Whenever used in this Ordinance, except when otherwise indicated by the context, the following terms shall have the following meanings:
(a) "Act 94" means Act 94, Public Acts of Michigan, 1933, as amended.
(b) "Adjusted Net Revenues" means for any operating year the excess of revenues over expenses for the System determined in accordance with generally accepted accounting principles, to which shall be added depreciation, amortization, interest expense on Bonds and payments to the Issuer in lieu of taxes, to which may be made the following adjustments:
(i) Revenues may be augmented by the amount of any rate increases adopted prior to the issuance of additional Bonds or to be placed into effect before the time principal or interest on the additional Bonds becomes payable from Revenues as applied to quantities of service furnished during the operating year or portion thereof that the increased rates were not in effect.
(ii) Revenues may be augmented by amounts, which may be derived from rates and charges to be paid by new customers of the System.
The adjustment of revenues and expenses by the factors set forth in (i) and (ii) above shall be reported upon by professional engineers or certified public accountants or other experts not in the regular employment of the Issuer.
(c) "Authority" means the Michigan Municipal Bond Authority.
(d) "Authorized Officers" means the President, Village Manager, Treasurer, and Village Clerk.
(e) "Bond" or "Bonds" means the Series 2004 Bonds, together with any additional Bonds of equal standing hereafter issued.
(f) "Issuer" means the VILLAGE OF BEVERLY HILLS, County of Oakland, State of Michigan.
(g) "MDEQ" means the Michigan Department of Environmental Quality.
(h) "Project" means the additions, extensions and improvements to the System together with appurtenances and attachments thereto.
(i) "Reserve Amount" means the amount required to be on deposit in the Bond Reserve Account with respect to any subsequent series of Bonds, which may not exceed the lesser of (1) the maximum annual debt service due on the Bonds in any year, (2) 125% of the average annual debt service on the Bonds, or (3) 10% of the principal amount of the Bonds.
(j) "Revenues" and "Net Revenues" mean the revenues and net revenues of the System and shall be construed as defined in Section 3 of Act 94, including with respect to "Revenues", the earnings derived from the investment of moneys in the various funds and accounts established by this Ordinance.
(k) "Series 2004 Bonds" means the Water Supply and Sewage Disposal System Revenue Bonds, Series 2004, of the Issuer in the principal amount of not to exceed $3,690,000 authorized by this Ordinance.
(l) "Sufficient Government Obligations" means direct obligations of the United States of America or obligations the principal and interest on which is fully guaranteed by the United States of America, not redeemable at the option of the Issuer, the principal and interest payments upon which, without reinvestment of the interest, come due at such times and in such amounts as to be fully sufficient to pay the interest as it comes due on the Bonds and the principal and redemption premium, if any, on the Bonds as it comes due whether on the stated maturity date or upon earlier redemption. Securities representing such obligations shall be placed in trust with a bank or trust company, and if any of the Bonds are to be called for redemption prior to maturity, irrevocable instructions to call the Bonds for redemption shall be given to the paying agent.
(m) "System" means the Water Supply and Sewage Disposal System of the Issuer, including such facilities thereof as are now existing, are acquired and constructed as the Project, and all enlargements, extensions, repairs and improvements thereto hereafter made.
19.02 NECESSITY; APPROVAL OF PLANS AND SPECIFICATIONS
It is hereby determined to be a necessary public purpose of the Issuer to acquire and construct the Project in accordance with the plans and specifications prepared by the Issuer's engineers, which plans and specifications are hereby approved. The Project qualifies for the State of Michigan Drinking Water Revolving Fund financing program being administered by the MDEQ and the Authority, whereby bonds of the Issuer are sold to the Authority and bear interest at a fixed rate of two and one-half percent (2.5%) per annum.
19.03 COSTS; USEFUL LIFE
The total cost of the Project is presently estimated not to exceed Three Million Six Hundred Ninety Thousand Dollars ($3,690,000) including the payment of incidental expenses as specified in Section 4 of this Ordinance, which estimate of cost is hereby approved and confirmed, and the period of usefulness of the Project is estimated to be not less than twenty (20) years.
19.04 PAYMENT OF COST; BONDS AUTHORIZED
To pay the cost of acquiring and constructing the Project, including payment of legal, engineering, financial and other expenses incident thereto and incident to the issuance and sale of the Series 2004 Bonds, the Issuer shall borrow the sum of not to exceed Three Million Six Hundred Ninety Thousand Dollars ($3,690,000) and issue the Series 2004 Bonds therefor pursuant to the provisions of Act 94.
19.05 ISSUANCE OF SERIES 2004 BONDS; DETAILS
The Series 2004 Bonds of the Issuer, to be designated WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM REVENUE BONDS, SERIES 2004 are authorized to be issued in the aggregate principal sum of not to exceed Three Million Six Hundred Ninety Thousand Dollars ($3,690,000) or as otherwise finally determined by order of the MDEQ for the purpose of paying the cost of the Project, including the costs incidental to the issuance, sale and delivery of the Series 2004 Bonds. The Series 2004 Bonds shall be payable out of the Net Revenues, as set forth more fully herein. The Series 2004 Bonds shall be in the form of a single fully?registered, nonconvertible bond of the denomination of the full principal amount thereof, dated as of the date of delivery of the Series 2004 Bonds, payable in principal installments serially as finally determined by the order of the MDEQ at the time of sale of the Series 2004 Bonds and approved by the Authority and an Authorized Officer. Final determination of the principal amount and the payment dates and amounts of principal installments of the Series 2004 Bonds shall be evidenced by execution of a Purchase Contract (the "Purchase Contract") between the Issuer and the Authority providing for sale of the Series 2004 Bonds, and the Authorized Officers are authorized and directed to execute and deliver the Purchase Contract when it is in final form and to make the determinations set forth above.
The Series 2004 Bonds shall bear interest at a rate of two and one?half percent (2.5%) per annum on the par value thereof or such other rate as evidenced by execution of the Purchase Contract, but in any event not to exceed the rate permitted by law, and the President and Village Clerk are authorized to execute and deliver the Series 2004 Bonds in accordance with the delivery instructions of the Authority. The Bonds shall be signed with the manual or facsimile signatures of the President and Village Clerk and shall have the Issuer's seal impressed or printed thereon.
The Series 2004 Bonds principal amount is expected to be drawn down by the Issuer periodically, and interest on the principal amount shall accrue from the date such principal amount is drawn down by the Issuer.
The Series 2004 Bonds shall not be convertible or exchangeable into more than one fully?registered bond. Principal of and interest on the Series 2004 Bonds shall be payable as provided in the Series 2004 Bond form set forth in this Ordinance.
The Series 2004 Bonds or principal installments thereof will be subject to prepayment prior to maturity with the prior written approval of the Authority in the manner and at the times as provided in the Series 2004 Bond form set forth in this Ordinance.
The Village Clerk shall record on the registration books payment by the Issuer of each installment of principal or interest or both when made and the cancelled checks or other records evidencing such payments shall be returned to and retained by the Village Clerk.
Upon payment by the Issuer of all outstanding principal of and interest on the Series 2004 Bonds, the Authority shall deliver the Series 2004 Bonds to the Issuer for cancellation.
19.06 REGISTRATION AND TRANSFER
Any Bond may be transferred upon the books required to be kept pursuant to this section by the person in whose name it is registered, in person or by the registered owner's duly authorized attorney, upon surrender of the Bond for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the transfer agent. Whenever any Bond or Bonds shall be surrendered for transfer, the Issuer shall execute and the transfer agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. The transfer agent shall require payment by the bondholder requesting the transfer of any tax or other governmental charge required to be paid with respect to the transfer. The transfer agent shall not be required (i) to issue, register the transfer of or exchange any Bond during a period beginning at the opening of business 15 days before the day of the giving of a notice of redemption of Bonds selected for redemption as described in the form of the Series 2004 Bond contained in Section 18 of this Ordinance and ending at the close of business on the day of that giving of notice, or (ii) to register the transfer of or exchange of any Bond so selected for redemption in whole or in part, except the unredeemed portion of Bonds being redeemed in part. The Issuer shall give the transfer agent notice of call for redemption at least 20 days prior to the date notice of redemption is to be given.
The transfer agent shall keep or cause to be kept, at its principal office, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Issuer; and, upon presentation for such purpose, the transfer agent shall, under such reasonable regulations as it may prescribe, transfer or cause to be transferred, on said books, Bonds as hereinbefore provided.
If any Bond shall become mutilated, the Issuer, at the expense of the holder of the Bond, shall execute, and the transfer agent shall authenticate and deliver, a new Bond of like tenor in exchange and substitution for the mutilated Bond, upon surrender to the transfer agent of the mutilated Bond. If any Bond issued under this Ordinance shall be lost, destroyed or stolen, evidence of the loss, destruction or theft may be submitted to the transfer agent and, if this evidence is satisfactory to both and indemnity satisfactory to the transfer agent shall be given, and if all requirements of any applicable law including Act 354, Public Acts of Michigan, 1972, as amended ("Act 354"), being sections 129.131 to 129.134, inclusive, of the Michigan Compiled Laws have been met, the Issuer, at the expense of the owner, shall execute, and the transfer agent shall thereupon authenticate and deliver, a new Bond of like tenor and bearing the statement required by Act 354, or any applicable law hereafter enacted, in lieu of and in substitution for the Bond so lost, destroyed or stolen. If any such Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond the transfer agent may pay the same without surrender thereof.
19.07 PAYMENT OF BONDS; SECURITY
The Series 2004 Bonds and the interest thereon shall be payable from the Net Revenues, and to secure such payment, there is hereby created a statutory lien upon the whole of the Net Revenues which shall be a first lien to continue until payment in full of the principal of and interest on the Series 2004 Bonds payable from the Net Revenues, or, until sufficient cash or Sufficient Government Obligations have been deposited in trust for payment in full of the Series 2004 Bonds then outstanding, principal and interest on such Series 2004 Bonds to maturity, or, if called for redemption, to the date fixed for redemption together with the amount of the redemption premium, if any. Upon deposit of cash or Sufficient Government Obligations, as provided in the previous sentence, the statutory lien shall be terminated with respect to the Series 2004 Bonds, the holders of the Series 2004 Bonds shall have no further rights under this Ordinance except for payment from the deposited funds, and the Series 2004 Bonds shall no longer be considered to be outstanding under this Ordinance.
As additional security for the Series 2004 Bonds sold to the Authority, the Issuer hereby pledges its revenue sharing payments from the State of Michigan for the payment of the principal of and interest on the Series 2004 Bonds. Should the Net Revenues at any time be insufficient to pay the principal of and interest on the Series 2004 Bonds as the same become due, then the Issuer shall advance funds which it receives from the State of Michigan as revenue sharing payments as shall be necessary to pay said principal and interest. The Issuer shall be reimbursed for any such advance from the Net Revenues subsequently received which are not otherwise pledged or encumbered by this Ordinance.
19.08 BONDHOLDERS' RIGHTS; RECEIVER
The holder or holders of the Bonds representing in the aggregate not less than twenty percent (20%) of the entire principal amount thereof then outstanding, may, by suit, action, mandamus or other proceedings, protect and enforce the statutory lien upon the Net Revenues of the System, and may, by suit, action, mandamus or other proceedings, enforce and compel performance of all duties of the officers of the Issuer, including the fixing of sufficient rates, the collection of Revenues, the proper segregation of the Revenues of the System and the proper application thereof. The statutory lien upon the Net Revenues, however, shall not be construed as to compel the sale of the System or any part thereof.
If there is a default in the payment of the principal of or interest on the Bonds, any court having jurisdiction in any proper action may appoint a receiver to administer and operate the System on behalf of the Issuer and under the direction of the court, and by and with the approval of the court to perform all of the duties of the officers of the Issuer more particularly set forth herein and in Act 94.
The holder or holders of the Bonds shall have all other rights and remedies given by Act 94 and law, for the payment and enforcement of the Bonds and the security therefor.
19.09 MANAGEMENT, FISCAL YEAR
The operation, repair and management of the System and the acquiring of the Project shall continue to be under the supervision and control of the Village Council. The Village Council may employ such person or persons in such capacity or capacities, as it deems advisable to carry on the efficient management and operation of the System. The Village Council may make such rules and regulations as it deems advisable and necessary to assure the efficient management and operation of the System. The System shall be operated on the basis of an operating year which shall coincide with the Village's fiscal year.
19.10 RATES AND CHARGES
The rates and charges for service furnished by and the use of the System and the methods of collection and enforcement of the collection of the rates shall be those in effect on the date of adoption of this Ordinance.
19.11 NO FREE SERVICE OR USE
No free service or use of the System, or service or use of the System at less than cost, shall be furnished by the System to any person, firm or corporation, public or private, or to any public agency or instrumentality, including the Issuer.
19.12 FIXING AND REVISING RATES; RATE COVENANT
The rates now in effect and the rate increases to be placed into effect, if any, are estimated to be sufficient to provide for the payment of the expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the System in good repair and working order, to provide for the payment of the principal of and interest on the Bonds as the same become due and payable, and the maintenance of the reserve therefor and to provide for all other obligations, expenditures and funds for the System required by law and this Ordinance. The rates shall be fixed and revised from time to time as may be necessary to produce these amounts, and it is hereby covenanted and agreed to fix and maintain rates for services furnished by the System at all times sufficient to provide for the foregoing.
19.13 FUNDS AND ACCOUNTS; FLOW OF FUNDS
Commencing upon the adoption of this Ordinance, all funds belonging to the System shall be transferred as herein indicated and all Revenues of the System shall be set aside as collected and credited to a fund to be designated WATER SUPPLY AND SEWAGE DISPOSAL SYSTEM RECEIVING FUND (the "Receiving Fund"). In addition, all Revenues in any accounts of the System shall be transferred to the Receiving Fund and credited to the funds and accounts as provided in this section. The Revenues credited to the Receiving Fund are pledged for the purpose of the following accounts and shall be transferred or debited from the Receiving Fund periodically in the manner and at the times and in the order of priority hereinafter specified:
A. OPERATION AND MAINTENANCE ACCOUNT: Out of the Revenues credited to the Receiving Fund there shall be first set aside in, or credited to, a fund designated OPERATION AND MAINTENANCE ACCOUNT (the "Operation and Maintenance Account"), monthly a sum sufficient to provide for the payment of the next month's expenses of administration and operation of the System and such current expenses for the maintenance thereof as may be necessary to preserve the same in good repair and working order.
A budget, showing in detail the estimated costs of administration, operation and maintenance of the System for the next ensuing operating year, shall be prepared by the Village Council at least 30 days prior to the commencement of each ensuing operating year. No payments shall be made to the Issuer from moneys credited to the Operation and Maintenance Account except for services directly rendered to the System by the Issuer or its personnel.
B. BOND AND INTEREST REDEMPTION ACCOUNT: There shall be established and maintained a separate depositary account designated BOND AND INTEREST REDEMPTION ACCOUNT (the "Redemption Account"), the moneys on deposit therein from time to time to be used solely for the purpose of paying the principal of, redemption premiums (if any) and interest on the Bonds. The moneys in the Redemption Account shall be kept on deposit with the bank or trust company where the principal of and interest on the Bonds, or any series thereof, are payable.
Out of the Revenues remaining in the Receiving Fund, after provision for the Operation and Maintenance Fund, there shall be set aside each month commencing April 1, 2004 in the Redemption Account a sum proportionately sufficient to provide for the payment when due of the current principal of and interest on the Bonds, less any amount in the Redemption Account representing accrued interest on the Bonds or investment income on amounts on deposit in the Redemption Account, (including investment income on amounts held as part of the Bond Reserve Account). Commencing April 1, 2004, the amount set aside each month for interest on the Bonds shall be equal to a fraction derived from the number of months from April 1, 2004 to the first interest payment date of the total amount of interest on the Bonds next coming due. Commencing on the first interest payment date, the amount set aside each month for interest on the Bonds shall be 1/6 of the total amount of interest on the Bonds next coming due. The amount set aside each month for principal, commencing April 1, 2004, shall be equal to that amount which is that fraction derived from the number of months from April 1, 2004 to the first principal payment date of the amount of principal next coming due by maturity and the amount set aside each month for principal payment commencing on the first principal payment date, shall be 1/12 of the amount of principal next coming due by maturity. If there is any deficiency in the amount previously set aside, that deficiency shall be added to the next succeeding monthly requirements. The amount to be set aside for the payment of principal and interest on any date shall not exceed the amount which, when added to the money on deposit in the Redemption Account, including investment income thereon, is necessary to pay principal and interest due on the Bonds on the next succeeding principal payment date.
There is hereby established a separate account in the Redemption Account designated BOND RESERVE ACCOUNT (the "Bond Reserve Account"). Any ordinance authorizing the issuance of a subsequent series of Bonds may provide for deposits to the Bond Reserve Account to be made from the proceeds of such series of Bonds or from some other source in an amount that will result in the funds or other assets on deposit in the Bond Reserve Account being equal to the Reserve Amount for the Bonds.
Except as otherwise provided in this section, the moneys or other funding sources credited to the Bond Reserve Account shall be used solely for the payment of the principal and redemption price (if any) of and interest on the Bonds as to which there would otherwise be a default or on the final maturity date for the Bonds of the series to which moneys in the Bond Reserve Account relate. If at any time it shall be necessary to use moneys credited to the Bond Reserve Account for such payment, then the moneys so used shall be replaced from the Revenues first received thereafter in the Receiving Fund which are not required to be deposited in the Operation and Maintenance Account or the Redemption Account.
C. REPLACEMENT ACCOUNT: There shall next be established and maintained an account designated REPLACEMENT ACCOUNT (the "Replacement Account"), the money credited thereto to be used solely for the purpose of making repairs and replacements to the System. Out of the Revenues and moneys of the System remaining in the Receiving Fund each month after provision has been made for the deposit of moneys in the Operation and Maintenance Account and the Redemption Account (including the Bond Reserve Account), there may be deposited in the Replacement Account such additional funds as the Village Council may deem advisable. If at any time it shall be necessary to use moneys in the Replacement Account for the purpose for which the Replacement Account was established, the moneys so used shall be replaced from any moneys in the Receiving Fund which are not required by this Ordinance to be used for the Operation and Maintenance Account or the Redemption Account (including the Bond Reserve Account).
D. IMPROVEMENT ACCOUNT: Out of the remaining Revenues in the Receiving Fund, after meeting the requirements of the Operation and Maintenance Account, the Redemption Account (including the Bond Reserve Account) and the Replacement Account, there may be next set aside in or credited to a fund to be designated IMPROVEMENT ACCOUNT (the "Improvement Account"), which Improvement Account may have several subaccounts therein, such sums monthly as the Issuer may deem advisable to be used for additions, improvements, enlargements or extensions to the System, including the planning thereof.
E. GENERAL OBLIGATION DEBT ACCOUNT: There is hereby established a separate account known as the GENERAL OBLIGATION DEBT ACCOUNT (the "G.O. Debt Account"). Out of the remaining Revenues in the Receiving Fund, there may be next set aside in or credited to monthly after meeting the requirements of the foregoing Accounts, to the G.O. Debt Account, or from other available moneys such sums as shall be necessary to pay debt service on presently existing or future general obligation bond issues of the Issuer or general obligations or contractual obligations of the Issuer incurred or to be incurred for System purposes.
F. SURPLUS MONEYS: Thereafter, any Revenues in the Receiving Fund after satisfying all the foregoing requirements of this Section may, at the discretion of the Issuer, be used for any of the following purposes:
1. Transferred to the Replacement Account, the Improvement Account or both, or
2. Transferred to the Redemption Account and used for the purchase of Bonds on the open market at not more than the fair market value thereof or used to redeem Bonds prior to maturity pursuant to Section 5 of this Ordinance.
19.14 PRIORITY OF FUNDS
In the event the moneys in the Receiving Fund are insufficient to provide for the current requirements of the Operation and Maintenance Account or the Redemption Account, any moneys or securities in other accounts of the System, except the proceeds of sale of the Bonds, shall be credited or transferred, first, to the Operation and Maintenance Account, and second to the Redemption Account.
19.15 DEPOSITARY AND FUNDS ON HAND
Moneys in the several funds and the accounts established pursuant to this Ordinance, except moneys in the Redemption Account (including the Bond Reserve Account) and moneys derived from the proceeds of sale of the Bonds, may be kept in one or more bank accounts at a bank or banks designated by resolution of the Issuer, and if kept in one bank account the moneys shall be allocated on the books and records of the Issuer in the manner and at the times provided in this Ordinance.
Moneys in the funds and accounts established herein and moneys derived from the proceeds of sale of the Bonds, may be invested by the Issuer in United States of America obligations or in obligations the principal of and interest on which is fully guaranteed by the United States of America and any investments hereafter permitted by law, and moneys derived from the proceeds of sale of the Bonds may also be invested in certificates of deposit of any bank whose deposits are insured by the Federal Deposit Insurance Corporation. Investment of moneys in the Redemption Account being accumulated for payment of the next maturing principal or interest payment of the Bonds shall be limited to obligations bearing maturity dates prior to the date of the next maturing principal or interest payment on the Bonds. Investment of moneys in the Bond Reserve Account shall be limited to obligations bearing maturity dates or subject to redemption, at the option of the holder thereof, not later than five years from the date of the investment. In the event investments are made, any securities representing the same shall be kept on deposit with the bank or trust company having on deposit the fund or funds or account from which the purchase was made. Profit realized or interest income earned on investment of funds in the Receiving Fund, Operation and Maintenance Account and Improvement Account shall be deposited in or credited to the Receiving Fund at the end of each fiscal year. Profit realized on interest income earned on investment of moneys in the Redemption Fund including income derived from the Bond Reserve Account shall be credited as received to the Redemption Account.
19.17 BOND PROCEEDS
From the proceeds of the sale of the Bonds there shall be immediately deposited in the Redemption Account an amount equal to the accrued interest and premium, if any, received on the delivery of the Bonds. The balance of the proceeds of the sale of the Bonds when received from the Authority shall be deposited in a bank or banks, designated by the Village Council, qualified to act as depository of the proceeds of sale under the provisions of Section 15 of Act 94, in an account designated CONSTRUCTION FUND (the "Construction Fund"). Moneys in the Construction Fund shall be applied solely in payment of the costs of the Project, including any engineering, legal and other expenses incident thereto and to the financing thereof. Payments for construction, either on account or otherwise, shall not be made unless the registered engineer in charge of such work shall file with the Village Council a signed statement to the effect that the work has been completed in accordance with the plans and specifications therefor; that it was done pursuant to and in accordance with the contract therefor (including properly authorized change orders), that such work is satisfactory and that such work has not been previously paid for.
Any unexpended balance of the proceeds of sale of the Bonds remaining after completion of the Project in the Construction Fund may, at the discretion of the Issuer, be used for further improvements, enlargements and extension to the System, if, at the time of such expenditures, such use is approved by the Michigan Department of Treasury, if such permission is then required by law. Any remaining balance after such expenditure shall be paid to the Redemption Account and may be used for the purpose of purchasing Bonds on the open market at not more than the fair market value thereof, but not more than the price at which the Bonds may next be called for redemption, or used for the purpose of paying principal of the Bonds upon maturity or calling Bonds for redemption.
19.18 BOND FORM
The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF MICHIGAN
COUNTY OF OAKLAND
VILLAGE OF BEVERLY HILLS
WATER SUPPLY SYSTEM AND SEWAGE DISPOSAL SYSTEM
REVENUE BOND, SERIES 2004
REGISTERED OWNER: Michigan Municipal Bond Authority
PRINCIPAL AMOUNT: Three Million Six Hundred Ninety Thousand Dollars ($3,690,000)
DATE OF ORIGINAL ISSUE: March 25, 2004
The VILLAGE OF BEVERLY HILLS, County of Oakland, State of Michigan (the "Village"), for value received, hereby promises to pay, but only out of the hereinafter described Net Revenues of the Village's Water Supply and Sewage Disposal System (hereinafter defined), to the Michigan Municipal Bond Authority (the "Authority"), or registered assigns, the Principal Amount shown above, or such portion thereof as shall have been advanced to the Village pursuant to a Purchase Contract between the Village and the Authority and a Supplemental Agreement by and among the Village, the Authority and the State of Michigan acting through the Department of Environmental Quality, in lawful money of the United States of America, unless prepaid prior thereto as hereinafter provided.
During the time the funds are being drawn down by the Village under this bond, the Authority will periodically provide to the Village a statement showing the amount of principal that has been advanced and the date of each advance, which statement shall constitute prima facie evidence of the reported information; provided that no failure on the part of the Authority to provide such a statement or to reflect a disbursement or the correct amount of a disbursement shall relieve the Village of its obligation to repay the outstanding Principal Amount actually advanced, all accrued interest thereon, and any other amount payable with respect thereto in accordance with the terms of this bond.
The Principal Amount shall be payable on the dates and in the annual principal installment amounts set forth in Schedule A attached hereto and made a part hereof, as such Schedule may be adjusted if less than $3,690,000 is disbursed to the Village or if a portion of the Principal Amount is prepaid as provided below, with interest on said principal installments from the date each said installment is delivered to the holder hereof until paid at the rate of two and one-half percent (2.5%) per annum. Interest is first payable on October 1, 2004, and semiannually thereafter and principal is payable on the first day of October commencing October 1, 2005 (as set forth in the Purchase Contract) and annually thereafter.
The Bonds may be subject to redemption prior to maturity by the Issuer only with the prior written consent of the Authority and on such terms as may be required by the Authority.
Notwithstanding any other provision of this bond, as long as the Authority is the owner of this bond, (a) this bond is payable as to principal, premium, if any, and interest at the designated office of Bank One Trust Company, National Association, or at such other place as shall be designated in writing to the Village by the Authority (the "Authority's Depository"); (b) the Village agrees that it will deposit with the Authority's Depository payments of the principal of, premium, if any, and interest on this bond in immediately available funds by 12:00 noon at least five business days prior to the date on which any such payment is due whether by maturity, redemption or otherwise; in the event that the Authority's Depository has not received the Village's deposit by 12:00 noon on the scheduled day, the Village shall immediately pay to the Authority as invoiced by the Authority an amount to recover the Authority's administrative cost and lost investment earnings attributable to that late payment; and (c) written notice of any redemption of this bond shall be given by the Village and received by the Authority's Depository at least 40 days prior to the date on which such redemption is to be made.
In the event of a default in the payment of principal or interest hereon when due, whether at maturity, by redemption or otherwise, the amount of such default shall bear interest (the "additional interest") at a rate equal to the rate of interest which is two percent above the Authority's cost of providing funds (as determined by the Authority) to make payment on the bonds of the Authority issued to provide funds to purchase this bond but in no event in excess of the maximum rate of interest permitted by law. The additional interest shall continue to accrue until the Authority has been fully reimbursed for all costs incurred by the Authority (as determined by the Authority) as a consequence of the Village's default. Such additional interest shall be payable on the interest payment date following demand of the Authority. In the event that (for reasons other than the default in the payment of any municipal obligation purchased by the Authority) the investment of amounts in the reserve account established by the Authority for the bonds of the Authority issued to provide funds to purchase this bond fails to provide sufficient available funds (together with any other funds which may be made available for such purpose) to pay the interest on outstanding bonds of the Authority issued to fund such account, the Village shall and hereby agrees to pay on demand only the Village's pro rata share (as determined by the Authority) of such deficiency as additional interest on this bond.
For prompt payment of principal and interest on this bond, the Village has irrevocably pledged the revenues of the Water Supply and Sewage Disposal System of the Village, including all appurtenances, extensions and improvements thereto (the "System"), after provision has been made for reasonable and necessary expenses of operation, maintenance and administration (the "Net Revenues"), and a statutory lien thereon is hereby recognized and created.
This bond is a single, fully-registered, non-convertible bond in the principal sum indicated above issued pursuant to Ordinance No. 317 duly adopted by the Village Council of the Village, and under and in full compliance with the Constitution and statutes of the State of Michigan, including specifically Act 94, Public Acts of Michigan, 1933, as amended, for the purpose of paying part of the cost of acquiring and constructing additions, extensions and improvements to the System.
For a complete statement of the revenues from which and the conditions under which this bond is payable, a statement of the conditions under which additional bonds of superior and equal standing may hereafter be issued and the general covenants and provisions pursuant to which this bond is issued, reference is made to the above-described Ordinance.
This bond is a self-liquidating bond, payable, both as to principal and interest, primarily from the Net Revenues of the Water Supply and Sewage Disposal System. The principal of and interest on this bond are secured by the statutory lien hereinbefore mentioned.
The Village has covenanted and agreed, and does hereby covenant and agree, to fix and maintain at all times while any bonds payable from the Net Revenues of the System shall be outstanding, such rates for service furnished by the System as shall be sufficient to provide for payment of the interest upon and the principal of the bonds of this issue, as and when the same shall become due and payable, and to maintain a bond redemption account (including a bond reserve account) therefor, to provide for the payment of expenses of administration and operation and such expenses for maintenance of the System as are necessary to preserve the same in good repair and working order, and to provide for such other expenditures and funds for the System as are required by said Ordinance.
This bond is transferable only upon the books of the Village by the registered owner in person or the registered owner's attorney duly authorized in writing, upon the surrender of this bond together with a written instrument of transfer satisfactory to the transfer agent, duly executed by the registered owner or the registered owner's attorney duly authorized in writing, and thereupon a new bond or bonds in the same aggregate principal amount and of the same maturity shall be issued to the transferee in exchange therefor as provided in the Ordinance authorizing the bonds, and upon payment of the charges, if any, therein prescribed.
It is hereby certified and recited that all acts, conditions and things required by law to be done precedent to and in the issuance of this bond and the series of bonds of which this is one have been done and performed in regular and due time and form as required by law.
IN WITNESS WHEREOF, the VILLAGE OF BEVERLY HILLS, County of Oakland, State of Michigan, by its Village Council, has caused this bond to be executed with the facsimile signatures of its President and its Clerk and the corporate seal of the Village to be impressed hereon, all as of the Date of Original Issue.
VILLAGE OF BEVERLY HILLS
Based on the schedule provided below unless revised as provided in this paragraph, repayment of the principal of the bond shall be made until the full amount advanced to the Village is repaid. In the event the Order of Approval issued by the Department of Environmental Quality (the "Order") approves a principal amount of assistance less than the amount of the bond delivered to the Authority, the Authority shall only disburse principal up to the amount stated in the Order. In the event (1) that the payment schedule approved by the Village and described below provides for payment of a total principal amount greater than the amount of assistance approved by the Order or (2) that less than the principal amount of assistance approved by the Order is disbursed to the Village by the Authority, the Authority shall prepare a new payment schedule which shall be effective upon receipt by the Village.
Principal Installment Amount of Principal
Due on October 1 Installment
The Issuer covenants and agrees with the holders of the Bonds that so long as any of the Bonds remain outstanding and unpaid as to either principal or interest:
(a) The Issuer will maintain the System in good repair and working order and will operate the same efficiently and will faithfully and punctually perform all duties with reference to the System required by the Constitution and laws of the State of Michigan, and this Ordinance.
(b) The Issuer will keep proper books of record and account separate from all other records and accounts of the Issuer, in which shall be made full and correct entries of all transactions relating to the System. The Issuer shall have an annual audit of the books of record and account of the System for the preceding operating year made each year by an independent certified public accountant, and a copy of the audit shall be mailed to the manager of each syndicate or account originally purchasing any issue of the Bonds. The auditor shall comment on the manner in which the Issuer is complying with the requirements of the Ordinance with respect to setting aside and investing moneys and meeting the requirements for acquiring and maintaining insurance. The audit shall be completed and so made available not later than six (6) months after the close of each operating year.
(c) The Issuer will maintain and carry, for the benefit of the holders of the Bonds, insurance on all physical properties of the System and liability insurance, of the kinds and in the amounts normally carried by municipalities engaged in the operation of water supply and sewage disposal systems, including self-insurance. All moneys received for losses under any such insurance policies shall be applied solely to the replacement and restoration of the property damaged or destroyed, and to the extent not so used, shall be used for the purpose of redeeming or purchasing Bonds.
(d) The Issuer will not sell, lease or dispose of the System, or any substantial part, until all of the Bonds have been paid in full, both as to principal and interest or provision made thereof as herein provided. The Issuer will operate the System as economically as possible, will make all repairs and replacements necessary to keep the System in good repair and working order, and will not do or suffer to be done any act which would affect the System in such a way as to have a material adverse effect on the security for the Bonds.
(e) The Issuer will not grant any franchise or other rights to any person, firm or corporation to operate a System that will compete with the System and the Issuer will not operate a system that will compete with the System.
(f) The Issuer will cause the Project to be acquired and constructed promptly and in accordance with the plans and specification therefor.
19.20 ADDITIONAL BONDS
Except as hereinafter provided, the Issuer shall not issue additional Bonds of equal or prior standing with the Series 2004 Bonds.
The right is reserved in accordance with the provisions of Act 94, to issue additional Bonds payable from the Revenues of the System which shall be of equal standing and priority of lien on the Net Revenues of the System with the Series 2004 Bonds but only for the following purposes and under the following terms and conditions:
(a) To complete the Project in accordance with the plans and specifications therefor. Such bonds shall not be authorized unless the engineers in charge of construction shall execute a certificate evidencing the fact that additional funds are needed to complete the Project in accordance with the plans and specifications therefor and stating the amount that will be required to complete the Project. If such certificate shall be so executed and filed with the Issuer, it shall be the duty of the Issuer to provide for and issue additional revenue bonds in the amount stated in said certificate to be necessary to complete the Project in accordance with the plans and specifications plus an amount necessary to issue such bonds or to provide for part or all of such amount from other sources.
(b) For subsequent repairs, extensions, enlargements and improvements to the System or for the purpose of refunding part of any Bonds then outstanding and paying costs of issuing such additional Bonds including deposits which may be required to be made to the Bond Reserve Account. Bonds for such purposes shall not be issued pursuant to this subparagraph (b) unless the Adjusted Net Revenues of the System for the preceding twelve-month operating year shall be equal to at least one hundred percent (100%) of the maximum amount of principal and interest thereafter maturing in any operating year on the then outstanding Bonds and on the additional Bonds then being issued. If the additional Bonds are to be issued in whole or in part for refunding outstanding Bonds, the annual principal and interest requirements shall be determined by deducting from the principal and interest requirements for each operating year the annual principal and interest requirements of any Bonds to be refunded from the proceeds of the additional Bonds. For purposes of this subparagraph (b) the Issuer may elect to use as the last preceding operating year any operating year ending not more than sixteen months prior to the date of delivery of the additional Bonds. Determination by the Issuer as to existence of conditions permitting the issuance of additional Bonds shall be conclusive. No additional Bonds of equal standing as to the Net Revenues of the System shall be issued pursuant to the authorization contained in this subparagraph if the Issuer shall then be in default in making its required payments to the Operation and Maintenance Account or the Redemption Account.
(c) For refunding a part of the outstanding Bonds and paying costs of issuing such additional Bonds including deposits which may be required to be made to the Bond Reserve Account. No additional Bonds shall be issued pursuant to this subsection unless the maximum amount of principal and interest maturing in any operating year after giving effect to the refunding shall be less than the maximum amount of principal and interest maturing in any operating year prior to giving effect to the refunding.
19.21 APPLICATION TO MDEQ AND AUTHORITY
The Authorized Officers are hereby authorized to make application to the Authority and to the MDEQ for placement of the Series 2004 Bonds with the Authority. The Authorized Officers are further authorized to execute and deliver such contracts, documents and certificates including a Purchase Contract, a Supplemental Agreement, an Issuer's Certificate and a Revenue Sharing Pledge Agreement as are necessary or advisable to qualify the Series 2004 Bonds for the Drinking Water Revolving Fund. In the event of a sale of the Series 2004 Bonds to the Authority, an Authorized Officer is hereby authorized to make such changes to the form of the Series 2004 Bonds contained in Section 18 of this Ordinance as may be necessary to conform to the requirements of 1985 PA 227 ("Act 227"), including, but not limited to changes in the principal maturity and interest payment dates and references to additional security required by Act 227. In the event the Series 2004 Bonds are sold to the Authority, the taxes collected by the Stat e of Michigan and returned to the Issuer may be pledged for payment of the Series 2004 Bonds, and an Authorized Officer is further authorized to negotiate, execute and deliver an agreement with the Authority for payment of such taxes to the Authority or to a trustee as provided in Section 23 of Act 227.
19.22 COVENANT REGARDING TAX EXEMPT STATUS OF THE BONDS
The Issuer shall, to the extent permitted by law, take all actions within its control necessary to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended, (the "Code") including, but not limited to, actions relating to any required rebate of arbitrage earnings and the expenditure and investment of Bond proceeds and moneys deemed to be Bond proceeds, and to prevent the Bonds from being or becoming "private activity bonds" as that term is used in Section 141 of the Code.
19.23 REPEAL, SAVINGS CLAUSE
All ordinances, resolutions or orders, or parts thereof, in conflict with the provisions of this Ordinance are, to the extent of such conflict, repealed.
19.24 SEVERABILITY, PARAGRAPH HEADINGS; AND CONFLICT
If any section, paragraph, clause or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other provisions of this Ordinance. The paragraph headings in this Ordinance are furnished for convenience of reference only and shall not be considered to be part of this Ordinance.
19.25 PUBLICATION RECORDATION
This Ordinance shall be published in full in The Observer & Eccentric, a newspaper of general circulation in the Issuer qualified under State law to publish legal notices, promptly after its adoption, and shall be recorded in the Ordinance Book of the Issuer and such recording authenticated by the signatures of the President and Village Clerk.
19.26 EFFECTIVE DATE
This Ordinance shall be effective upon its adoption.
Adopted and signed this 3rd day of November, 2003.