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Ord. 0874 10-12-98CITY OF PEARLAND ORDINANCE NO. 874 AN ORDINANCE AUTHORIZING THE PURCHASE OF A SURETY RESERVE FUND POLICY; AND ENACTING OTHER PROVISIONS RELATING THERETO; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: that: ARTICLE I FINDINGS AND DETERMINATIONS Section 1.1. Findings and Determinations. It is hereby officially found and determined (a) Pursuant to Section 5.6 of Ordinance Nos. 725 and 726, as amended (the "Bond Ordinances"), the City is authorized to substitute a Surety Policy or Policies issued in amounts equal to all or part of the Average Annual Principal and Interest Requirements on the Bonds in lieu of depositing cash into the Reserve Fund. (b) The Bond Ordinances provide that no such substitution shall occur without (i) a finding that such substitution is cost effective and (ii) receipt of an opinion of nationally recognized bond counsel that such substitution is permitted by applicable Texas law. (c) Ordinance No. 725 requires the written consent of the owners of 100% of the outstanding principal amount of the Series 1996B Bonds to such substitution and Ordinance No. 726 requires the written consent of the Bond Insurer for any amendment or supplement to become effective. (d) The City Council has been presented with evidence that the substitution of a Surety Policy issued in an amount equal to the Average Annual Principal and Interest Requirements will provide an economic benefit to the City and the City Council therefore finds that such substitution is cost effective. (e) The City has obtained an opinion of nationally recognized bond counsel (attached as Exhibit A hereto) that the substitution of a Surety Policy herein authorized is permitted by applicable Texas law. (f) The Texas Water Development Board (the "TWDB"), as the owner of 100% of the Series 1996B Bonds, and Financial Security Assurance Inc. (the "Bond Insurer") have provided the City Council with their written consents to the substitution of a Surety Policy as herein authorized. ::ODMA\PCDOCS\HOUSTON\518043\3 ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2.1. Definitions. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Bond Ordinances. Section 2.2. Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE III SURETY POLICY Section 3.1. Substitution of Surety Policy. The requirements of Section 5.6 of the Bond Ordinances having been satisfied, the purchase of one or more Surety Policies issued by Financial Security Assurance Inc. substantially in the form attached hereto as Exhibit B in an aggregate amount equal to the Average Annual Principal and Interest Requirements on the Bonds is hereby authorized. Such policy or policies, as the case may be, shall be deposited into the Reserve Fund immediately upon receipt by the City. Section 3.2. Disposition of Funds on Deposit in the Reserve Fund. Upon the deposit of the Surety Policy to the Reserve Fund, the amount on deposit in the Reserve Fund will exceed the Average Annual Principal and Interest Requirements on all Bonds by an amount equal to the amount of funds on deposit in the Reserve Fund immediately preceding the deposit of the Surety Policy. Therefore, pursuant to Section 5.6 of the Bond Ordinances, the funds currently on deposit in the Reserve Fund shall be transferred to the Interest and Sinking Fund established for the payment of the Bonds; provided however, that any such transfer of funds from the Reserve Fund shall be limited to the extent necessary to maintain in the Reserve Fund a fund balance that, when aggregated with the insured amount under the Surety Policy, is not less than the Average Annual Principal and Interest Requirements on all Bonds. ::ODMA\PCDOCS'HOUSTOM518043\3 2 ARTICLE IV MISCELLANEOUS Section 4.1. Notice to Rating Agencies. As required by Exhibit A to Ordinance No. 726, the delivery of a copy of this Ordinance in substantially final form to Standard & Poor's Ratings Service and Moody's Investors Service at least 10 days prior to the effective date hereof is hereby authorized, ratified and confirmed. Section 4.2. Further Proceedings and Related Matters. The Mayor, the City Secretary and other appropriate officers and agents ot the City are hereby authorized and directed to do any and all things necessary and/or convenient and to take all other actions that are reasonably necessary to carry out the terms of this Ordinance, including executing by manual or facsimile signature and delivering on behalf of the City all certificates, consents, receipts, requests, notices, investment agreements and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of this Ordinance. The Mayor may authorize such ministerial changes in the written text of this Ordinance as are necessary to consummate the substitution of the Surety Policy authorized hereby and as he determines are consistent with the intent and purposes of this Ordinance, which determination shall be final. Section 4.3. Severability. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. Section 4.4. Open Meeting. It is hereby found, determined and declared that a sufficient written notice of the date, hour, place and subject of the meeting of the City Council at which this Ordinance was adopted was posted at a place convenient and readily accessible at all times to the general public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended, and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 4.5. Declaration of Emergency. It is hereby officially found and determined that a case of emergency attectmg life, health, property and the public peace exists which requires the holding of the meeting at which this Ordinance is passed and further requires that this Ordinance be passed finally and take effect immediately on the date of its introduction, such emergency and urgent public necessity being that the purchase of the Surety Policy authorized herein and the substitution thereof for the funds on deposit in the Reserve Fund is required as soon as possible and without delay for the purposes set forth herein. ::ODMAW CDOCS\HOUSTOMS/8043 3 3 Section 4.6. Repealer. All ordinances, or parts thereof inconsistent herewith, are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED THIS I a-li\ h� day of t C,3/45 7Cir , 1998. ATTEST: ecret. ,"ity s P, Texas AL) ::ODMA\PCDOCS\HOUSTOM578043\3 4 Mayor, City of Pearland, Texas ::ODMAWCDOCSU{OUSTON\578043\3 EXHIBIT A OPINION OF BOND COUNSEL 5 OCT 07 '98 13:56 FR MAYOR DAY CALDWELL 512 32b `Jd5d I D'11ih4414(O1ir41G0 r.GO/G.] Page 2 of 2 Pef 'Ro, -R upon such acceleration together with any accrued hem nn t bs the date of acceleragon and (b) when interest on a Bond, payable on the stated date far payment of Interest, "Nonpayment means. Bond_ the failure of the Issuer to have provided aufiident frrvie to the Paying Agent for principal and Interest tat Is Clue for Payment on such Bond, "Nonpayment" shag also 1 Bond, any payment of principal or interest that is Due for Payment made to en Owner inure that Mt been repovannes ham such Owner pursuant to the United Stales Ba banlwptor in accordance with find, noneppealaNe order of a own !having compe means telephonic er teteoepled notes, subsequently ctnamtad in a s+8ned writing, or or certified mall, from the Issuer, the Trustee or the Paying Agent to Financial (a) the person or entity making the claim, (h) the Policy Number. (c) the darned churned amount berdme Due tor Payment. "Owner' moan*, in respect or a the time of Nonpayment,13 entitled under the terms of such Bored to payment nsanpt that "Owner' shall not include the Issuer or any person or e oonsitutes the underlying security for the Bonds. 'Policy Limit shag reserve fund required to be maintained for the Bands by the Bond Service Reserve Requirement), but inno event shall the Percy Oaf asdomatcally end ihrevocably be reduced tom time to time by Senvree Reserve Roquirament,ose provided in the end boar andtheWlW are nolongerW WICzdngWWeI_Bon Fbenda; seamy may appoint a fiscal agent (the "Insurer' written nticeto the Trustee and the Paying Agent Agent Fran end alter the date of receipt of such notices required to be delivered to Financial Seal the Insureds Fiscal _�� t and to Financial(b) al payments iegt*ed to be made by Security or by the Insurer's Fiscal Agehton of Ffnanabl &partly aNy and The ins rer'e the Insurers Mal Agent or any failure of to make peymarib due under lbw Perm To the fulled extent platted by alb for the benefit of each fndud'ng, eft hartanitailan.the the lent that such right" obligatpne underthis This raghy sots furls in any other agreement expressy modified by an for any reason maturity end (bb PROPERTY IN In A. 350 BRAN to pea of a inUlofall • In respect ofa behalf of the.. a trustee in icban. es by such who, at abkgnaon debt service eThPO4Limit uction in the Debt means the earlier of of this Poky by giving address of the Insurer's Fiscal Paying A8an1, (a) ooples of ail I be elnwltaneouey delivered to received unit received by both and may be made directly by Financial . The Insurers Fecal Argent is the agent ant be liable to any Owner far any ad or It or cause to be deposited sufficient funds agrees not to assert, and hereby waives, owmardalm, setoff fa otherw. assignment satomise) and defenses acquired othenvise, to labia P by Mel security avoid pa of as ex reel prmAsions of this Polley. rdel Security, and *het not be modified, altered or affected by any madlication or arnandmant !henna Except to Ow extent (a) any premium paid in rued of this Poky nonrefundable or provision being made for payment. of the Bonds tutor to canceled or revoked. THIS POLICY IS NOT COVERED BY THE SECURITY FUND SPECIFIED] IN AI I ICLt 76 OF THE NEW YORK CIAI. SECURITY ASSURANCE INC. has caused this Polity to be exeaaed on its FINANCIAL SECURITY ASSURANCE INC. By Financial Sareurigr Assure/use Holdlnoa Ltd. New York N Y 100224022 Fomt 501E NY (8dS6) Authmixad Officer 012) 826-Otoo OCT 07 '9S 11:00 +2123300872 PROEMS ** TrhTRI PAGF.Ri ** OCT 07 '98 13:54 FR MAYOR DAY CALDLJELL 512 320 132J2 IU 51184414(3H(HLa) r"ZJc:ua c MUNICIPAL BOND DEBT Eli E RESERVE INSURANC OLICY epeti FINANCIAL SCURI7Y ASSURANCE INC. ("Financial Security),, 1 UNCONDmoNALLY AND IRREVOCAOLY agrees to pay to the trustee "Paying Agent'? as set forth in the documentation (the 'Bond Doartts. sMc ecuring t hereto), that ppoorttoon t af Ihe off the principal off1aannd Interestonly PaymentPayment bid shall he unpaid by reason of �paymen by the . . FinancialSeardbwD Make paymentes pied in this Poky to the Buelnaeo tray an which rends principal and inures ..: �. th the Business Day on which Financial Security sh neesorta saki:viaty to N. A Notice of Nonpayment will received pdorto boo pm. (New Yak time) on such Bust next Business Day. If any Notice of Nonpayment deemed not (0 have been received by Financtal - - Security shall promptly so advise the Trustee, amended Notice of Nonpp�aar� 1. Payment by Fi.r of the Owvners shad. to theolden! thereof, Ouch payment, Financial Security shall • - •• � . • r interest and expenses) pursuantto the = •. ,`r,^!'t�,. payine sired become the owner of d arty M of principal of er interest on ding the Owner's fight t0 receive the Bond, to the extent of aryl p ilia amount available under this any port/rule time to be paid to reduced by any payment , •: Pocky sisal be reinstated Yr such payment (exclusive • " tlaeeSt ineesDays of the issuer with notice of - y Payment tothe Bettie Bond Documa 8vailabiewes *;•,:.lMso• ;piethe tame -R Data mum: s be Agent on the later of the the Ruckuses Day next .. of Nonpayment, in a term a given Swamis. Day tit is will be deemed received on the rity Is incomplam. It shall be procedina h and Frnnnaal su= s appropriate, who may submit en taste° or Peying Agent for tha benefit i; ndai Security under this Upon nt of the amount so pad With ursament In respect of a Bend, Financial coupon to the Bond or right to receipt of Band acids be billy enhmgatad to the rlphts of the Owner. =nta under Bond and all insurance policies in respell of al hereunder. exceed the Policy Limit. The amount available at under the terms of tNs PotcY shad ButomadcalW be °waver, after such payment, the amount available under this (y� Up to the Policy Mitt, to the ardent of the reimbursement of to Financial Security by or an behalf of the teluet. Within Security shad provide the Trustee, to Paying Agent and be available alit respect to (a) any Nonpayment that occurs prior Date of this Policy or (b) BO tic# that are not outstanding under the under this Pciey Is also matte under another Mann= policy a „a, d first shall be matte undor this Pettey to the ardent of the amount SW Limit. In rto event ohm Financier Security Incur thipliatta liabitity tir Sate Bonds tat at covered underthis Policy and any other insurance Security hes issued. wed byta�)h°arrar ' oaf Busmen n day o tan(nshall Swum* or n', Inatlt ors in the State of New York are, or the Insurer's AS Agent is, authorized order to remain dosed. "Due for Payment' means (e) when reteain° to the 1'4 , • - on the stated matunly date thereof or the date at which the same shad have been slrsdng fund redemption and does not refer to any eerier date on which PaYment for redemption (otter than by mandatory sinking fund redemption), acceleration or otter maturity unless Financial Paranky shall elect, In Its side lsaCfe5pn• to pay arch principal doe OCT 07 '98 10:59 +2123390872 PR8E.02 NOTE TO COUNCIL A TRUE AND CORRECT COPY OF EXHIBIT "B" TO ORDINANCE NO. 874 WILL BE PROVIDED PRIOR TO THE CITY COUNCIL MEETING ON OCTOBER 12, 1998.