with
standards proposed by the American Standards Institute substantially in the form as
follows:
(~)
($)
(1)
(9)
(9a}
(10}
(Continued on the back of this Bond)
FIGURE I
(Front)
-15-
(10) (16)
(Continued)
FIGURE 2
(Back)
-16-
The text of the Notes to be located thereon at the item numbers shown shall be as
follows:
Item 1, figure 1 = "STATE OF IOWA"
"COUNTY OF DUBUQUE"
"CITY OF DUBUQUE"
"WATER REVENUE CAPITAL LOAN NOTE"
"SERIES 2007"
Item 2, figure
Item 3, figure
Item 4, figure
Item 5, figure
Item 6, figure
Item 7, figure
Item 8, figure
1 =Rate: 3.0%
1 =Final Maturity:
1 =Note Date: _
1 = CUSIP #
1 = "Registered"
1 =Certificate No. R-1
1 =Principal Amount: $
Item 9, figure 1 =The City of Dubuque, Iowa, a municipal corporation organized
and existing under and by virtue of the Constitution and laws of the State of Iowa (the
"Issuer"), for value received, promises to pay from the source and as hereinafter provided,
to
IOWA FINANCE AUTHORITY
Item 10, figure 1 = or registered assigns, the principal sum of (principal amount
written out) in lawful money of the United States of America, on the maturity dates and in
the principal amounts set forth on the Debt Service Schedule attached hereto and
incorporated herein by this reference, with interest on said sum from the date of each
advancement made under a certain Loan and Disbursement Agreement dated as of the
date hereof until paid at the rate of 3.0% per annum, payable on December 1, 2007, and
semi-annually thereafter on the 1st day of June and December in each year. As set forth
on said Debt Service Schedule, principal shall be payable on June 1, 2009 and annually
thereafter on the first day of June in the amounts set forth therein until principal and
interest are fully paid, except that the final installment of the entire balance of principal
and interest, if not sooner paid, shall become due and payable on June 1, 2028.
Notwithstanding the foregoing or any other provision hereof, principal and interest shall
be payable as shown on said Debt Service Schedule until completion of the Project, at
which time the final Debt Service Schedule shall be determined by the Trustee and
attached hereto based upon actual advancements, final costs and completion of the
Project, all as provided in 567 Iowa Administrative Code, Chapter 92. Payment of
-17-
principal and interest of this Note shall at all times conform to said Debt Service Schedule
and the rules of the Drinking Water State Revolving Fund Program.
Interest and principal shall be paid to the registered holder of the Note as shown on
the records of ownership maintained by the Registrar as of the 15th day of the month next
preceding such interest payment date. Interest shall be computed on the basis of a 360-
day year of twelve 30-day months.
This Note is issued pursuant to the provisions of Section 384.83 of the Code of
Iowa, for the purpose of paying costs of acquisition, construction, reconstruction,
extending, remodeling, improving, repairing and equipping all or part of the System,
including restoration of two deteriorating concrete clear well storage reservoirs, and
evidences amounts payable under a certain Loan and Disbursement Agreement dated as
of the date hereof, in conformity to a Resolution of the City Council of said City duly
passed and approved. For a complete statement of the revenues and funds from which
and the conditions under which this Note is payable, a statement of the conditions under
which additional notes or bonds of equal standing may be issued, and the general
covenants and provisions pursuant to which this Note is issued, reference is made to the
above-described Loan and Disbursement Agreement and Resolution.
This Note is subject to optional redemption at a price of par plus accrued interest
(i) on any interest payment date after the ten (10) year anniversary date of the Loan and
Disbursement Agreement and this Note or (ii} in the event that all or substantially all of
the Project is damaged or destroyed. Any optional redemption of this Note may be made
from any funds regardless of source, in whole or from time to time in part, in inverse
order of maturity, by lot by giving thirty (30) days notice of redemption by certified or
registered mail, to the Iowa Finance Authority (or any other registered owner of the
Note). This Note is also subject to mandatory redemption as set forth in Section 5 of the
Agreement.
Ownership of this Note may be transferred only by transfer upon the books kept
for such purpose by the City Treasurer, Dubuque, Iowa the Registrar. Such transfer on
the books shall occur only upon presentation and surrender of this Note at the office of
the Registrar, together with an assignment duly executed by the owner hereof or his duly
authorized attorney in the form as shall be satisfactory to the Registrar. Issuer reserves
the right to substitute the Registrar and Paying Agent but shall, however, promptly give
notice to registered Noteholders of such change. All Notes shall be negotiable as
provided in Article 8 of the Uniform Commercial Code and subject to the provisions for
registration and transfer contained in the Note Resolution.
-18-
This Note and the series of which it forms a part, and any additional obligations
which may be hereafter issued and outstanding from time to time on a parity with said
Notes, as provided in the Resolution and Loan and Disbursement Agreement of which
notice is hereby given and which are hereby made a part hereof, are payable from and
secured by a pledge of the net revenues of the municipal water utility (the "System"), as
defined and provided in said Resolution. There has heretofore been established and the
City covenants and agrees that it will maintain just and equitable rates or charges for the
use of and service rendered by said System in each year for the payment of the proper and
reasonable expenses of operation and maintenance of said System and for the
establishment of a sufficient sinking fund to meet the principal of and interest on this
series of Notes, and other obligations ranking on a parity therewith, as the same become
due. This Note is not payable in any manner by taxation and under no circumstances shall
the City be in any manner liable by reason of the failure of said net earnings to be
sufficient for the payment hereof.
And it is hereby represented and certified that all acts, conditions and things
requisite, according to the laws and Constitution of the State of Iowa, to exist, to be had,
to be done, or to be performed precedent to the lawful issue of this Note, have been
existent, had, done and performed as required by law.
IN TESTIMONY WHEREOF, said City by its City Council has caused this Note
to be signed by the manual or facsimile signature of its Mayor and attested by the manual
or facsimile signature of its City Clerk, with the seal of said City impressed hereon, and
authenticated by the manual or facsimile signature of an authorized representative of the
Registrar, the City Treasurer of Dubuque, Iowa, all as of the day of
2007.
Item 11, figure 1 =Date of Authentication:
Item 12, figure 1 = This is one of the Notes described
in the within mentioned Resolution, as registered by the City
Treasurer.
CITY TREASURER
By:
Registrar
Item 13, figure 1 =Registrar and Transfer Agent: City Treasurer
Paying Agent: City Treasurer
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Item 14, figure 1 = (Seal)
Item 15, figure 1 = [Signature Block]
City of Dubuque, Iowa
By: (manual or facsimile signature
Mayor
Attest: (manual or facsimile signature)
City Clerk
Item 17, figure 2 = [Assignment Block]
[Information Required for Registration]
ASSIGNMENT
the within Note and does hereby irrevocably constitute and appoint
attorney in fact to transfer the said Note on the books kept for registration of the within
Note, with full power of substitution in the premises.
Dated:
(Person(s) executing this Assignment sign(s) here)
SIGNATURE )
GUARANTEED)
IMPORTANT -READ CAREFULLY
For value received, the undersigned hereby sells, assigns and transfers unto
(Social Security or Tax Identification No. )
The signature(s) to this Power must correspond with the name(s) as written upon
the face of the Certificate(s) or Note(s) in every particular without alteration or
enlargement or any change whatever. Signature guarantee must be provided in
accordance with the prevailing standards and procedures of the Registrar and
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Transfer Agent. Such standards and procedures may require signature to be
guaranteed by certain eligible guarantor institutions that participate in a recognized
signature guarantee program.
INFORMATION REQUIRED FOR REGISTRATION OF TRANSFER
Name of Transferee(s) _
Address of Transferee(s) _
Social Security or Tax
Identification Number of
Transferee(s)
Transferee is a(n):
Individual*
Partnership
Corporation
Trust
*If the Note is to be registered in the names of multiple individual owners, the names of
all such owners and one address and social security number must be provided.
The following abbreviations, when used in the inscription on the face of this Note,
shall be construed as though 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
IA UNIF TRANS MIN ACT - .........Custodian............
(Gust) (Minor)
under Iowa Uniform Transfers
to Minors Act ..............
(State)
Section 14. Equality of Lien. The timely payment of principal of and interest on
the Notes and Parity Obligations shall be secured equally and ratably by -the revenues of
the System without priority by reason of number or time of sale or delivery; and the
revenues of the System are hereby irrevocably pledged to the timely payment of both
principal and interest as the same become due.
-21-
Section 15. Application of Note Proceeds -Project Fund. Proceeds of the Notes
shall be credited to the Project Fund and expended therefrom for the purposes of issuance.
Any amounts on hand in the Project Fund shall be available for the payment of the
principal of or interest on the Notes at any time that other funds of the System shall be
insufficient to the purpose, in which event such funds shall be repaid to the Project Fund
at the earliest opportunity. Any balance on hand in the Project Fund and not immediately
required for its purposes may be invested not inconsistent with limitations provided by
law, the Internal Revenue Code and this Resolution.
Section 16. User Rates. There has heretofore been established and published as
required by law, just and equitable rates or charges for the use of the service rendered by
the System. Said rates or charges shall be paid by the owner of each and every lot, parcel
of real estate, or building that is connected with and uses the System, by or through any
part of the System or that in any way uses or is served by the System.
Any revenue paid and collected for the use of the System and its services by the
Issuer or any department, agency or instrumentality of the Issuer shall be used and
accounted for in the same manner as any other revenues derived from the operations of
the System.
Section 17. Application of Revenues. From and after the delivery of any Notes,
and as long as any of the Notes or Parity Obligations shall be outstanding and unpaid
either as to principal or as to interest, or until all of the Notes and Parity Obligations then
outstanding shall have been discharged and satisfied in the manner provided in this
Resolution, the entire income and revenues of the System shall be deposited as collected
in a fund to be known as the Water Revenue Fund (the "Revenue Fund"), and shall be
disbursed only as follows:
(a) Operation and Maintenance Fund. Money in the Revenue Fund shall
first be disbursed to make deposits into a separate and special fund to pay current
expenses. The fund shall be known as the Water Utility Operation and
Maintenance Fund (the "Operation and Maintenance Fund"). There shall be
deposited in the Operation and Maintenance Fund each month an amount
sufficient to meet the current expenses of the month plus an amount equal to
1/12th of expenses payable on an annual basis such as insurance. After the first
day of the month, further deposits may be made to this account from the Revenue
Fund to the extent necessary to pay current expenses accrued and payable to the
extent that funds are not available in the Surplus Fund.
- 22 -
(b) Sinkin Fund. Money in the Revenue Fund shall next be disbursed
to make deposits into a separate and special. fund to pay principal of and interest on
the Notes and Parity Obligations. The fund shall be known as the Water Revenue
Note Principal and Interest Sinking Fund (the "Sinking Fund"). The required
amount to be deposited in the Sinking Fund in any month shall be an amount equal
to 1/6th of the installment of interest coming due on the next interest payment date
on the then outstanding Notes and Parity Obligations, plus 1/12th of the
installment of principal coming due on such Notes on the next succeeding
principal payment date until the full amount of such installment is on hand. If for
any reason the amount on hand in the Sinking Fund exceeds the required amount,
the excess shall forthwith be withdrawn and paid into the Revenue Fund. Money
in the Sinking Fund shall be used solely for the purpose of paying principal of and
interest on the Notes and Parity Obligations as the same shall become due and
payable.
(c) Subordinate Obli ations. Money in the Revenue Fund may next be
used to pay principal of and interest on (including reasonable reserves therefor)
any other obligations which by their terms shall be payable from the revenues of
the System, but subordinate to the Notes and Parity Obligations, and which have
been issued for the purposes of extensions and improvements to the System or to
retire the Notes or Parity Obligations in advance of maturity, or to pay for
extraordinary repairs or replacements to the System.
(d) Surplus Revenue. All money thereafter remaining in the Revenue
Fund at the close of each month may be deposited in any of the funds created by
this Resolution, to pay for extraordinary repairs or replacements to the System, or
may be used to pay or redeem the Notes or Parity Obligations, any of them, or for
any lawful purpose.
Money in the Revenue Fund shall be allotted and paid into the various funds and
accounts hereinbefoie referred to in the order in which said funds are listed, on a
cumulative basis on the 10th day of each month, or on the next succeeding business day
when the 10th shall not be a business day; and if in any month the money in the Revenue
Fund shall be insufficient to deposit or transfer the required amount in any of said funds
or accounts, the deficiency shall be made up in the following month or months after
payments into all funds and accounts enjoying a prior claim to the revenues shall have
been met in full.
Section 18. Investments. The funds provided by this Resolution may be invested
only in Permitted Investments or deposited in financial institutions which are members of
- 23 -
the Federal Deposit Insurance Corporation and the deposits in which are insured thereby
and all such deposits exceeding the maximum amount insured from time to time by FDIC
or its equivalent successor in any one financial institution shall be continuously secured
by a valid pledge of direct obligations of the United States Government having an
equivalent market value. All such interim investments shall mature before the date on
which the moneys are required for the purposes for which said fund was created or
otherwise as herein provided. The provisions of this Section shall not be construed to
require the Issuer to maintain separate bank accounts for the funds created by this
Section; except the Sinking Fund shall be maintained in a separate account but may be
invested in conjunction with other funds of the City but designated as a trust fund on the
books and records of the City.
All income derived from such investments shall be deposited in the Revenue Fund
and shall be regarded as revenues of the System. Investments shall at any time necessary
be liquidated and the proceeds thereof applied to the purpose for which the respective
fund was created.
Section 19. Covenants Re ag rdin tg he Operation of the S, sue. The Issuer
hereby covenants and agrees with each and every holder of the Notes and Parity
Obligations:
(a) Maintenance and Efficiencv. The Issuer will maintain the System in
good condition and operate it in an efficient manner and at reasonable cost.
(b) Sufficiency of Rates. On or before the beginning of each Fiscal Year
the Governing Body will adopt or continue in effect rates for all services rendered
by the System determined to be sufficient to produce Net Revenues for the next
succeeding Fiscal Year which are (i) adequate to pay the principal and interest
requirements thereof and to create or maintain the reserves as provided in this
Resolution, and (ii) not less than 110 percent of the principal and interest
requirements of the next succeeding Fiscal Year. No free use of the System by the
Issuer or any department, agency or instrumentality of the Issuer shall be permitted
except upon the determination of the Governing Body that the rates and changes
otherwise in effect are sufficient to provide Net Revenues at least equal to the
requirements of this subsection.
(c) Insurance. The Issuer shall maintain insurance for the benefit of the
Noteholders on the insurable portions of the System of a kind and in an amount
which normally would be carried by private companies engaged in a similar kind
of business. The proceeds of any insurance, except public liability insurance, shall
-24-
be used to repair or replace the part or parts of the System damaged or destroyed,
or if not so used shall be placed in an improvement fund for the benefit of the
System.
(d) Accounting and Audits. The Issuer will cause to be kept proper
books and accounts adapted to the System and in accordance with generally
accepted accounting practices and will diligently act to cause the books and
accounts to be audited and reported upon by an Independent Auditor and will
provide copies of the audit report to the Department, all as provided in the
Agreement. The Department, Original Purchaser and holders of any of the Notes
and Parity Obligations shall have at all reasonable times the right to inspect the
System and the records, accounts and data of the Issuer relating thereto.
(e) State Laws. The Issuer will faithfully and punctually perform all
duties with reference to the System required by the Constitution and laws of the
State of Iowa, including the making and collecting of reasonable and sufficient
rates for services rendered by the System as above provided, and will segregate the
revenues of the System and apply said revenues to the funds specified in this
Resolution.
(f) Pro e .The Issuer will not sell, lease, mortgage or in any manner
dispose of the System, or any capital part thereof, including any and all extensions
and additions that may be made thereto, until satisfaction and discharge of all of
the Notes and Parity Obligations shall have been provided for in the manner
provided in this Resolution; provided, however, this coveriant shall not be
construed to prevent the disposal by the Issuer of property which in the judgment
of its Governing Body has become inexpedient or unprofitable to use in connection
with the System, or if it is to the advantage of the System that other property of
equal or higher value be substituted therefor, and provided further that the
proceeds of the disposition of such property shall be placed in a revolving fund to
be used in preference to other sources for capital improvements to the System.
Any such proceeds of the disposition of property acquired with the proceeds of the
Notes or Parity Obligations shall not be used to pay principal or interest on the
Notes and Parity Obligations or for payments into the Sinking Fund.
(g) Fideli , Bond. That the Issuer shall maintain fidelity bond coverage
in amounts which normally would be carried by private companies engaged in a
similar kind of business on each officer or employee having custody of funds of
the System.
- 25 -
(h) Additional Charges. The Issuer will require proper connecting
charges and/or other security for the payment of service charges.
(i) Budget. The Governing Body of the Issuer shall approve and
conduct operations pursuant to a system budget of revenues and current expenses
for each Fiscal Year. Such budget shall take into account revenues and current
expenses during the current and last preceding Fiscal Years. Copies of such
budget and any amendments thereto shall be mailed to the Original Purchaser and
to the Noteholders upon request.
(j) Loan and Disbursement Agreement. The Issuer will comply with the
terms and conditions of the Loan and Disbursement Agreement and perform as
provided thereunder.
Section 20. Remedies of Noteholders. Except as herein expressly limited the
holder or holders of the Notes and Parity Obligations shall have and possess all the rights
of action and remedies afforded by the common law, the Constitution and statutes of the
State of Iowa, and of the United States of America, for the enforcement of payment of
their Notes and interest thereon, and of the pledge of the revenues made hereunder, and of
all covenants of the Issuer hereunder.
Section 21. Prior Lien and Parity Obli ations. The Issuer will issue no other
notes, bonds or obligations of any kind or nature payable from or enjoying a lien or claim
on the property or revenues of the System having priority over the Notes or Parity
Obligations.
Additional Bonds may be issued on a parity and equality of rank with the Notes
with respect to the lien and claim of such additional obligations to the revenues of the
System and the money on deposit in the funds adopted by this Resolution, for the
following purposes and under the following conditions, but not otherwise:
(a) For the purpose of refunding any of the Notes or Parity Obligations
which shall have matured or which shall mature not later than three months after
the date of delivery of such refunding obligation and for the payment of which
there shall be insufficient money in the Sinking Fund;
(b) For the purpose of making extensions, additions, improvements or
replacements to the System, or refunding any outstanding Notes, Parity
Obligations or other obligations issued for such extensions, additions and
improvements, if all of the following conditions shall have been met:
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(i) before any such Additional Bonds ranking on a parity are
issued, there will have been procured and filed with the Clerk, a statement
of an Independent Auditor, not a regular employee of the Issuer, reciting the
opinion based upon necessary investigations that the Net Revenues of the
System for the preceding Fiscal Year (with adjustments as hereinafter
provided) were equal to at least 1.10 times the maximum amount that will
be required in any Fiscal Year prior to the longest maturity of any of the
then outstanding Notes or Parity Obligations for both principal of and
interest on all Notes or Parity Obligations then outstanding which are
payable from the net earnings of the System and the Additional Bonds then
proposed to be issued.
For the purpose of determining the Net Revenues of the System for
the preceding Fiscal Year as aforesaid, the amount of the gross revenues for
such year may be adjusted by an independent consulting engineer or by the
Independent Auditor, so as to reflect any changes in the amount of such
revenues which would have resulted had any revision of the schedule of
rates or charges imposed at or prior to the time of the issuance of any such
Additional Bonds been in effect during all of such preceding Fiscal Year.
(ii) the Additional Bonds must be payable as to principal and as to
interest on the same month and day as the Notes herein authorized.
(iii) for the purposes of this Section, principal and interest falling
due on the first day of a Fiscal Year shall be deemed a requirement of the
immediately preceding Fiscal Year.
(iv) for the purposes of this Section, general obligation bonds or
notes shall be refunded only upon a finding of necessity by the Governing
Body and only to the extent the general obligation bonds or notes were
issued or the proceeds thereof were expended for the System.
(vj for purposes of this Section, "preceding Fiscal Year" shall be
the most recently completed Fiscal Year for which audited financial
statements prepared by a certified public accountant are issued and
available, but in no event a Fiscal Year which ended more than eighteen
months prior to the date of issuance of the Additional Bonds.
Section 22. Disposition of Proceeds: Arbitrage Not Permitted. The Issuer
reasonably expects and covenants that no use will be made of the proceeds from the
-27-
issuance and sale of the Notes issued hereunder which will cause any of the Notes to be
classified as arbitrage bonds within the meaning of Section 148(a) and (b) of the Internal
Revenue Code of the United States, and that throughout the term of said Notes it will
comply with the requirements of said statute and regulations issued thereunder.
To the best knowledge and belief of the Issuer, there are no facts or circumstances
that would materially change the foregoing statements or the conclusion that it is not
expected that the proceeds of the Notes will be used in a manner that would cause the
Notes to be arbitrage bonds. Without limiting the generality of the foregoing, the Issuer
hereby agrees to comply with the provisions of the Tax Exemption Certificate and the
provisions of the Tax Exemption Certificate are hereby incorporated by reference as part
of this Resolution. The City Treasurer is hereby directed to make and insert all
calculations and determinations necessary to complete the Tax Exemption Certificate in
all respects and to execute and deliver the Tax Exemption Certificate at issuance of the
Notes to certify as to the reasonable expectations and covenants of the Issuer at that date.
The Issuer covenants that it will treat as Yield Restricted any proceeds of the Notes
remaining unexpended after three years from the issuance and any other funds required by
the Tax Exemption Certificate to be so treated. If any investments are held with respect
to the Notes and Parity Obligations, the Issuer shall treat the same for the purpose of
restricted yield as held in proportion to the original principal amounts of each issue.
The Issuer covenants. that it will exceed any investment yield restriction provided
in this Resolution only in the event that it shall first obtain an opinion of recognized bond
counsel that the proposed investment action will not cause the Notes to be classified as
arbitrage bonds under Section 148(a) and (b) the Internal Revenue Code or regulations
issued thereunder.
The Issuer covenants that it will proceed with due diligence to spend the proceeds
of the Notes for the purpose set forth in this Resolution. The Issuer further covenants that
it will make no change in the use of the proceeds available for the construction of
facilities or change in the use of any portion of the facilities constructed therefrom by
persons other than the Issuer or the general public unless it has obtained an opinion of
bond counsel or a revenue ruling that the proposed project or use will not be of such
character as to cause interest on any of the Notes not to be exempt from federal income
taxes in the hands of holders other than substantial users of the project, under the
provisions of Section 142(a) of the Internal Revenue Code of the United States, related
statutes and regulations.
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Section 23. Additional Covenants, Representations and Warranties of the Issuer.
The Issuer certifies and covenants with the purchasers and holders of the Notes from time
to time outstanding that the Issuer through its officers, (a) will make such further specific
covenants, representations and assurances as may be necessary or advisable; (b) comply
with all representations, covenants and assurances contained in the Tax Exemption
Certificate, which Tax Exemption Certificate shall constitute a part of the contract
between the Issuer and the owners of the Notes; (c) consult with bond counsel (as defined
in the Tax Exemption Certificate); (d) pay to the United States, as necessary, such sums
of money representing required rebates of excess arbitrage profits relating to the Notes;
(e) file such forms, statements and supporting documents as may be required and in a
timely manner; and (f) if deemed necessary or advisable by its officers, to employ and pay
fiscal agents, financial advisors, attorneys and other persons to assist the Issuer in such
compliance.
Section 24. Amendment of Resolution to Maintain Tax Exemption. This
Resolution may be amended without the consent of any owner of the Notes if, in the
opinion of bond counsel, such amendment is necessary to maintain tax exemption with
respect to the Notes under applicable Federal law or regulations.
Section 25. Qualified Tax-Exempt Obli atg_ ions. For the sole purpose of
qualifying the Note as "Qualified Tax-Exempt Obligations" pursuant to Section 265(b) of
the Internal Revenue Code of the United States, as amended, the Issuer designates the
Note as qualified tax-exempt obligations and represents that the reasonably anticipated
amount oftax-exempt governmental and Internal Revenue Code Section 501(c)3
obligations which will be issued during the current calendar year will not exceed Ten (10)
Million Dollars.
Section 26. Discharge and Satisfaction of Notes. The covenants, liens and
pledges entered into, created or imposed pursuant to this Resolution may be fully
discharged and satisfied with respect to the Notes and Parity Obligations, or any of them,
in any one or more of the following ways:
(a) By paying the Notes or Parity Obligations when the same shall
become due and payable; and
(b) By depositing in trust with the City Treasurer, or with a corporate
trustee designated by the Governing Body, for the payment of said obligations and
irrevocably appropriated exclusively to that purpose an amount in cash or direct
obligations of the United States the maturities and income of which shall be
sufficient to retire at maturity, or by redemption prior to maturity on a designated
-29-
date upon which said obligations may be redeemed, all of such obligations
outstanding at the time, together with the interest thereon to maturity or to the
designated redemption date, premiums thereon, if any that may be payable on the
redemption of the same; provided that proper notice of redemption of all such
obligations to be redeemed shall have been previously published or provisions
shall have been made for such publication.
Upon such payment or deposit of money or securities, or both, in the amount and
manner provided by this Section, all liability of the Issuer with respect to the Notes or
Obligations shall cease, determine and be completely discharged, and the holders thereof
shall be entitled only to payment out of the money or securities so deposited.
Section 27. Resolution a Contract. The provisions of this Resolution shall
constitute a contract between the Issuer and the holder or holders of the Notes and Parity
Obligations, and after the issuance of any of the Notes no change, variation or alteration
of any kind in the provisions of this Resolution shall be made in any manner, except as
provided in the next succeeding Section, until such time as all of the Notes and Parity
Obligations, and interest due thereon, shall have been satisfied and discharged as
provided in this Resolution.
Section 28. Amendment of Resolution Without Consent. The Issuer may,
without the consent of or notice to any of the holders of the Bonds and Parity Obligations,
amend or supplement this Resolution for any one or more of the following purposes:
(a) to cure any ambiguity, defect, omission or inconsistent provision in
this Resolution or in the Notes or Parity Obligations; or to comply with any
applicable provision of law or regulation of federal or state agencies; provided,
however, that such action shall not materially adversely affect the interests of the
holders of the Notes or Parity Obligations;
(b) to change the terms or provisions of this Resolution to the extent
necessary to prevent the interest on the Notes or Parity Obligations from being
includable within the gross income of the holders thereof for federal income tax
purposes;
(c) to grant to or confer upon the holders of the Notes or Parity
Obligations any additional rights, remedies, powers or authority that may lawfully
be granted to or conferred upon the holders of the Notes;
-30-
(d) to add to the covenants and agreements of the Issuer contained in this
Resolution other covenants and agreements of, or conditions or restrictions upon,
the Issuer or to surrender or eliminate any right or power reserved to or conferred
upon the Issuer in this Resolution; or
(e) to subject to the lien and pledge of this Resolution additional pledged
revenues as may be permitted by law.
Section 29. Amendment of Resolution Requiring Consent. This Resolution may
be amended from time to time if such amendment shall have been consented to by holders
of not less than two-thirds in principal amount of the Notes and Parity Obligations at any
time outstanding (not including in any case any Notes which may then be held or owned
by or for the account of the Issuer, but including such Refunding Obligations as may have
been issued for the purpose of refunding any of such Notes if such Refunding Obligations
shall not then be owned by the Issuer); but this Resolution may not be so amended in such
manner as to:
(a) Make any change in the maturity or interest rate of the Notes, or
modify the terms of payment of principal of or interest on the Notes or any of them
or impose any conditions with respect to such payment;
(b) Materially affect the rights of the holders of less than all of the Notes
and Parity Obligations then outstanding; and
(c) Reduce the percentage of the principal amount of Notes, the consent
of the holders of which is required to effect a further amendment.
Whenever the Issuer shall propose to amend this Resolution under the provisions
of this Section, it shall cause notice of the proposed amendment to be filed with the
Original Purchaser and to be mailed by certified mail to each registered owner of any
Note as shown by the records of the Registrar. Such notice shall set forth the nature of
the proposed amendment and shall state that a copy of the proposed amendatory
Resolution is on file in the office of the City Clerk.
Whenever at any time within one year from the date of the mailing of said notice
there shall be filed with the City Clerk an instrument or instruments executed by the
holders of at least two-thirds in aggregate principal amount of the Notes then outstanding
as in this Section defined, which instrument or instruments shall refer to the proposed
amendatory Resolution described in said notice and shall specifically consent to and
approve the adoption thereof, thereupon, but not otherwise, the Governing Body of the
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Issuer may adopt such amendatory Resolution and such Resolution shall become effective
and binding upon the holders of all of the Notes and Parity Obligations.
Any consent given by the holder of a Note pursuant to the provisions of this
Section shall be irrevocable for a period of six months from the date of the instrument
evidencing such consent and shall be conclusive and binding upon all future holders of
the same Note during such period. Such consent may be revoked at any time after six
months from the date of such instrument by the holder who gave such consent or by a
successor in title by filing notice of such revocation with the City Clerk.
The fact and date of the execution of any instrument under the provisions of this
Section may be proved by the certificate of any officer in any jurisdiction who by the laws
thereof is authorized to take acknowledgments of deeds within such jurisdiction that the
person signing such instrument acknowledged before him the execution thereof, or may
be proved by an affidavit of a witness to such execution sworn to before such officer.
The amount and numbers of the Notes held by any person executing such
instrument and the date of his holding the same may be proved by an affidavit by such
person or by a certificate executed by an officer of a bank or trust company showing that
on the date therein mentioned such person had on deposit with such bank or trust
company the Notes described in such certificate.
Notwithstanding anything in this Section to the contrary, the holder or holders of
100% of the Notes and Parity Obligations may consent to any amendment of this
Resolution, or waive any notices required hereunder, on such terms and under such
conditions as said holders shall determine to be appropriate.
Section 30. Severabilitv. If any section, paragraph, or provision of this
Resolution shall be held 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.
Section 31. Repeal of Conflicting Ordinances or Resolutions and Effective Date.
All other Ordinances, Resolutions and orders, or parts thereof, in conflict with the
provisions of this Resolution are, to the extent of such conflict, hereby repealed; and this
Resolution shall be in effect from and after its adoption.
-32-
Section 32.' Rule of Construction. This Resolution and the terms and conditions
of the Notes authorized hereby shall be construed whenever possible so as not to conflict
with the terms and conditions of the Loan and Disbursement Agreement. In the event
such construction is not possible, or in the event of any conflict or inconsistency between
the terms hereof and those of the Loan and Disbursement Agreement, the terms of the
Loan and Disbursement Agreement shall prevail and be given effect to the extent
necessary to resolve any such conflict or inconsistency.
PASSED AND APPROVED this 1st day of October, 2007.
Roy D. Buol
Mayor
ATTEST:
Jeanne F. Schneider
City Clerk
- 33 -
IOWA FINANCE AUTHORITY
(SEAL)
By:
Its:
(SEAL)
By:
Its:
By:
Its:
Executive Director
IOWA DEPARTMENT OF NATURAL
RESOURCES
Director
WELLS FARGO BANK,
NATIONAL ASSOCIATION
Trust Officer
-12-
EXHIBIT A
Date
Estimated Advancements
Amount
-13-
g
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4 rN N N N N N N N N N N N N~D N
W V V T V1 N A A W W N N+ .+ 0 0 to O Oo ~ V V O) ~ VI Ut A A W W N N+ .++ O O V
~ ~ _ _N M ~
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~~~~~~~~~~ggso~~~~~~~~~~~~~~~~~~~~~~~~~~~~o°s
~8888888888888888888888888S88SS888888888~~8~
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EXHIBIT C
LIST OF FEDERAL LAWS AND AUTHORITIES
ENVIRONMENTAL:
- Archeological and Historic Preservation Act of 1974, PL 93-291
- Clean Air Act, 42 U.S.C. 7506(C)
- Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq.
- Coastal Zone Management Act of 1972, PL 92-583, as amended
- Endangered Species Act 16 U.S.C. 1531, et seq.
- Executive Order 11593, Protection and Enhancement of the Cultural Environment
- Executive Order 11988, Floodplain Management
- Executive Order 11990, Protection of Wetlands
- Farmland Protection Policy Act, 7 U.S.C. 4201 et seq.
- Fish and Wildlife Coordination Act, PL 85-624, as amended
- National Historic Preservation Act of 1966, PL 89-665, as amended
- Safe Drinking Water Act, Section 1424(e}, PL 92-523, as amended
- Wild and Scenic Rivers Act PL 90-542, as amended
-15-
ECONOMIC
- Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, as
amended
- Section 306 of the Clean Air Act and Section 508 of the Clean Water Act,
including Executive Order 11738, Administration of the Clean Air Act and the
Federal Water Pollution Control Act with Respect to Federal Contracts, Grants or
Loans
SOCIAL LEGISLATION
- Age Discrimination Act, PL 94-135
- Civil Rights Act of 1964, PL 88-352
- Section 13 of PL 92-500; Prohibition against sex discrimination under the Federal
Water Pollution Control Act
- Executive Order 11246, Equal Employment Opportunity
- Executive Orders 11625 and 12138, Women's and Minority Business Enterprise
- Rehabilitation Act of 1973, PL 93-112 (including Executive Orders 11914 and
11250)
MISCELLANEOUS AUTHORITY:
- Uniform Relocation and Real Property Acquisition Policies Act of 1970, PL 91-
646
- Executive Order 12549 -Debarment and Suspension
- Single Audit Act of 1984 and OMB Circular A-133
DCORNELL\553091.1 \WP\10422079
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