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ORD 19-868 ORDINANCE NO. 19-868 AN ORDINANCE of the City of Federal Way,Washington, relating to contracting indebtedness;providing for the issuance,sale and delivery of one or more series of not to exceed $15,000,000 aggregate principal amount of limited tax general obligation bonds to provide funds to repay the City's portion of the South Correctional Entity Facility Public Development Authority Bonds,Series 2009A and Series 2009B(Taxable Build America Bonds—Direct Payment),and to pay the costs of issuance of the bonds; fixing or setting parameters with respect to certain terms and covenants of the bonds; appointing the City's designated representative to approve the final terms of the sale of the bonds; and providing for other related matters. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance,the following capitalized terms 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 that may be purchased to accomplish the repayment of the City's portion of the SCORE Bonds as authorized by this ordinance. (b) "Authorized Denomination" means $5,000 or any integral multiple thereof within a maturity of a Series. (c)"Beneficial Owner"means,with respect to a Bond,the owner of any beneficial interest in that Bond. (d) "Bond" means each bond issued pursuant to and for the purposes provided in this ordinance. Ordinance No. 19-868 Page 1 of 28 (e) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. (f)"Bond Account"means the Limited Tax General Obligation Bond Account,2019,of the City created for the payment of the principal of and interest on the Bonds. (g)"Bond Purchase Contract"means an offer to purchase a Series of the Bonds,setting forth certain terms and conditions of the issuance, sale and delivery of those Bonds, which offer is authorized to be accepted by the Designated Representative on behalf of the City,if consistent with this ordinance. (h) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of each Bond. (i)"Bond Registrar"means the Fiscal Agent,or any successor bond registrar selected by the City for any Series of Bonds. (j) "City" means the City of Federal Way, Washington, a municipal corporation duly organized and existing under the laws of the State. (k) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (1) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (m) "DTC"means The Depository Trust Company,New York,New York, or its nominee. (n)"Designated Representative"means the officer of the City appointed in Section 4 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). Ordinance No. 19-868 Page 2 of 28 (o) "Final Terms" means the terms and conditions for the sale of a Series of the Bonds including the amount, date or dates, denominations, interest rate or rates (or mechanism for determining interest rate or rates), whether a Series is federally tax-exempt, payment dates, final maturity, redemption rights, price, and other terms or covenants. (p)"Fiscal Agent"means the fiscal agent of the State,as the same may be designated by the State from time to time. (q)"Government Obligations"has the meaning given in RCW 39.53.010,as now in effect or as may hereafter be amended. (r)"Issue Date"means,with respect to a Bond,the date of initial issuance and delivery of that Bond to the Purchaser in exchange for the purchase price of that Bond. (s)"Letter of Representations"means the Blanket Issuer Letter of Representations between the City and DTC,dated May 1, 1997,as it may be amended from time to time,and any successor or substitute letter relating to the operational procedures of the Securities Depository. (t) "MSRB"means the Municipal Securities Rulemaking Board. (u) "Official Statement" means an offering document, disclosure document, private placement memorandum or substantially similar disclosure document provided to purchasers and potential purchasers in connection with the initial offering of a Series of the Bonds in conformance with Rule 15c2-12 or other applicable regulations of the SEC. (v) "Owner"means, without distinction, the Registered Owner and the Beneficial Owner. (w)"Purchaser"means KeyBanc Capital Markets Inc.,of Seattle,Washington,or such other corporation, firm, association,partnership, trust,bank, financial institution or other legal entity or Ordinance No. 19-868 Page 3 of 28 group of entities selected by the Designated Representative to serve as purchaser in a private placement, underwriter or placement agent in a negotiated sale of any Series of the Bonds. (x)"Rating Agency"means any nationally recognized rating agency then maintaining a rating on the Bonds at the request of the City. (y)"Record Date"means the Bond Registrar's close of business on the 15th day of the month preceding an interest payment date. With respect to redemption of a Bond prior to its maturity,the Record Date shall mean the Bond Registrar's close of business on the date on which the Bond Registrar sends the notice of redemption in accordance with Section 9. (z)"Registered Owner"means,with respect to a Bond,the person in whose name that Bond is registered on the Bond Register. For so long as the City utilizes the book-entry only system for the Bonds under the Letter of Representations,Registered Owner shall mean the Securities Depository. (aa) "Rule 15c2-12" means Rule 15c2-12 promulgated by the SEC under the Securities Exchange Act of 1934, as amended. (bb) "SEC"means the United States Securities and Exchange Commission. (cc) "Securities Depository" means DTC, any successor thereto, any substitute securities depository selected by the City that is qualified under applicable laws and regulations to provide the services proposed to be provided by it, or the nominee of any of the foregoing. (dd) "Series of the Bonds" or"Series" means a series of the Bonds issued pursuant to this ordinance. (ee) "SCORE 2009 Bonds" means all or a portion of the City's portion of the South Correctional Entity Public Development Authority Bonds,Series 2009A maturing in the years 2021 and 2022, and the City's portion of the South Correctional Entity Public Development Authority Ordinance No. 19-868 Page 4 of 28 Bonds,Series 2009B(Taxable Build America Bonds—Direct Payment)maturing in the years 2020, 2022, 2024, 2029 and 2039. f "State"means the Stateof Washington. (gg) "Term Bond"means each Bond designated as a Term Bond and subject to mandatory redemption in the years and amounts set forth in the Bond Purchase Contract. (hh) "Undertaking" means the undertaking to provide continuing disclosure entered into pursuant to Section 17 of this ordinance. (ii) "2009A Bonds" means the South Correctional Entity Public Development Authority Bonds, Series 2009A. (jj) "2009B Bonds" means the South Correctional Entity Public Development Authority Bonds, Series 2009B (Taxable Build America Bonds—Direct Payment). Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: (a) Interlocal Agreement and SCORE. Pursuant to an Amended and Restated SCORE Interlocal Agreement dated as of October 1,2009(the Interlocal Agreement"),among on the City and the cities of Auburn,Burien,Des Moines,Renton, SeaTac and Tukwila(collectively,the"Member Cities"), such cities agreed to jointly construct, equip, maintain and operate a consolidated correctional facility to be located in Des Moines, Washington (the "Facility"). To carry out the purposes of the Interlocal Agreement,the Member Cities established the South Correctional Entity ("SCORE") as a governmental administrative agency. In order to finance and refinance the acquisition, construction, equipping and improvement of the Facility, the City of Renton, Ordinance No. 19-868 Page 5 of 28 Washington chartered the South Correctional Entity Facility Public Development Authority (the "Authority") as a public corporation. (b)The Repayment. Pursuant to Resolution No.2 of the Authority's Board of Directors(the "SCORE 2009 Bond Resolution"), the Authority issued its SCORE 2009 Bonds. There are currently$2,755,000 of 2009A Bonds outstanding,all of which may be subject to redemption prior to their stated maturity dates at any time on or after January 1, 2020. In addition, there are $68,865,000 of 2009B Bonds outstanding, $66,480,000 of which may be subject to redemption prior to their stated maturity dates at any time on or after January 1, 2020. Pursuant to the Interlocal Agreement,the City is assigned 18%of the total debt service on the 2009 Bonds. The City Council finds that it is in the best interests of the City and its taxpayers to issue the Bonds in order to carry out the repayment of all or a portion of the City's percentage of the SCORE 2009 Bonds, if determined to be advantageous to the City by the Designated Representative. (c) Debt Capacity. The maximum amount of indebtedness authorized by this ordinance is $15,000,000. Based on the following facts,this amount is to be issued within the amount permitted to be issued by the City for general municipal purposes without a vote: (1) The assessed valuation of the taxable property within the City as ascertained by the last preceding assessment for City purposes for collection in the calendar year 2019 is $11,316,068,196. (2)As of December 31, 2018,the City had limited tax general obligation indebtedness, consisting of bonds, leases and conditional sales contracts outstanding in the principal amount of Ordinance No. 19-868 Page 6 of 28 $31,498,600, which is incurred within the limit of up to 11/4% of the value of the taxable property within the City permitted for general municipal purposes without a vote. (3) As of December 31, 2018, the City had no outstanding unlimited tax general obligation indebtedness. (d)The Bonds. For the purpose of providing the funds necessary to carry out the repayment of the SCORE 2009 Bonds and to pay the costs of issuance and sale of the Bonds,the City Council finds that it is in the best interests of the City and its taxpayers to issue and sell the Bonds to the Purchaser,pursuant to the terms set forth in the Bond Purchase Contract as approved by the City's Designated Representative consistent with this ordinance. Section 3. Authorization of Bonds. The City is authorized to borrow money on the credit of the City and issue negotiable limited tax general obligation bonds evidencing indebtedness in one or more Series in the aggregate principal amount not to exceed$15,000,000 to provide funds necessary to carry out the repayment of the City's portion of the SCORE 2009 Bonds and to pay the costs of issuance and sale of the Bonds. Section 4. Description of Bonds; Aj,pointment of Designated Representative. The City's Finance Director,or the Mayor in his absence,is appointed as the Designated Representative of the City and is authorized and directed to conduct the sale of the Bonds in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of each Series of the Bonds,with such additional terms and covenants as the Designated Representative deems advisable, within the following parameters: (a)The Bonds may be issued in one or more Series,and the aggregate principal amount of the Bonds shall not exceed $15,000,000; Ordinance No. 19-868 Page 7 of 28 (b)One or more rates of interest may be fixed for the Bonds as long as no rate of interest for any maturity of the Bonds exceeds 6.00%; (c) The true interest cost to the City for each Series of Bonds does not exceed 5.00%; (d)The aggregate purchase price for each Series of Bonds shall not be less than 95%and not more than 125%of the aggregate stated principal amount of the Bonds,excluding any original issue discount; (e) The Bonds may be issued subject to optional and mandatory redemption provisions; (f) 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, 2019; and (g) Each Series shall mature no later than December 1, 2039. In addition,a Series of the Bonds may not be issued if it would cause the indebtedness of the City to exceed the City's legal debt capacity on the Issue Date. The Designated Representative may determine whether it is in the City's best interest to provide for bond insurance or other credit enhancement, may determine whether a Series is federally tax-exempt, and may accept such additional terms,conditions and covenants as he or she may determine are in the best interests of the City, consistent with this ordinance. In determining the number of series,the series designations,final principal amounts,date of the Bonds, denominations, interest rates, payment dates, redemption provisions, tax status, and maturity dates for the Bonds,the Designated Representative,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. Ordinance No. 19-868 Page 8 of 28 Section 5. Bond Registrar; Registration and Transfer of Bonds. (a) Registration of Bonds. Each Bond shall be issued only in registered form as to both principal and interest and the ownership of each Bond shall be recorded on the Bond Register. (b) Bond Registrar; Duties. The Fiscal Agent is appointed as initial Bond Registrar. 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 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. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on each Bond. The Bond Registrar may become an Owner 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 Owners. (c) Bond Register; Transfer and Exchange. The Bond Register shall contain the name and mailing address of each Registered Owner and the principal amount and number of each Bond held by each Registered Owner. A Bond surrendered to the Bond Registrar may be exchanged for a Bond or Bonds in any Authorized Denomination of an equal aggregate principal amount and of the same Series, interest rate and maturity. A Bond 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 any Bond or Ordinance No. 19-868 Page 9 of 28 transfer registered ownership during the period between the applicable Record Date and the next upcoming interest payment or redemption date. (d) Securities Depository; Book-Entry Only Form. If a Bond is to be issued in book-entry form, DTC shall be appointed as initial Securities Depository and each such Bond initially shall be registered in the name of Cede&Co.,as the nominee of DTC. Each Bond registered in the name of the Securities Depository shall be held fully immobilized in book-entry only form by the Securities Depository in accordance with the provisions of the Letter of Representations. Registered ownership of any Bond registered in the name of the Securities Depository may not be transferred except: (i)to any successor Securities Depository; (ii)'to any substitute Securities Depository appointed by the City; or (iii) to any person if the Bond is no longer to be held in book-entry only form. Upon the resignation of the Securities Depository, or upon a termination of the services of the Securities Depository by the City,the City may appoint a substitute Securities Depository. If(i)the Securities Depository resigns and the City does not appoint a substitute Securities Depository, or(ii)the City terminates the services of the Securities Depository,the Bonds no longer shall be held in book-entry only form and the registered ownership of each Bond may be transferred to any person as provided in this ordinance. Neither the City nor the Bond Registrar shall have any obligation to participants of any Securities Depository or the persons for whom they act as nominees regarding accuracy of any records maintained by the Securities Depository or its participants. Neither the City nor the Bond Registrar shall be responsible for anynotice that is permitted or required to be given to a Registered g p Owner except such notice as is required to be given by the Bond Registrar to the Securities Depository. Ordinance No. 19-868 Page 10 of28 Section 6. Form and Execution of Bonds. (a)Form of Bonds; Signatures and Seal. Each Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. Each Bond shall be signed by the Mayor and the 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. If any officer whose manual or facsimile signature appears on a Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her manual or facsimile signature is authenticated by the Bond Registrar,or issued or delivered by the City,that Bond 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,although he or she did not hold the required office on its Issue Date. (b)Authentication. Only a Bond bearing a Certificate of Authentication in substantially 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 Bonds, 2019, described in the Bond Ordinance." The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. Section 7. Payment of Bonds. Principal of and interest on each Bond shall be payable in lawful money of the United States of America. Principal of and interest on each Bond registered in Ordinance No. 19-868 Page 11 of 28 the name of the Securities Depository is payable in the manner set forth in the Letter of Representations. Interest on each Bond not registered in the name of the Securities Depository is payable by electronic transfer on the interest payment date,or by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register on the Record Date. However,the City is not required to make electronic transfers except pursuant to a request by a Registered Owner in writing received on or prior to the Record Date and at the sole expense of the Registered Owner. Principal of each Bond not registered in the name of the Securities Depository is payable upon presentation and surrender of the Bond by the Registered Owner to the Bond Registrar. The Bonds are not subject to acceleration under any circumstances. Section 8. Bond Account. The Bond Account is created as a special fund of the City for the sole purpose of paying principal of and interest on the Bonds. Bond proceeds in excess of the amounts needed to pay the costs of repaying the City's portion of the SCORE 2009 Bonds and the costs of issuance, if any, shall be deposited into the Bond Account unless they are used for capital projects pursuant to Section 14(2). All amounts allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Account as necessary for the timely payment of amounts due with respect to the Bonds. The principal of and interest on the Bonds shall be paid out of the Bond Account. Until needed for that purpose,the City may invest money in the Bond Account temporarily in any legal investment, and the investment earnings shall be retained in the Bond Account and used for the purposes of that fund. Ordinance No. 19-868 Page 12 of 28 Section 9. Redemption Provisions and Purchase of Bonds. (a) Optional Redemption. The Bonds shall be subject to redemption, or prepayment, at the option of the City on terms acceptable to the Designated Representative, as set forth in the Bond Purchase Contract, consistent with the parameters set forth in Section 4. (b) Mandatory Redemption. Each Bond that is designated as a Term Bond in the Bond Purchase Contract, consistent with the parameters set forth in Section 4 and except as set forth below,shall be called for redemption at a price equal to the stated principal amount to be redeemed, plus accrued interest,on the dates and in the amounts as set forth in the Bond Purchase Contract. If a Term Bond is redeemed under the optional redemption provisions,defeased or purchased by the City and surrendered for cancellation,the principal amount of the Term Bond so redeemed,defeased or purchased(irrespective of its actual redemption or purchase price) shall be credited against one or more scheduled mandatory redemption installments for that Term Bond. The City shall determine the manner in which the credit is to be allocated and shall notify the Bond Registrar in writing of its allocation prior to the earliest mandatory redemption date for that Term Bond for which notice of redemption has not already been given. (c) Selection of Bonds for Redemption; Partial Redemption. If fewer than all of the outstanding Bonds are to be redeemed at the option of the City,the City shall select the Series and maturities to be redeemed. If fewer than all of the outstanding Bonds of a maturity of a Series are to be redeemed, the Securities Depository shall select Bonds registered in the name of the Securities Depository to be redeemed in accordance with the Letter of Representations,and the Bond Registrar shall select all other Bonds to be redeemed randomly in such manner as the Bond Registrar shall determine. All or a portion of the principal amount of any Bond that is to be redeemed may be Ordinance No. 19-868 Page 13 of 28 redeemed in any Authorized Denomination. If less than all of the outstanding principal amount of any 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 Series,maturity and interest rate in any Authorized Denomination in the aggregate principal amount to remain outstanding. (d)Notice of Redemption. Notice of redemption of each Bond registered in the name of the Securities Depository shall be given in accordance with the Letter of Representations. Notice of redemption of each other Bond,unless waived by the Registered Owner,shall 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 at the address appearing on the Bond Register on the Record Date. The requirements of the preceding sentence shall be satisfied when notice has been mailed as so provided, whether or not it is actually received by an Owner. In addition, the redemption notice shall be mailed or sent electronically within the same period to the MSRB (if required under the Undertaking), to each Rating Agency, 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 any Bond. (e) Rescission of Optional Redemption Notice. In the case of an optional redemption,the notice of redemption may state that the City retains the right to rescind the redemption notice and the redemption by giving a notice of rescission to the affected Registered Owners at any time on or prior to the date fixed for redemption. Any notice of optional redemption that is so rescinded shall be of no effect,and each Bond for which a notice of optional redemption has been rescinded shall remain outstanding. Ordinance No. 19-868 Page 14 of 28 (f)Effect of Redemption. Interest on each Bond called for redemption shall cease to accrue on the date fixed for redemption,unless either the notice of optional redemption is rescinded as set forth above,or money sufficient to effect such redemption is not on deposit in the Bond Account or in a trust account established to refund or defease the Bond. (g)Purchase of Bonds. The City reserves the right to purchase any or all of the Bonds offered to the City at any time at any price acceptable to the City plus accrued interest to the date of purchase. Section 10. Failure To Pay Bonds. If the principal of any Bond is not paid when the Bond is properly presented at its maturity or date fixed 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 fixed 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, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 11.Pledge of Taxes. The Bonds constitute a general indebtedness of the City and are payable from tax revenues of the City and such other money as is lawfully available,and pledged by the City for the payment of principal of and interest on the Bonds. For as long as any of the Bonds are outstanding,the City irrevocably pledges that it shall,in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters,include in its annual property tax levy amounts sufficient,together with other money that is lawfully available,to pay principal of and interest on the Bonds as the same become due. The full faith, credit and Ordinance No. 19-868 Page 15 of 28 resources of the City are pledged irrevocably for the prompt payment of the principal of and interest on the Bonds and such pledge shall be enforceable in mandamus against the City. Section 12. Tax Covenants. (a)Preservation of Tax Exemption for Interest on Bonds. The City covenants that it will take all actions necessary to prevent interest on any Bonds issued as federally tax-exempt 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 those Bonds or other funds of the City treated as proceeds of those Bonds that will cause interest on those 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 a Series of the Bonds, take all actions necessary to comply(or to be treated as having complied) with those requirements in connection with the Bonds. (b)Post-Issuance Compliance. The Finance Director is authorized and directed to review and update the City's written procedures to facilitate compliance by the City with the covenants in this ordinance and the applicable requirements of the Code that must be satisfied after the Issue Date to prevent interest on the Bonds from being included in gross income for federal tax purposes. (c) Designation of Bonds as "Qualified Tax-Exempt Obligations." A Series of the Bonds may 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 Series does not constitute"private activity bonds"within the meaning of Section 141 of the Code; Ordinance No. 19-868 Page 16 of 28 (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)that 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 calendar year in which the Series is issued will not exceed $10,000,000; and (3)the amount of tax-exempt obligations,including the Series,designated by the City as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Series is issued does not exceed$10,000,000. Section 13. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan,which may include(a)paying when due the principal of and interest on any or all of the Bonds (the "defeased Bonds"); (b) redeeming the defeased Bonds prior to their maturity; and (c)paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the"trust account"),money and/or Government Obligations maturing at a time or times and bearing interest in amounts sufficient to redeem,refund or defease the defeased Bonds in accordance with their terms,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. Thereafter,the Owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds solely from the trust account and the defeased Bonds shall be deemed no longer outstanding. In that event,.the City may apply money remaining in any fund or Ordinance No. 19-868 Page 17 of 28 account (other than the trust account) established for the payment or redemption of the defeased Bonds to any lawful purpose. Unless otherwise specified by the City in a refunding or defeasance plan,notice of refunding or defeasance shall be given,and selection of Bonds for any partial refunding or defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of Bonds. Section 14. Use of Bond Proceeds; Repayment of City's Portion of SCORE 2009 Bonds. (a)Appointment of Refunding Trustee; Selection of SCORE 2009 Bonds. If necessary,the Designated Representative is authorized and directed to appoint a financial institution to serve as Refunding Trustee and to perform the duties of Refunding Trustee under this ordinance or deposit the Bond proceeds with the Refunding Trustee selected by the Authority,and to select the SCORE 2009 Bonds to be repaid by the Bonds. The Designated Representative may choose to repay fewer than all of the City's portion of the SCORE 2009 Bonds. The City's portion of the SCORE 2009 Bonds,as selected by the Designated Representative,shall be identified in a repayment plan set forth in the certificate of the Designated Representative. (b)Use of Bond Proceeds;Acquisition of Acquired Obligations. On the Issue Date,all or a portion of the proceeds of the sale of the Bonds may be deposited with a refunding trustee (the "Refunding Trustee")and used to discharge the obligations of the City relating to the City's portion of the SCORE 2009 Bonds by carrying out the refunding plan in accordance with the certificate of the Designated Representative. To the extent practicable,such obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations,if authorized by the Designated Representative, 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 Ordinance No. 19-868 Page 18 of 28 the payment of the amount required to be paid by the refunding plan. The Acquired Obligations,if any, shall be listed and more particularly described in a schedule attached to a refunding trust agreement, but are subject to substitution as set forth below. Any Bond proceeds or other money deposited with the Refunding Trustee not needed to carry out the refunding plan shall be returned to the City for deposit in the Bond Account to pay interest on the Bonds on the next upcoming first interest payment date,unless,after consulting with the City's bond counsel,they are used for capital projects. (c)Substitution of Acquired Obligations. The City reserves the right at any time to substitute cash or other direct, noncallable obligations of the United States of America ("Substitute Obligations")for any of the Acquired Obligations if the City obtains(1)an opinion of Bond Counsel to the effect that the interest on a Series of the Bonds issued as federally tax-exempt and the repayment of the City's portion of the 2009A Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d)of the Code,and(b)a verification by a nationally recognized independent certified public accounting firm that such substitution will not impair the timely payment of the amounts required to be paid by the refunding plan. 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) Refunding Trust Agreement; Administration of Refunding Plan. The Designated Representative is authorized and directed to execute a refunding trust agreement setting forth the duties,obligations and responsibilities of the Refunding Trustee in connection with the carrying out the refunding plan,if necessary. The refunding trust agreement shall,among other things,authorize Ordinance No. 19-868 Page 19 of 28 and direct the Refunding Trustee to purchase the Acquired Obligations (or Substitute Obligations) and to make the payments required to be made by the refunding plan. 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 in accordance with the provisions of the SCORE 2009 Bond Resolution,this ordinance,chapter 39.53 RCW and other applicable State law. All administrative costs(including without limitation 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 plan)and costs of issuance of the Bonds may be paid out of the amounts deposited with the Refunding Trustee or other available money of the City, in accordance with the refunding trust agreement. (e) Call for Redemption of the City's Portion of the SCORE 2009 Bonds. The Designated Representative is authorized to request the Authority to call the City's portion of the SCORE 2009 Bonds for redemption on the date fixed for repayment(the"Repayment Date")in accordance with the SCORE 2009 Bond Resolution and this ordinance. Section 15. Sale and Delivery of the Bonds. (a) Manner of Sale of Bonds; Delivery of Bonds. The Designated Representative is authorized to sell each Series of the Bonds by negotiated sale or private placement, based on the assessment of the Designated Representative of market conditions,in consultation with appropriate City officials and staff, Bond Counsel and other advisors. In determining the method of sale of a Series and accepting the Final Terms, the Designated Representative shall take into account those factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. Ordinance No. 19-868 Page 20 of 28 (b) Procedure for Negotiated Sale or Private Placement. If the Designated Representative determines that a Series of the Bonds is to be sold by negotiated sale or private placement, the Designated Representative shall select one or more Purchasers with which to negotiate such sale. lm p The Bond Purchase Contract for each Series of the Bonds shall set forth the Final Terms. The Designated Representative is authorized to execute the Bond Purchase Contract on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. (c) Preparation, Execution and Delivery of the Bonds. The Bonds will be prepared at City expense and will be delivered to the Purchaser in accordance with the Bond Purchase Contract, together with the approving legal opinion of Bond Counsel regarding the Bonds. Section 16. Official Statement. (a) Preliminary Official Statement Deemed Final. The Designated Representative shall review and, if acceptable to her or him, approve the preliminary Official Statement prepared in connection with each sale of a Series of the Bonds to the public or through a Purchaser as a placement agent. For the sole purpose of the Purchaser's compliance with paragraph(b)(1)of Rule 15c2-12,if applicable,the Designated Representative is authorized to deem that preliminary Official Statement final as of its date,except for the omission of information permitted to be omitted by Rule 15c2-12. The City approves the distribution to potential purchasers of the Bonds of a preliminary Official Statement that has been approved by the Designated Representative and been deemed final, if applicable, in accordance with this subsection. (b) Approval of Final Official Statement. The City approves the preparation of a final Official Statement for each Series of the Bonds to be sold to the public in the form of the preliminary Official Statement that has been approved and deemed final in accordance with subsection(a),with Ordinance No. 19-868 Page 21 of 28 such modifications and amendments as the Designated Representative deems necessary or desirable, and further authorizes the Designated Representative to execute and deliver such final Official Statement to the Purchaser if required under Rule 15c2-12. The City authorizes and approves the distribution by the Purchaser of the final Official Statement so executed and delivered to purchasers and potential purchasers of a Series of the Bonds. Section 17. Undertaking to Provide Continuing Disclosure. If necessary 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 (the "Undertaking") for the benefit of holders of the Bonds: (a)Undertaking 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: (1) Annual financial information and operating data of the type included in the final official statement for the Bonds and described in paragraph(b) ("annual financial information"); (2)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: (A)principal and interest payment delinquencies;(B)non-payment related defaults,if material;(C)unscheduled draws on debt service reserves reflecting financial difficulties; (D) unscheduled draws on credit enhancements reflecting financial difficulties; (E) substitution of credit or liquidity providers, or their failure to perform;(F)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 Ordinance No. 19-868 Page 22 of 28 notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;(G)modifications to rights of holders of the Bonds,if material; (H)bond calls(other than scheduled mandatory redemptions of Term Bonds),if material,and tender offers;(I)defeasances;(J)release,substitution,or sale of property securing repayment of the Bonds, if material;(K)rating changes;(L)bankruptcy,insolvency,receivership or similar event of the City, as such "Bankruptcy Events" are defined in Rule 15c2-12; (M) 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 action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (N) appointment of a successor or additional trustee or the change of name of a trustee, if material; (0) incurrence of a financial obligation of the City or obligated person,if material,or agreement to covenants,events of default,remedies,priority rights, or other similar terms of a financial obligation of the City or obligated person, any of which affect security holders,if material;and(P)default,event of acceleration,termination event,modification of terms, or other similar events under the terms of the financial obligation of the City or obligated person, any of which reflect financial difficulties. The term"financial obligation"means a(i)debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of(i) or(ii). The term "financial obligation" shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. (3)Timely notice of a failure by the City to provide required annual financial information on or before the date specified in paragraph (b). Ordinance No. 19-868 Page 23 of 28 (b)Type of Annual Financial Information Undertaken to be Provided. The annual financial information that the City undertakes to provide in paragraph(a): (1) Shall consist of(A) annual financial statements prepared (except as noted in the financial statements) in accordance with applicable generally accepted accounting principles applicable to local governmental units of the State such as the City, as such principles may be changed from time to time,which statementsmay be unaudited,provided,that if and when audited financial statements are prepared and available they will be provided; (B) principal amount of general obligation bonds outstanding at the end of the applicable fiscal year;(C)assessed valuation for that fiscal year;and(D)regular property tax levy rate and regular property tax levy rate limit for the fiscal year; (2) 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, 2018; and (3) 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 Undertaking. This Undertaking is subject to amendment after the primary offering of the Bonds without 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 Ordinance No. 19-868 Page 24 of 28 the reasons for the amendment. If the amendment changes the type 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. This Undertaking shall inure to the benefit of the City and the holder of each Bond, and shall not inure to the benefit of or create any rights in any other person. (e) Termination of Undertaking. 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 p gtY g Undertaking shall terminate if the provisions of Rule 15c2-12 that 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 Bond Counsel delivered to the City, and the City provides timely notice of such termination to the MSRB. (f) Remedy for Failure to Comply with Undertaking. As soon as practicable after the City learns of any failure to comply with this Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected. No failure by the City or other obligated person to comply with this Undertaking shall constitute an event of default. The sole remedy of any holder of a Bond shall be to take action to compel the City or other obligated person to comply with this Undertaking, including seeking an order of specific performance from an appropriate court. (g)Designation of Official Responsible to Administer Undertaking. The Finance Director or his or her designee is the person designated,in accordance with the Bond Ordinance,to carry out the Undertaking in accordance with Rule 15c2-12,including,without limitation,the following actions: (1) Preparing and filing the annual financial information undertaken to be provided; Ordinance No. 19-868 Page 25 of 28 (2)Determining whether any event specified in paragraph(a)has occurred,assessing its materiality, where necessary, with respect to the Bonds, and preparing and disseminating any required notice of its occurrence; (3) 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 required under Rule 15c2-12; (4) Selecting, engaging and compensating designated agents and consultants,including financial advisors and legal counsel,to assist and advise the City in carrying out this Undertaking; and (5) Effecting any necessary amendment of this undertaking. Section 18. Supplemental and Amendatory Ordinances. The City may supplement or amend this ordinance for any one or more of the following purposes without the consent of any Owners of the Bonds: (a)To add covenants and agreements that do not materially adversely affect the interests of Owners, 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 Beneficial Owners of the Bonds. Section 19. Agreement with the Authority. The Designated Representative is authorized to enter into an agreement with the Authority that includes(a)covenants of the Authority regarding the use of the facilityrefinanced bythe Bonds and other representations of the Authorityrelevant to the p Ordinance No. 19-868 Page 26 of 28 of anyof theof Bondsproceeds and redeemingthe SCORE tax-exempt status Bonds, (b) the use 2009 Bonds,and(c)such other provisions as the Designated Representative determines are advisable and consistent with this ordinance. Section 20. Severability. Should any section, subsection, paragraph, sentence, clause, or phrase of this ordinance,or its application to any person or situation,be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of this ordinance or its application to any other person or situation.The City Council of the City of Federal Way hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clauses,phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses,phrases, or portions be declared invalid or unconstitutional. Section 21. Corrections. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto. Section 22. Ratification.Any act consistent with the authority and prior to the effective date of this ordinance is hereby ratified and affirmed. Section 23. Effective Date. This ordinance shall take effect and be in force thirty(30)days from and after its passage and publication, as provided by law. PASSED by the City Council of the City of Federal Way this 7th day of May, 2019. [Signatures to Follow] Ordinance No. 19-868 Page 27 of 28 CITY OF FEDERAL WAY: 4 --11,i ter'. 14t deER'ELL, MA OR ATTEST: diniuctiAi W / S' P''ANIE COURTNEY, CM CITY CLERK APPROVED AS TO FORM: e J. RYAN CALL, CITY ATTORNEY FILED WITH THE CITY CLERK: 04-12-2019 PASSED BY THE CITY COUNCIL: 05-07-2019 PUBLISHED: 05-10-2019 EFFECTIVE DATE: 06-09-2019 k ORDINANCE NO.: 19-868 Ordinance No. 19-868 Page 28 of 28