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HomeMy WebLinkAboutRes2022-023 Electric Bond Sponsored by: Bower CITY OF SEWARD,ALASKA RESOLUTION 2022-023 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, PROVIDING FOR THE AUTHORIZATION, SALE, ISSUANCE AND DELIVERY OF CITY OF SEWARD, ALASKA, ELECTRIC REVENUE BOND IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED TEN MILLION DOLLARS ($10,000,000) TO FINANCE CERTAIN ELECTRIC FACILITY IMPROVEMENTS OF THE CITY; FIXING CERTAIN DETAILS OF SAID BOND; AND PROVIDING FOR RELATED MATTERS WHEREAS,the City of Seward,Alaska(the"City")is a home rule city and under Section 11 of Article X of the Alaska Constitution may exercise all legislative power not prohibited by law or the Charter of the City, and it has been determined that the matters set forth in this resolution are not prohibited by law or the Charter; and WHEREAS, the City owns, operates, and maintains an electric system (the "System") which is in need of certain additions, improvements and extensions; and WHEREAS, the Constitution and statutes of the State of Alaska and the Charter of the City permit the City to issue revenue bonds to finance projects which serve a public purpose which bonds are secured only by revenues of the project and which do not constitute a debt or pledge of the faith and credit or taxing power of the City and which may be authorized by the City Council and do not require ratification by the electors of the City; and WHEREAS,the City Council finds that it is in the best interest of the City to authorize the issuance of a series of electric revenue bonds to finance necessary electric infrastructure to the System; and WHEREAS, it is necessary to establish the form, conditions, covenants and method of sale of such series of electric revenue bonds and to make provision for establishing the amount, maturities,interest rates and redemptions rights and other terms thereof; and WHEREAS, the City Council finds it is appropriate to delegate to each of the City Manager, acting City Manager, City Finance Director and acting City Finance Director authority to determine the maturity amounts,interest rates, and other details of the series of electric revenue bonds, and to determine other matters pertaining to such bond that are not provided for in this resolution; and NOW,THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SEWARD,ALASKA: CITY OF SEWARD,ALASKA RESOLUTION 2022-023 Section 1. Purpose. The purpose of this resolution is to authorize the issuance, sale and delivery of not to exceed Ten Million Dollars ($10,000,000) principal amount of an electric revenue bond ("Bond"), to fix the form, covenants, and method of sale of said Bond, to provide for establishing the amount, maturities, interest rates, redemption rights and other terms of the Bond and to fix the conditions under which additional electric revenue bonds may be authorized and issued on a parity with bonds issued pursuant to Resolution No. 95-048. Section 2. Definitions. As used in this resolution, unless a different meaning clearly appears from the context: "Acquired Obligations" means and includes any of the following securities, if and to the extent the same are at the time legal for investment of funds of the City: any noncallable bonds or other noncallable obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America. "Annual Debt Service Requirement"means,with respect to any particular Fiscal Year and to any specified bonds, an amount equal to (i) interest accruing during such Fiscal Year on such bonds,except to the extent such interest is to be paid from deposits in the Debt Service Subaccount from bond proceeds;(ii)the principal amount of such bonds due during such Fiscal Year for which no sinking fund installments have been established;plus(iii)the unsatisfied balance of any sinking fund installment for such bonds due during such Fiscal Year. "Bond Account" means the Electric Revenue Bond Account as defined in Section 12 hereof. "Bond Bank"means the Alaska Municipal Bond Bank Authority. "Bond Register" means the registration books maintained by the Registrar containing the names and addresses of the owners of the Bond. "Bond" means the City of Seward, Alaska, Electric Revenue Bond, authorized by this resolution. "Bond Year"has the meaning given such term in the Federal Tax Certificate. "Capitalized Interest Subaccount"means the Capitalized Interest Subaccount created in the Bond Account by Section 12 hereof. "Charter" means the Home Rule Charter of the City, as the same may be amended from time to time. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 "City"means the City of Seward, Alaska, a municipal corporation organized and existing under the Charter and Constitution and laws of the State of Alaska. "Code"means the Internal Revenue Code of 1986,as amended,and all applicable treasury regulations thereunder. "Consulting Engineer" means an independent consulting engineer or engineering firm licensed to practice in the State of Alaska,retained and appointed pursuant to Section 16 hereof. "Council" means the general legislative authority of the City, as the same may be constituted from time to time. "Debt Service Subaccount" means the Debt Service Subaccount created in the Bond Account by Section 12 hereof. "Federal Tax Certificate" means the certificate executed and delivered by the City at the time of issuance and delivery of the Bond setting forth the City's reasonable expectations as to the use of Bond proceeds. "Fiscal Year"means the 12-month period commencing on January 1 each year through and including December 31 of that year. "Future Parity Bonds"means any System revenue bonds,notes,or other obligations of the City, other than the 2016 Bond or the Bond, issued under a resolution wherein the City pledges that the payments to be made out of the Pledged Revenues into the Bond Account and Reserve Subaccount therein to pay and secure the payment of the principal of and interest on such revenue bonds, notes or other obligations will be on a parity with the payments required by this resolution to be made out of such Pledged Revenues into the Bond Account and Reserve Subaccount to pay and secure the payment of the principal of and interest on the Bond. "Government Obligations"means any of the following: (i) any bonds or other obligations which, as to principal and interest, constitute direct obligations of, or are unconditionally guaranteed by, the United States of America; (ii) bonds, debentures, or other evidences of indebtedness issued or guaranteed by any agency or corporation which has been or may hereafter be created pursuant to an act of Congress as an agency or instrumentality of the United States of America; (iii)bonds, debentures, or other evidences of indebtedness issued or guaranteed by any agency or corporation which has been or may hereafter be created pursuant to an act of Congress as an agency or instrumentality of the United States of America; (iv) obligations of financial institutions insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, to the extent insured; and(v)bank certificates of deposit fully secured by obligations described in(i)and(ii)hereof. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 "Gross Revenues"means all rates and charges and other income (including income from Electric Account investments), in each case derived by or for the account of the City from the ownership, leasing or operation of the System, except proceeds from the sale of bonds or notes, any grants received for the City of Seward Electric Utility and interest received and profits derived from the investment of moneys obtained from such sources or from moneys held in any fund solely to pay or secure the payment of any bonds or notes issued in connection with the System. "Loan Agreement"means the Loan Agreement between the City and the Alaska Municipal Bond Bank pertaining to the sale of the Bond. "Net Revenues" means, for any Fiscal Year or other period of time, the Gross Revenues and interest and profits derived from the investment of moneys held in the Bond Account during such period less Operating Expenses for such period. "Operating Expenses"means, for any Fiscal Year or other period of time, the expenses of a non-capital nature incurred for operation, maintenance or repair of the System of a non-capital nature, and shall include, without limiting the generality of the foregoing, payments required by any electric purchase agreements, source of supply expenses, fuel expenses, treatment, transmission and distribution expenses, customer accounts expenses, administrative and general expenses, insurance premiums, lease rentals, legal, regulatory, and engineering expenses, payments to pension, retirement, group life insurance, health and hospitalization funds or other employee benefit funds which are properly chargeable to current operations,interest on customers' deposits, payroll tax expenses and any other expenses required to be paid under the provisions of this resolution or by law or permitted by standard practices for public utility systems similar to the properties and business of the System(adjusted to reflect public ownership) and applicable in the circumstances. Operating Expenses shall not include depreciation, amortization or any principal, redemption price or purchase price of, or interest on, any obligations of the City incurred in connection with and payable from Gross Revenues or any fee or charge in lieu of City taxes. "Parity Bonds"means the 2016 Bond,the Bond and any Future Parity Bonds. "Project"has the meaning assigned in Section 3. "Pledged Revenues" means Net Revenues and interest received and profits derived from the investment of moneys obtained from moneys held in any fund or account which secures the payment of principal of, and interest on, any Parity Bond. "Registered Owner" means the person named as the registered owner of the Bond in the Bond Register. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 "Registrar" means the Finance Director or acting Finance Director of the City, or any successor that the Finance Director or acting Finance Director may appoint. "Reserve Subaccount"means the Reserve Subaccount created in the Bond Account. "Resolution No. 95-048" means Resolution No. 95-048 passed and approved by the City Council on May 22, 1995. "Reserve Subaccount Requirement" means an amount equal to the least of(i) 10%of the proceeds of sale of the Parity Bonds; (ii) 125% of the average Annual Debt Service Requirement for all Parity Bonds;(iii)the maximum Annual Debt Service Requirement on all outstanding Parity Bonds; or such lesser amount as may be required by the Code. "System" means the existing electric system of the City as the same may be added to, improved and extended for as long as any Parity Bonds are outstanding,but shall not include such electric supply, transmission and distribution facilities that hereafter may be purchased, constructed or otherwise acquired by the City as a separate electric system, the revenues of which may be pledged to the payment of bonds issued to purchase, construct or otherwise acquire and improve such separate system. "2016 Bond"means the City of Seward,Alaska, Electric Revenue Refunding Bond,2016. Section 3. Authorization of Bond and Purpose of Issuance. The City is hereby authorized to issue and sell a revenue bond designated the City of Seward, Alaska, Electric Revenue Bond, 20XX (the "Bond") in one or more series in the aggregate principal amount of not to exceed Ten Million Dollars ($10,000,000). The proceeds of the Bond shall be used to (i) pay the costs of certain additions, betterments, and extensions of the System (collectively, the "Project"), and (ii) pay costs of issuance of the Bond. Available funds of the City shall be used to make any necessary deposits to the Reserve Subaccount and the Capitalized Interest Subaccount. The Project serves a public purpose of the City. Section 4. Date, Maturities, Interest Rates, and Other Details of the Bond. The Bond shall be dated and mature on such dates not later than December 1, 2052, and shall bear interest from its date of issuance, payable on such dates, and at such rates, not exceeding 6%per annum, as the City Council or each of City Manager, acting City Manager, Finance Director and acting Finance Director may fix and determine at or prior to the time of sale of the Bond. The Bond shall be fully registered as to both principal and interest, shall be in the denomination of$5,000 each, or any integral multiple thereof, and shall be numbered in such manner and with any additional designation as the Registrar deems necessary for purposes of identification. CITY OF SEWARD, ALASKA RESOLUTION 2022-023 Section 5. Place and Medium of Payment. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. For so long as the outstanding Bond is registered in the name of the Alaska Municipal Bond Bank, payments of principal and interest thereon shall be made as provided in the Loan Agreement. In the event that the Bond is no longer registered in the name of the Alaska Municipal Bond Bank, interest on the Bond shall be paid by check mailed (or by wire transfer to a Registered Owner of Bond in aggregate principal amount of$1,000,000 or more who so requests) to the Registered Owners of the Bond at the addresses for such Registered Owners appearing on the Bond Register on the 15th day of the month preceding the interest and principal payment dates. Section 6. Registration. A. Bond Register.The Bond shall be issued only in registered form as to both principal and interest. The Registrar shall keep, or cause to be kept, a bond register. B. Registered Ownership.The City and the Registrar,each in its discretion,may deem and treat the Registered Owner of the Bond as the absolute owner thereof for all purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be made only as described in Section 5 hereof, but such registration may be transferred as herein provided. All such payments made as described in Section 5 shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. C. Transfer or Exchange. The Bond shall be transferred only upon the Bond Register kept bythe Registrar. Upon surrender for transfer or exchange of Bond at the office of the P S� pany Registrar, with a written instrument of transfer or authorization for exchange in form and with guaranty of signature satisfactory to the Registrar, duly executed by the registered owner thereof or its duly authorized attorney, the City shall execute and the Registrar shall deliver an equal aggregate rinci al amount of the Bond of the same principal installments and maturityof any principal p p authorized denominations, subject to such reasonable regulations as the Registrar mayprescribe � Sn and upon payment sufficient to reimburse it for any tax,fee,or other governmental charge required to bepaid in connection with such transfer or exchange. Bond surrendered for transfer or Any exchange shall be cancelled by the Registrar. The Registrar shall not be required to transfer or exchange a Bond subject to redemption during the 15 days preceding any principal or interest payment date or the date of mailing of notice of redemption of the Bond, or any Bond after such Bond has been called for redemption. D. Registration Covenant. The City covenants that, until the Bond has been surrendered and cancelled, it will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 Section 7. Redemption. The Bond may be redeemed at the times and in the manner as set forth in the Loan Agreement and Bond,as the City Council,or each of the City Manager,acting City Manager, Finance Director, and acting Finance Director may fix and determine at or prior to the time of sale of the Bond. Notice of any intended redemption of the Bond shall be given not less than 45 nor more than 60 days prior to the date fixed for redemption by United States mail to registered owners of the Bond to be redeemed at their addresses as they appear on the Bond Register on the day the notice is mailed; provided, however, that for so long as the Bond is registered in the name of the Alaska Municipal Bond Bank, all notices shall be given only as provided in the Loan Agreement. The requirements of this section shall be deemed to be complied with when notice is mailed as herein provided, whether or not it is actually received by the Registered Owner. All official notices of redemption shall be dated and shall state: (a) the redemption date; (b) the redemption price; (c) if fewer than all outstanding principal installments of the Bond are to be redeemed, the identification (and, in the case of partial redemption, the respective principal installment amounts)of the Bond to be redeemed; (d) that on the redemption date the redemption price will become due and payable upon each such bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and (e) the place where such Bond is to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Registrar. Notice of redemption having been given as aforesaid, the Bond or portions of the Bond to be redeemed shall,on the redemption date,become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bond or portion of the Bond shall cease to bear interest. Upon surrender of such Bond for redemption in accordance with said notice, such Bond shall be paid by the Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any partial redemption of any Bond, there shall be prepared for the Registered Owner a new Bond or Bonds of the same maturity in the amount of the unpaid principal. Any Bond which has been redeemed shall be cancelled and destroyed by the Registrar and shall not be reissued. If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 Section 8. Form of Bond. The form of the Bond shall be substantially as follows: UNITED STATES OF AMERICA STATE OF ALASKA CITY OF SEWARD (A Municipal Corporation of the State of Alaska) NO. 1 $ ELECTRIC REVENUE BOND, 20XX REGISTERED OWNER: Alaska Municipal Bond Bank PRINCIPAL AMOUNT: The City of Seward, Alaska(the"City"), a municipal corporation of the State of Alaska, hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or its registered assigns,but only from the sources stated herein, the Principal Amount indicated above in the following installments on 1 of each of the followingyears, and to pay, from the sources stated herein, interest on such installments from the date hereof, payable on , 20_ and semiannually thereafter on the first days of each each year, at the rates per annum as follows: Maturity Principal Interest Date Amount Rate For so long as this Bond is owned by the Alaska Municipal Bond Bank(the "Bond Bank"), payment of principal and interest shall be made as provided in the Loan Agreement between the Bond Bank and the City. In the event that this Bond is no longer owned by the Bond Bank, payment of principal and interest on this Bond will be made by check or draft mailed by first class mail to the Registered Owner at the address appearing on the Bond Register of the City,provided that the final installment of principal and interest on this Bond will be payable at the office of the City Finance Director(the"Registrar")upon surrender of this Bond. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day CITY OF SEWARD,ALASKA RESOLUTION 2022-023 months. Both principal of and interest on this Bond are payable in lawful money of the United States of America solely out of the special fund of the City known as the "Electric Revenue Bond Account." created by resolution of the City. This bond (the "Bond") in the aggregate principal sum of $ is issued pursuant to the Constitution and statutes of the State of Alaska and the Charter and duly adopted resolutions and ordinances of the City, including Resolution No. 20XX-XXX (the "Bond Resolution"). The definitions contained in the Bond Resolution shall apply to capitalized terms contained herein. The Bond is being issued for the purpose of paying costs of certain additions, betterments, and extensions of the System (collectively, the "Project"), installing and constructing all other items incidental to the Project, and costs of issuance of the Bond.. Principal installments maturing on or after , 20_, may be called for redemption at the option of the City on any date on and after in whole, or in part, at a price of par plus accrued interest to the date of redemption. Notice of any such intended redemption shall be given as provided in the Loan Agreement, so long as the Bond Bank is the registered owner of the Bond,or as otherwise set forth in the Bond Resolution if the Bond Bank is no longer the registered owner. From and after the date fixed for redemption, interest on any principal installment of the Bond so called for redemption shall cease to accrue, provided funds for such redemption are on deposit in the Bond Account. The City does hereby pledge and bind itself to set aside out of Gross Revenues and the money in the Electric Account of the City and to pay into the Bond Account the various amounts required by the Bond Resolution to be paid into and maintained in said Account all within the times provided in the Bond Resolution. The City has further pledged and bound itself to pay into such Electric Account as collected all Gross Revenues. The Bond is payable only from Pledged Revenues and other amounts pledged thereof under the Bond Resolution and the Bond does not constitute a general obligation of the City. The pledge of Gross Revenues and moneys in the Electric Account contained herein and in the Bond Resolution may be discharged by making provision,at any time,for the payment of the principal of and interest on this Bond in the manner provided in the Bond Resolution. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 The pledge of amounts to be paid into the Bond Account is declared to be a lien and charge upon the money in the Electric Account and Gross Revenues superior to all other charges of any kind or nature except Operating Expenses(other than payments in lieu of City taxes)and equal in rank to the lien and charge thereon for amounts pledged to the payment of any Parity Bonds or Future Parity Bonds hereafter issued. The City has further bound itself to maintain the System in good condition and repair, to operate the same in an efficient manner and at a reasonable cost, and to establish,maintain,and collect rates and charges for electric service and all other services or facilities furnished or supplied by the System in each fiscal year for as long as any Parity Bonds are outstanding that will provide Net Revenues in an amount equal to at least 1.30 times the amount of the Annual Debt Service Requirement for such year on all outstanding Parity Bonds. It is hereby certified that all acts, conditions, and things required by the Constitution and statutes of the State of Alaska and the Charter and resolutions of the City to be done precedent to and in the issuance of this Bond have happened, been done, and performed. IN WITNESS WHEREOF, the City of Seward, Alaska, has caused this Bond to be executed with the manual or facsimile signature of its Mayor and to be countersigned with the manual or facsimile signature of its Clerk and the official seal of the Cityto be impressed or imprinted hereon, as of this dayof p p , 20XX. CITY OF SEWARD, ALASKA , Mayor ATTEST: , City Clerk (City Seal) CITY OF SEWARD,ALASKA RESOLUTION 2022-023 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED,the undersigned sells assigns and transfers unto (Please insert Social Security or taxpayer identification number of transferee) (Please print or typewrite name and address, including zip code of Transferee) the within bond and does hereby irrevocably constitute and appoint of , or its successor, as Registrar, to transfer said bond on the books kept for registration thereof with full power of substitution in the premises. Dated: NOTE: The signature on this Assignment must correspond with the name of the registered owner as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: Section 9. Execution of Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor of the city, countersigned with the manual or facsimile signature of the Clerk. The official seal of the City shall be impressed or imprinted on the Bond.The execution of a Bond on behalf of the City by persons that at the time of the execution are duly authorized to hold the proper offices shall be valid and sufficient for all purposes,although any such person shall have ceased to hold office at the time of issuance and delivery of the Bond or shall not have held office on the date of the Bond. Section 10. Mutilated, Destroyed, Stolen, or Lost Bond. Upon surrender to the Registrar of a mutilated Bond,the City shall execute and deliver a new Bond of like maturity and principal amount. Upon filing with the Registrar of evidence satisfactory to the City that a Bond has been destroyed,stolen,or lost and of the ownership thereof, and upon furnishing the City with CITY OF SEWARD,ALASKA RESOLUTION 2022-023 indemnity satisfactory to it, the City shall execute and deliver a new Bond of like maturity and principal amount. The person requesting the authentication and delivery of a new Bond pursuant to this section shall comply with such other reasonable regulations as the City may prescribe and pay such expenses as the City may incur in connection therewith. Any Bond issued pursuant to this section in substitution for a Bond alleged to be destroyed,stolen or lost shall constitute original additional contractual obligations on the part of the City, whether or not the Bond alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and shall be equally and proportionately secured with any other Bond issued hereunder. Section 11. Electric Account and Priority of Use of Gross Revenues. There has been created by the City a special fund known as the"Electric Account." Gross Revenues and funds in the Electric Account are hereby pledged to and shall be used only for the following purposes and in the following order of priority: First,to pay Operating Expenses; Second, to make all payments, including sinking fund payments, required to be made into the Debt Service Subaccount for the payment of the principal of and interest on Parity Bonds; Third,to make all payments required to be made into the Reserve Subaccount; Fourth, to make all payments, including sinking fund payments, required to be made into a subordinate lien debt service account for the payment of the principal of and interest on any subordinate lien bonds; Fifth, to make all payments required to be made into a reserve account for subordinate lien bonds; Sixth, to make all required payments of charges or fees in lieu of City taxes; and Seventh, to pay the costs of additions, betterments, improvements, and repairs to and extensions and replacements of the Sjrstem, to make legally authorized payments into any other fund or account of the City, to purchase or redeem electric revenue bonds or notes of the City, or for any other proper purpose in connection with the operation of the System. Section 12. Electric Revenue Bond Account and Subaccounts Therein. The City has created a special fund of the City known as the "Electric Revenue Bond Account" (the "Bond Account"),which fund is a trust fund to be drawn upon for the sole purpose of paying the principal of and interest and premium, if any, on all Parity Bonds and Future Parity Bonds. The Bond Account consists of four subaccounts, the Project Subaccount, the Debt Service Subaccount, the Reserve Subaccount and the Capitalized Interest Subaccount. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 Amounts pledged to be paid into the Bond Account are hereby declared to be a lien and charge upon Gross Revenues and the moneys in the Electric Account superior to all other charges of any kind or nature, except Operating Expenses, and equal in rank to the charge thereon to pay and secure the payment of the principal of and interest on all Parity Bonds. At the time of issuance of the Bond, all proceeds shall be (i) deposited into the Project Subaccount to be used for paying costs of the Project and cost of issuance of the Bond, (ii) deposited into the Reserve Subaccount in an amount necessary to satisfy the Reserve Subaccount Requirement, and (iii) deposited into the Capitalized Interest Subaccount for purposes of paying interest on the Bond. From and after the time of issuance and delivery of the Bond and as long thereafter as any of the same remain outstanding,the City hereby irrevocably obligates and binds itself to set aside and pay into the Debt Service Subaccount out of Gross Revenues and moneys in the Electric Account or out of any other moneys legally available therefor on or before the 20th day of each month the following: A. Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the interest scheduled to become due on Parity Bonds on the next interest payment date; and B. Such amounts, in approximately equal monthly installments, as will be sufficient to accumulate(i)the principal amount of Parity Bonds due for which no sinking fund installments have been established; plus (ii) the unsatisfied balance of any sinking fund installment for Parity Bonds,in each case during the next 12 months. Moneys in the Debt Service Subaccount may be held in cash or invested in Government Obligations which investments mature prior to the time such money is required for the payment of the principal of or interest on the Parity Bonds. All interest earned on and profits derived from such investments shall remain in and become a part of the Debt Service Subaccount. Section 13. Capitalized Interest Subaccount. There is hereby created a Capitalized Interest Subaccount to be held in the Bond Account. The City shall use amounts on deposit in the Capitalized Interest Subaccount for payment of interest on the Bond on or before June 1, 2024. Any moneys remaining in the Capitalized Interest Subaccount after June 1, 2024 shall be transferred to the Debt Service Subaccount to pay debt service on the Bond. Section 14. Reserve Subaccount. The City hereby covenants and agrees that it will at the time of issuance of the Bond cause amounts to be paid into the Reserve Subaccount such that the total amount in the Reserve Subaccount will be equal to the Reserve Subaccount Requirement. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 The City further covenants and agrees that it will at all times maintain therein an amount at least equal to the Reserve Subaccount Requirement until there is a sufficient amount in the Bond Account and Reserve Subaccount to pay the principal of, premium, if any, and interest on all outstanding Parity Bonds,at which time the money in the Reserve Subaccount may be used to pay such principal, premium, if any, and interest; provided, however, that moneys in the Reserve Subaccount may be withdrawn, or set aside in a special account in the Bond Account pursuant to Section 19 of this resolution,to pay(with or without other available funds)the principal,premium, if any, and interest on all of the outstanding Parity Bonds of any single issue or series payable out of the Bond Account, so long as the moneys remaining on deposit in the Reserve Subaccount are at least equal to the Reserve Subaccount Requirement on all of the remaining outstanding Parity Bonds.The City may,from time to time,transfer from the Reserve Subaccount to the Debt Service Subaccount amounts in excess of the Reserve Subaccount Requirement. In the event there shall be a deficiency in the Debt Service Subaccount for meeting maturing installments of either principal of or interest on the Parity Bonds, such deficiency shall be made up from the Reserve Subaccount by the withdrawal of funds therefrom. Any deficiency created in the Reserve Subaccount by reason of any such withdrawal shall then be made up from the money in the Electric Account first available therefor after making necessary provision for the required payments into the Debt Service Subaccount. Investments in the Reserve Subaccount shall be valued at amortized cost except that in the event of a deficiency in the Reserve Subaccount caused by the withdrawal or transfer of moneys therefrom the amount of such deficiency shall be determined by valuing all investments in the Reserve Subaccount at the then market value. All money in the Reserve Subaccount may be kept in cash or invested in Government Obligations. Such investments shall mature not later than the last maturity of the Parity Bonds outstanding at the time of their purchase. Interest on any such investments and/or any profits realized from the sale thereof shall be deposited in and become a part of the Debt Service Subaccount. Section 15. Investment of Certain Accounts. Moneys held in the Bond Account and in the Reserve Subaccount shall be invested and reinvested to the fullest extent practicable in Government Obligations which mature not later than at such times as shall be necessary to provide moneys when needed for payments to be made from such Accounts. Nothing in this resolution shall prevent any Government Obligations acquired as investments of funds held under the resolution from being issued or held in book-entry form on the books of the Department of the Treasury of the United States. Obligations purchased as an investment of moneys in any account or subaccount created under this resolution shall be deemed at all times to be a part of such account or subaccount and any profit realized from the liquidation of such investment shall be credited to such account or CITY OF SEWARD,ALASKA RESOLUTION 2022-023 subaccount and any loss resulting from the liquidation of such investment shall be charged to the respective account or subaccount. In computing the amount in any account or subaccount created under this resolution for any purpose provided in this resolution,obligations purchased as an investment of moneys therein shall be valued at cost plus interest accrued and unpaid at the date of computation. Section 16. Specific Covenants. The City hereby covenants with the owners of each of the Parity Bonds for so long as any of the same remain outstanding as follows: A. The City will establish, maintain, and collect rates and charges for electricity and all other services or facilities furnished or supplied by the System in each Fiscal Year that will provide Net Revenues in an amount equal to at least 1.30 times the amount of the Annual Debt Service Requirement for such year on all outstanding Parity Bonds. B. The City will at all times maintain, preserve, and keep the System and every part and parcel thereof in good repair, working order, and condition; will from time to time make or cause to be made all necessary and proper repairs, renewals, and replacements thereto so that the business carried on in connection therewith may be properly and advantageously conducted; and will at all times operate the System in an efficient manner and at a reasonable cost. C. The City will at all times carry all-risk insurance and such other forms of insurance on such of the buildings,equipment,property,and facilities of the System as are ordinarily insured in such amounts and with such deductibles as under good business practice are ordinarily carried on such buildings, equipment, property, and facilities but such insurance shall in all events be in an amount at least equal to the lessor of(i) 80%of the estimated replacement cost of the insurable parts of the System;or(ii)the aggregate principal amount of the Parity Bonds then outstanding,in each case such all-risk insurance shall include, but not be limited to, hazards such as fire, water, lightning, tornado, windstorm, hail, explosion, riot, civil commotion, vandalism and malicious mischief, aircraft and vehicles, excluding flood,tidal wave,wavewash, subsidence, or earthquake insurance. In addition to the above insurance, the City shall also carry public liability insurance and such other types of insurance as are usually carried by municipal corporations operating like properties. All such insurance shall be carried with responsible insurers and the policies shall be payable to the City. D. The City will not expend any of the money in the Bond Account for any extensions or betterments which are not economically sound and which will not contribute to the operation of the System in an efficient and economical manner unless such extensions or betterments are required by law or by any regulatory body having valid jurisdiction. E. The City will keep and maintain proper books and accounts with respect to the operation of the System in such manner as prescribed by any authorities having jurisdiction over CITY OF SEWARD,ALASKA RESOLUTION 2022-023 111 the System; will cause its books and accounts to be audited annually by a certified public accountant not later than 180 days following the end of each Fiscal Year, copies of which audits shall be disclosed in accordance with any continuing disclosure obligation and, upon request, be furnished to the owners of the Parity Bonds. Said audit shall show whether or not the City has in all respects performed and complied with the covenants set forth in this resolution, including the payments into the Debt Service Subaccount and Reserve Subaccount provided for herein. F. All employees and agents of the City collecting or handling money of the City in connection with the management and operation of the System shall be bonded in an amount commensurate with the funds they handle and in an amount sufficient to protect the City from loss. G. The City will not sell or otherwise dispose of the System unless contemporaneously with such sale or disposal there shall be paid from the Bond Account a sum sufficient to pay the principal of and interest on all Parity Bonds then outstanding to the date or dates on which they first maybe redeemed, nor will it sell or otherwise dispose of any part of the System which is material to the production of Gross Revenues unless, in the opinion of the Consulting Engineer, the remaining System will generate Gross Revenues sufficient to enable the City to comply with the requirements of this resolution and each resolution authorizing the issuance of Future Parity Bonds. H. The City will not at any time create or permit to accrue or exist any lien or other encumbrance or indebtedness upon the System or the Gross Revenues,or any part thereof,or upon any account or subaccount created hereunder,prior or superior to the lien thereon for the payment of the ParityBonds, and willpayand discharge, or cause to bepaid and discharged, anyand all g � g � lawful claims for labor, materials, or supplies which, if unpaid, might become a lien or charge upon the Revenue,or any part thereof,or upon any account or subaccount in the hands of the City, prior or superior to the lien of the Parity Bonds, or which might impair the security of the Parity Bonds. I. The City will not expend any of the Gross Revenues derived by it from the operation of the System or the proceeds of any indebtedness payable from Gross Revenues for any additions, betterments, or improvements to the System which are not economically sound and which will not properly and advantageously contribute to the conduct of the business of the System in an efficient and economical manner. J. At any and all times the City shall, as far as it may be authorized by law,make,do, execute, acknowledge, and deliver all further resolutions, acts, deeds, conveyances, assignments, g Y 1� transfers,and assurances as may be necessary or desirable for better assuring,conveying,granting, pledging, assigning, and confirming all and singular the rights, Gross Revenues, and other funds, moneys, and securities pledged or assigned under this resolution, or intended so to be, or which the City may become bound to pledge or assign. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 K. The City is duly authorized under all applicable laws to issue the Bond and to adopt this resolution and to pledge the Gross Revenues and other funds,moneys,and securities purported to be pledged by this resolution in the manner and to the extent provided in this resolution. The Gross Revenues and other funds,moneys, and securities so pledged are and will be free and clear of any pledge, lien, charge, or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and assignment created by Resolution 95-048 and this resolution, and all corporate or other action on the part of the City to that end has been and will be duly and validly taken. The Bond and the provisions of this resolution are and will be the valid and legally enforceable obligations of the City in accordance with their terms and the terms of this resolution. The City shall at all times,to the extent permitted by law,defend,preserve, and protect the pledge of the Gross Revenues and the other funds, moneys, and securities pledged under this resolution and all the rights of the Bondholders under this resolution against all claims and demands of all persons whomsoever. L. The City has,and will have so long as any Parity Bonds are outstanding,good right and lawful power to operate,maintain,and repair the System and to fix and collect rates, fees,and other charges to the use and sale of the capacity,output,or services of the System. M. The City shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the City under the laws of the State of Alaska and this resolution. Section 17. Parity Bonds. At the time of the issuance of the Bond, the City shall have on file a certificate executed by a Consulting Engineer experienced in the construction and operation of municipal utilities (which certificate may not be dated more than 30 days prior to the date of delivery of the Bond) showing that in his or her professional opinion the"annual income available for revenue bond debt service," as hereinafter set forth, shall be at least equal to 1.30 times the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the Bond. Such "annual income available for revenue bond debt service" shall be determined by adding the following: A. The Net Revenues for any 12 consecutive months out of the 24 months immediately preceding the month of delivery of the Bond. B. The Net Revenues derived from those customers of the System that have become customers during such 12-consecutive-month period or thereafter and prior to the date of such certificate, adjusted to reflect an estimate of a full year's Net Revenues from each such customer to the extent such Net Revenues were not included in(A)above. CITY OF SEWARD, ALASKA RESOLUTION 2022-023 C. The estimated annual Net Revenues to be derived from any person, firm, association, private- or municipal corporation under any executed contract for electric service, which Net Revenues were not included in any of the sources of Net Revenues described in this section. D. The estimated annual Net Revenues to be derived from the operation of any additions or improvements to or extensions of the System under construction but not completed at the time of such certificate and not being paid for out of the proceeds of sale of the Bond, and which Net Revenues are not otherwise included in any of the sources of Net Revenues described in this section. E. The estimated Net Revenues to be derived from the operation of any additions and improvements to or extensions of the System being paid for out of the proceeds of sale of the Bond. In the event the City will not derive any Gross Revenues as a result of the construction of the additions, improvements, or extensions being made or to be made to the System within the provisions of subparagraphs(D)and(E)immediately above,the estimated Operating Expenses of such additions, improvements, and extensions shall be deducted from such "annual income available for revenue bond debt service." The computation of "annual income available for revenue bond debt service" shall be adjusted to reflect the electric rates and charges effective on the date of such certificate or approved by the regulatory authority with jurisdiction to become effective thereafter if there has been any change in such rates and charges put into effect or so approved during or after such 12-consecutive- month base period. Notwithstanding the preceding provisions of this section, the certificate of the Consulting Engineer referred to above shall not be required if one-half of Pledged Revenues, verified from certain financial statements of the City, for a period of any consecutive two out of the three Fiscal Years immediately preceding the issuance and delivery of the Bond, was equal to at least 1.30 times the maximum Annual Debt Service required to be paid in any Fiscal Year succeeding the date of issuance of the Bond and all outstanding Parity Bonds. Further, notwithstanding the preceding provisions of this Section 16, Future Parity Bonds may be issued if the City shall have on file a certificate of the Consulting Engineer stating his or her opinion that the Net Revenues for the next full Fiscal Year after the initial operation of any additions or improvements to or extensions of the System being paid for out of the proceeds of the Future Parity Bonds will be at least equal to 1.30 times the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the Future Parity Bonds being issued and that at the time of the issuance of the Future Parity Bonds there is no deficiency in the Debt Service Subaccount or Reserve Account. CITY OF SEWARD, ALASKA RESOLUTION 2022-023 Section 18. Subordinate Lien Bonds. Nothing contained herein shall prevent the City from issuing revenue bonds or notes which are a charge upon Gross Revenues and the moneys in the Bond Account subordinate or inferior to the payments required herein to be made therefrom into the Debt Service Subaccount and Reserve Subaccount,or from issuing electric revenue bonds to refund maturing bonds for the payment of which moneys are not otherwise available. Section 19. Covenants Regarding Arbitrage and Private Activity Bonds. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such Bond pursuant to Section 148 of the Code which will cause the Bond to be an"arbitrage bond"within the meaning of said section and the regulations applicable thereunder. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bond) and the applicable regulations thereunder throughout the term of the Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a"private activity bond" under Section 141 of the Code. The City will take any action determined by the City, after consultation with its bond counsel, to be legal and practicable and required to be taken by the City under future federal laws or regulations in order to maintain the exemption of the interest on the Bond from federal income taxation. Section 20. Defeasance. In the event that money and/or Acquired Obligations maturing at such time or times and bearing interest to be earned thereon in amounts sufficient to redeem and retire the Bond in accordance with its terms are set aside in a special trust account to effect such redemption or retirement and such money and the principal of and interest on such obligations are irrevocably set aside and pledged for such purpose,then no further payments need to be made into the Bond Account for the payment of the principal of and interest on such a Bond, and the Bond shall cease to be entitled to any lien,benefit,or security of this resolution except the right to receive the funds so set aside and pledged,and such Bond shall be deemed not to be outstanding hereunder or under any other resolution authorizing the issuance of Future Parity Bonds. For so long as the Bond Bank is the Registered Owner for any Parity Bonds,the City will give 30 days' notice to the Bond Bank of any defeasance. Section 21. General Authorization to Municipal Officials. The Mayor, City Manager, acting City Manager, Finance Director, acting Finance Director and City Clerk are each hereby authorized to do everything necessary to complete such sale and to deliver the Bond to the purchaser thereof upon payment of the purchase price thereof. Section 22. Amendatory and Supplemental Resolutions. CITY OF SEWARD,ALASKA RESOLUTION 2022-023 A. The City Council from time to time and at any time may pass a resolution or resolutions supplemental hereof, which resolution or resolutions thereafter shall become a part of this resolution, for anyone or more of the following purposes: (1) To add to the covenants and agreements of the City contained in this resolution, other covenants and agreements thereafter to be observed, or to surrender any right or power herein reserved to or conferred upon the City. (2) To make such provisions for the purpose of curing any ambiguities or of curing, correcting, or supplementing any defective provision contained in this resolution or in regard to matters or questions arising under this resolution as the City Council may deem necessary or desirable and not inconsistent with this resolution and which shall not adversely affect the interest of the owners of the Parity Bonds. Any such supplemental resolution of the City Council may be adopted without the consent of the owner of any Parity Bonds at any time outstanding, notwithstanding any of the provisions of subsection B of this section. B. With the consent of the owners of not less than 60%in aggregate principal amount of the Parity Bonds at the time outstanding, the City Council may pass a resolution or resolutions supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this resolution or of any supplemental resolution; provided, however,that no such supplemental resolution shall: (1) Extend the fixed maturity of any of the Parity Bonds, or reduce the rate of interest thereon, or reduce the amount or change the date of any sinking fund installment requirement, or extend the time of payments of interest from their due date, or reduce the amount of the principal thereof, or reduce any premium payable on the redemption thereof, without the consent of the owner of each Parity Bond so affected; or (2) Reduce the aforesaid percentage of owners of Parity Bonds required to approve any such supplemental resolution without the consent of the owners of all of the Parity Bonds then outstanding. (3) Remove the pledge and lien of this resolution on Pledged Revenues. It shall not be necessary for the consent of the owners of Parity Bonds under this subsection B to approve the particular form of any proposed supplemental resolution, but it shall be sufficient if such consent shall approve the substance thereof. C. Upon the passage of any supplemental resolution pursuant to the provisions of this section,this resolution shall be deemed to be modified and amended in accordance therewith,and CITY OF SEWARD,ALASKA RESOLUTION 2022-023 the respective rights,duties, and obligations of the City under this resolution and all owners of the Parity Bonds outstanding hereunder shall thereafter be determined, exercised, and enforced thereunder, subject in all respects to such modification and amendment, and all the terms and conditions of any such supplemental resolution shall be deemed to be part of the terms and conditions of this resolution for any and all purposes. D. Parity Bonds executed and delivered after the execution of any supplemental resolution adopted pursuant to the provisions of this section may bear a notation as to any matter provided for in such supplemental resolution,and if such supplemental resolution shall so provide, new Parity Bonds so modified as to conform, in the opinion of the City Council, to any modification of this resolution contained in any such supplemental resolution,may be prepared by the City and delivered without cost to the owners of Parity Bonds then outstanding,upon surrender for cancellation of such Parity Bonds in equal aggregate principal amounts. Section 23. Loan Agreement. The Bond shall be sold and delivered to the Bond Bank pursuant to the terms of the Loan Agreement. The City has been advised by the Bond Bank that bond market conditions are fluctuating and that the most favorable market conditions for the sale of the Bond Bank bonds may not occur on the date of a regular City Council meeting. The City 111 Council has determined that it would be inconvenient to hold a special meeting on short notice to approve the terms of the Bond. Therefore,the City Council hereby determines that it is in the best interest of the City to delegate the authority to approve the terms of the Bond as provided herein. Each of the City Manager,acting City Manager,City Finance Director and acting Finance Director is hereby authorized to determine the aggregate principal amount, principal installment amounts, interest rates, yields, dated date, principal and interest payment dates, and redemption terms, if any, for the Bond, so that such terms of the Bond conform to the terms of the corresponding Bond Bank bonds;provided that(i)the principal installments of the Bond shall not exceed the principal amount of the portion of the corresponding maturity of the Bond Bank bonds that is allocated to the Bond; and (ii) the interest rate on each principal installment of the Bond shall not exceed the interest rate on the corresponding maturity of the Bond Bank bonds. Based upon the foregoing determinations, the City Manager, acting City Manager, City Finance Director or acting City Finance Director each is authorized to negotiate and execute the Loan Agreement in the form submitted to and part of the records of this meeting. The authority granted to the City Manager, acting City Manager,City Finance Director and acting Finance Director by this section shall expire 180 days after the effective date of this resolution. If the City Manager, acting City Manager, City Finance Director or acting City Finance Director has not executed a Loan Agreement within 180 days from the effective date of this resolution,the Loan Agreement may not be executed on behalf of the City without further authorization from the City Council. Section 24. Authority of Officers. The Mayor,City Manager,acting City Manager,City Finance Director, acting Finance Director, and City Clerk are, and each of them hereby is, authorized and directed to do and perform all things and determine all matters not determined by CITY OF SEWARD,ALASKA RESOLUTION 2022-023 this resolution, to the end that the City may carry out its obligations under the Bond and this resolution. Section 25. Miscellaneous. A. All payments made by the City of, or on account of, the principal of or interest on the Bond shall be made on the Bond ratably and in proportion to the amount due thereon, respectively, for principal or interest as the case may be. B. No recourse shall be had for the payment of the principal of or the interest on the Bond or for any claim based thereon or on this resolution against any member of the City Councilor officer of the City or any person executing the Bond. The Bond is not and shall not be in any way a debt or liability of the State of Alaska or of any political subdivision thereof, except the City, and from the Pledged Revenues as stated on the Bond,and do not and shall not create or constitute an indebtedness or obligation, either legal, moral or otherwise, of said state or of any political subdivision thereof,except the City, and from the Pledged Revenues as stated on the Bond. Section 26. Continuing Disclosure. The City acknowledges that, under Rule 15c2-12 of the Securities and Exchange Commission(the"Rule"),the City may now or in the future be an "obligated person" with respect to bonds issued by the Bond Bank. In accordance with the Rule and as the Bond Bank may require the City shall enter into a continuing disclosure agreement and undertake to provide certain financial information and operating data as set forth in the Loan Agreements. Notwithstanding any other provision of this resolution, failure of the City to comply with the continuing disclosure agreement shall not be considered a default of the City's obligations under this resolution or the Bond;however,the beneficial owner of any Bond or Bond Bank bond may bring an action for specific performance, to cause the City to comply with its obligations under this section. Section 27. Severability. If anyone or more of the provisions of this resolution shall be declared by any court of competent jurisdiction to be contrary to law,then such provision shall be null and void and shall be deemed separable from the remaining provisions of this resolution and shall in no way affect the validity of the other provisions of this resolution or of the Bond. Section 28. Incorporation of Recitals. The Recitals set forth in this resolution are hereby incorporated in, and made a part of,this resolution. Section 29. Effective Date. This resolution shall take effect thirty (30) days following approval by the City Council. CITY OF SEWARD, ALASKA RESOLUTION 2022-023 PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14`1' day of February, 2022. TH I Y O SEWARD, AL KA Christy Terry Mayor AYES: Calhoon, DeMoss, Osenga, Wells, McClure, Terry NOES: None ABSENT: Casagranda ABSTAIN: None ATTEST: rends . Ballou, C City Clerk (City Se ......'••®, '*,J OF • ( S ,`. J_f r • • r3�.. :fi I