ORD 12-719DRDINANCE NO. 12-719
AN ORDINANCE of the City of Federal Way, Washington, relating to
contracting indebtedness; providing for the issuance, sale and delivery of not
to exceed $13,300,000 par value of Limited Tax General Obligation
Refunding Bonds, to refund a portion of the City's outstanding Limited Tax
General Obligation Bonds, 2003; and delegating authority to the Mayor or
Finance Director to approve the final terms of the bonds.
THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DO
ORDAIN AS FOLLOWS:
Section l. Definitions. As used in this ordinance, the following words shall have the
following meanings:
(a) "Acquired Obligations" means those United States Treasury Certificates
of Indebtedness, Notes, and Bonds--State and Local Government Series and other direct,
noncallable obligations of the United States of America purchased to accomplish the refunding
of the Refunded Bonds as authorized by this ordinance.
(b) "Authorized Denomination" means $5,000 or any integral multiple thereof
within a maturity.
(c) "Beneficial Owner" means the owner of any beneficial interests in the
Bonds.
(d) `Bond Account" means the account or accounts created by this ordinance
in the Debt Service Fund of the City for the payment of the Bonds.
(e) "Bond Register" means the books or records maintained by the Bond
Registrar for the purpose of identifying ownership of the Bonds.
(� "Bond Registrar" means the Fiscal Agent.
(g) "Bonds" means the not to exceed $13,300,000 par value Limited Tax
General Obligation Refunding Bonds, with such annual designation as of the date of issuance, of
the City issued pursuant to and for the purposes provided in this ordinance.
(h) "City" means the City of Federal Way, Washington, a municipal
corporation duly organized and existing under the laws of the State.
(i) "City Council" means the governing body of the City, acting in its
legislative capacity.
(j) "Code" means the United States Internal Revenue Code of 1986, as
amended and applicable rules and regulations promulgated thereunder.
Ordinance No. 12-719 Page 1 of 17
(k) "DTC" means The Depository Trust Company, New York, New York.
(1) "Fiscal Agent" means the fiscal agent of the State, as the same may be
designated by the State from time to time.
(m) "Letter of Representations" means the Blanket Issuer Letter of
Representations dated May 1, 1997, between the City and DTC, as it may be amended from time
to time.
(n) "MSRB" means the Municipal Securities Rulemaking Board.
(o) "Owners" means, without dYStinction, the Registered Owner(s) and the
Beneficial Owner(s).
(p) "Refunded Bonds" means all or a portion of the outstanding Limited Tax
General Obligation Bonds, 2003, of the City maturing in the years 2014 through 2027, inclusive,
and 2033, issued pursuant to Ordinance No. 03-451 and Resolution No. 03-400, the refunding of
which has been provided for by this ordinance.
(q) "Refunding Plan" means:
(a) the placement of sufficient proceeds of the Bonds which,
with other money of the City, if necessary, will acquire the Acquired
Obligations to be deposited, with cash, if necessary, with the Refunding
Trustee;
(b) the payment of the principal of and interest on the
Refunded Bonds when due up to and including December l, 2013, and the
call, payment, and redemption on December 1, 2013, of all of the then-
outstanding Refunded Bonds at a price of par; and
(c) the payment of the costs of issuing the Bonds and the costs
of carrying out the foregoing elements of the Refunding Plan.
(r) "Refunding Trust Agreement" means a Refunding Trust Agreement
between the City and the Refunding Trustee.
(s) "Refunding Trustee" means the trustee or escrow agent or any successor
trustee or escrow agent serving as refunding trustee to carry out the Refunding Plan.
(t) "Registered Owner" means the person in whose name a Bond is registered
on the Bond Register. For so long as the City utilizes the book—entry system for the Bonds under
the Letter of Representations, Registered Owner shall mean DTC.
(u) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the
Securities Exchange Act of 1934, as amended.
Ordinance No. 12-719 Page 2 of 17
(v) "SEC" means the United States Securities and Exchange Commission.
(w) "State" means the State of Washington.
(x) "Undertaking" means the continuing disclosure agreement set forth in
Section 15 of this ordinance.
Section 2 Recitals and Findin�s
(a) Pursuant to Ordinance No. 03-451 and Resolution No. 03-400, the City
heretofore issued its $15,000,000 par value Limited Tax General Obligation Bonds, 2003 (the
"2003 Bonds"), for the purpose of providing a portion of the funds to construct a community
center, and by ordinance and resolution reserved the right to redeem the 2003 Bonds maturing on
and after December l, 2014 prior to their maturity on December l, 2013, at a price of par plus
accrued interest to the date fixed for redemption.
(b) There are presently outstanding $11,955,000 par value of 2003 Bonds
maturing on December 1 of each of the years 2014 through 2027, inclusive, and 2033, and
bearing various interest rates from 3.90% to 4.75% (the "Refunded Bonds"). There is also
outstanding $695,000 par value of 2003 Bonds maturing on December 1 in the years 2012 and
2013 that will not be refunded.
(c) After due consideration, it appears to the City Council that all or a portion
of the Refunded Bonds may be refunded by the issuance and sale of the limited tax general
obligation refunding bonds authorized herein (the "Bonds") so that a savings will be effected by
the difference between the prineipal and interest cost over the life of the Bonds and the principal
and interest cost over the life of the Refunded Bonds but for such refunding, which refunding
will be effected by carrying out the Refunding Plan.
(d) To effect that refunding in the manner that will be most advantageous to
the City it is found necessary and advisable that certain Acquired Obligations bearing interest
and maturing at such time or times as necessary to accomplish the refunding as aforesaid be
purchased out of a portion of the proceeds of the Bonds.
(e) The City Council deems it to be in the best interests of the City to issue
and sell the Bonds to pay part of carrying out the Refunding Plan.
Section 3. Debt Capacity. The assessed valuation of _the taxable property within the
City as ascertained by the last preceding assessment for City purposes for the calendar year 2012
is $7,722,983,802.
(a) The City has outstanding general indebtedness as follows:
(i) Limited tax general obligation bonds, notes, leases and
conditional sales contracts outstanding in the principal amount of $28,157,950,
which is incurred within the limit of up to 1%z% of the value of the taxable
property within the City permitted for general municipal purposes.
Ordinance Na 12-719 Page 3 of 17
(ii) No unlimited tax general obligation bonds for capital
purposes outstanding. The debt described in this paragraph is incurred with the
approval of the requisite number of the City's qualified voters, within the limit of
up to 2'/2% of the value of the taxable property within the City for general
municipal purposes (when combined with the outstanding limited tax general
obligation indebtedness), 2'/2% for utility purposes and 2'/2% for open space and
economic development purposes.
(b) The ma�cimum amount of indebtedness authorized by this ordinance is
$13,300,000 and is issued within the limitation permitted for general municipal purposes without
a vote.
Section 4. Purpose and Authorization of Bonds. The City shall borrow money on the
credit of the City and issue negotiable limited tax general obligation refunding bonds evidencing
that indebtedness in one or more series, in the aggregate principal amount of not to exceed
$13,300,000 to carry out the Refunding Plan.
Section 5. Description of Bonds. The Bonds shall be called City of Federal Way,
Washington, Limited Tax General Obligation Refunding Bonds, with such annual designation as
of the date of issuance. The Bonds shall be issued in one or more series, in the aggregate
principal amount of not to exceed $13,300,000; shall be dated their date of initial delivery to the
purchaser; shall be in Authorized Denominations; and shall be numbered separately in the
mann.er and with any additional designation as the Bond Registrar deems necessary for purposes
of identification. .
The Bonds shall bear interest (computed on the basis of a 360-day year of twelve 30-day
� months) payable semiannually on each June 1 and December l, commencing June l, 2012, or the
June 1 or December 1 after the issuance of the Bonds; to the maturity or earlier redemption of the
Bonds; and shall mature on December 1 in years and amounts and bear interest at the rates per
arinum as shall be determined pursuant to Section 19 hereof.
Section 6. Bond Registrar; Re�istration and Transfer of Bonds.
(a) Registration of Bonds. The Bonds shall be issued only in registered form
as to both principal and interest and shall be recorded on the Bond Register.
(b) Bond Re ig strar. The Bond Registrar shall keep, or cause to be kept,
sufficient books for the registration and transfer of the Bonds, which shall be open to inspection
by the City at all times. The Bond Register shall contain the name and mailing address of the
Registered Owner of each Bond and the principal amount and number of each of the Bonds held
by each Registered Owner.
The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds
transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to
serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers
and duties under this ordinance.
Ordinance 1Vo. 12-719 PaSe 4 �.r� �
The Bond Registrar shall be responsible for its representations contained in the Bond
Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become either a
Registered or Beneficial Owner of Bonds with the same rights it would have if it were not the
Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of
its officers or directors to act as members of, or in any other capacity with respect to, any
committee formed to protect the rights of Beneficial Owners.
Bonds surrendered to the Bond Registrar may be exchanged for Bonds of the same series
in any Authorized Denomination of an equal aggregate principal amount and of the same interest
rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon
and surrendered to the Bond Registrar. Any exchange or transfer shall be without cost to the
owner or transferee. The Bond Registrar shall not be obligated to exchange or transfer any Bond
during the 15 days preceding any principal payment or redemption date.
(c) DTC and the Book Entr� s�tem. The Bonds initially shall be registered
in the name of Cede & Co., as the nominee of DTC. The Bonds so registered shall be held in
fully immobilized form by DTC as depository in accordance with the provisions of the Letter of
Representations. Neither the City nor the Bond Registrar shall have any responsibility or
obligation to DTC participants or the persons for whom they act as nominees with respect to the
Bonds regarding accuracy of any records maintained by DTC or DTC participants of any amount
in respect of principal of or interest on the Bonds, or any notice which is permitted or required to
be given to Registerec� Owners hereunder (except such notice as is required to be given by the
Bond Registrar to DTC). '
For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its
successor depository shall be deemed to be the Registered Owner for all purposes hereunder and
all references to registered owners, bondowners, bondholders or the like shall mean DTC or its
nominee and, except for the purpose of the City's undertaking herein to provide continuing
disclosure, shall not mean the Beneficial Owners. Registered ownership of such Bonds, or any
portions thereof may not thereafter be transfened except: (i) to any successor of DTC or its
,
nominee, if that successor shall be qualified under any applicable laws to
proposed to be provided by it; (ii) to any substitute depository appointed
substitute depository's successor; or (iii) to any person if the Bonds ar
immobilized form.
provide the services
by the City or such
e no longer held in
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the City that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the City may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained or (ii) the City determines
that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any
person as provided herein and the Bonds no longer shall be held in fully immobilized form.
Ordinance No. 12-719 Page S of I7
Section 7. Form and Execution of Bonds: The Bonds shall be prepared in a form
consistent with the provisions of this ordinance and state law and shall be signed by the Mayor
and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of
the City or a facsimile reproduction thereof shall be impressed or printed thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this ordinance: "Certificate Of Authentication. This Bond is one of the fully
registered City of Federal Way, Washington, Limited Tax General Obligation Refunding Bonds,
described in the Bond Ordinance." The authorized signing of a Certificate of Authentieation
shall be conclusive evidence that the Bond so authenticated has been duly executed,
authenticated and delivereci and is entitled to the benefits of this ordinance.
If any officer whose manual or facsimile signature appears on the Bonds ceases to be an
officer of the City authorized to sign bonds before the Bonds bearing his or her manual or
facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City,
those Bonds nevertheless may be authenticated, issued and delivered and, when authenticated,
issued and delivered, shall be as binding on the City as though that person had continued to be an
officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City
by any person who, on the actual date of signing of the Bond, is an officer of the City authorized
to sign bonds, althaugh he or she did not hald the required office on the date of issuance of the
Bonds. �
Section 8. Pavment of Bonds. Both principal of and interest on the Bonds shall be
' payable in lawful money of the United States of Ameriea. For as long as the Bonds are
registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds
shall be made in the manner set forth in the Letter of Representations. If the Bonds cease•to be
in book-entry-only form, interest on the Bonds shall be paid by checks or drafts of the Bond
Registrar mailed on the interest payment date to the Registered Owners at the addresses
appearing on the Bond Register on the 15th day of the month preceding the interest payment date
or by electronic transfer on the interest payment date. The City shall not be required to make
electronic transfers except to a Registered Owner of Bonds pursuant to a request in writing (and
at the sole expense of that Registered Owner) received at least 10 days before an interest
payment date. Principal of the Bonds shall be payable upon presentation and surrender of the
Bonds by the Registered Owners to the Bond Registrar.
Section 9. Redemption Provisions and Open Market Purchase of Bonds.
(a) Optional Redemption. The Mayor or Finance Director may designate
certain maturities of the Bonds as being subject to redemption at the option of the City prior to
their respective maturities.
(b) Mandatory Redemption. The Mayor or Finance Director may approve the
designation of certain maturities of the Bonds as Term Bonds.
(c) Partial Redemptions. Portions of the principal amount of any Bond, in any
Authorized Denomination, may be redeemed. If less than all of the principal amount of any
Ordinanee No. 12-719 Page 6 of 17
Bond is redeemed, upon surrender of that Bond to the Bond Registrar, there shall be issued to the
Registered Owner, without charge, a new Bond (or Bonds, at the option of the Registered
Owner) of the same maturity and interest rate in any Authorized Denomination in the aggregate
principal amount remaining unredeemed.
(d) Selection of Bonds for Redemption. If fewer than all of the outstanding
Bonds within a maturity are to be redeemed prior to maturity, Bonds shall be selected for
redemption randomly within a maturity in such manner as the Bond Registrar shall determine.
Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its
nominee, selection of Bonds for redemption shall be in accordance with the Letter of
Representations.
(e) Notice of Redemption. While the Bonds are held by DTC in book-entry
only form, any notice of redemption shall be given at the time, to the entity and in the manner
required by DTC in accordance with the Letter of Representations, and the Bond Registrar shall
not be required to give any other notice of redemption. If the Bonds cease to be in book-entry
only form unless waived by any Registered Owner of the Bonds to be redeemed, the City: sha11
cause notice of any intended redemption of Bonds to be given by the Bond Registrar not less
than 20 nor more than 60 days prior to the date fixed for redemption by first-class mail, postage
prepaid; to the Registered Owner of any Bond to be redeemed at the address appearing on the
Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this
sentence shall be deemed to have been fulfilled when notice has been mailed as so provided,
whether or not it is actually received by the Registered or Beneficial Owner of any Bond.
In the case of an optional redemption, the notice may state thaf the City retains the right
to rescind the redemption notice and the related optional redemption of Bonds by giving a notice
of rescission to the affected Registered Owners at any time prior to the scheduled optional
redemption date. Any notice of optional redemption that is so rescinded shall be of no effect,
and the Bonds for which the notice of optional redemption has been rescinded shall remain
outstanding.
In addition, the redemption notice shall be mailed or sent electronically within the same
period to the MSRB, consistent with the Undertaking, to any nationally recognized rating agency
which at the time maintains a rating on the Bonds at the request of the City, and to such other
persons and with such additional information as the Finance Director shall determine, but these
additional mailings shall not be a condition precedent to the redemption of Bonds.
(� Effect of Redemption. Interest on Bonds called for redemption shall cease
to accrue on the date fixed for redemption, unless the notice of redemption is rescinded as set
forth above.
(g) Open Market Purchase. The City further reserves the right and option to
purchase any or all of the Bonds in the open market at any time at any price acceptable to the
City plus accrued interest to the date of purchase.
(h) Cancellation of Bonds.
section shall be canceled.
All Bonds purchased or redeemed under this
Ordinance No. 12-719 Page 7 of 17
Section 10. Failure To Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or date set for redemption, the City shall be obligated to pay interest on
that Bond at the same rate provided in the Bond from and after its maturity or date set for
redemption until that Bond, both principal and interest, is paid in full or until sufficient money
for its payment in full is on deposit in the Bond Account and the Bond has been called for
payment by giving notice of that call to the Registered Owner.
Section 11. Pled�e of T�es. For as long as any of the Bonds are outstanding, the City
irrevocably pledges to include in its budget and levy taa�es annually, within the constitutional and
statutory tax limitations provided by law without a vote of the electors of the City, on all of the
ta.xable property within the City in an amount sufficient, together with revenues from the 1%
utility tax and other money legally available and to be used therefor, to pay when due the
principal of and interest on the Bonds. The full faith, credit and resources of the City are pledged
irrevocably for the annual levy and collection of those taxes and the prompt payment of that
principal and interest.
Section 12 Tax Matters
(a) Preservation of T� Exemption for Interest on Bonds. The City covenants
that it will take all actions reasonably necessary and within its control to prevent interest on the
Bonds from being included in gross income for federal income tax purposes, and it will neither
take any action nor make or permit any use of proceeds of the Bonds or other funds of the City
treated as proceeds of the Bonds at any time during the term of the Bonds which will cause
interest on the Bonds to be included in gross income for federal income tax purposes. The City
also covenants that it will, to the extent the arbitrage rebate requirements of Section 148 of the
Code are applicable to the Bonds, take all actions necessary to comply (or to be treated as having
complied) with those requirements in connection with the Bonds, including the calculation and
payment of any penalties that the City has elected to pay as an alternative to calculating rebatable
arbitrage, and the payment of any other penalties if required under Section 148 of the Code to
prevent interest on the Bonds from being included in gross income for federal income tax
purposes. The Finance Director is authorized and directed to adopt and implement on behalf of
the City procedures to facilitate compliance by the City with the covenants in this Section 12(a)
and the applicable requirements of the Code that must be satisfied after the issue date to maintain
the tax exemption for interest on the Bonds after the issue date.
(b) Designation of Bonds as "Qualified Tax-Exempt Obligations." The Bonds
shall be designated as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3)
of the Code, if the following conditions are met: (1) the Finance Director is able to determine
and certify that the Bonds are not "private activity bonds" within the meaning of Section 141 of
the Code; (2) the reasonably anticipated amount of tax-exempt obligations (other than private
activity bonds and other obligations not required to be included in such calculation) which the
City and any entity subordinate to the City (including any entity that the City controls, that
derives its authority to issue tax-exempt obligations from the City, or that issues tax-exempt
obligations on behalf of the City) will issue during the calendax year in which the Bonds are
issued will not exceed $10,000,000; and (3) the amount of tax-exempt obligations, including the
Bonds, so designated by the City as "qualified tax-exempt obligations" for the purposes of
Ordinance 1Vo. I2-719 Page 8 of 17
Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not
exceed $10,000,000.
Section 13. Refunding or Defeasance of tfie Bonds. The City may issue refunding
bonds pursuant to the laws of the State or use money available from any other lawful source to
pay when due the principal of and interest on the Bonds, or any portion thereof included in a
refunding or defeasance plan, and to redeem and retire, refund or defease all such then-
outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the costs of
the refunding or defeasance. If money and/or "government obligations" (as defined in chapter
39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing interest in
amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease
the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow
account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds
(hereinafter called the "trust account"), then all right and interest of the Owners of the defeased
Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment
of the defeased Bonds shall cease and become void. T'he Owners of defeased Bonds shall have
the right to receive payment of the principal of and interest on the defeased Bonds from the trust
account. The City shall include in the refunding or defeasance plan such provisions as the City
deems necessary for the random selection of any defeased Bonds that constitute less than all of a
particular maturity af the Bonds, for notice of the defeasance to be given to the owners of the
d�feased Bonds and to such other persons as the City shali determine, and for any required
replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no
longer outstanding, and the City may apply any money in any other fund or account established
for the payment or redemption of the defeased Bonds to any lawful purposes as it shall
determine.
' If the Bands are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
Section 14. Bond Account and Deposit of Bond Proceeds. The Bond Account is
hereby created and established in the office of the Finance Director as a special account or
accounts in the Debt Service Fund, for the purpose of paying principal of and interest on the
Bonds. All taxes and other amounts allocated to the payment of the principal of and interest on
the Bonds shall be deposited in the Bond Account.
Section 15. Refundin� of the Refunded Bonds.
(a) Appointment of Refundin� Trustee. The Mayor or Finance Director are
authorized to appoint a Refunding Trustee in connection with the Bonds.
(b) Use of Bond Proceeds; Acquisition of Acquired Obli atg ions. A sufficient
amount of the proceeds of the sale of the Bonds shall be deposited immediately upon the receipt
thereof with the Refunding Trustee and used to discharge the obligations of the City relating to
the Refunded Bonds under Ordinance No. 03-451 and Resolution No. 03-400 by providing for
the payment of the amounts required to be paid by the Refunding Plan. To the extent
practicable, such obligations shall be discharged fully by the Refunding Trustee's simultaneous
Ordinance No. 12-719 Page 9 of 17
purchase of the Acquired Obligations, bearing such interest and maturing as to principal and
interest in such amounts and at such times so as to provide, together with a beginning cash
balance, if necessary, for the payment of the amount required to be paid by the Refunding Plan.
The Acquired Obligations will be listed and more particularly described in the Refunding Trust
Agreement between the City and the Refunding Trustee, but are subject to substitution as set
forth below. Any Bond proceeds or other money deposited with the Refunding Trustee not
needed to purchase the Acquired Obligations and provide a beginning cash balance, if any, and
pay the costs of issuance of the Bonds shall be returned to the City at the time of delivery of the
Bonds to the initial purchaser thereof and deposited in the Bond Account to pay interest on the
Bonds on the first interest payment date.
(c) Substitution of Acquired Obli at� ions. Prior to the purchase of any
Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute other
direct, noncallable obligations of the United States of America ("Substitute Obligations") for any
of the Acquired Obligations and to use any savings created thereby for any lawful City purpose
if, (a) in the opinion of the City's bond counsel, the interest on the Bonds and the Refunded
Bonds will remain excluded from gross income for federal income tax purposes under Sections
103, 148, and 149(d) of the Code, and (b) such substitution shall not impair the timely payment
of the amounts required to be paid by the Refunding Plan, as verified by a nationally recognized
independent certified public accounting firm.
After the purchase of the Acquired Obligations by the Refunding Trustee, the City
resErves the right to substitute therefar cash or Substitute Obligations subject to the c�nditions
that such money or securities held by the Refunding Trustee shall be sufficient to carry out the
Refunding Plan, that such substitution will not cause the Bonds or the Refunded Bonds to .be
arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in
effect on the �date of such substitution and applicable to obligations issued on the issue dates of
the Bonds and the Refunded Bonds, as applicable, and that the City obtain, at its expense: {1) a
verification by a nationally recognized independent certified public accounting firm acceptable
to the Refunding Trustee confirming that the payments of principal of and interest on the
substitute securities, if paid when due, and any other money held by the Refunding Trustee will
be sufficient to carry out the Refunding Plan; and (2) an opinion from bond counsel to the City,
its successor, or other nationally recognized bond counsel to the City, to the effect that the
disposition and substitution or purchase of such securities, under the statutes, rules, and
regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or
the Refunded Bonds to be included in gross income for federal income tax purposes and that
such disposition and substitution or purchase is in compliance with the statutes and regulations
applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition,
or redemption of the Acquired Obligations and the substitutions therefor shall be released from
the trust estate and transferred to the City to be used for any lawful City purpose.
(d) Administration of Refunding Plan. The Refunding Trustee is authorized
and directed to purchase the Acquired Obligations (or substitute obligations) and to make the
payments required to be made by the Refunding Plan from the Acquired Obligations (or
substitute obligations) and money deposited with the Refunding Trustee pursuant to this
ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with
the Refunding Trustee and any income therefrom shall be held irrevocably, invested and applied
Ordinance No. i2-719 Page 10 of 17
in accordance with the provisions of Ordinance No.03-451, Resolution No.03-400, this
ordinance, chapter 39.53 RCW and other applicable statutes of the State of Washington and the
Refunding Trust Agreement. All necessary and proper fees, compensation, and expenses of the
Refunding Trustee for the Bonds and all other costs incidental to the setting up of the escrow to
accomplish the refunding of the Refunded Bonds and costs related to the issuance and delivery
of the Bonds, including bond printing, verification fees, financial advisor fees, bond counsel's
fees, and other related expenses, shall be paid out of the proceeds of the Bonds.
(e) Authorization for Refunding Trust Agreement. To carry out the
Refunding Plan provided for by this ordinance, the Finance Director of the City is authorized and
directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement setting
forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the
payment, redemption, and retirement of the Refunded Bonds as provided herein and stating that
the provisions for payment of the fees, compensation, and expenses of such Refunding Trustee
set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement, the
Finance Director of the City is authorized to make such changes therein that do not change the
substance and purpose thereof or that assure that the escrow provided therein and the Bonds are
in compliance with the requirements of federal law governing the exclusion of interest on the
Bonds from gross income for federal income tax purposes.
(� Authorization for Replacement Bonds. If necessary, the City may issue
replacement bonds in principal amounts reflecting the defeased and nondefeased portions of the
2003 Bonds. The replacement bonds shall be printed, executed and authenticated in the same
� manner as the 2003 Bonds.
� Section 16. Call for Redemption of the Refunded Bonds. The City calls for
redemptio� on December 1, 2013, all of the Refunded Bonds at par plus accrued interest. Such
call for redemption shall be irrevacable after the delivery of the Bonds to the initial purchaser
thereof. The date on which the Refunded Bonds are herein called for redemption is the first date
on which those bonds may be called.
The proper City officials are authorized and directed to give or cause to be given such
notices as required, at the times and in the manner required, pursuant to Ordinance No. 03-451
and Resolution No. 03-400 in order to effect the redemption prior to their maturity of the
Refunded Bonds.
Section 17. City Findings with Respect to Refundin�. The City Council of the City
finds and determines that the issuance and sale of the Bonds at this time will effect a savings to
the City and is in the best interest of the City and its taxpayers and in the public interest. In
making such finding and determination, the City Council has given consideration to the fixed
maturities of the Bonds and the Refunded Bonds, the costs of issuance of the Bonds and the
known earned income from the investment of the proceeds of the issuance and sale of the Bonds
and other money of the City used in the Refunding Plan, if any, pending payment and
redemption of the Refunded Bonds.
The City Council further finds and determines that the money to be deposited with the
Refunding Trustee for the Refunded Bonds in accordance with Section 15 of this ordinance will
Ordinance No. 12-7I9 Page II of i7
discharge and satisfy the obligations of the City under Ordinance No. 03-451 and Resolution
No. 03-400 with respect to the Refunded Bonds, and the pledges, charges, trusts, covenants, and
agreements of the City therein made ar provided for as to the Refunded Bonds, and that the
Refunded Bonds shall no longer be deemed to be outstanding under such ordinance immediately
upon the deposit of such money with the Refunding Trustee.
Section 18. Undertaking to Provide Continuing Disclosure. To meet the requirements
of paragraph (b)(5) of Rule 15c2-12, as applicable to a participating underwriter for the Bonds,
the City makes the following written Undertaking for the benefit of holders of the Bonds:
(a) Undertakin� to Provide Annual Financial Information and Notice of
Listed Events. The City undertakes to provide or cause to be provided, either directly or through
a designated agent, to the MSRB, in an electronic format as prescribed by the MSRB,
accompanied by identifying information as prescribed by the MSRB:
(i) Annual financial information and operating data of the type
included in the final official statement for the Bonds and described in
subsection (b) of this section ("annual financial information");
(ii) Timely notice (not in excess of 10 business days after the
occurrence of the event) of the occurrence of any of the following events with
respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-
payment related defaults, if material; (3) unscl�eduled draws on debt service
reserves reflecting financial difficulties; (4) unscheduled draws on credit
enhancements reflecting financial difficulties; (5) substitution of credit or
liquidity providers, or their failure to perform; (6) adverse tax opinions, the
issuance by the Internal Revenue Service of proposed or final determinations of
, taxability, Notice of Proposed Issue (IRS Form 5701 — TEB) or other material
notices or determinations with respect to the tax status of the Bonds;
(7) modifications to rights of holders of the Bonds, if material; (8) bond calls
(other than scheduled mandatory redemptions of Term Bonds), if material, and
tender offers; (9) defeasances; (10) release, substitution, or sale of property
securing repayment of the Bonds, if material; (11) rating changes;
(12) bankruptcy, insolvency, receivership or similar event of the City, as such
"Bankruptcy Events" are defined in Rule 15c2-12; (13) the consummation of a
merger, consolidation, or acquisition involving the City or the sale of all or
substantially all of the assets of the City other than in the ordinary course of
business, the entry into a definitive agreement to undertake such an actian or the
termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material; and (14) appointment of a successor or
additional trustee or the change of name of a trustee, if material.
(iii) Timely notice of a failure by the City to provide required
annual financial information on or before the date specified in subsection (b) of
this section.
Ordinance No. 12-719 Page 12 of I7
(b) Type of Annual Financial Information Undertaken to be Provided. The
annual financial information that the City undertakes to provide in subsection (a) of this section:
(i) Shall consist of (1) annual financial statements prepared
(except as noted in the financial statements) in accordance with applicable
generally accepted accounting principles applicable to State local governmental
units such as the City, as such principles may be changed from time to time,
which statements shall not be audited, except, however, that if and when audited
financial statements are otherwise prepared and available to the City they will be
provided; (2) outstanding general obligation bonds; (3) assessed valuation for the
fiscal year; (4) regular property tax levy rate and regular property tax levy rate
limit for the fiscal year; and (5) general fund revenues from other major tax
sources;
(ii) Shall be provided not later than the last day of the ninth
month after the end of each fiscal year of the City (currently, a fiscal year ending
December 31), as such fiscal year may be changed as required or permitted by
State law, commencing with the City's fiscal year ending December 31, 2012; and
(iii) May be provided in a single or multiple documents, and
may be incorporated by specific reference to documents available to the public on
the Internet website of the MSRB or filed with the SEC.
(c) Amendment of Undertakin�. The Undertaking is subject to amendment
after the primary offering of the Bonds withaut the consent of any holder of any Bond, or of any
broker, dealer, municipal securities dealer, participating underwriter, rating agency or the MSRB,
under the circumstances and in the manner permitted by Rule 15c2-12. The City will give notice
to the MSRB of the substance (or provide a copy) of any amendment to the Undertaking and a
brief statement of the reasons for the amendment. If the amendment changes the t�pe of annual
financial information to be provided, the annual financial information containing the amended
financial. information will include a narrative explanation of the effect of that change on the type
of information to be provided.
(d) Beneficiaries. The Undertaking evidenced by this section sha11 inure to
the benefit of the City and any Beneficial Owner of Bonds, and shall not inure to the benefit of or
create any rights in any other person.
(e) Termination of Undertakin�. The City's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In addition, the City's
obligations under this Undertaking shall terminate if those provisions of Rule 15c2-12 which
require the City to comply with this Undertaking become legally inapplicable in respect of the
Bonds for any reason, as confirmed by an opinion of nationally recognized bond counsel or other
counsel familiar with federal securities laws delivered to the City, and the City provides timely
notice of such termination to the MSRB.
(� Remedp for Failure to Com�iv with Undertakin�. As soon as practicable
after the City learns of any failure to comply with the Undertaking, the City will proceed with
Ordinance ]Vo. 12-719 Page 13 of l7
due diligence to cause such noncompliance to be corrected. No failure by the City or other
obligated person to comply with the Undertaking shall constitute a default in respect of the
Bonds. The sole remedy of any Beneficial Owner of a Bond shall be to take such actions as that
Beneficial Owner deems necessary, including seeking an order of specific performance from an
appropriate court, to compel the City or other obligated person to comply with the Undertaking.
(g) Desi�nation of Official Responsible to Administer Undertakin�. The
Finance Directar of the City (or such other officer of the City who may in the future perform the
duties of that office) or his or her designee is authorized and directed in his or her discretion to
take such further actions as may be necessary, appropriate or convenient to carry out the
Undertaking of the City in respect of the Bonds set forth in this section and in accordance with
Rule 15c2-12, including, without limitation, the following actions:
(i) Preparing and filing the annual financial information
undertaken to be provided;
(ii) Determining whether any event specified in subsection (a)
has occurred, assessing its materiality, where necessary, with respect to the
Bonds, and preparing and disseminating any required notice of its occurrence;
(iii) Determining whether any person other than the City is an
"obligated person" within the meaning of Rule 15c2-12 with respect to the Bonds,
and obtaining from such person an undertaking to provide any annual financial
information and notice of listed events for that person in accordance with
Rule 15c2-12;
(iv) Selecting, engaging and compensating designated agents
and consultants, including but not limited to financial advisors and legal counsel,
to assist and advise the City in carrying out the Undertaking; and
(v) Effecting any necessary amendment of the Undertaking.
Section 19. Sale of Bonds. The City Council has determined that it is in the best
interest of the City to delegate to the Mayor or Finance Director the authority to choose the
method of sale of the Bonds, approve the final principal amount, dates, denominations, interest
rates, payment dates, maturity dates, and redemption provisions of the Bonds, and minimum
savings to be achieved by the Refunding Plan, in the manner provided herein, provided that:
(a) The aggregate principal amount of the Bonds does not exceed
$13,300,000;
(b) One or more rates of interest may be fixed for the Bonds, which rate or
rates must be in multiples of 1/8 or 1/20 of 1% or both, and no rate of interest for any maturity
of the Bonds may exceed 5.0%;
(c) The combined true interest cost to the City for all Bonds issued under this
ordinance does not exceed 3.5%;
Ordinance No. 12-719 Page 14 of I7
(d) The purchase price for the Bonds may not be less than 98%;
(e) The Bonds shall be issued subject to optional and mandatory redemption
provisions, including designation of Term Bonds, if any, set forth in Section 9.
{� There is a minimum net present value savings of 5.0% of the Refunded
Bonds;
(g) The Bonds shall be dated as of the date of their delivery, which date and
time for the issuance and delivery of the Bonds is not later than December 31, 2013; and
(h) Interest shall be payable at fixed rates semiannually on each June 1 and
December 1, principal shall be payable annually on each December 1 and the final maturity shall
not be later than December 1, 2033.
In determining the method of sale of the Bonds, final principal amount, dates,
denominations, interest rates, payment dates, maturity dates, and redemption provisions of the
Bonds, and minimum savings to be achieved by the Refunding Plan, the Mayor or Finance
Director, in consultation with other City officials and staff and advisors, shall take into account
those factors that, in his or her judgment, will result in the lowest true interest cost on the Bonds
to their maturity, including, but not limited to current financial market conditions and current
interest rates for obligations comparable to the Bonds.
The Mayor or Finance Director is authorized to sell the Bonds by competitive sale in
accordance with a notice of sale that shall be consistent with this ordinance; provided that the
Bonds may be sold pursuant to a negotiated sale if the Mayor or Finance Director determines that
a negotiated sale is in the City's best interest because of market conditions.
The Bonds will be printed at City expense and will be delivered to the purchaser in
accordance with this ordinance, with the approving legal opinion of Foster Pepper PLLC,
municipal bond counsel of Seattle, Washington, regarding the Bonds.
Section 20. Official Statement. The City Council authorizes the Mayor or Finance
Director to approve a preliminary official statement in connection with the offering of the Bonds
prepared pursuant to Section 19 of this ordinance and to "deem final" such preliminary official
statement as of its date, except for the omission of information dependent upon the pricing of the
Bonds and the completion of the purchase. The City agrees to cooperate with the purchaser to
deliver or cause to be delivered, within seven business days from the date of the sale of the
Bonds and in sufficient time to accompany any confirmation that requests payment from any
customer of the purchaser, copies of a final official statement in sufficient quantity to comply
with Section (b)(4) of the Rule and the rules of the MSRB.
In addition, the City authorizes and approves the preparation, execution by the Mayor or
Finance Director and delivery to the purchaser of a final official statement for the Bonds, in the
form of the preliminary official statement, with such modifications and amendments thereto as
shall be deemed necessary or desirable by the City. The City authorizes the Mayor or Finance
Director to approve the distribution by the purchaser of that final official statement to potential
purchasers and purchasers of the Bonds.
Ordinance No. 12-719 Page 1 S of 17
The authority to the Mayor and Finance Director granted by Sections 19 and 20 shall
remain in effect until withdrawn by the City Council.
Section 21. Supplemental Ordinances. The City Council from time to time and at any
time may pass an ordinance or ordinances supplemental to this ordinance which supplemental
ordinance or ordinances thereafter shall become a part of this ordinance, for any one or more of
the following purposes:
(a) To add covenants and agreements that do not adversely affect the interests
of the holders and owners of the Bonds, or to surrender any right or power reserved to or
conferred upon the City.
(b) To cure any ambiguities or to cure, correct or supplement any defective
provision contained in this ordinance in a manner that does not materially adversely affect the
interest of the holders and owners of the Bonds.
I
Section 22. General Authorization and Ratification. The Mayor, Finance Director,
City Clerk, and other appropriate officers of the City are severally authorized and directed to take
any actions and to execute documents as in their judgment may be necessary or desirable to carry
out the terms of, and complete the transactions contemplated �by, this ordinance (including
everything necessary for the prompt delivery of the Bonds to the purchaser and for the proper
application, use and investment of the proceeds of the sale thereo�, and all actions heretofore
taken in furtherance thereof and not inconsistent with the terms of this ordinance are ratified and
confirmed in all respects.
Section 23. Severabilitv. The provisions of this ordinance are declared to be separate
and severable. If a court of competent jurisdiction, all appeals having been eachausted or all
appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as
to any person or circumstance, such offending provision shall, if feasible, be deemed to be
modified to be within the limits of enforceability or validity. However, if the offending
provision cannot be so modified, it shall be null and void with respect to the particular person or
circumstance, and all other provisions of this ordinance in all other respects, and the offending
provision with respect to all other persons and all other circumstances, shall remain valid and
enforceable.
Section 24 . Effective Date of Ordinance This ordinance shall take effect and be in
force from and after its passage and five days following its publication as required by law.
Ordinance No. 92-719 Page 16 of 17
PASSED by the City Council of the City of Federal Way this 6 day of March, 2012.
ATTEST:
CITY OF FEDERAL WAY
� � �
�� _ _.�
_ -
, �. .�,..
,
CITY CLERK, CA OL M EILLY, CMC
APPROVED AS TO FORM:
��
CITY ATTORNEY, PATRICIA A. RICHARDSON
,
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.:
2/28/2012
3/06/2012
3/9/2012
3/14/2012
12-719
Ordenance No. 12-719 Page 17 of 17