Ordinance #32: Water Revenue Bond
An ordinance providing for the issuance of $85,000.00 water revenue bonds of the Village of Georgetown, Idaho; providing for the payment of said bonds out of the earnings and revenues of the water system of said Village; providing for the form of said bonds and interest coupons to be attached thereto; creating a special fund in the office of the Village Treasurer to be known as the “Water Revenue Bond Redemption Fund of 1958; creating a reserve fund in the Largilliere Company Bankers at Soda Springs, Idaho, prescribing certain covenants; authorizing the issuance of parity bonds; setting forth a saving clause and providing for the publication and effective date of this ordinance.
WHEREAS, at a Special Election held in the Village of Georgetown, Idaho, on November 4, 1958, Water Revenue Bonds in the amount of $85,000.00 were authorized for the purpose of acquiring funds to pay the cost of the construction, acquisition and installation of additions and betterments to the Water System of said Village, pursuant to the provisions of Ordinance #31; and
WHEREAS, there are certain requirements that must be complied with by the issuing corporation prior to the issuance of these Water Revenue Bonds.
NOW THEREFORE, THE VILLAGE OF GEORGETOWN, IDAHO, DOES ORDAIN AS FOLLOWS:
That for the purpose of obtaining and providing funds to pay the cost of the additions and betterments to the Water System of said Village, and in order to pay the cost of the issuance of said Water Revenue Bonds, and the cost of all engineering, inspection, fiscal and legal expenses, and interest, which it is estimated will accrue during the construction period and for six months thereafter on money borrowed, there shall be issued and sold by the Village of Georgetown, Idaho, Water Revenue Bonds of said Village in the aggregate principal amount of $85,000.00, which is the estimated cost and expense of the foregoing, which said bonds shall be dated at a rate, or rates, of not in excess of five per cent (5%) per annum, payable semi-annually after date, shall be of the denomination of $1,000.00 each, and shall mature and be payable as follows:
$2,000.00 in each of the year 1960 to 1964, both inclusive;
$3,000.00 in each of the year 1965 to 1970, both inclusive;
$4,000.00 in each of the year 1971 to 1976, both inclusive;
$5,000.00 in each of the year 1977 to 1979, both inclusive;
$6,000.00 in each of the year 1980 to 1982, both inclusive.
The Board of Trustees of said Village reserves the right to redeem any or all bonds maturing on or After December 1, 1969, aggregating $63,000.00, and being numbered from 23, to 85, both inclusive on any interest payment date on or after December 1, 1968, at 103, said redemption to be in the inverse order of the numbering of said bonds, highest number first, upon and after prior publication of notice of the intention to redeem any of said bonds by publication of such notice at least once in a newspaper of general circulation within said Village at least thirty (30) days prior to the date of intended redemption, and upon the date fixed for redemption interest upon the bonds thus called for redemption shall cease to accrue.
That the form of said bonds the interest coupons which shall be attached thereto and the Certificate of the Clerk and Treasurer of said Village, which shall be printed upon the back of each bond shall be substantially in the following form, viz:
BOND FORM IN ORDINANCE BOOK
There shall be, and there is hereby created and established in the office of the Treasurer of the Village of Georgetown, Idaho, a Special Water system Fund, which shall be known and described as the “Water Revenue Bond Redemption Fund of 1958” of the Village of Georgetown, Idaho, into which Fund for the purpose of paying the principal and interest of these bonds, according to their maturities, shall be paid monthly by said Village and the proper officers of said Village shall pay monthly, and this Board of Trustees, by this ordinance does hereby promise and agree, and obligates and binds the Village of Georgetown, to set aside and pay out of the gross earnings and revenues of said water system (subject to the primary deduction there from of sums equal to the costs and expenses of operation and maintenance of such water system) a definite sum monthly in every month during the life of said bonds, commencing with the month the bonds are dated, and until the full payment of said bonds and interest, equal in amount ( in each such month in each year during said period of monthly payments) to one-twelfth, of the aggregate amount of bond principal which will be payable during, and at the expiration of, each such year during the life of said bonds, and as specifically set forth hereinbefore, plus one-twelfth (in each month) of the bond interest accruing and being payable within each such year.
It is hereby made the mandatory official duty of the Treasurer of the Village of Georgetown, Idaho, for the time being, to maintain said Water Revenue Bond Redemption Fund of 1958, continuously in his office, and to pay, and to cause to be paid, into said Water Revenue Bond Redemption Fund of 1958, out of the said revenues of said water system, the foregoing bonds, and the semi-annual interest thereon and to apply said moneys for the payment and retirement of said Water Revenue bonds according to their terms.
The foregoing Water Revenue Bond redemption Fund of 1958, created hereby, and the funds paid therein, as required hereinbefore, shall be used solely for the purpose of the payment of the principal of said bonds and authorized hereby as they mature and become payable, and the payment of the interest thereon as the same accrues and becomes payable, as provided in the interest coupons which shall be attached to said bonds, without preference or priority of the interest upon one bond over another bond maturing in any year, by reason of its numbering, priority of issuance or otherwise.
The Board of Trustees and the corporate authorities of the Village of Georgetown, hereby declare that in fixing the amounts to be paid into said Water Revenue Bond Redemption Fund of 1958, as aforesaid, they have exercised due regard to the cost of operation and maintenance of said water system and that no portion of said revenues nor charges have been previously pledged for any other indebtedness.
Said Village hereby covenants and agrees with the owners and holders of each of said bonds that the Village will establish and collect rates and charges for said water system for as long as any of the $85,000.00 bonds authorized herein are outstanding, and will make available for the payment of the principal and interest of all such bonds as the same shall accrue an amount equivalent to 1.4 times the amount required each year for the principal and interest payments due on all such outstanding bonds. The amount “available for the payment of the principal and interest of all such bonds as the same shall accrue” is hereby defined as the gross revenues of said water system less expenses of maintenance and operations, but before depreciation.
There shall be, and there is hereby created and established by said Village, in addition to the Water Revenue Bond Redemption Fund of 1958 a Reserve Fund, and in addition, to the sums above required, said Village shall set aside and pay into said Reserve Fund from legally available funds the sum of at least $6,000.00 on or before the bonds authorized by Ordinance #31 and Ordinance #32 are sold and issued, and said Reserve Fund shall further be increased to $7500.00 by November 1, 1962, from legally available funds. When the moneys, as required above, have been deposited in said Reserve Fund no further payments shall be made into said Fund. Said Village further agrees that it will at all times maintain said sum in said Reserve Fund. In the event of a deficiency in the said Water Revenue Bond Redemption Fund of 1958, for the payment of maturing principal and interest amounts, as such deficiency shall be made up from the Reserve fund and said Reserve Fund shall be reimbursed out of the next available revenues arising from said water system and costs and expenses of maintenance and operation.
The foregoing funds deposited in the Reserve Fund must be deposited in the Largilliere Company Bankers at Soda Springs, Idaho, or invested in direct obligations of the United States Government having a guaranteed redemption price and maturing not later than twelve years from the date of issue and in no event later than the last maturity date of the bonds.
It is the duty of the Village to transfer from its General Fund to the Water Fund, a sum or sums of money for furnishing the municipality, or any of its departments, boards, or agencies, the services and facilities of such water system.
In addition to the covenants set forth in Ordinance #31 of this Village and in this Ordinance, the Board of Trustees further covenant and agree that none of the funds specifically pledged have heretofore been pledged for the payment of any special fund indebtedness whatsoever and that the revenues of said water system are sufficient in amount to fully pay the foregoing bonds hereby authorized in addition to all other charges thereon.
Language expressing the terms or substance of this Section and the covenants contained in Ordinance #31 shall be set forth in the forgoing bonds in the form or, or as, a covenant and agreement of said Village with each and all of the owners and holders at any time of said bonds or any of them.
So long as any of the bonds hereby authorized remain outstanding the Village of Georgetown shall maintain and carry for the benefit of the Village and the holders of said bonds insurance, if available, against loss by fire or other casualty on the physical properties of the water system of the kinds and in the amounts normally carried by private companies engaged in the operation of similar properties. All moneys received from losses from any such insurance policies are hereby pledged by the Village as security for the payment of said bonds until and unless such proceeds are paid out to repair the loss or damage or to restore the physical property lost or damaged, in respect to which such proceeds have been received. The payment of premiums for all insurance policies required under the provisions of this Section shall be considered an operation and maintenance expense of the municipal water system.
A complete set of books of account of said water system shall be kept in the office of the Treasurer of said Village and shall be open to inspection by the public at any time during office hours. The books of account shall be audited biennially by a public accountant appointed by the Village of Georgetown, Idaho. Said audit shall be made within sixty (60) days following the close of each fiscal year. Each such audit, in addition to whatever matters may be thought proper by the accountant to be included therein, shall include the following:
1. A statement in detail of the income and expenditures of the water system for each fiscal year.
2. A balance sheet as of the end of such fiscal year.
3. The accountant’s comment regarding the manner in which the Village has carried out the requirements of this ordinance, and the accountant’s recommendation for any change or improvements in the operation of the system.
4. A list of the insurance policies in force at the end of the fiscal year, setting out as to each policy the amount of the policy, the risks covered, the name of the insurer and the expiration date of the policy.
5. The number of metered water customers at the end of the year.
All expenses incurred in the making of the audits required by this section shall be regarded and paid as a maintenance operation and expense.
The Village further binds itself irrevocably that while any of the bonds herein authorized remain outstanding no additional bonds payable from the revenues of said system shall be issued the payment of the interest on and the principal of which is a charge on said revenues equal to and on a parity with the bonds herein authorized unless the following conditions are complied with:
(1) At the time of the issuance of such additional Water Revenue Bonds there is no deficiency in the Water Revenue Bond Redemption Fund of 1958, and no deficiency in the Reserve Fund of any outstanding Revenue Bond Issue, or issues, which bond obligations constitute a lien upon the funds arising from revenues derived from the operation of the water system as presently constituted or revenue derived from any part thereof.
(2) The Village shall provide in each Ordinance authorizing the issuance of additional bonds having a parity of lien, and the first maturities of which are four years or less after date of bonds that there will be established for each such issue a Water Revenue Bond Redemption Fund, or to the same extent and purposes as other Water Revenue Bond Redemption Funds and Reserve Funds herein provided for. There shall be paid into any Reserve Fund hereafter created under the provisions of this sub-paragraph, within a period to be provided by Ordinance authorizing such parity issue but in no event later than four years from the date of issue of said bonds, an amount equal to one year’s debt service on the respective additional bond issue, or issues. Payments into such Redemption Fund of Funds and Reserve Fund or Funds shall rank equally with the payments into Redemption Funds or Reserve Funds previously established under authority of this Ordinance, and the obligation to make the same shall constitute an equal obligation and charge upon the revenues of the water system but shall be in addition to obligations theretofore incurred. Provided, however, that in the event any such additional bonds are issued the first maturity dates of which are more than four years from the date of issue of said additional bonds, then and in that event the obligation of the Village to make payments into a Reserve Fund shall be as follows:
The Village shall make payment into said Reserve Fund at such times and in such amounts that, 365 days prior to the date upon which the first annually maturing bond principal shall become payable, there shall be in said Reserve Fund an amount equal to one year’s principal requirement on such additional parity bond issue. Provided, further, however, that in addition to the payments into the Reserve Fund immediately hereinabove required, as to any such additional parity bond issue the first maturity of principal of which is more than four years after the date of issuance of such bonds, the Village shall pay into said Reserve Fund within a period to be provided by ordinance authorizing such parity issue, but in no event later than four years of the date of issuance of the bonds, an amount equal to one year’s interest requirements under such additional parity bond issue, and shall thereafter maintain such amount in said Reserve Fund (making payments therein in the event of transfers there from to the Redemption Fund) during such time as such bond issue shall remain outstanding, except that the moneys in said Reserve Fund may be used to pay the principal and interest upon the last maturing bonds.
(3) That at the time of the issuance of such additional bonds the Village shall have on file a certificate from an independent consulting engineer licensed to practice in the State of Idaho and experienced in the construction and cooperation of municipal utilities. This certificate shall show that the annual average of the net revenues of the system for any thirty-six consecutive months out of the forty-eight months immediately preceding the month of delivery of such additional bonds, shall be at least equal to 1.4 times the average annual amount required thereafter for the payment of principal and interest on all bonds having an equal lien on the revenues of the system as the Series 1958 Bonds to be outstanding immediately subsequent to the issuance of additional bonds.
(4) “Net income” for the purpose of this subparagraph shall be construed to mean gross income reduced by expenses of normal maintenance, and or operation before depreciation, but increased by such increased revenue as may reasonably be anticipated for the next succeeding 365 days, whether through changes in rates, theretofore authorized, or by additional accounts, or both.
(5) The engineer may adjust the historical operating figures to reflect the annual gross revenue to be derived from the operation of the additional, extensions and betterments to be acquired or constructed from the proceeds from the sale of the additional bonds less his estimate of any increased cost for operation and maintenance of the water system allocable to such improvements.
(6) The Village shall have the power, and reserves the right to issue bonds having a parity of lien as in this Ordinance provided without the certificate of a certified professional engineer, for refunding purposes only, provided:
(a) Such refunding bonds may be exchanged for, or their proceeds are used to retire, prior to maturity, an equal amount in principal value of outstanding bonds, or any part thereof, issued for acquisition, construction, betterment or extension of the water system, or any part thereof, or any or all other Water Revenue Bonds which may hereafter be issued on a parity with the bonds herein presently issued, or any part of said bond issues, and
(b) Such issuance of refunding bonds does not require a larger debt service payment in any year thereafter over the life of the refunding bonds than was required to be paid over the life of the bonds to be refunded; and
(c) The Village will, in the Ordinance providing for the issuance of such refunding bonds and for the creation of a bond Redemption Fund, further create a Reserve Fund in the manner provided in Section 10, subparagraph (2) of this Ordinance.
(7) Nothing herein contained shall prevent the Village from issuing Water Revenue Bonds or Warrants which are a charge on the Water Revenue Bond Redemption Fund junior or inferior to the payments to be made into the Reserve Fund or any other Fund created on behalf of any parity bonds issued subsequent to this issue.
When for any reason the Village of Georgetown, or any of its authorized agents, have not deposited sufficient moneys into the Water Revenue Bond Redemption Fund of 1958, and there has been a default in the payment of the principal and interest of the bonds outstanding and payable, then, and in that event, one or any number of the holders of the bonds, representing twenty-five per cent (25%) of the outstanding bonds, are entitled to the appointment of a Receiver, which Receiver may enter and take possession of said water system, operate, and maintain the same, prescribe rates, fees, tools or charges and collect and receive and apply all revenue thereafter arising there from in the same manner as the Village of Georgetown itself might do.
If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portions of this Ordinance.
This ordinance shall take effect and be in full force upon its passage, approval and publication in one issue of the News-Examiner, a newspaper of general circulation in said Village published at Montpelier, Bear Lake County, Idaho, and being the official newspaper of said Village.
Passed under suspension of all rules and regulations of the Board of Trustees upon which proper roll call votes were duly taken, and duly enacted an Ordinance of this Village at an adjourned regular meeting of the Chairman and Board of Trustees of the Village of Georgetown, Bear Lake County, Idaho, on December 12, 1958.
W. W. Hayes, Chairman
M. Floyd Clark, Clerk