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Home My WebLink About057191 � Substituted Copy Dated 12/9/91 ORDINANCE NO. 5719 AN ORDINANCE AUTHORIZING THE ISSUANCE OF GENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1991, IN THE AGGREGATE PRINCIPAL AMOUNT OF $20,005,000, OF THE CITY OF PUEBLO, COLORADO, FOR THE PURPOSE OF REFUNDING CERTAIN OF THE CITY'S GENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1984A, CURRENTLY OUTSTANDING IN THE AMOUNT OF $11,025,000, AND THE CITY'S GENERAL OBLIGATION WATER BONDS, SERIES 1986, CURRENTLY OUTSTANDING IN THE AMOUNT OF $7,320,000; PROVIDING FOR THE ESTABLISHMENT OF AN ESCROW FUND FOR THE PAYMENT OF THE OUTSTANDING BONDS TO BE REFUNDED; PRESCRIBING THE FORM OF THE SERIES 1991 BONDS; PROVIDING FOR THE SALE OF THE SERIES 1991 BONDS; PROVIDING FOR THE APPLICATION OF THE NET REVENUES OF THE MUNICIPAL WATERWORKS SYSTEM AND FOl2 THE LEVY OF TAXES TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 1991 BONDS; AND PRESCRIBING OTHER DETAILS IN CONNECTION THEREWITH WHEREAS, the City of Pueblo (the "City "), in the County of Pueblo and the State of Colorado, is a political subdivision of the State, a body corporate and politic, and a home rule city pursuant to Article XX of the State Constitution and the home rule charter of the City (the "Charter "); and WHEREAS, at the request and upon the advice of the Board of Water Works of Pueblo, Colorado (by resolution of the Board of Water Works adopted on November 19, 1991), the City Council (the "Council ") deems it necessary to authorize by this Ordinance the issuance of fully registered General Obligation Water Refunding Bonds, Series 1991 (the "Series 1991 Bonds "), of the City to provide funds to refund and pay certain General Obligation Water Refunding Bonds and General Obligation Water Bonds of the City which are currently outstanding, as more fully described in this Ordinance; and WHEREAS, the City, by Ordinance heretofore adopted and approved by the Council, authorized the issuance of its General Obligation Water Refunding Bonds, Series 1984A, dated April 15, 1984, in the amount of $19,115,000 (the "Series 1984A Bonds "), of which there remains outstanding the aggregate principal amount of $11,850,000, bearing interest payable semiannually on May 1 and November 1 each year, and maturing on May 1 and November 1 in the years 1992 through 1999; and WP94002- 051/178 WHEREAS, the City, by Ordinance heretofore adopted and approved by the Council, authorized the issuance of its General Obligation Water Bonds, Series 1986, dated July 1, 1986, in the amount of $7,320,000 (the "Series 1986 Bonds "), of which there remains outstanding the aggregate principal amount of $7,320,000, bearing interest payable semiannually on May 1 and November 1 each year, and maturing on November 1 in the years 1999, 2000 and 2001; and WHEREAS, the Council has determined that it is necessary and in the best interests of the City and its residents that certain of the presently outstanding Series 1984A Bonds (namely, those which mature on and after November 1, 1992) and the Series 1986 Bonds, in the aggregate outstanding principal amount of $18,345,000 (the "Refunded Bonds "), be advance refunded in order to achieve present value savings by reducing debt service, all to the benefit of the City and its residents, in accordance with the Charter; and WHEREAS, there has been presented to the Council at this meeting proposed forms of the Paying Agency Agreement, the Bond Purchase Agreement, the Preliminary Official Statement, the final Official Statement and the Escrow Agreement (each as defined hereinafter); and WHEREAS, for purposes of complying with Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), the City desires to deem the Preliminary Official Statement to be final within the meaning of the Rule; and WHEREAS, the City's General Obligation Water Refunding Bonds, Series 1991, in the aggregate principal amount of $20,005,000, herein authorized, will be sold and awarded to Piper, Jaffray & Hopwood Incorporated, of Denver, Colorado (the "Original Purchaser "), in return for payment of the purchase price as set forth in the Bond Purchase Agreement. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, COLORADO: Section 1. Except to the extent inconsistent with this Ordinance, all action heretofore taken by the City, its Board of Water Works and the officials thereof directed toward the issuance and sale of the Series 1991 Bonds, as hereinafter defined, to the Original Purchaser, for the purposes set forth below, is hereby ratified, approved and confirmed. Section 2. For the purpose of providing moneys with which to refund and pay the Refunded Bonds, including premiums, if any, and interest on the Refunded Bonds to the WP94002/051/178 -2- redemption date, and pursuant to the terms of the City's Charter and the Colorado Public Securities Refunding Act, Chapter 11 of Article 56, Colorado Revised Statutes, as amended, the City shall issue its General Obligation Water Refunding Bonds, Series 1.991, in the aggregate principal amount of $20,005,000 (the "Series 1991 Bonds "). The Series 1991 Bonds shall be dated December 1, 1991, and shall bear interest from that date, except that if interest on the Series 1991 Bonds shall be in default, Series 1991 Bonds issued in exchange for Series 1991 Bonds surrendered for transfer or exchange shall bear interest from the date to which interest has been paid in full on the Series 1991 Bonds surrendered. The Series 1991 Bonds shall be issuable solely as fully registered bonds in the denomination of $5,000 or any integral multiple thereof, numbered consecutively from R -1, and will bear interest at the rates (payable on May 1 and November 1 of each year, commencing on May 1, 1992), and will mature on May 1 and November 1 in the years as follows: Principal Principal Interest Rate Amount Amount (May 1 and Year (May 1) (November 1) November 1) 1992 $ 130,000 $ 760,000 4.30% 1993 1,070,000 1 4.70 1994 1,120,000 1,150,000 5.05 1995 1,180,000 1,205,000 5.25 1996 725,000 780,000 5.35 1997 275,000 260,000 5.55 1998 630,000 660,000 5.75 1999 1,610,000 1,655,000 5.90 2000 1,705,000 1,750,000 6.00 2001 1,110,000 1,140,000 6.05 If upon presentation at maturity, payment of any Series 1991 Bond is not made as herein provided, interest shall continue thereon at the interest rate designated in such Series 1991 Bond until the principal thereof is paid in full. Principal of and premium, if any, on the Series 1991 Bonds shall be payable in lawful money of the United States of America at the principal corporate trust office of the Paying Agent (as defined hereinafter) in Pueblo, Colorado, or at the principal corporate trust office of its successor paying agent. Interest on the Series 1991 Bonds is payable by check or draft of the Paying Agent mailed to such person as is the registered owner thereof on the Record Date, or, if arranged in advance of the Record Date, by a registered -3- WP94002/051/178 owner, by wire transfer to that registered owner. The "Record Date" shall be the fifteenth day of the month preceding any interest payment date, regardless of whether such date is a business day. The Series 1991 Bonds are noncallable for redemption prior to maturity. Section 3. Pueblo Bank and Trust Company, Pueblo, Colorado, is hereby appointed as bond registrar and paying agent (the "Registrar" or the "Paying Agent ", as the case may be) for the City for purposes of the Series 1991 Bonds and the City hereby approves the execution and delivery of the Registration and Paying Agency Agreement, dated as of December 1, 1991 (the "Paying Agency Agreement "), between the City and the Paying Agent, to be in form and substance satisfactory to the City Attorney. The President of the Council is hereby authorized and directed to execute and deliver the Paying Agency Agreement and the City Clerk or any assistant City Clerk is hereby authorized and directed to attest the Paying Agency Agreement and affix the seal of the City. Section 4. The Registrar shall maintain on behalf of the City books for the purpose of registration and transfer of Series 1991 Bonds, and such books shall specify the person entitled to each of the Series 1991 Bonds and the rights evidenced thereby, and all transfers of Series 1991 Bonds and the rights evidenced thereby (such person is hereinafter referred to as the "Registered Owner "). Series 1991 Bonds may be transferred or exchanged by the Registered Owner upon payment of costs and any taxes or governmental charges required to be paid with respect to such transfer or exchange, at the principal corporate trust office of the Paying Agent. Series 1991 Bonds may be exchanged for a like aggregate principal amount of Series 1991 Bonds of other authorized denominations of the same series and maturity. Upon surrender for transfer of any Series 1991 Bond, duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner of such Series 1991 Bond or his attorneys duly authorized in writing, the City shall execute and the Paying Agent shall authenticate and deliver in the name of the transferee or transferees a new Series 1991 Bond or Bonds for a like aggregate principal amount. The person in whose name any Series 1991 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes. Notwithstanding any of the above, the City and the Paying Agent shall not be required (a) to issue, register, transfer or exchange any Series 1991 Bond during a period beginning at the opening of business on the Record Date next preceding any interest payment date or on -4- WP94002/051/178 any date of selection of Series 1991 Bonds to be redeemed, and ending at the close of business on the interest payment date or on the day on which the applicable notice of redemption is given or (b) to register, transfer or exchange any Series 1991 Bond previously selected or called for redemption in whole or in part. Section 5. (a) The Series 1991 Bonds shall be executed in the name and on behalf of the City with the manual or facsimile signature of the President of the Council, shall bear a manual or facsimile of the seal of the City and shall be attested by the manual or facsimile signature of the City Clerk. Should any officer whose manual or facsimile signature appears on the Series 1991 Bonds cease to be such officer before delivery of the Series 1991 Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes. The President of the Council and the City Clerk are hereby authorized and directed to prepare and to execute the Series 1991 Bonds in accordance with the requirements of this Ordinance. When the Series 1991 Bonds have been duly executed, the officers of the City are authorized to, and shall, deliver the Series 1991 Bonds to the Paying Agent for authentication. No Series 1991 Bond shall be secured by this Ordinance or entitled to the benefit hereof, or shall be valid or obligatory for any purpose, unless the certificate of authentication of the Paying Agent, in substantially the form set forth in this Ordinance, has been duly executed by the Paying Agent. Such certificate of the Paying Agent upon any Series 1991 Bond shall be conclusive evidence and the only competent evidence that such Series 1991 Bond has been authenticated and delivered hereunder. The Paying Agent's certificate of authentication shall be deemed to have been duly executed by it if manually signed by an authorized officer of the Paying Agent, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Series 1991 Bonds. (b) For purposes of this Section 5, "Agent Member" means a member of, or participant in, the Securities Depository; "Person" means any individual, corporation, partnership, joint venture, association, joint -stock company, trust, unincorporated organization or government or any agency or political subdivision thereof and "Securities Depository" means The Depository Trust Company and its successors and assigns or if, (i) the then Securities Depository resigns from its functions as depository of the Series 1991 Bonds or (ii) the City discontinues use of the Securities Depository -5- WP94002/051/178 pursuant to Section 5(e) hereof, any other securities depository which agrees to follow procedures required to be followed by a securities depository in connection with the Series 1991 Bonds and which is selected by the City with the consent of the Paying Agent. (c) Except as otherwise provided in this Section 5, the Series 1991 Bonds in the form of one global bond for each stated maturity date shall be registered in the name of the Securities Depository or its nominee and ownership thereof shall be maintained in book -entry form by the Securities Depository for the account of the Agent Members. Initially, each Series 1991 Bond shall be registered in the name of CEDE & Co., as the nominee of The Depository Trust Company. Except as provided in subsection (e) of this Section 5 the Series 1991 Bonds may be transferred, in whole but not in part, only to the Securities Depository or a nominee of the Securities Depository or to a successor Securities Depository selected or approved by the City or to a nominee of such successor Securities Depository. Each global bond shall bear a legend substantially to the following effect: "Except as otherwise provided in the Ordinance, this global bond may be transferred, in whole but not in part, only to another nominee of the Securities Depository (as defined in the Ordinance) or to a successor Securities Depository or to a nominee of a successor Securities Depository." (d) Except as otherwise provided in this Section 5, the City and the Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Securities Depository or any Agent Member with respect to any beneficial ownership interest in the Series 1991 Bonds, (ii) the delivery to any Agent Member, beneficial owner of the Series 1991 Bonds or other Person, other than the Securities Depository, of any notice with respect to the Series 1991 Bonds or (iii) the payment to any Agent Member, beneficial owner of the Series 1991 Bonds or other Person, other than the Securities Depository, of any amount with respect to the principal of or interest on the Series 1991 Bonds. So long as the certificates for the Series 1991 Bonds issued under this Ordinance are not issued pursuant to subsection (e) of this Section 5, the City and the Paying Agent may treat the Securities Depository as, and deem the Securities Depository to be, the absolute owner of the Series 1991 Bonds for all purposes whatsoever, including, without limitation, (i) the payment of principal of and interest on such Series 1991 Bonds, (ii) giving notices of -6- WP94002/051/178 redemption and other matters with respect to such Series 1991 Bonds and (iii) registering transfers with respect to such Series 1991 Bonds. In connection with any notice or other communication to be provided to the registered owners of the Series 1991 Bonds pursuant to this Ordinance by the City or the Paying Agent with respect to any consent or other action to be taken by such registered owners, the City or the Paying Agent, as the case may be, shall establish a record date for such consent or other action and, if the Securities Depository shall be the sole registered owner of all of the Series 1991 Bonds, give the Securities Depository notice of such record date not less than fifteen (15) calendar days in advance of such record date to the extent possible. The notice to the Securities Depository provided for in the preceding sentence shall be given only when the Securities Depository is the sole registered owner of the Series 1991 Bonds. (e) If at any time the Securities Depository notifies the City and the Paying Agent that it is unwilling or unable to continue as Securities Depository with respect to any or all of the Series 1991 Bonds or if at any time the Securities Depository shall no longer be registered or in good standing under the Securities Exchange Act of 1934 or other applicable statute or regulation and a successor Securities Depository is not appointed by the City with the consent of the Paying Agent within 90 days after the City receives notice or becomes aware of such condition, as the case may be, then subsection (c) of this Section 5 shall no longer be applicable and the City shall execute and the Paying Agent shall authenticate and deliver certificates representing the Series 1991 Bonds as provided below. In addition, the City may determine at any time that the Series 1991 Bonds shall no longer be represented by global certificates and that the provisions of subsections (c), (d) and (e) of this Section 5 shall no longer apply to the Series 1991 Bonds. In such event, the City shall execute and the Paying Agent shall authenticate and deliver certificates representing the Series 1991 Bonds as provided below. Certificates for the Series 1991 Bonds issued solely in exchange for a global certificate pursuant to this subsection (e) shall be registered in such names and authorized denominations as the Securities Depository, pursuant to instructions from the Agent Members or otherwise, shall instruct the City and the Paying Agent. The Paying Agent shall promptly deliver such certificates representing the Series 1991 Bonds to the Persons in whose names such Series 1991 Bonds are so registered. -7- WP94002/051/178 Section 6. The sale of the Series 1991 Bonds to the Original Purchaser, at a price of 99.25% of the principal amount thereof, plus accrued interest, in accordance with the Bond Purchase Agreement dated as of December 9, 1991, in substantially the form presented to this meeting with such changes thereon as may be approved by the President of the Council and the City Attorney, is hereby approved. Upon the authentication of the Series 1991 Bonds, the Paying Agent shall deliver the same to the Original Purchaser or its designees as directed by the City as hereinafter provided. Prior to the authentication and delivery by the Paying Agent of the Series 1991 Bonds there shall be filed with the Paying Agent the following: (a) a certified copy of this Ordinance; (b) an executed copy of the Escrow Agreement (as hereinafter defined); and (c) a request and authorization to the Paying Agent on behalf of the City and signed by the President of the Council to authenticate and deliver the Series 1991 Bonds to the Original Purchaser upon payment to the City of the sum specified in such request and authorization plus accrued interest thereon to the date of delivery. The proceeds of such payment shall be deposited or transferred as provided in this Ordinance. The proceeds of the Series 1991 Bonds shall be used only for the purposes set forth in this Ordinance, namely, for deposit into the escrow account pursuant to the Escrow Agreement, for deposit of the accrued interest into the Bond Fund (as hereinafter defined), and for paying the costs of the issuance of the Series 1991 Bonds, and for no other purpose whatever. Neither the Original Purchaser nor any Registered Owner of any Series 1991 Bond shall be responsible for the application or disposal by the City, or any of its officers or employees, of any of the funds derived from the sale of the Series 1991 Bonds. Section 7. The Series 1991 Bonds shall be in substantially the following form with such omissions, insertions, endorsements and variations as may be required by the circumstances or by this Ordinance and which are consistent with this Ordinance: -8- WP94002/051/178 (Form of Series 1991 Bond) UNITED STATES OF AMERICA STATE OF COLORADO COUNTY OF PUEBLO CITY OF PUEBLO GENERAL OBLIGATION WATER REFUNDING BOND SERIES 1991 R- INTEREST RATE: MATURITY DATE: ISSUE DATE: CUSIP DECEMBER 1, 1991 NUMBER: REGISTERED OWNER: PRINCIPAL SUM: DOLLARS The City of Pueblo (the "City "), in the County of Pueblo and State of Colorado, for value received, promises to pay to the Registered Owner (named above), or registered assigns, in the manner hereinafter provided, and upon presentation and surrender hereof at the principal corporate trust office of the paying agent, transfer agent and bond registrar named below, the Principal Sum (stated above) on the Maturity Date (stated above), to pay interest on said sum from the date hereof at the Interest Rate (stated above) per annum, semiannually on November 1 and May 1 each year, commencing May 1, 1992, to the Registered Owner hereof or registered assigns, said interest being payable until said principal sum is paid, unless this bond shall have been previously called for redemption and payment shall have been duly made or provided for. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America, without deduction for exchange or collection charges, at the principal office of Pueblo Bank and Trust Company, Pueblo, Colorado, as paying agent, transfer agent and bond registrar (the "Registrar" or "Paying Agent "), or at the office of any successor paying agent appointed by the City. Interest on this bond shall be paid by the Registrar on behalf of the City by check or draft of the Registrar mailed on or before an interest payment date to the Registered Owner at his address as it appears on the registration books of the Registrar at the close of business on the fifteenth day of the month prior to each interest payment date (whether or not a business day) (the "Record Date "), regardless of any transfer or exchange of this bond subsequent to such Record Date and prior to such interest payment date. -9- WP94002/051/178 REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF WHICH SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the proceedings of the City authorizing the issuance of the Series 1991 Bonds until the Certificate of Authentication hereon shall be signed on behalf of the Registrar. IN WITNESS WHEREOF, the City Council of the City has caused this bond to be executed with the facsimile signature of the President of the City Council, and to be attested by the facsimile signature of the City Clerk of the City under the facsimile seal of the City, all as of December 1, 1991. (FACSIMILE SEAL) ATTEST: (Facsimile Signature) President of the City Council (Facsimile Signature) City Clerk DATE: CERTIFICATE OF AUTHENTICATION This bond is one of the Series 1991 Bonds of the issue described in the within- mentioned Ordinance. Pueblo Bank and Trust Company, as Registrar (Manual Signature) Authorized Officer (Back of Series 1991 Bond) This bond is one of a series of general obligation bonds of the City denominated as the "City of Pueblo, General Obligation Water Refunding Bonds, Series 1991," which the City is issuing in the aggregate principal amount of $20,005,000 (the "Series 1991 Bonds "). The Series 1991 -10- WP94002/051/178 Bonds are issued for the purpose of defraying the cost of (i) advance refunding certain of the City's General Obligation Water Refunding Bonds, Series 1984A, currently outstanding in the aggregate principal amount of $11,025,000 (the "Series 1984A Bonds "), (ii) advance refunding the City's General Obligation Water Bonds, Series 1986, currently outstanding in the aggregate principal amount of $7,320,000 (the "Series 1986 Bonds ") and (iii) paying certain costs and expenses associated with the issuance of the Series 1991 Bonds. The Series 1991 Bonds are noncallable for redemption prior to maturity. Series 1991 Bonds are issuable solely as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. This bond is transferable by the Registered Owner hereof, or by his attorney duly authorized in writing, at the principal office of the Registrar, but only in the manner, subject to the limitations and upon payment by the Registered Owner of any cost, tax or governmental charge required to be paid with respect to such transfer or any exchange as and upon surrender and cancellation of this bond. Upon such transfer a new Series 1991 Bond or Bonds of the same maturity or maturities and of authorized denomination or denominations, for the same aggregate principal amount and bearing interest at the rate per annum set forth in this bond, will be issued to the transferee in exchange therefor. The City and the Registrar may deem and treat the Registered Owner hereof (whether or not this Bond shall be overdue) as the absolute owner of this Bond for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. The City and the Registrar shall not be required (a) to issue, register, transfer or exchange any Series 1991 Bond during a period beginning at the opening of business on the Record Date preceding any interest payment date or on any date of selection of Series 1991 Bonds to be redeemed, and ending at the close of business on the interest payment date or day on which the applicable notice of redemption is given or (b) to register, transfer or exchange any Series 1991 Bond previously selected or called for redemption in whole or in part. -11- WP94002/051/178 It is hereby certified and recited that all the requirements of law have been fully complied with by the proper City officers in the issuance of this bond, that the total debt of the City, including that of this bond, does not exceed any limit of indebtedness prescribed by the Constitution or laws of the State of Colorado, or the Charter of the City, and that provision has been made for the levy and collection of annual taxes on all of the taxable property in the City sufficient to pay the interest on and the principal of this Series 1991 Bond when the same become due. The full faith and credit of the City are hereby pledged for the punctual payment of the principal of and the interest on this bond. The Series 1991 Bonds, of which this is one, are additionally secured by a pledge of the net revenues of the municipal waterworks system of the City (the "System "). The net revenues of the System are defined for purposes of the Series 1991 Bonds as the gross revenues of the System less payment of operation and maintenance expenses. In addition to the Series 1991 Bonds, the City currently has outstanding $5,000,000 aggregate principal amount of its General Obligation Water Refunding Bonds, Series 1984B, and $825,000 principal amount of its General Obligation Water Refunding Bonds, Series 1984A, not being refunded in this financing, both of which are payable from the net revenues of the System on a parity with the Series 1991 Bonds. The City also may issue additional debt obligations payable on a parity with the Series 1991 Bonds. In addition, payment of the Series 1991 Bonds is secured by an insurance policy issued by the Municipal Bond Investors Assurance Corporation, as set forth below under "Statement of Insurance." The Series 1991 Bonds have been issued under the authority of, and in full conformity with, the Constitution and the laws of the State of Colorado, including, in particular, the Public Securities Refunding Act, Article 56 of Title 11, Colorado Revised Statutes, as amended (the "Act "), and pursuant to an ordinance duly adopted by the City. WP94002/051/178 -12- STATEMENT OF INSURANCE The Municipal Bond Investors Assurance Corporation (the "Insurer ") has issued a policy containing the following provisions, such policy being on file at Pueblo Bank and Trust Company, Pueblo, Colorado. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to Pueblo Bank and Trust Company, Pueblo, Colorado or its successor (the "Paying Agent ") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean the City of Pueblo, Colorado, General Obligation Water Refunding Bonds, Series 1991. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of -13- WP94002/051/178 ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504. This policy is noncancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION -14- WP94002/051/178 [FORM OF LEGAL OPINION CERTIFICATE] Legal Opinion Certificate The undersigned City Clerk of the City of Pueblo, Colorado, hereby certifies that in connection with the issuance of the Series 1991 Bonds, an opinion in substantially the following form was delivered by Kutak Rock & Campbell to the City, and that said original legal opinion was signed by said firm of attorneys and dated as of the date of original delivery of the Series 1991 Bonds. CITY OF PUEBLO, COLORADO By [Facsimile Signature] City Clerk [Form of Legal Opinion] [FORM OF ASSIGNMENT FOR SERIES 1991 BONDS] ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (please print or typewrite name and address of transferee) (Tax Identification or Social Security No. ) the within bond and all rights and title hereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: -15- WP94002/051/178 Signature Guaranteed By: NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. Signature(s) must be guaran- teed by a national bank or trust company or by a broker- age firm having a membership in one of the major stock exchanges. (End of Series 1991 Bond Form) Section 8. For the purpose of providing the necessary moneys to pay the interest accruing on the Series 1991 Bonds as the same becomes due, and for the purpose of providing for the payment of the Series 1991 Bonds as they mature, there shall be levied on all the taxable property in the City, in addition to all other taxes, direct annual taxes sufficient to pay said interest and principal promptly as the same become due, and said taxes when collected shall be applied solely for the purpose of the payment of the interest on and the principal of the Series 1991 Bonds; but nothing in this Ordinance shall be so construed as to prevent the City from applying any other funds legally available to the payment of said interest or principal as the same, respectively, become due, and upon such payments the levies herein provided may thereupon to that extent be diminished. The sums produced by the levies hereinabove provided to meet the interest on the Series 1991 Bonds and to discharge the principal thereof when due are hereby applied for that purpose, and said amounts shall be included in the annual budget and the appropriation ordinances to be adopted and passed by the Council in each year (and in the annual appropriation and budget resolutions of the Board of Water Works of Pueblo, Colorado) if such actions shall be necessary to effectuate the provisions of this Ordinance, while any of the Series 1991 Bonds, either as to principal or interest, are outstanding or unpaid. No Charter, statutory or constitutional provisions enacted after the issuance of the Series 1991 Bonds shall in any manner be construed as limiting or impairing the obligation of the City to levy ad valorem taxes without limitation of rate or amount for the payment of the principal of and interest on the Series 1991 Bonds. -16- WP94002/051/178 Section 9. The City, by and through the Board of Water Works of Pueblo, Colorado (the "Board "), hereby irrevocably pledges to pay the principal of, premium, if any, and the interest on the Series 1991 Bonds from the net revenues of the municipal waterworks sytem (the "System "). The City hereby reserves the right to secure, without restriction, any water bonds and refunding water bonds of the City heretofore and hereafter issued equally and ratably with the Series 1991 Bonds. The City, by and through the Board, also hereby commits itself to fix and annually to maintain rates and charges for water and services furnished by the System which, together with moneys on hand and available therefor, will be sufficient to pay operation and maintenance expenses of the System and the principal of, premium, if any, and interest on all bonds, including the Series 1991 Bonds, and other obligations of the System, as they respectively become due. The term "net revenues" as used herein refers to the gross revenues of the System less the payment of operation and maintenance expenses. The term "operation and maintenance expenses" as used herein means all current reasonable and necessary expenses of operating, maintaining and repairing the System, but does not include any allowance for depreciation or capital replacements and improvements. Section 10. The terms "municipal waterworks system" or "System" as used herein shall include not only the property comprising the System at the present time, but all additions and betterments thereto and improvements and extensions thereto which may hereafter be constructed or acquired by the City by and through the Board. Section 11. The City hereby additionally irrevocably covenants and agrees with each and every Registered Owner of the Series 1991 Bonds that so long as any of the Series 1991 Bonds remain outstanding: (a) by and through the Board, it will continue to operate and manage the System in an efficient and economical manner and keep and maintain separate accounts of the receipts and disbursements thereof in such manner that the revenues thereof may at all times be readily and accurately determined; (b) it will not sell or alienate any of the property constituting any part or all of the System in any manner or to any extent as might reduce the security provided for the payment of the Series 1991 Bonds, but the City, by and through the Board, may sell any portion of such property which shall have been replaced by other -17- WP94002/051/178 similar property of at least equal value, or which shall cease to be necessary for the efficient operation of the System; (c) the rates established by and through the Board for all services rendered by the System to the City and to its inhabitants and to all consumers within or without the boundaries of the City shall be reasonable and just, taking into account and consideration the cost and value of the System and the proper and necessary allowances for the depreciation thereof and capital improvements thereto and the amounts necessary for the retirement of all bonds and other obligations payable from the revenues of the System, and the interest accruing thereon; (d) by and through the Board, there shall be charged against all purchasers of service from the System such rates, charges and other amounts as shall produce revenues from the System adequate to meet the requirements of this and the preceding sections of this Ordinance; (e) by and through the Board, the City shall cause all rates, fees and service charges appertaining to the System to be collected as soon as reasonable, shall prescribe and enforce rules and regulations for the payment thereof and for the connection of properties with and the disconnection of properties from the System, and shall provide methods of collection and penalties, including but not limited to denial of service for nonpayment of such rates, fees and service charges, to the end that net revenues of the System shall be adequate to meet the requirements hereof; (f) at regular periods each year, the City, by and through the Board, will render bills for water services furnished and, until paid, all water rates, fees, tolls and charges shall constitute a lien on the property served, and the City, by and through the Board, shall take whatever action is legally permissible promptly to enforce and collect delinquent water rates, fees, tolls and charges and to enforce said liens; (g) at least once each year, the City, by and through the Board, will furnish to the Original Purchaser a complete statement of the receipts and disbursements of and for the System for the fiscal year immediately preceding such statement; and WP94002/051/178 -18- (h) the City, by and through the Board, will carry worker's compensation, public liability and other forms of insurance on insurable System property, in such amounts as is customarily carried on prudently operated systems of similar character and size. Section 12. Proceeds derived from the sale of the Series 1991 Bonds in the approximate amount of $308,451.81 shall be expended for payment of the costs and expenses incurred in connection with the issuance of the Series 1991 Bonds. Section 13. Proceeds derived from the sale of the Series 1991 Bonds in the approximate amount of $19,696,050.89, shall be deposited with Pueblo Bank and Trust Company, Pueblo, Colorado, in its capacity as escrow agent (hereinafter the "Escrow Agent "), in a separate fund and escrow account created under and pursuant to the Escrow Agreement dated as of January 14, 1992 (the "Escrow Agreement ") between the City and the Escrow Agent, which account shall be at all times sufficient, together with any interest to be derived from the investment and any temporary reinvestment of the deposits, or any part thereof, in direct obligations of or obligations guaranteed by the United States of America, to pay the principal of, premium, if any, and interest on the Refunded Bonds in accordance with the terms of the Escrow Agreement. Section 14. If for any reason, at any time, the funds on hand in such Escrow Account shall be insufficient to meet the payments required as the same shall be about to become due and payable, the City shall forthwith deposit in such Escrow Account such additional funds as may be required fully to meet the amount about to become due and payable. Section 15. The Escrow Agreement is hereby approved and adopted, and the President of the Council and the City Clerk are hereby authorized and directed to execute and deliver the Escrow Agreement, on behalf of the City, in substantially the form and with substantially the content as presented to this meeting, with such changes as the City Attorney may approve, the execution of the Escrow Agreement by the President of the Council to conclusively show such approval. Section 16. The City hereby establishes with the Paying Agent the "City of Pueblo, Colorado, General Obligation Water Refunding Bonds, Series 1991, Bond Fund" (the "Bond Fund "), to be used for the payment of principal of, premium, if any, and interest on the Series 1991 Bonds, into which there shall be deposited by the City at the times required by the Paying -19- WP94002/051/178 Agency Agreement, moneys sufficient to pay the principal, premium, if any, and interest due, whether at maturity or upon early redemption, on the Series 1991 Bonds on the next interest payment date. Accrued interest received with respect to the Series 1991 Bonds, if any, shall be deposited in the Bond Fund. The Bond Fund shall be maintained with the Paying Agent as set forth in the Paying Agency Agreement. Section 17. Any provision of this Ordinance to the contrary notwithstanding, the City may issue additional notes, bonds or other securities payable from the general ad valorem taxes and the net revenues of the System provided for herein having a lien on said taxes and net revenues on a parity with or subordinate to, but not prior or superior to, the lien thereon of the Series 1991 Bonds authorized herein. Section 18. The distribution and use of the Preliminary Official Statement in connection with the offering and sale of the Series 1991 Bonds are in all respects hereby confirmed and approved. The form of final Official Statement, as presented at this meeting, is hereby approved and adopted, and the President of the Council is authorized and directed to approve and sign, on behalf of the City, the final Official Statement for use in connection with the offering and sale of the Series 1991 Bonds. The execution of the final Official Statement by the President of the Council shall be conclusively deemed to evidence the approval of the form and contents thereof by the City. Section 19. The Council of the City, having been fully informed of and having considered all the pertinent facts and circumstances, and based upon the best information and belief of the members of the Council, does hereby find, determine and declare that: (a) the moneys and securities to be placed in the Escrow Account, together with interest to be derived from such investments, are in an amount which at all times shall be sufficient to pay the Refunded Bonds as they become due upon maturity or earlier redemption, as to principal, premium, if any, and interest; (b) the total aggregate amount of general obligation indebtedness of the City does not now, and upon the issuance of the Series 1991 Bonds will not, exceed any applicable limit prescribed by the Constitution or laws of the State of Colorado or the City's Charter; —20— WP94002/051/178 (c) the issuance of the Series 1991 Bonds and the refunding of the Refunded Bonds, and all procedures undertaken incident thereto, are in full compliance and conformity with all presently applicable requirements, provisions and limitations prescribed by the Constitution and laws of the State of Colorado and the City's Charter; (d) all covenants, statements, representations and agreements contained in the Series 1991 Bonds are hereby approved and adopted as the covenants, statements, representations and agreements of the City; (e) the City covenants with the Original Purchaser and all subsequent Registered Owners of the Series 1991 Bonds that it will make no use of the proceeds of the Series 1991 Bonds at any time during the term thereof which, if such use had been reasonably expected on the date the Series 1991 Bonds are issued, would have caused the Series 1991 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code "); (f) the City shall timely file Internal Revenue Form 8038 -G which shall contain the information required to be filed pursuant to Section 149(e) of the Code; (g) the Series 1991 Bonds shall not become directly or indirectly federally guaranteed within the meaning of Section 149(b) of the Code; (h) the City covenants that the gross proceeds of the Series 1991 Bonds shall not be used in a manner which will cause the Series 1991 Bonds to be considered "private activity bonds" within the meaning of Section 141 of the Code; and (i) the City will comply with the letter of investment instructions delivered to it on the date of issue of the Series 1991 Bonds with respect to the application aqd investment of the Series 1991 Bond proceeds. Section 20. Payment of the Series 1991 Bonds shall be additionally secured by a bond insurance policy issued by Municipal Bond Investors Assurance Corporation, and the City agrees to pay the premium for such bond insurance, but only from the proceeds of the Series 1991 Bonds. WP94002/051/178 -21- Section 21. The President of the Council, the City Clerk and the Director of Finance of the City shall, and they are hereby authorized and directed to take all necessary or appropriate actions and to execute and deliver all other agreements, certificates and documents as may be necessary or desirable to effectuate the provisions of this Ordinance and to comply with the requirements of law. Section 22. If any one or more sections or parts of this Ordinance shall be adjudged unenforceable or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance, it being the intention that the various provisions hereof are severable. Section 23. All ordinances or parts thereof in conflict with this Ordinance are hereby repealed to the extent of such conflict. Section 24. This Ordinance is, and shall constitute, a legislative measure of the City, and after the Series 1991 Bonds hereby authorized are issued, sold and are outstanding, this Ordinance shall constitute a contract between the City and the Registered Owners of the Series 1991 Bonds, and shall be and remain irrepealable until the Series 1991 Bonds, and the interest accruing thereon shall have been fully paid, satisfied and discharged. Section 25. This Ordinance, immediately on its passage, shall be recorded in the Book of Ordinances kept for that purpose, authenticated by the signatures of the President of the Council and the City Clerk, and shall be published as required by the Charter of said City. Section 26. No recourse shall be had for the payment of the principal or premium, if any, or interest on any of the Series 1991 Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in this Ordinance, the Escrow Agreement or the Paying Agency Agreement against any past, present or future officer, employee or agent of the City, or of any successor public corporation, as such, either directly or through the City or any sucessor public corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such officers, employees or agents as such is hereby expressly waived and released as a condition of and consideration for the passage of this Ordinance, the execution of the Escrow Agreement and the Paying Agency Agreement, and the issuance of the Series 1991 Bonds. WP94002/051/178 -22- Introduced and adopted on first presentation November 25, 1951; Amended and finally adopted on December 9, 1991. ( S E A L ) BY SAMUEL CORSENTINO Councilmember ATTEST: APPRO * lerk Pre dent of the Council -23- WP94002/051/178 NEW ISSUE FULL -BOOK ENTRY OR 5 RATINGS: Moody's: Aaa � Standardf� PsAAAM In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with certain restrictions set forth in the t Qrdinance authorizing the issuance of the Series 1991 Bonds regarding invesEment and application of the Series 1991 Bond proceeds and other matters, interest on the Series 1991 Bonds is not includable in gross income for federal or State of Colorado income tax purposes. See the caption "TAX MATTERS" in this Official Statement $ 20,005,OOO T CITY OF PUEBLO, COLORADO GENERAL OBLIGATION WATER REFUNDING BONDS SERIES 1991 Dated: December 1, 1991 Due: May 1 and November 1, as shown below The Series 1991 Bonds will be issued as fully registered bonds without coupons and are initially to be registered in the name "Cede & Co." as nominee for The Depository Trust Company, as securities depository for the Series 1991 Bonds. Purchases by beneficial owners are to be made in book -entry form in denominations of $5,000 and integral multiples thereof. Beneficial owners will not receive certificates evidencing their interests in the Series 1991 Bonds. The principal of the Series 1991 Bonds will be payable at the principal office of Pueblo Bank and Trust Company, in Pueblo, Colorado, as Paying Agent. Interest on the Series 1991 Bonds is payable on May 1 and November 1, commencing May 1, 1992, by check or draft of the Paying Agent mailed to the registered owner (initially Cede & Co.) as of the Record Date (as defined herein). See the captions "THE SERIES 1991 BONDS -- General Description" and " -- Book -Entry Form" in this Official Statement. MATURITY SCHEDULE Date Principal Amount Interest Rate May 1, 1992 $ 1410,000 4.30 November 1, 1992 7§O1,000 4.30 May 1, 1993 1,02tu,000 4.70 November 1, 1993 1,OU 4.70 May 1, 1994 1,12QT,000 5.05 November 1, 1994 1,15QT,000 5 May 1, 1995 1,1$41,000 5.25 November 1, 1995 1,205,000 2-5 May 1, 1996 72x 5.35 November 1, 1996 7,$41,000 5.35 WP94002- 051/154 p. May 1, 1997 2 5 November 1, 1997 262x,000 5155 May 1, 1998 63U,000 5.75 November 1, 1998 6UT ,000 5.75 May 1, 1999 1,61xU,000 5.90 November 1, 1999 1,65Sx,000 5.90 May 1, 2000 1,705-,000 6.00 November 1, 2000 1,75U,000 6.00 May 1, 2001 1,110,000 6.05 November 1, 2001 1,140,000 6.05 The Series 1991 Bonds are not callable prior to their maturity. The Series 1991 Bonds constitute legally valid general obligations of the City. All of the taxable property in the City is subject to the levy of general (ad valorem) taxes to pay the principal of and interest on the Series 1991 Bonds without limitation of rate or amount. Payment of the principal of and interest on the Series 1991 Bonds is additionally secured by a pledge of the net revenues derived from the ownership and operation of the municipal waterworks system. Payment of the principal of and interest on the Series 1991 Bonds when due will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1991 Bonds by Municipal Bond Investors Assurance Corporation The proceeds from the sale of the Series 1991 Bonds will be used (i) to advance refund the City's General Obligation Water Refunding Bonds, Series 1984A maturing on and after November 1, 1992 (ii) to advance refund the City's General Obligation Water Bonds, Series 1986 and (iii) to pay certain costs and expenses associated with the issuance of the Series 1991 Bonds. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THE SERIES 1991 BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 1991 Bonds are offered, and if issued by the City and accepted by subject to the approval of legality by Counsel, and certain other conditions. It Series 1991 Bonds will be made on or abot New York, against payment therefor. subject to prior sale, when, as the Underwriter named below, and Kutak Rock & Campbell, as Bond is expected that delivery of the it January 14, 1992, in New York, PIPER, JAFFRAY & HOPWOOD INCORPORATED The date of this Official Statement is December , 1991 WP94002- 051/154 No dealer, broker, salesman or other person has been authorized by the City of Pueblo, Colorado (the "City "), the Board of Water Works of Pueblo, Colorado (the "Board ") or the Underwriter to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 1991 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, the Board and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by, the Underwriter. All summaries herein of documents and agreements, and all summaries herein of the Series 1991 Bonds are qualified in their entirety by references to the form thereof included in the herein defined Ordinance and the provisions with respect thereto included in the aforesaid documents and agreements. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the information or opinions set forth herein after the date of this Official Statement. THE SERIES 1991 BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2) OF THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE CITY, THE BOARD AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE PRICES AT WHICH THE SERIES 1991 BONDS ARE OFFERED TO THE PUBLIC BY THE UNDERWRITER (AND THE YIELDS RESULTING THEREFROM) MAY VARY FROM THE INITIAL PUBLIC OFFERING PRICES APPEARING ON THE COVER PAGE HEREOF. IN ADDITION, THE UNDERWRITER MAY ALLOW CONCESSIONS OR DISCOUNTS FROM SUCH INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1991 BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. -i- WP94002- 051/154 CONTENTS OF OFFICIAL STATEMENT Page SUMMARY STATEMENT ............... ............................... iii INTRODUCTORY STATEMENT .......... ............................... 1 USE OF PROCEEDS ................. ............................... 2 DEBT STRUCTURE .................. ............................... 2 ASSESSMENTS, LEVIES AND COLLECTION ............................. 5 THE SERIES 1991 BONDS ........... ............................... 7 BOND INSURANCE .................. ............................... 11 THECITY ........................ ............................... 13 THE BOARD OF WATER WORKS ........ ............................... 20 THESYSTEM ...................... ............................... 23 DEBT SERVICE SCHEDULE ........... ............................... 32 PUEBLO DEMOGRAPHICS ............. ............................... 33 THE ORDINANCE ................... ............................... 35 THE RESOLUTION .................. ............................... 36 UNDERWRITING .................................................... 37 RATINGS ......................... ............................... 37 PENDING LEGAL PROCEEDINGS, SOVEREIGN IMMUNITY AND INSURANCE .... 37 TAX MATTERS ..................... ............................... 39 EXPERTS ......................... ............................... 40 APPROVAL OF LEGAL PROCEEDINGS ... ............................... 40 MISCELLANEOUS ................... ............................... 41 APPENDIX A - Audited Financial Statements of the Board of Water Works of Pueblo, Colorado, as of December 31, 1990 and 1989 and Related Statements For The Years Then Ended ............... A -1 APPENDIX B - Audited Combined Financial Statements of the City of Pueblo, Colorado, as of and for the year ended December 31, 1990 .......... B -1 APPENDIX C - Form of Bond Insurance Policy ..................... C -1 -ii- WP94002- 051/154 F SUMMARY STATEMENT All capitalized terms used in this Summary Statement shall have the same meanings as ascribed to such terms in this Official Statement. This Summary Statement is subject in all respects to more complete information set forth in this Official Statement and the appendices thereto. The City The City of Pueblo, Colorado (the "City "), is a body corporate and politic and a municipal corporation duly organized and existing as a home rule city under the laws of the State of Colorado (the "State ") and its home rule charter (the "Charter "). The City, with an estimated 1990 Census population of 98,640, is located in south - central Colorado, approximately 120 miles south of Denver, Colorado, and 45 miles south of Colorado Springs, Colorado. See information contained under the captions "THE CITY" and "PUEBLO DEMOGRAPHICS" in this Official Statement. The System The City, through its Board of Water Works (the "Board "), operates a municipal water works system (the "System "), which provides services to the residents of the City and adjacent areas. The System currently serves approximately 100,000 persons. See the caption "THE SYSTEM" in this Official Statement. The City's Charter provides that title to the properties of the System is in the City, but that the entire control, management and operation of the System shall be exercised by the Board, over which the City Council shall have no jurisdiction or control, and further, that the City shall adopt all ordinances requested by the Board which shall be reasonably necessary to assist the Board in the management of the System. Issuance of Bonds and Purpose of Issue The City is offering its City of Pueblo, Colorado, General Obligation Water Refunding Bonds, Series 1991, in the aggregate principal amount of $ 20,005,000 1 (the "Series 1991 Bonds "). The Series 1991 Bonds are being) issued pursuant to the City's powers as a home rule city under Article XX, Section 6 of the Constitution of the State, the Charter, the Colorado Public Securities Refunding Act, Chapter 11 of Article 56 of the Colorado Revised Statutes, as amended (the "Act "), a resolution (the "Resolution ") adopted by the Board and an Ordinance (the "Ordinance ") adopted by the City Council of the City. The Series 1991 Bonds are issuable only as fully registered bonds and are initially to be registered in the name "Cede & Co." as nominee for The Depository Trust Company, as securities depository for the Series 1991 Bonds. Purchases by beneficial owners are to be made in book -entry form in denominations of $5,000 and integral multiples thereof. The proceeds of the Series 1991 Bonds will be used for the purpose of defraying the cost of ( i ) advance refunding the City's General Obligation Water Refunding Bonds, Series 1984A maturing on and after November 1, 1992, currently outstanding in the aggregate principal amount of $11,025,000 (the "Refunded Series 1984A Bonds "), to be called for early redemption on May 1, 1992, (ii) advance WP94002- 051/154 -iii- refunding the City's General Obligation Water Bonds, Series 1986, currently outstanding in the aggregate principal amount of $7,320,000 (the "Series 1986 Bonds "), which will be called for early redemption on November 1, 1993, and (iii) paying certain costs and expenses associated with the issuance of the Series 1991 Bonds, all as described under the caption "USE OF PROCEEDS" in this Official Statement. Securitv for the Series 1991 Bonds The Series 1991 Bonds are direct general obligations of the City, payable as to both principal and interest from general (ad valorem) taxes levied against all taxable property within the City without limitation as to rate or amount. The Series 1991 Bonds additionally are secured by a pledge of net revenues of the System. The "net revenues" of the System include gross revenues of the System less any amounts required to pay operation and maintenance expenses. Operation and maintenance expenses deducted from gross revenues include all current reasonable and necessary expenses of operating, maintaining and repairing the System, but do not include any allowance for depreciation or capital replacements and improvements. See the caption "THE SYSTEM" in this Official Statement. The payment of the principal of and interest on the Series 1991 Bonds when due will be guaranteed by an insurance policy (the "Bond Insurance Policy ") to be issued by the Municipal Bond Investors Assurance Corporation (the "Bond Insurer ") simultaneously with the delivery of the Series 1991 Bonds. See the caption "BOND INSURANCE" in this Official Statement and the form of the Bond Insurance Policy contained in Appendix C to this Official Statement. Rate Covenant Pursuant to the Resolution, the Board has covenanted to set the fees, rates and other charges for water and services furnished by the System such that revenues from the System, together with other available funds, will be sufficient to pay operation and maintenance expenses of the System and the principal of and the interest on all bonds and other obligations constituting a lien on revenues of the System as they become due. Additionally, the Board has covenanted that the rates for all services rendered by the System to the users of the System shall be reasonable and just, taking into consideration the cost and value of the System and the proper and necessary allowances for depreciation and for retirement of principal and interest on all bonds and obligations payable from revenues of the System. See the caption "THE RESOLUTION" in this Official Statement. Based on the covenants of the Board, the City has made certain similar covenants in the Ordinance for the benefit of the purchasers of the Series 1991 Bonds. See the caption "THE ORDINANCE" in this Official Statement. -iv- WP94002- 051/154 Additional Debt Upon the issuance of the Series 1991 Bonds, the remaining bonded indebtedness of the City payable from a pledge of the "net revenues" of the System consists of the principal of and interest on the City's General Obligation Water Refunding Bonds, Series 1984A maturing on May 1, 1992, currently outstanding in the aggregate principal amount of $825,000 (the "Outstanding Series 1984A Bonds ") and the City's General Obligation Water Refunding Bonds, Series 1984B (the "Series 1984B Bonds "), currently outstanding in the aggregate principal amount of $5,000,000. The Board has reserved the right to issue additional debt instruments secured by a pledge of the System's net revenues on a parity with the Series 1991 Bonds; however, the Board does not presently plan to issue any such additional debt. Additional Bonds The City reserves the right to issue additional general obligation indebtness secured on a parity with the Series 1991 Bonds, the Outstanding Series 1984A Bonds and the Series 1984B Bonds. The City has no present plans to issue additional general obligation indebtedness. -v- WP94002- 051/154 OFFICIAL STATEMENT $1 20,005,000 CITY OF PUEBLO, COLORADO GENERAL OBLIGATION WATER REFUNDING BONDS SERIES 1991 INTRODUCTORY STATEMENT This Official Statement, which includes the cover page, summary statement and appendices hereto, is furnished in connection with the offering of $1 20,005,000 aggregate principal amount of General Obligation Water Refundingi Bonds, Series 1991 (the "Series 1991 Bonds ") of the City of Pueblo, Colorado (the "City "). The Series 1991 Bonds are legally issued, valid general obligations of the City. All of the taxable real property in the City is subject to the levy of general (ad valorem) taxes to pay the principal of and interest on the Series 1991 Bonds without limitation of rate or amount. Payment of the principal of and interest on the Series 1991 Bonds is additionally secured by a pledge of the net revenues derived from the City's municipal waterworks system, including any subsequent additions to or improvements of such system (the "System "), operated by the Board of Water Works of Pueblo, Colorado (the "Board ") and by an insurance policy (the "Bond Insurance Policy ") to be issued by the Municipal Bond Investors Assurance Corporation (the "Bond Insurer ") simultaneously with the delivery of the Series 1991 Bonds. The "net revenues" of the System include the gross revenues of the System less any amounts required to pay operation and maintenance expenses (which include all current reasonable and necessary expenses of operating, maintaining and repairing the System, but which do not include any allowance for depreciation or capital replacements and improvements). See the captions "THE SYSTEM" and "BOND INSURANCE" in this Official Statement. Pursuant to a resolution (the "Resolution ") adopted by the Board, the Board has covenanted to charge users of the System rates and charges sufficient, together with other available moneys, to pay operation and maintenance expenses of the System and the principal of and interest on all of the Series 1991 Bonds and other obligations constituting a lien on the revenues of the System as they become due. See the caption "THE RESOLUTION" in this Official Statement. Based on the covenants of the Board, the City has made certain similar covenants. See the captions "THE BONDS- -Rate Covenant" and "THE ORDINANCE" in this Official Statement. The Series 1991 Bonds are being issued pursuant to the City's powers as a home rule city under Article XX of the Colorado Constitution, the Colorado Public Securities Refunding Act, C.R.S. 11 -56 -101, et seq., the City's home rule charter (the "Charter "), the Resolution and a bond ordinance adopted by the City Council of the City (the "Ordinance "). See the captions "THE RESOLUTION" and "THE ORDINANCE" in this Official Statement. WP94002- 051/154 Brief descriptions of the City, the System, the Board, the Series 1991 Bonds, the Bond Insurer, the Ordinance and the Resolution are included in this Official Statement. All references herein to the Ordinance and the Resolution are qualified in their entirety by references to such documents, and references herein to the Series 1991 Bonds are qualified in their entirety by reference to the form thereof included in the Ordinance. During the period of the offering, copies of the Ordinance and the Resolution will be available at the offices of Piper, Jaffray & Hopwood Incorporated (the "Underwriter ") in Denver, Colorado. USE OF PROCEEDS The net proceeds from the sale of the Series 1991 Bonds will be used for the purpose of defraying the cost of (i) advance refunding the City's General Obligation Water Refunding Bonds, Series 1984A maturing on and after November 1, 1992, currently outstanding in the aggregate principal amount of $11,025,000 (the "Refunded Series 1984A Bonds "), (ii) advance refunding the City's General Obligation Water Bonds, Series 1986, currently outstanding in the aggregate principal amount of $7,320,000 (the "Series 1986 Bonds ") and (iii) paying certain costs and expenses associated with the issuance of the Series 1991 Bonds, including the premium for the Bond Insurance Policy. To effectuate the refunding of the Refunded Series 1984A Bonds and the Series 1986 Bonds, the City will enter into an Escrow Agreement, dated as of January 14, 1991, with Pueblo Bank and Trust Company, pursuant to which the City, from the net proceeds of the Series 1991 Bonds, will deposit an amount sufficient to pay the principal of, premium and interest on the Refunded Series 1984A Bonds and the principal of, premium and interest on the Series 1986 Bonds. The Refunded Series 1984A Bonds will be called for early redemption on May 1, 1992 at a redemption price of 101% of the principal amount thereof, plus accrued interest, and the Series 1986 Bonds will be called for early redemption on November 1, 1993 at a redemption price of 101% of the principal amount thereof, plus accrued interest. The estimated application of the proceeds of the Series 1991 Bonds, excluding accrued interest, is as follows: Deposit to Escrow Fund ................... $ Costsof Issuance ........................ DEBT STRUCTURE Debt Limitation The Charter provides that the City may no general property taxes if the aggregate amount City (after giving effect to the indebtedness to of the assessed valuation of the taxable propert y II III t issue bonds payable out of of such indebtedness of the be incurred) would exceed 10% within the City as shown by -2- WP94002- 051/154 the last assessment for City purposes. Excluded from the computation of indebtedness for the purpose of this limitation are general obligation bonds or other evidences of indebtedness issued by the City for the acquisition, extension or improvement of water or the System, local improvement district bonds, revenue bonds and refunding bonds. The City's current debt limit is $38,442,485 and the amount of outstanding debt applicable to the limit (after deductions allowed by law) as of December 31, 1990 is $14,180,694, leaving a legal debt margin of $24,261,791. The Series 1991 Bonds, however, will not be counted against the allowable debt limit of the City. Overlapping Debt The only entity which overlaps the City and which has substantial annual obligations is School District #60. As of December 2, 1991, School District #60 had remaining lease - purchase obligations of $22,375,000. Such lease - purchase obligations are subject to the annual appropriation of moneys by School District #60. The mill levy for School District #60 in 1990 (collectible in 1991) was 38.406. Some portions of the City are subject to property tax levies for bonded indebtedness of metropolitan districts or other entities which overlap small portions of the City, but none of this indebtedness is material from the standpoint of the amount payable by residents of the City. Pueblo County imposed taxes at a mill levy of 28.050 in 1990 for county services; such taxes are payable in 1991. The County presently has no outstanding general obligation indebtedness. Summary of Indebtedness The following table summarizes the general debt and revenue bond obligations of the City as of December 31, 1990, as adjusted to give effect to the Series 1991 Bonds (See the City's financial statements included as Appendix B to this Official Statement): Description of Indebtedness Interest Outstanding i Rates Amount General Obligation Water Refunding Bonds, Series 1991 4.30 - 6-M $1 20,005,000 General Obligation Refunding Bonds, Series 1987A 6.30 - 8.25% $8,805,000 General Obligation Street and Bridge Bonds, Series 1987B 6.30 - 7.40; $2,510,000 General Obligation Water Refunding Bonds, Series 1984A 8.400 $825,000 -3- WP94002- 051/154 General Obligation Water Refunding Bond, Series 1984B 9.50% $5,000,000 General Obligation Refunding Bonds, Series 1985 6.80 - 8.50% $ 1,740,000 Sewer Revenue Crossover Refunding Bonds, Series 1986 6.90 - 9.30% $11,600,000 Sewer Revenue Refunding Bonds, Series 1985 5.50 - 9.250 $ 4,045,000 The foregoing table does not include various obligations such as Capital Leases referred to in Note 7 to the City's financial statements included as Appendix B hereto. The following table presents certain selected debt ratios for the City: Based on Total Net of Self - Outstanding Debt Supportincr Debt City 1990 Assessed Valuation $ 384,424,850 $ 384,424,850 City Estimated 1990 Statu_tory "Actual" Value 1,987,721,547 1,987,721,547 Estimated Population 98,640 98,640 City General Obligation Deb utstandina Upon Issuance of the Series 1991 Bonds 38,235,000 12,165,000 City Debt Per Capita City Debt as a Ratio of: Assessed Valuation 9,95% 3,42/ Statutory "Actual" Value 1.92% __66% Estimated Overlapping General Obligation Debt Q Debt Service Schedule The following table presents the City's principal and interest obligations on the Series 1991 Bonds, other existing general obligation indebtedness, and the total estimated debt service requirements: -4- WP94002- 051/154 Other Year General Ending Series 1991 Bonds Obligation Total December 31 Principal Interest Debt Service Debt Service Debt Servi 1992 $ L &% L= $ nnR -Lta $ R95 Ft $3,597,859 $ 1993 t thn nnn i 1 03 FFR i R LU UB 2,756,964 1994 i � ��n nnn 1 T nt� 3,158,951 i F �Fn 4�a 1995 i � �R5 nnn L R14 F 1 J _ LU _ kd Z 3,205,167 _ Una Rao 1996 � t sn5 nnn i z0 _IIt ,�i _t ZU nsn 4,777,003 I � QR� nsR 1997 i �RR nnn i i t tL _26 5,956,600 i 7 t�� R9fi 1998 I t 290 nnn I 5g9 19Z I t RR9 t�R 5,314,368 L � t9F a4t 1999 1 � ��s nnn I QRR SF�, I R �R 3,491,970 2000 I R ass nnn Z L R �a 3,560,618 i � �n7 agR 2001 2,250,000 i t 74� i 7 �R� RaR 3,641,018 ASSESSMENTS, LEVIES AND COLLECTION Procedures After the City Council of the City enacts the ordinance to make the proper mill levy for the ensuing fiscal year (as described under the caption "THE CITY - -City Budget" in this Official Statement), the City Council is directed to cause the new mill levy to be certified to the County Commissioners. The County Assessor extends the mill levy upon the tax list and includes the taxes in the County Assessor's general warrant to the County Treasurer for collection. Colorado statutes provide procedures for the valuation of property for assessment purposes. Under Colorado law, both real and personal property is subject to taxation, but there are classes of property which are exempt from taxation including household furnishings, personal effects and intangible personal property. Using manuals and data furnished by the State Property Tax Administrator, the County Assessor determines the actual value of all taxable real property, and most other classes of taxable property, as of January 1 each year, the annual date of assessment. The factors to be considered by the County Assessor to determine actual value in the case of unimproved land (except portions used for open space) include consideration of the amount of time required to realize potential future values. Assessed Valuation and Property Tax Levies of the City Currently, Colorado statutes require a residential property assessment level at 14.34% of actual value and almost all other property at 290 of actual value. In subsequent years, certain adjustments to this percentage must be made as described in the following paragraph. By statute, "actual value" for the years 1983 to 1986 was determined from the 1977 level of value. Colorado statutes now contain provisions intended to implement gradually a method to -5- WP94002- 051/154 determine assessed valuation which is more closely related to actual value at the time of assessment. Therefore, for the years 1987 and 1988, the 1985 level of value was used to determine actual value. For the years 1989 and 1990, the statutes require generally that actual value for 1987 and the first half of 1988 be used; for the years 1991 and 1992 that actual value for 1989 and the first half of 1990 be used; for the year 1993 that actual value for 1991 and the first half of 1992 be used; and thereafter the level of value to be used to determine actual value shall be advanced by one year over that used for the previous reassessment cycle. For each year in which there is a change in the level of value used in determining actual value, the Colorado General Assembly, pursuant to the authority granted in Section 3 of Article X of the State constitution, must, by law, adjust the percentage of actual value applicable to residential property in order that the percentage of aggregate statewide valuation for assessment which is attributable to residential real property for such year equals the target percentage, which is a percentage designed to ensure that the percentage of the aggregate statewide valuation for assessment which is attributable to residential real property remains the same as it was in the year immediately preceding the year in which such change occurs. The Colorado statutes now nrovide for an annual review of statewide assessment compliance. The Directs of the Legislative Council is authorized to retain an independent contractor to review assessments and determine deviations from established compliance tolerances. Based on the independent contractor's report, the State Board of Equalization may issue orders to County Assessors to reappraise classes of property found not to be in compliance with acceptable valuations. Historical Property Tax Data The following table, based on information compiled by the City, provides a five -year summary of assessed valuations, tax levies, collections and delinquencies for the City: Collections Delinquent as a Outstanding Taxes as Fiscal Mill Assessed Total Tax Percentage Delinquent Percentage of Year Levv Valuation(1) Tax Lev Collections of Levy Tax Collections Total Levy 1986 19.25 $283,493,220 $5,457,244 $5,433,243 99.56% $ 24,001 .44% 1987 15.10 384,303,200 5,802,978 5,778,964 99.58 24,014 .42 1988 17.10 362,756,620 6,203,138 6,151,125 99.16 52,013 .84 1989 17.10 391,096,605 6,565,255 6,468,996 98.53 96,259 1.47 1990 17.10 384,424,850 6,573,665 6,240,062(2) 94.93(2) 333,603(2) 5.01(2) ( 1 ) Assessed values shown are the basis for taxes collectible in the following year. (2) Through October 1, 1991. —6— WP94002- 051/154 Largest Taxpayers The following table lists the ten largest taxpayers in the City in 1990: 1990 Percentage of Type of Assessed Total Assessed Taxpayer Business Valuation Valuation U.S. West Telephone $11,715,500 3.0% Centel Corporation Electricity 5,201,950 1.4 Public Service Company of Colorado Gas Utility 3,901,600 1.0 Pueblo Mall Limited Partnership Shopping Mall 3,088,440 0.8 Colorado National Bank of Pueblo Bank 1,628,820 0.4 Buell Development Co. Midtown Shopping Center Shopping Mall 1,368,700 0.4 Joshward (Montgomery Ward) Retail Stores 1,172,020 0.3 Denver US Bank Corp. Bank 1,165,640 0.3 Bay 511 Corp. Mall Convenience 1,161,910 0.3 Dayton- Hudson (Mervyns- Target) Retail Stores 1,060,730 0.3 Total $ 31,465,310 8.2% THE SERIES 1991 BONDS General Description The Series 1991 Bonds are dated December 1, 1991, issuable solely in the form of fully registered bonds and will initially be registered in the name of "Cede & Co.," as nominee for The Depository Trust Company ( "DTC "), as securities depository for the Series 1991 Bonds. Purchases by beneficial owners of the Series 1991 Bonds ( "Beneficial Owners ") are to be made in book - entry -only form in the denominations of $5,000 or any integral multiple thereof. The Series 1991 Bonds will mature and bear interest from their date at the rates of interest specified on the cover page of this Official Statement. The principal of and premium, if any, on the Series 1991 Bonds -7- WP94002- 051/154 will be payable at the principal office of Pueblo Bank and Trust Company, in Pueblo, Colorado, as Paying Agent. Interest on the Series 1991 Bonds, payable on May 1 and November 1 of each year, commencing on May 1, 1992, is payable to the registered owner thereof (initially Cede & Co.) as of the Record Date (the 15th day of the month immediately preceding each interest payment date) by check or draft of the Paying Agent mailed to such registered owner of each Series 1991 Bond. Payments to Beneficial Owners are to be made as described under the caption "Book -Entry Form" below. If upon presentation at maturity, payment of any Series 1991 Bond is not made as provided in the Ordinance, interest shall continue thereon at the interest rate designated in such Series 1991 Bond until the principal thereof is paid in full. In the event any Series 1991 Bond is mutilated, lost, stolen or destroyed, the City may execute and the Paying Agent may authenticate a new Series 1991 Bond of like maturity and denomination as that mutilated, lost, stolen or destroyed; provided that the City and the Paying Agent shall have received indemnity satisfactory to it and provided further in the case of any mutilated bond, such mutilated bond shall first be surrendered to the City or the Paying Agent, and in the case of any lost, stolen or destroyed bond, there shall be first furnished to the City and the Paying Agent evidence of such loss, theft or destruction satisfactory to the City and the Paying Agent. In the event any such bond shall have matured, instead of issuing a duplicate bond, the City may pay the same without surrender thereof. The City and the Paying Agent may charge the holder of such bond with its reasonable fees and expenses (including printing) in connection with the foregoing. Book -Entry For DTC will act as securities depository for the Series 1991 Bonds. One fully registered Series 1991 Bond for each maturity, in the aggregate original principal amount of such maturity, will be registered in the name of Cede & Co., as nominee for DTC. DTC is a limited - purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants (the "Participants ") and to facilitate the clearance and settlement of securities transactions among Participants in such securities through electronic book -entry changes in accounts of the Participants, thereby eliminating the need of physical movement of securities certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and /or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. WP94002- 051/154 me Ownership interests in the Series 1991 Bonds may be purchased by or through Participants. Such Participants and the Beneficial Owners for whom they acquire interests in the Series 1991 Bonds as nominees will not receive certificated Series 1991 Bonds, but each such Participant will receive a credit balance in the records of DTC in the amount of such Participant's interest in the Series 1991 Bonds which will be confirmed in accordance with DTC's standard procedures. Each Beneficial Owner may desire to make arrangements with the Participant to receive a credit balance in the records of such Participant, and may desire to make arrangements with such Participants to have all notices or other communications of the City or the Paying Agent to DTC, which may affect such persons, forwarded in writing by such Participant and to have notification made of all interest payments. Neither the City nor the Paying Agent has any responsibility or obligation to any Participant or to any person on behalf of whom a Participant holds an interest in the Series 1991 Bonds with respect to payments, notices or accuracy of the records of the Participants. The obligations of the Participants to the Beneficial Owners and of DTC to the Participants with respect to interests in the Series 1991 Bonds are established by the rules and procedures used by such Participants and DTC. The City and the Paying Agent shall be entitled to treat the person in whose name any Series 1991 Bond is registered as the absolute owner thereof for all purposes of the Ordinance and any applicable laws, notwithstanding any notice to the contrary received by the City or the Paying Agent, and the City and the Paying Agent shall have no responsibility for transmitting payments to, communicating with, notifying, or otherwise dealing with any Participant or Beneficial Owners of the Series 1991 Bonds. DTC will receive payments from the Paying Agent to be remitted to the Participants for subsequent disbursement to the Beneficial Owners. The ownership interest of each Beneficial Owner in the Series 1991 Bonds will be recorded on the records of the Participants, whose ownership interests will be recorded on a computerized book -entry system operated by DTC. When reference is made to any action which is required or permitted to be taken by the Beneficial Owners, such reference shall only relate to those permitted to act by statute, regulation or otherwise on behalf of such Beneficial Owners for such purposes. When notices are given, they shall be sent to DTC with a request that DTC forward (or cause to be forwarded) the notices to the Participants so that such Participants may forward (or cause to be forwarded) the notice to the Beneficial Owners. Beneficial Owners will receive a written confirmation from the Participants of their purchase detailing the terms and series of the Series 1991 Bonds acquired. Transfers of ownership interest in the Series 1991 Bonds will be accomplished by book entries made by DTC and the Participants who act on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 1991 Bonds except as specifically provided in the Ordinance. Interest and principal will be paid by the Paying Agent to DTC, then paid by DTC to the Participants and thereafter paid by the Participants to the Beneficial Owners when due. WP94002- 051/154 IRE For every transfer and exchange of the Series 1991 Bonds or an interest therein, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. DTC's services with respect to the Series 1991 Bonds may be discontinued or terminated at any time under the following circumstances: (i) DTC may determine to discontinue providing its services with respect to the Series 1991 Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. (ii) The City may remove DTC as provided in the Ordinance. In the event that DTC's services are so discontinued or terminated because it is unwilling or is determined to be unable to discharge its responsibilities or DTC is removed or resigns, and no substitute securities depository willing to undertake the functions of DTC can be found which, in the opinion of the City, is willing and able to undertake such functions upon reasonable and customary terms, the City will be obligated to deliver Series 1991 Bond certificates as described in the Ordinance. The above information concerning DTC and the Participants was obtained from DTC; the City is not responsible for DTC's relationship with its Participants, its rules and procedures or for its Participants' relationships to their customers or the Participant's rules and procedures. Redemption of Series 1991 Bonds The Series 1991 Bonds are not callable prior to their maturity. Transfer and Exchange of Bonds Series 1991 Bonds may be transferred or exchanged by the registered owner thereof upon payment of cost, any tax or governmental charge required to be paid with respect to such transfer or exchange, at the principal corporate trust office of the Paying Agent. Series 1991 Bonds may be exchanged for a like aggregate principal amount of Series 1991 Bonds of other authorized denominations of the same maturity. Upon surrender for transfer of any Series 1991 Bond, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner of such Series 1991 Bond or his attorneys duly authorized in writing, the City shall execute and the Paying Agent shall authenticate and deliver in the name of the transferee or transferees a new Series 1991 Bond or Series 1991 Bonds for a like aggregate principal amount. The person in whose name any Series 1991 Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes. Notwithstanding any of the above, the City and the Paying Agent shall not be required (a) to issue, register, transfer or exchange any Series 1991 Bond during a period beginning at the opening of business on the Record Date and ending at the close of business on the interest payment date or day on which -10- WP94002- 051/154 the applicable notice of redemption is given or (b) to register, transfer or exchange any Series 1991 Bond selected or called for redemption in whole or in part. Rate Covenant As security for the Series 1991 Bonds, the Board has covenanted to fix and annually to maintain rates and charges for water and services furnished by the System, except as may otherwise be required by law, which, together with moneys on hand and available therefor, will be sufficient to pay operation and maintenance expenses of the System and the principal of and interest on all bonds and other obligations of the System as they respectively become due. The Board has further covenanted that the rates for all services rendered by the System to the City and to its inhabitants and to all consumers within or without the boundaries of the City shall be reasonable and just, taking into account and consideration the cost and value of the System, the proper and necessary allowances for the depreciation thereof and the amounts necessary for the retirement of all bonds and other securities or obligations payable from the revenues of the System, and the accruing interest thereon. See the caption "THE RESOLUTION" in this Official Statement. On the basis of the covenants made by the Board, the City has made certain similar covenants in the Ordinance for the benefit of the purchasers of the Series 1991 Bonds. See the caption "THE ORDINANCE" in this Official Statement. Additional Bonds Additional general obligation bonds secured by the full faith and credit of the City or by the net revenues of the System on a parity with the Series 1991 Bonds may be issued by the City in its discretion. The principal of and interest on the City's General Obligation Refunding Water Bonds, Series 1984A maturing on May 1, 1991 (the "Outstanding Series 1984 Bonds "), presently outstanding in the aggregate principal amount of $825,000 and the City's General Obligation Water Refunding Bonds, Series 1984B, presently outstanding in the aggregate principal amount of $5,000,000, are secured by the net revenues of the system on a parity with the Series 1991 Bonds. The City presently has no plans to issue additional general obligation indebteness. BOND INSURANCE The following information has been furnished by the Bond Insurer for use in this Official Statement. Reference is made to Appendix C for a specimen of the Bond Insurance Policy. The Bond Insurance Policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Authority to the Trustee or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Series 1991 Bonds as such -11- WP94002- 051/154 payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Bond Insurance Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the Series 1991 Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference "). The Bond Insurance Policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Series 1991 Bond. The Bond Insurance Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; or (iii) any Preference relating to (i) through (ii) above. The Bond Insurance Policy also does not insure against nonpayment of principal of or interest on the Series 1991 Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the Series 1991 Bonds. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Bond Insurer from the Paying Agent or any owner of a Series 1991 Bond the payment of an insured amount for which is then due, that such required payment has not been made, the Bond Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Series 1991 Bonds or presentment of such other proof of ownership of the Series 1991 Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Series 1991 Bonds as are paid by the Bond Insurer, and appropriate instruments to effect the appointment of the Bond Insurer as agent for such owners of the Series 1991 Bonds in any legal proceeding related to payment of insured amounts on the Series 1991 Bonds, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying Agent payment of the insured amounts due on such Series 1991 Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. The Bond Insurer is the principal operating subsidiary of MBIA Inc. The principal shareholders of MBIA Inc. are The Aetna Casualty and Surety Company, the Fund American Companies, Inc., subsidiaries of CIGNA Corporation, and Credit Local de France, CAECL S.A., and they own approximately 350 of the outstanding common stock of MBIA Inc. Neither MBIA Inc. nor its shareholders are obligated to pay the debts of or claims against the Bond Insurer. The WP94002- 051/154 -12- Bond Insurer is a limited liability corporation rather than a several liability association. The Bond Insurer is domiciled in the State of New York and licensed to do business in all 50 states, the District of Columbia and the Commonwealth of Puerto Rico. As of December 31, 1990, the Bond Insurer had admitted assets of $1.8 billion (audited), total liabilities of $1.2 billion (audited), and total capital and surplus of $579 million (audited) prepared in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of September 30, 1991, the Bond Insurer had admitted assets of $2.0 billion (unaudited), total liabilities of $1.4 billion (unaudited), and total capital and surplus of $619 million (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Copies of the Bond Insurer's year end financial statements prepared in accordance with statutory accounting practices are available from the Bond Insurer. The address of the Bond Insurer is 113 King Street, Armonk, New York 10504. Moody's Investors Service rates all bond issues insured by the Bond Insurer "Aaa" and short term loans "MIG 1," both designated to be of the highest quality. Standard & Poor's Corporation rates all new issues insured by the Bond Insurer "AAA" Prime Grade. The Moody's Investors Service rating of the Bond Insurer should be evaluated independently of the Standard & Poor's Corporation rating of the Bond Insurer. No application has been made to any other rating agency in order to obtain additional ratings on the Series 1991 Bonds. The ratings reflect the respective rating agency's current assessment of the creditworthiness of the Bond Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Series 1991 Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of either or both ratings may have an adverse effect on the market price of the Series 1991 Bonds. THE CITY Mznara 1 The City was incorporated in 1885 and is one of the original home rule cities under the Constitution of Colorado. It is an incorporated municipality, a body politic and corporate, existing under the laws of Colorado. Because the City is a "home rule" city, the City's Charter governs all local and municipal matters. State law applies to matters of local or municipal concern only to the extent not superseded by the Charter or -13- W094002- 051/154 ordinances of the City. The Constitution of Colorado reserves to the City certain powers, including the power to issue, refund and liquidate all kinds of municipal obligations and the power to assess property in the City, and to levy and collect taxes on such property, for municipal purposes. City Council The governing body of the City consists of the seven members of the City Council. Four of these members of the City Council are elected by district and three are elected from the City at large. The members of the City Council are elected for staggered four -year terms at the general municipal election held in November in odd numbered years. The members of the City Council elect the President of the City Council, who is the presiding officer and is recognized as head of the City government for ceremonial purposes. The President of the City Council votes like other members of the City Council, has no veto power, and has no special administrative duties. The President and members of the City Council, the date of expiration of their current terms, and their principal occupations are, respectively, as follows: Expiration Member of Term Occupation Michael Occhiato 1993 Rancher (President) John A. Califano 1995 Retired Samual J. Corsentino 1993 Retired Fay Kastelic 1993 Retired Joyce Lawrence(1) 1995 Community Volunteer Chris Weaver(1) 1995 Certified Public Accountant Howard Whitlock 1993 Retired (1) Ms. Lawrence and Mr. Weaver will replace Gilbert Garbiso and Kenneth Hunter, whose terms will expire at the end of 1991. All legislative powers of the City are held by the City Council except as provided in the Charter. The affirmative vote of four members of the City Council is required for the adoption of any ordinance. The Charter provides for voter referenda and initiatives, pursuant to which voters can require the City Council to submit ordinances to the voters at special or general city elections. The City Council appoints all boards and commissions, unless otherwise required by law, and it appoints the City Manager. The City Manager is the -14 WP94002- 051/154 executive head of the government of the City and is responsible for the enforcement of the City's laws and ordinances. The City Manager also administers the operation of all the departments and divisions of the City, including the Finance, Public Safety, Parks and Recreation, Personnel, Public Works, Purchasing and Transportation Departments. The City Manager has the authority to appoint directors of all departments of the City, including the City Attorney. City Employees The City has a total of approximately 700 full -time employees. Three unions represent City employees: The National Association of Government Employees Local R9 -45, The International Brotherhood of Firefighters and The International Brotherhood of Police Officers Local 537. The City considers its employee relations to be satisfactory. Retirement Plans All employees of the City, other than employees of the fire and police departments, participate in the Municipal Division of the State of Colorado Public Employees' Retirement Association ( "PERA "). The City currently is required to contribute to PERA an amount equal to 10.20 of salary of all covered employees, and each covered employee is required to contribute 8.0% of salary. Benefits include an annuity, payable by PERA upon an employee's retirement, equal to 2 -1/2% of final average salary (the average of the highest three consecutive years) per year of service for the first 20 years of service and an additional 1.25% of final average salary per year of service for the next 20 years, with a maximum annual annuity of 75% of final average salary. Disability and death benefits also are provided. According to the December 31, 1990 Comprehensive Annual Report of the Public Employees' Retirement Association of Colorado (the "Report "), the Municipal Division of the Fund had an unfunded accrued service liability of $28,137,508 as of December 31, 1990. Colorado statutes require the unfunded accrued service liability to be amortized over a period not exceeding 60 years, and the unfunded accrued service liability for the Municipal Division is reported to be amortizable over approximately a 35 -year period, based on current contribution levels and the actuarial assumptions set forth in the Report. The City is affiliated with the State Fire and Police Pension Association ( "FPPA ") which was created in 1979 as a result of enactment of Senate Bill 79 by the General Assembly. Fulltime firefighters and police officers hired on or after January 1, 1980, and electing employees hired after April 8, 1978, are entitled to the normal retirement benefits administered by FPPA. Benefits are calculated as 2% of the average of the employee's highest three year's salary per year of service (up to a maximum of 25 years) . Disability retirement and survivor benefits are provided to all full -time firefighters and police officers. Presently, both the City and its covered employees contribute 8% of salary to the FPPA plan. The FPPA plans are required to be actuarially valued annually, and the rates of -15- WP94002- 051/154 contributions may be adjusted based upon the needs of the plans to reach actuarial soundness, as long as employee contributions do not exceed employer contributions. The most recent valuation of the FPPA system as of January 1, 1990 indicated an excess of net assets available over the pension benefit obligation of $32,040,984. The City's firefighters and police who were hired before April 8, 1978 are covered by the City's Fire Pension Fund and Police Pension Fund, respectively. Currently, employees are required to contribute 8% of salary to the respective funds, with the City contributing the balance necessary to fund the system based on actuarial computations specified by statute. The City's required contributions to the Fire Pension Fund and Police Pension Fund in 1990 were 51% and 90 of salary, respectively. Based upon the actuarial valuation reports dated December 31, 1990 prepared by William M. Mercer, Incorporated, the unfunded accrued liability (surplus) for the Fire Pension Fund was $20,132,539, and for the Police Pension Fund, it was ($4,085,688). Municipal Services The City provides its citizens with fire and police protection, streets and highways, public works and improvements, parks and recreation services, health and sanitation services, social services, planning and zoning and general administrative services. Water services are provided by the Board. See the captions "THE BOARD OF WATER WORKS" and "THE SYSTEM" in this Official Statement. Gas and electric services in the City are provided by private companies. The City owns and operates Pueblo Memorial Airport and a separately incorporated bus company providing services within the City. The airport facility currently is operated with subsidies from the City's general fund and certain federal agencies and the City expects continuation of operation on this basis. The bus company operations are subsidized by the City and the federal government, with subsidies from the City's general fund and the federal government being $508,200 and $509,148, respectively, through October 1, 1991. City Revenues The following table sets forth the sources of the City's general revenues for the periods indicated: -16- 1094002- 051/154 Licenses Intergov- and ernmental Charge for Fines and Highway Year Taxes(1) Permits(2) Transfers(3) Services(4) Forfeits(5) Users(6) Other(7) Totals 1981 $19,377,323 $290,929 $623,282 $323,879 $537,594 $1,768,032 $1,442,836 $24,363,875 1982 19,503,570 188,641 584,366 329,561 416,894 1,742,114 1,733,494 24,498,640 1983 20,110,274 97,577 611,395 163,331 307,493 1,868,871 1,545,354 24,704,295 1984 22,152,201 101,725 715,450 169,847 371,231 2,355,692 960,181 26,826,327 1985 24,910,466 114,346 723,406 185,245 470,778 2,137,423 815,191 29,356,855 1986 25,930,339 129,931 853,773 191,308 448,280 2,347,702 684,545 30,585,878 1987 27,143,162 118,355 891,910 226,183 482,858 2,821,642 583,851 32,267,961 1988 27,147,545 114,918 888,720 204,942 523,146 3,006,243 570,624 32,456,138 1989 28,753,682 111,734 947,747 199,857 592,969 3,226,392 812,910 34,645,291 1990 29,386,428 107,758 978,589 182,054 697,899 3,954,901 315,568 35,623,197 (1) Includes property taxes, cigarette and tobacco taxes, sales and use taxes and franchise taxes. (2) Includes health licenses, professional and occupational licenses, amusement licenses, building permits and miscellaneous other licenses and permits. (3) Includes alcoholic beverage taxes and motor vehicle taxes collected by the State of Colorado, the County of Pueblo's portion of the costs of maintaining a sanitary landfill and animal shelter and miscellaneous other intergovernmental transfers. (4) Includes revenues from sales of building code books, codification books and traffic ordinance books, witness fees, zoning and rezoning variances, xerox copies and miscellaneous other sources. (5) Principally from municipal court. (6) Collected and distributed by the State of Colorado. (7) Includes interest earned on City funds, rentals, sale of trees, discounts earned and miscellaneous other sources. The following table sets forth a summary of the revenues, expenses and changes in Fund Balances for the City's General Fund for the five years ended December 31, 1990: -17- WP94002- 051/154 GENERAL FUND STATEMENT OF REVENUES EXPENSES AND CHANGES IN FUND BALANCES 2,620,010 1,867,742 1,974,302 3,898,996 3,670,663 1 990 1989 1 988 1987 1986 Revenues 1,000,858 644,048 1.479.919 1.432.565 1.458.053 Taxes $29,386,428 $28,753,682 $27,147,545 $27,143,162 $25,930,339 Licenses & Permits 107,758 111,734 114,918 118,355 129,931 Revenue From other Agencies 978,589 947,747 888,720 891,910 853,773 Charges for Services 182,054 199,857 204,942 226,183 191,308 Fines & Forefeits 697,899 592,969 523,146 482,858 448,280 Interest Income 150,746 609,639 368,352 362,115 490,316 Miscellaneous 164.822 203.271 202.272 221.736 194.229 Total revenues 31,668,296 31,418,899 29,449,895 29,446,319 28,238,176 Expenditures Current General Government Public Safety Parks & Recreation Transportation Public Works Insurance & contingencies Intergovernmental Total Expenditures $ 3,331,000 $ 3,344,751 15,194,884 14,625,194 2,616,598 2,620,010 1,867,742 1,974,302 3,898,996 3,670,663 979,487 438,096 1,447,700 1,515,193 29,336,407 28,188,209 $ 3,064,053 $ 2,827,090 $ 3,358,572 14,358,763 14,068,232 13,337,305 2,582,792 2,540,779 2,341,937 2,092,067 536,794 525,511 3,473,539 5,251,177 4,728,832 613,156 1,000,858 644,048 1.479.919 1.432.565 1.458.053 27,664,289 27,657,495 26,394,258 Excess (Deficiency) of revenues over expenditures 2.331.889 3.230.690 1.785.606 1.788.824 1.843.918 Other financing sources Operating transfers in 3,954,901 3,226,392 3,006,243 2,821,642 3,726,361 Operating transfers out (6.964.625 (5.734.750 (5.461.776 (5.418.321 (5.403.906 Total other financing sources (3,009,724) (2,508,358) (2,455,533) (2,596,679) (1,677,545) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (677,835) 722,332 (669,927) (807,855) 166,373 Balance, January 1 3,112,452 2,390,120 2,952,508 3,752,969 4,047,525 Residual Equity Transfer 0 0 110,929 0 (472,073) Increase (Decrease)in Reserve for Inventory 0 0 (3.390 7.394 11.144 Balance, December 31 $ d td _ Fil 7 $ 777 d57 $ $ 7 Q59 Sf1R $ 757 _ 9h4 Source: City of Pueblo Audited Financial Statements, 1986 -1990. -18- WP94002- 051/154 The following table provides a breakdown by type of tax for the City's tax revenues for the years indicated: Calendar Property Sales and Franchise Tobacco Total Year Taxes Use Taxes(1) Taxes Taxes Taxes 1980 $4,401,090 $11,944,532 $1,496,467 $596,876 $18,438,965 1981 4,229,107 12,908,246 1,648,309 591,661 19,377,323 1982 4,210,614 13,027,557 1,733,448 531,951 19,503,570 1983 4,272,393 13,314,608 2,057,295 465,978 20,110,274 1984 4,448,719 14,973,537 2,297,647 432,298 22,152,201 1985 4,464,513 17,644,786 2,386,961 414,206 24,910,466 1986 5,336,260 17,948,464 2,278,146 367,469 25,930,339 1987 5,396,702 19,172,828 2,194,229 379,403 27,143,162 1988 5,486,156 19,015,140 2,234,818 411,431 27,147,545 1989 6,107,723 19,994,029 2,224,814 427,116 28,753,682 1990 6,424,489 20,201,127 2,370,319 390,493 29,386,428 (1) The sales tax was 3% from 1980 through 1984 and 3.5% from 1985 to 1990. City Budget The Charter requires the City Manager to submit to the City Council an annual or current expense budget for the ensuing fiscal year and a capital budget not later than the first regular meeting of the City Council in October of each year. The annual budget is required to contain an estimate of all anticipated revenues and the estimated expenditures necessary for the operation of the City's departments, offices and agencies. It is also required to include an estimate of the general fund surplus or deficit, debt service requirements and an estimate of the sum required to be raised by tax levy for the ensuing fiscal year. After public hearing, the City Council may adopt the budget without change or may amend the budget by adding new items of expenditure or by increasing, decreasing or removing items of expenditure, except that the City Council may not reduce any item of appropriation for debt service. The Charter directs the City Council in adopting the budget to estimate the amount of money necessary to be raised by tax levy, taking into account total proposed expenditures and estimated revenues. Prior to December 1st of each year, the City Council is required to adopt the budget, an appropriation ordinance and the tax levy ordinance. For a description of the process by which property is assessed and ad valorem taxes are levied and collected, see the caption "ASSESSMENTS, LEVIES AND COLLECTION" in this Official Statement. Capital Improvements The City annually budgets and expends funds on capital improvements for street construction, replacement and addition of traffic control devices, improvements and acquisitions of recreational facilities, and other similar improvements. Capital improvements ordinarily are funded from the City's general funds. The City estimates that expenditures for such capital improvements will be approximately $500,000 in 1991 and $1,000,000 in 1992. -19- WP94002- 051/154 THE BOARD OF WATER WORKS General The Board was formed in 1957 as a result of the consolidation of the Pueblo Water Works and the Pueblo Water Works District No. 2, the two previous providers of water service in the City. Pursuant to the Charter, the entire control, management and operation of the City's municipal waterworks System are vested in the Board, although title to the properties of the System is held by the City. The Board has the independent authority to exercise all powers granted to first class cities under the Constitution and laws of Colorado. The City Council has no jurisdiction or control over the Board, and it is required to adopt all ordinances requested by the Board which are reasonably necessary to assist the Board in management of the System and its property or to enable the Board to purchase or condemn additional water rights or property of any kind needed to supply water to the City. The Board may not enter into any contract or make any purchase involving an expenditure of more than $1,000 until it advertises a proposal for bids for the contract or purchase at least ten days prior to awarding the contract or making the purchase. This restriction does not apply to contracts for personal, professional or technical services not lending themselves to competitive bidding. Administration The Board consists of five members, all of whom are elected at large for staggered six -year terms. The current members of the Board, their Board offices, the year of commencement of their terms and expiration of their current terms, and their principal occupations are as follows: -20- WP94002- 051/154 Expiration of Years on Term Member and Board Office the Board (December 31) Principal Occupation Verdon L. Johnson 23 1997 Owner, Johnson's Sporting (Board President) Goods Michael W. Stillman 11 1997 Vice President, National (Secretary Treasurer) Material Trading Kevin F. McCarthy 3 1995 Owner, Almont, Inc. (Vice President) Manager, George F. McCarthy Funeral Home Dwight G. Robbe 7 1995 Agent, New York Life (Vice President) Insurance Company Claudia Johnson -Smith 3 1993 Accountant, Byerly & (Vice President) Cosyleon, Inc. -20- WP94002- 051/154 The Executive Director of the Board is Alan C. Hamel. Mr. Hamel, age 49, has held this position since September 1982. Prior to becoming Executive Director, he was Operations Manager for the Board of Water Works from March 1982 until September 1982, and Division Manager of Transmission and Distribution for the Board from 1973 to 1982. Mr. Hamel received a B.S. in Business Administration from the University of Southern Colorado in 1966 and holds a Class III Colorado Water Distribution Certification. The Water Board's operation is divided into three primary segments: Administrative Services, Operations and Water Resources. Biographical information on the Directors, Managers and key employees is presented below. Jerry J. Cantrell, age 48, is the Director of Administrative Services, having held that position since March 1991. Prior to becoming Administrative Services Director, Mr. Cantrell was Finance Division Manager for the Board from November 1973 to March 1991. Mr. Cantrell received an A.A. degree in Business from Cowley County Community Jr. College in 1963 and a B.A. in Business from Southwestern College in 1966. Terry R. Book, age 40, has been Director of Operations since March 1991. Previously, Mr. Book was the Division Manager of Transmission and Distribution and Engineering from 1982 to 1991 and he was Civil Engineer for the Board from 1978 to 1982. Mr. Book graduated from Colorado State University in 1973 with a B.S. in Civil Engineering. He is a Registered Professional Engineer in Colorado and holds a Class III Colorado Water Distribution Certification. Roger L. O'Hara, age 48, has been Water Resources Manager for the Board since June 1985. Previously, Mr. O'Hara held the positions of Civil Engineer and Engineering Division Manager from November 1977 to June 1985. Mr. O'Hara graduated from the University of Oklahoma in 1969, and he is a Registered Professional Engineer in Colorado. Other key Staff personnel include: James D. Hurt, age 49, Division Manager of Treating, Pumping & Laboratory since 1982 has been employed by the Board since 1964. He attended Southern Colorado State College and currently holds a Colorado Class A Water Treatment Certification and Class III Colorado Water Distribution Certification. James M. Blasing, age 41, has been employed by the Water Board since October 1972. Mr. Blasing has held a number of positions during his tenure, including Service Worker; Assistant Supervisor of Transmission & Distribution; Supervisor, Transmission & Distribution and in March 1991, he became the Division Manager of Transmission and Distribution. He holds a B.A. in Education from Southern Colorado State College, 1972 and a Masters in Public Administration from the University of Colorado, Colorado Springs, 1983. He also holds a Class III Colorado Water Distribution Certification. WP94002- 051/154 -21- Charles W. Arnot, age 45, is Manager of Benefits for the Board of Water Works. He has been employed by the Board since 1972. Mr. Arnot attended the University of Denver from 1964 through 1968 and later attended Southern Colorado State College majoring in accounting. Robert E. Long, age 61, is Manager of Purchasing, Personnel and Safety, and has been employed by the Board of Water Works since 1972. Mr. Long received a B.S. in Business Administration from the University of Rochester, Rochester, New York in 1961. Board Employees The Board employs a total of 118 persons. Approximately 70% of the Board's employees are unionized and represented by the American Federation of State, County and Municipal Employees, Local 1045. The working policy agreement with this union will expire at the end of 1992. The Board believes its employee relations are good. Retirement Plan Employees of the Board who have at least three years of service and who are at least 25 years of age are eligible to participate in the Retirement Plan for Employees of the Board of Water Works of Pueblo, Colorado (the "Plan "). See Notes 1 and 2 to the Financial Statements which are included in Appendix A to this Official Statement. The Board is obligated to make contributions to the Plan annually pursuant to the working policy agreement with the union, and the Board has contributed amounts totalling $98,261 in 1988, $99,391 in 1989, $100,522 in 1990, and anticipates contributions of $131,791 and $178,549 in 1991 and 1992, respectively. These amounts exceed the contributions which would have been required of the Board on an actuarial basis because of the Board's working policy agreement with the union. No employee contributions to the Plan have been required since January 1, 1975. As of April 1, 1991, the number of active employees covered under the Plan was 104, and the number of retired employees and terminated employees with vested rights was 44. The most recent valuation of the Plan was made by William M. Mercer, Incorporated as of April 1, 1991. The actuarial value of assets was determined to be $3,388,229, on the basis of the "aggregate cost method." Under this method the present value, as of the valuation date, of all benefits expected to be paid is determined based upon various actuarial assumptions. Contributions are necessary to make up the difference between this present value of expected benefits and the actual value of the assets of the Plan (the "unfunded portion "). The amount of the necessary contributions is determined as a percentage of valuation payroll. The actuarial present value of all accrued benefits of the Plan was calculated as of April 1, 1991 by William M. Mercer, Incorporated to be $2,508,741. As of that date, the actuarial present value of the Plan's assets equalled $3,774,887. The percentage of valuation payroll was calculated to be 69% for union employees and 31% for management. Application of these percentages to the valuation payroll resulted in total necessary contributions in the amount of $198,549 for the year beginning April 1, 1991. The Plan generally has been actuarially valued approximately once every two years. -22- WP94002- 051/154 The actuarial assumptions selected by William M. Mercer, Incorporated, in its report included the following: a 7.5% per year (compounded annually) rate of return on Plan assets; mortality rates in accordance with the 1983 Group Annuity Mortality Table (except disabled mortality rates, which are based on the 1983 Railroad Retirement Board Totally Disabled Annuitants Selected Mortality Table); graduated disablement and termination rates (based on age); graduated salary increases (based on age); and average retirement age of 61. Assets of the Plan were valued at market value. THE SYSTEM Water Demand The System presently serves water to approximately 100,000 persons, comprised of the City's population plus a small number of persons living in areas outside the City limits. The System's largest customers for treated water are the Colorado State Hospital and the Minnequa Plant of CF &I Steel Corporation which is located outside of the City. The System's largest raw water customer is the Comanche Plant of Public Service Company of Colorado. See the title "Water Sales and Revenues" under this caption. During the past five years, the number of water customers has increased slightly and total water usage has reflected prevailing weather conditions. Peak system demand of 60,220,000 gallons occurred on July 27, 1987. The following table sets forth the number of water customers, annual water usage, total gallons of water pumped, percentage of unaccounted for water, average gallons of water pumped per day, gallons of water pumped on the peak day and average rainfall for the calendar years indicated: The following tables sets forth the ten largest users of treated water, their annual consumption for 1990 and the Revenue derived from each entity in 1990: -23- WP94002- 051/154 Average Billed % Pumped Peak Day Average Consumption Water Pumped Unaccounted Per Day Pumpage Rainfall Year Cust's (000's gal.) (000's gal.) Water(1) (000's gal.) (000's gal.) Inches(2) 1990 33,936 7,220,000 8,065,000 10.5 22,100 59,720 17.09 1989 33,871 8,304,000 9,174,000 9.5 25,200 60,130 8.33 1988 33,862 8,186,000 9,160,000 10.6 25,100 54,530 11.38 1987 33,737 7,847,000 8,719,000 10.0 23,900 60,220 10.82 1986 33,650 7,392,000 8,355,000 11.5 22,900 55,060 10.77 The unaccounted for water includes water used or lost in seepage, system storage, fire (1) protection, street cleaning and water distribution system flushing. (2) Reported by the United States Weather Bureau as measured at Pueblo Municipal Airport. The following tables sets forth the ten largest users of treated water, their annual consumption for 1990 and the Revenue derived from each entity in 1990: -23- WP94002- 051/154 t *C F & I Steel Corporation has filed for reorganization under Chapter 11 of the United States Bankruptcy Code. The Board makes no representations regarding the success of such reorganization. The Board projects that it has sufficient water to meet the needs of the area served beyond the year 2020, based on retention of all present water resource entitlements and in light of present population projections (which have been based on historic population growth). See the titles "Water Supply" and "Effects of Environmental Regulations" under this caption. Water Facilities The System is made up of approximately 484 miles of main, varying in size from four inches to 48 inches, and is subject to only minor seepage losses. The Board has budgeted about $1,445,000 for improvement and replacement of its distribution system for the 1992 fiscal year. Since the 1985 fiscal year, the Board has expended an average of $1,523,000 annually for improvement and replacement of water distribution facilities. See the title "Water Distribution" under this caption. The system has raw water storage capacity of 26,500 acre -feet in Clear Creek reservoir and Twin Lakes, both located several miles south of Leadville, Colorado. Additionally, the Board has 5,000 acre -feet of water storage in Turquoise Reservoir west of Leadville, Colorado, and annually purchases storage in Pueblo Reservoir, west of the City, in varying quantities. Fifteen treated water storage facilities have a total capacity of approximately 50.8 million gallons. See the titles "Water Supply" and "Water Distribution" under this caption. -24- WP94002- 051/154 ANNUAL CONSUMPTION NAME: (000 gallons) REVENUE C F & I Steel Corporation* 192,681 $ 270,026 Colorado State Hospital 158,341 198,087 University of Southern Colorado 128,637 158,909 School District 60 91,768 124,937 St. Mary Corwin Hospital 82,888 103,005 Pueblo Country Club 62,693 78,666 Pueblo Housing Authority 62,482 90,549 Meadowbrook Mobile Park 47,590 91,725 Imperial Memorial Gardens 36,942 46,062 Countryside Mobile Park 35,526 46,297 Total 899,548 $1,208,263 % of Annual Total 12.5 12.1 (all customers) *C F & I Steel Corporation has filed for reorganization under Chapter 11 of the United States Bankruptcy Code. The Board makes no representations regarding the success of such reorganization. The Board projects that it has sufficient water to meet the needs of the area served beyond the year 2020, based on retention of all present water resource entitlements and in light of present population projections (which have been based on historic population growth). See the titles "Water Supply" and "Effects of Environmental Regulations" under this caption. Water Facilities The System is made up of approximately 484 miles of main, varying in size from four inches to 48 inches, and is subject to only minor seepage losses. The Board has budgeted about $1,445,000 for improvement and replacement of its distribution system for the 1992 fiscal year. Since the 1985 fiscal year, the Board has expended an average of $1,523,000 annually for improvement and replacement of water distribution facilities. See the title "Water Distribution" under this caption. The system has raw water storage capacity of 26,500 acre -feet in Clear Creek reservoir and Twin Lakes, both located several miles south of Leadville, Colorado. Additionally, the Board has 5,000 acre -feet of water storage in Turquoise Reservoir west of Leadville, Colorado, and annually purchases storage in Pueblo Reservoir, west of the City, in varying quantities. Fifteen treated water storage facilities have a total capacity of approximately 50.8 million gallons. See the titles "Water Supply" and "Water Distribution" under this caption. -24- WP94002- 051/154 The Board operates the Whitlock Plant, which is located north of the Arkansas River at 9th Street and Adee Avenue Extended. This facility was constructed and began treatment of the City's water in 1977. The maximum capacity of the Whitlock Plant is currently 80 mgd. See the title "Water Treatment" under this caption. The following table presents the book cost of the utility plant of the System (at June 30 of the years indicated) and reflects the expansion of the System's facilities: 1990 $102,184,690 1989 $ 98,798,663 1988 $ 97,727,433 1987 $ 96,130,936 Water Supply The following table sets forth the Board's developed annual water supply available at the Board's intake in a drought year, based upon either average historical yields, potential entitlement, or firm contract: Quantity Source (1) (Acre -Feet) Arkansas River 38,033 Hobson Ranch 1,178 Booth - Orchard Grove 9,000 Columbine, Ewing, Wurtz, and Wurtz Extension Transmountain Ditches 2,268 Homestake Project 2,226 Busk Ivanhoe 1,363 Twin Lakes 5,462 Fryingpan- Arkansas Project 8,040 Clear Creek Reservoir 4,700 Shallow Wells 1,560 73,830 (1) This table does not include an undeveloped supply at the Board's Leadville Ranch, the share of the West Pueblo Ditch or an additional estimated 17,000 acre -feet of water available from the reuse of transmountain water. The Arkansas River, Hobson Ranch, Booth Orchard, and Leadville Ranch water rights are direct flow rights. Direct flow rights must be used at the time they become available and cannot be stored. Historically the Board has not made use of all of its direct flow water rights, particularly during winter months. The Board's other water supplies are transmountain water and may be stored by the Board for future use. The Board has the right to store 15,000 acre -feet of water in Twin Lakes as a result of ownership of its Twin -25- WP94002- 051/154 Lakes shares. In addition, the Board owns 11,500 acre -feet of storage in Clear Creek Reservoir and 5000 acre -feet in Turquoise Reservoir. The City has also been allocated 31,200 acre -feet of storage in the Fryingpan- Arkansas System. This reuse water, combined with the above mentioned water supplies, will supply the needs in a drought year for a population of 350,000 with associated commercial and industrial developments. In 1990, total consumption (both potable and nonpotable) by the Board's customers amounted to about 32,884 acre -feet. Available unused water supplies (other than direct flow rights) generally are stored for future use or sold to third parties. The Board anticipates its water supplies are sufficient to cover projected needs beyond the year 2020, based upon assumed continued population growth at historical rates. If growth exceeds historical averages or if environmental regulations or unexpected conditions limit available water supply, the Board's ability to satisfy water demand could be adversely affected. See the title "Effects of Environmental Regulations" under this caption. Water Treatment The Whitlock Plant consists of raw water intake structures, primary and secondary settling basins, connecting piping, flumes and control gates, chemical feed equipment, chemical storage facilities, filters, settled water and treated water pumps, sludge lagoons and laboratory facilities. The basic treatment processes are presedimentation, chemical coagulation, flocculation- sedimentation, disinfection, filtration and fluoridation. Raw water is taken in from the Arkansas River two miles above the Whitlock Plant, and return flow goes into the Arkansas River. Activated carbon is first added to the raw water for taste and odor control and for organics removal. The water then goes into a primary sedimentation reservoir for initial settling, and from there it flows through a connecting flume and metering device (where several chemicals are injected for flocculation and disinfection purposes), to the flocculation (turbidity removal) and mixing basins, and then to sedimentation basins. Additional chemicals may be added for algal or odor control. The final steps include filtration, postchlorination and flouridation. The maximum day treatment capacity of the Whitlock Plant is 80 mgd, which should meet the City's treatment needs through 2010. The Colorado Department of Health has the authority to enforce standards as to the quality of water supplied. The Board's quality control laboratory has obtained the interim State certification for chemical and bacterial analysis of public drinking water supplies and has been evaluated by the federal Environmental Protection Agency. In order to monitor the Board's treatment processes, approximately 180 distribution and 720 process samples per month are collected and examined by the Board's laboratory personnel. This testing by the Board has not revealed any violations of the requirements of the Safe Drinking Water Act of 1974 or the Federal Safe Drinking Water Act of 1986 and its amendments. WP94002- 051/154 -26- A United States Geological Service study indicated that uranium mining in the drainage basin of the Arkansas River has caused moderately high radiation levels in certain tributaries of the Arkansas River; however, the radiation level of the Arkansas River is below the maximum allowed under the Federal Safe Drinking Water Act. The Board expects that any additional water treatment costs resulting from such uranium would be imposed upon the mining companies involved. Water Distribution The Arkansas River flows through the City generally from west to east, and its flood plain has the lowest elevation in the City, with terrain rising from the Arkansas River to the north and south. As the City has expanded, the higher elevations away from the Arkansas River have been developed. Due to the topography of the area, the System's water distribution facilities are divided into seven pressure zones in order to provide satisfactory service to the Board's customers. Each zone includes an area within certain elevations, and water pressure generally is maintained between 40 to 110 pounds per square inch. The System's distribution facilities consist of three primary pump stations, several secondary (booster) pump stations, fifteen treated water storage facilities, and transmission and distribution mains. Capital Improvements The Board retains the engineering firm of Black & Veatch, Consulting Engineers, of Kansas City, Missouri, to assist the Board in maintaining and renovating the System. In 1990, Black & Veatch prepared a comprehensive study of the System (the "Study ") which includes recommendations to the Board for specific projects constituting a long term expansion, maintenance and renovation plan. Black & Veatch also maintains a computer model of the System for study purposes. Pursuant to the Study, the Board, since the date of the Study, has annually budgeted specific amounts for capital improvements, in accordance with the Study's recommendations. Funds for capital improvements are derived from current revenues, and in recent years, declines in revenues have caused the Board to postpone certain capital improvements; however, the Board does not believe that such postponements have had any significant adverse impact on the System or that substantially greater expenditures will be required in future years because of such postponements. Since the Board's 1985 fiscal year, the Board has spent an annual average of $2,637,000 on capital improvements. The projected capital improvement budgets for fiscal years 1992 through 1996 are set forth below: -27- WP94002- 051/154 Capital Improvements(1) 1992 1993 1994 1995 1996 Equipment $ 247,460 $ 482,000 $ 499,800 $ 222,000 $ 234,000 Improvements & Replacements 2,151,850 1,814,400 1,630,600 1,872,000 1,822,600 Expansion 156,500 277,000 163,000 176,000 204,000 Total $ 2,555,810 $ 2,573,400 $ 2.293,400 $ 2,270,000 $ 2,260,600 (1) Capital Improvements are anticipated to be funded from revenues of the System. Since the Board has recenity completed a 20 year replacement program for the System, the amounts budgeted for capital expenditures in future years are less than the historical amounts. Effects of Environmental Regulations Various environmental laws, regulations and legal proceedings at both the state and federal levels could affect future operations of the System. Generally, the environmental requirements relate to environmental impact, land use, appropriation of water, and water quality. The Board's ability to use and develop water rights in the future may be affected by environmental requirements. Water rights of the Board also might be affected by legal actions presently being pursued in the Colorado water courts in which claims of vested rights to water flowing in and through National Forest and federal lands are asserted by certain federal agencies. If successful, these actions could prevent or reduce the amount of water diverted under water rights belonging to the Board and other water users. The Board intends to vigorously pursue its rights to divert the water subject to these claims. Should the Board fail in its defense against these claims, the effect on the Board's water rights would not be material. The June 1982 adoption and the July 1990 Revision of the Arkansas River Basin's Stream Classifications and Standards set the Arkansas River upstream of Pueblo's intake to cold water class 1 aquatic life, recreation class 1 and water supply uses. This requires that any discharge to the Arkansas River must meet these high standards and must not degrade the water quality. This benefits the Board in its treatment process. Treatment plant expansions and modifications made in the last 10 years are adequate to treat the City's drinking water to meet all federal and State mandated regulations. -28- WP94002- 051/154 P1 Water Rates Water rates in effect as of January 1, 1991 are set forth below. The rates are established by the Board after recommendations of its staff are considered. Scheduled rates charged for water are subject only to the approval of the Board. Minimum monthly charges for users within and outside the City for up to the first 2,000 gallons used are set forth in the following table: Minimum Monthly Charge (Effective January 1, 1988)(1) Mot-pr 4i7a Within Outside the City the City 3/4" $ 5.35 $ 8.02 1" 6.82 10.23 1 -1/2" 11.36 17.05 2" 18.17 27.25 3" 34.07 51.11 4 51.10 76.65 6 85.16 127.74 8 113.55 170.32 (1) Rates are reviewed on an annual basis and are determined to cover the operating expenses, debt service and capital expenditures for the System. Current projections are for a rate increase of 4 -6o for 1993. In addition to the minimum monthly charge, $1.22 is charged to customers in the City (or $1.82 for users outside the City) for each 1,000 gallons used in excess of the first 2,000 gallons. The charge per acre -foot for raw water is $293.33. The Board imposes water tap fees, plant water investment fees, water meter set fees and water main extension fees to partially compensate the Board for the costs of providing service to new areas. Water tap fees are based on the costs of the labor, equipment and material involved and presently range from $69.00 for a 3/4" tap to $1,447.00 for a 16" x 12" tap. The plant water investment fees for customers seeking service through new taps are based on the size of meters and currently range from $1,766.00 for 3/4" meters to $683,942 for 8" meters. Water meter set fees are based on costs of material, equipment, labor and outside service and generally range from $198.00 for 3/4" meters to $10,225.00 for 8" meters, with credits ranging from $24.00 to $4,500.00 available for certain existing meters. Water main extension fees are based on main size and now generally range from $12.69 to $32.89 per lineal foot, with a unit cost of $20.51 and with actual cost of asphalt pavement or concrete replacement to be paid by the applicant. Rates for multifamily housing facilities generally provide for lower charges and fees for each additional dwelling unit after the first. -29- WP94002- 051/154 A summary of the Board's Statements of Revenues, Expenses and Retained Earnings for the Fiscal Years ended December 31, 1990, 1989 and 1988 is presented below: Im Revenues General Water Sales General Customers $10,932,244 Comanche Plant 2,372,638 City of Aurora -0- Untreated 507,677 Taps and Meters 51,011 Material Sales 38,951 Main Assessments 47,690 Plant Water 2,522,638 Investment Fees 186,305 Other 366,622 Total Revenues 14,503,138 Operating Expenses (personnel 710,149 services, and operation and 36,618 maintenance) 49,194 Administration 120,925 Finance 552,195 Meter Services 307,595 Treating and Pumping 2,754,748 Transmission, Distribution 386,816 and Engineering 1,387,350 Purchasing, Personnel 12,868,514 and Maintenance 417,939 Water Resources 426,262 Plant -at -Large 1,993,300 Total Operating Expenses 7,960,314 Depreciation 2,133,760 Net Operating Revenue 4,409,064 Non Operating Revenue (Expenses) (1,995,311) Net Revenue 2,413,753 Retained Earnings, January 1 54,460,558 Retained Earnings, December 31 $ R7a Ztt 137,114 167,266 Ten Months 592,177 604,933 Ended 1989 1990 October 31, 1991 2,891,526 2,635,386 (unaudited) $11,038,024 $10,004,771 $ 9,494,481 2,522,638 2,385,653 1,742,967 -0- 275,000 275,000 598,795 352,227 710,149 33,463 36,618 21,890 49,194 39,559 30,563 33,754 49,687 23,414 203,614 209,838 140,111 406,031 386,816 429,939 14,885,513 13,740,169 12,868,514 137,114 167,266 143,451 592,177 604,933 527,802 287,755 316,742 298,109 2,891,526 2,635,386 2,283,597 1,426,864 1,561,910 1,283,217 433,565 447,358 394,459 418,712 637,980 620,882 1.910.598 2,236,694 1,950,156 8,098,311 8,608,269 7,501,673 2,078,525 2,095,383 1,868,544 4,708,677 3,036,517 3,498,297 (1,812,123) (1,687,961) (1,032,829) 2,896,554 1,348,556 2,465,468 56,874,311 59,770,865 61,119,421 $ Sq ��n aFS $ apt 63.584,889 (1) Retained Earnings, October 1, 1991 WP94002- 051/154 -30- The following table represents the Board's debt service coverage on its outstanding bonded indebtedness, assuming the Series 1991 Bonds were outstanding in such years. Management's Discussion and Analysis of Significant Items in Summary of Revenues and Expenditures Water Sales General Customers Generally, changes in revenues from water sales are directly related to the amount and timing of rainfall affecting usage for residential irrigation of lawns, the largest single use of water from the System. Water Sales - Comanche The Board has a long -term water supply contract with Public Service Company of Colorado ( "PSCo ") for PSCo's Comanche generating facility which requires payment by PSCo whether or not water is used. See the title "Contract Water Sales" under this caption. Water Sales- Untreated From time to time the Board sells excess water to the highest bidder (generally agricultural users). The revenues fluctuate depending on the amount of the excess and general market conditions for water sales. Taps and Meters, Material Sales, Main Assessments and Plant Water Investment Fees These revenue categories are directly proportional to new construction and have remained relatively low as a result of a relatively slow rate of growth in the Pueblo area over the last several years. Interest Income These amounts result from investment of reserves and excesses of cash flow over current expenditures. Other These amounts result from collections from the City for billing of the City's sanitary sewer fees and from miscellaneous reimbursements of construction and similar projects for others which are not budgeted. Adminstration, Finance and Meter Services These amounts consist primarily of salaries and expenses of personnel conducting these services and remain fairly stable regardless of the City's water demand. -31- WP94002- 051/154 _1988 m 1990 Net Operating Revenues $4,409,064 $4,409,064 $3,036,517 plus depreciation expense 2,133,760 2,133,760 2,095,383 plus interest expense 2,494,483 2,397,357 2,289,121 Net Revenues Available for Debt Service 9,037,307 8,940,181 7,421,021 Maximum Annual Debt Service $ t 75� Sh� $ 1 - 1 I Debt Coverage Ratio 2.40x 2.38x 1.9$ I Management's Discussion and Analysis of Significant Items in Summary of Revenues and Expenditures Water Sales General Customers Generally, changes in revenues from water sales are directly related to the amount and timing of rainfall affecting usage for residential irrigation of lawns, the largest single use of water from the System. Water Sales - Comanche The Board has a long -term water supply contract with Public Service Company of Colorado ( "PSCo ") for PSCo's Comanche generating facility which requires payment by PSCo whether or not water is used. See the title "Contract Water Sales" under this caption. Water Sales- Untreated From time to time the Board sells excess water to the highest bidder (generally agricultural users). The revenues fluctuate depending on the amount of the excess and general market conditions for water sales. Taps and Meters, Material Sales, Main Assessments and Plant Water Investment Fees These revenue categories are directly proportional to new construction and have remained relatively low as a result of a relatively slow rate of growth in the Pueblo area over the last several years. Interest Income These amounts result from investment of reserves and excesses of cash flow over current expenditures. Other These amounts result from collections from the City for billing of the City's sanitary sewer fees and from miscellaneous reimbursements of construction and similar projects for others which are not budgeted. Adminstration, Finance and Meter Services These amounts consist primarily of salaries and expenses of personnel conducting these services and remain fairly stable regardless of the City's water demand. -31- WP94002- 051/154 Treating and Pumping and Plant -at- Large These amounts consist primarily of the costs of chemicals for treating the water and the cost of power for operating the System. These amounts increase as the demand for water increases. Also included are assessments for improvements to certain storage and transmission facilities in which the Board has an ownership interest. Contract Water Sales The Board provides raw water to the Comanche Plant of the Public Service Company of Colorado pursuant to a 35 -year contract entered into in 1972. The contract calls for the Board to supply raw water in minimum amounts ranging from 9,600 acre -feet annually during calendar years through 1983, and decreasing over time to 6,600 acre -feet in each year beginning in 2001 and continuing through 2008. The maximum required supply available to the Comanche Plant under the contract is 1250 of the minimum amounts. The charge for water under the contract is $293.33 per acre -foot. The Public Service Company is required to pay for the annual minimum water supplied under the contract whether or not it actually requires use of that water. DEBT SERVICE SCHEDULE The following table sets forth the debt service requirements on the Series 1991 Bonds. Date Principal Interest Fgrigd Total 05/01/92 $ T 130,000.00 $ 458,367.71 $ 588,367.71 11/01/92 - 760,000.00 547,246.25 1,307,246.25 05/01/93 1,070,000.00 530,960.25 1,600,906.25 11/01/93 1,090,000.00 505,761.25 1,595,761.25 05/01/94 1,120,000.00 480,146.25 1,600,146.25 11/01/94 1,150,000.00 451,866.25 1,601,866,25 05/01/95 1,180,000.00 422,828.75 1,602,828.75 11/01/95 1,205,000.00 391,853.75 1,596,853.75 05/01/96 725,000.00 360,222.50 1,085,222.50 11/01/96 780,000, U 340,828.75 1,120,828.75 05/01/97 275,000.00 319,963.75 594,963.75 11/01/97 260,000.00 312,332,K 572,332,50 05/01/98 630,000.00 305,117.50 935,117,50 11/01/98 660,000.00 287,005.00 947,005.00 05/01/99 1,610,000.00 268,030.00 1,878,030,00 11/01/99 1,655,000.00 220,535.00 1,875,535.00 05/01/00 1,705,000,00 171,712.50 1,876,712.50 11 /01 /00 1 750,000.00 120,562.50 1,870,562.50 05/01/01 1 110,000.00 68,062.50 1,178,062,50 11 /01 /01 1,140,000.00 34,485.00 1,174,485.00 � Totals $T20,005,000 M $T6,597,833,96 -32- WP94002- 051/154 PUEBLO DEMOGRAPHICS Population The populations for the periods indicated for the City, Pueblo County and the State of Colorado are presented below: Year City County State 1990 98,640 123,051 3,294,394 1989 105,504 123,363 3,284,537 1988 105,110 123,737 3,271,448 1987 103,853 122,838 3,263,354 1986 102,799 122,365 3,243,803 1985 101,553 121,907 3,214,448 1984 101,306 122,360 3,174,844 1983 101,543 123,756 3,137,512 1982 101,149 124,797 3,064,868 1981 101,481 124,797 2,980,340 Source: Colorado Division of Local Government Employment The average annual unemployment in the City, the State of Colorado and the United States for the past ten years is as follows: Year City Colorado United States 1990 6.7% 4.9% 5.5% 1989 8.2 5.8 5.3 1988 8.9 6.4 5.5 1987 10.7 7.7 6.2 1986 12.0 7.4 7.0 1985 10.5 5.9 7.2 1984 10.6 5.6 7.5 1983 14.0 6.7 9.6 1982 16.6 7.7 9.5 1981 10.0 5.5 7.6 Source: Colorado Division of Employment for Pueblo and State of Colorado data; U.S. Bureau of Labor Statistics for United States data. -33- WP94002- 051/154 ..r The major employers in the Pueblo area are: Employer CF &I Steel Corporation (Manufacturing)* .............. School District No. 60 (Education) ................... St. Mary - Corwin Hospital (Healthcare) ................ Colorado State Hospital (Healthcare) ................. Parkview Episcopal Hospital (Healthcare) ............. Pueblo County (Local Government) ..................... Unisys(Manufacturing) ** ............................. City of Pueblo (Local Government) .................... WATS Marketing Group (Telemarketing) ** ............... School District No. 70 (Education) ................... University of Southern Colorado (Education) .......... Pueblo Army Depot (Federal Government) ............... Pueblo Community College (Education) ................. Candy's Tortilla Factory (Manufacturing) ............. Trane Corporation ** Target Distribution Center (Warehousing) ** ........... U.S. Postal Service (Federal Government) ............. McDonnell Douglas Astronautics (Manufacturing) * *..... Employees 2,000 1,900 1,425 1,296 1,130 893 680 670 641 640 618 567 481 440 400 350 299 264 Source: City of Pueblo 1991 Data Book and other City sources *CF &I Steel Corporation has filed for reorganization under 11 of the United States Bankruptcy Code. * *New employers in the Airport Industrial Park since 1984. Education Chapter The City has 23 elementary schools, 6 middle high schools and 4 senior high schools. Enrollment in School District #60 (Pueblo) for the previous five years was as follows: 1990 .................... 18,363 1989 .................... 18,403 1988 .................... 18,800 1987 .................... 18,693 1986 .................... 18,875 Also located within the City is the University of Southern Colorado and Pueblo Community College. In addition to those institutions, the City has business, technical and trade schools. -34- WP94002- 051/154 Miscellaneous The following table provides certain economic and demographic data for the County compiled by the Colorado Division of Local Government. Building Year Permits Retail Sales 1990 N/A $1,307,000,000 1989 N/A 1,312,390,000 1988 274 1,282,980,000 1987 308 1,133,770,000 1986 264 1,055,330,000 1985 272 1,160,680,000 1984 194 1,171,520,000 1983 119 1,039,770,000 1982 291 1,152,050,000 1981 329 1,456,860,000 THE ORDINANCE Pursuant to a resolution adopted by the Board, the City has adopted an ordinance (the "Ordinance ") which authorizes the issuance of the Series 1991 Bonds for the purpose of refunding the Refunded Series 1984A Bonds and the Series 1986 Bonds. See the caption "USE OF PROCEEDS" in this Official Statement. The Ordinance also appoints a registrar and paying agent for the Series 1991 Bonds, approves a form of bond, pledges the net revenues of the System and the City's general ad valorem tax revenues to the payment of the Series 1991 Bonds, and makes certain other provisions with regard to the Series 1991 Bonds and the payment of the principal of, premium, if any, and interest on the Series 1991 Bonds. In addition, the City makes certain covenants and agreements in the Ordinance for the benefit of the owners of the Series 1991 Bonds, as follows: (a) by and through the Board, it will continue to operate and manage the System in an efficient and economical manner and keep and maintain separate accounts of the receipts and disbursements thereof in such manner that the revenues thereof may at all times be readily and accurately determined; (b) it will not sell or alienate any of the property constituting any part or all of the System in any manner or to any extent as might reduce the security provided for the payment of the Series 1991 Bonds, but the City, by and through the Board, may sell any portion of such property which shall have been replaced by other similar property of at least equal value, or which shall cease to be necessary for the efficient operation of the system; -35- WP94002- 051/154 (c) the rates established by and through the Board for all services rendered by the System to the City and to its inhabitants and to all consumers within or without the boundaries of the City shall be reasonable and just, taking into account and consideration the cost and value of the System and the proper and necessary allowances for the depreciation thereof and the amounts necessary for the retirement of all bonds and other securities or obligations payable from the revenues of the System, and the accruing interest thereon; (d) by and through the Board, there shall be charged against all purchasers of service such rates and amounts as shall produce revenues from the System adequate to meet the requirements of the Ordinance; (e) by and through the Board, the City shall cause all rates, fees and service charges appertaining to the System to be collected as soon as reasonable, shall prescribe and enforce rules and regulations for the payment thereof and for the connection with and the disconnection from properties of the System, and shall provide methods of collection and penalties, including but not limited to denial of service for nonpayment of such rates, fees and service charges, to the end that net revenues of the System shall be adequate to meet the requirements of the Ordinance; (f) at regular periods each year, the City, by and through the Board, will render bills for water services furnished and, until paid, all water rates, fees, tolls and charges shall constitute a lien on the property served, and the City, by and through the Board, shall take whatever action is legally permissible promptly to enforce and collect delinquent water rates, fees, tolls and charges and to enforce said liens; and (g) the City, in its own name or in cooperation with the Board, will carry worker's compensation, public liability and other forms of insurance on insurable System property, in such amounts as is customarily carried on prudently operated systems of like character. The Ordinance also provides that it shall be irrepealable until the principal of and interest on the Bonds shall have been fully paid, satisfied and discharged. THE RESOLUTION On November 19, 1991, the Board adopted a resolution (the "Resolution ") reciting the Board's determination that the issuance of the Series 1991 Bonds was necessary and in the best interests of the City and specifically requesting the City Council of the City to adopt an ordinance authorizing the issuance of the Series 1991 Bonds. The resolution further set forth the agreement by the Board to transmit to the City revenues from the System sufficient to pay the principal of and interest on the Series 1991 Bonds as such principal and interest came due from time to time. The Resolution further set forth the covenants of the Board described under the heading "THE ORDINANCE " above. -36- WP94002- 051/154 The Resolution, by its terms, is a legislative measure of the Board and is and shall remain irrepealable until the principal of and interest on the Series 1991 Bonds is fully paid, satisfied and discharged. UNDERWRITING Piper, Jaffray & Hopwood Incorporated, the Underwriter, has agreed to purchase the Series 1991 Bonds from the City under a Bond Purchase Agreement at an aggregate purchase price of o of the principal amount of the Series 1991 Bonds, plus accrued interest. The Underwriter is committed to take and pay for all of the Series 1991 Bonds if any are taken. The Series 1991 Bonds are being offered for sale to the public at the prices shown on the cover of this Official Statement. The Bond Purchase Agreement provides that the obligations of the Underwriter are subject to certain conditions, including, among other things, that (i) there has been no material change in the condition of the City and the System from that described herein, and (ii) no event has occurred which impairs or threatens to impair the status of the interest on the Series 1991 Bonds as exempt from federal income taxation. RATINGS Moody's Investors Service and Standard & Poor's Corporation have given the Series 1991 Bonds ratings of "Aaa" and "AAA," respectively, with the understanding that upon the delivery of the Series 1991 Bonds, the Bond Insurance Policy insuring the payment of the principal of and interest on the Series 1991 Bonds when due will be issued by the Bond Insurer. Such ratings reflect only the respective view of such organizations. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating agencies if, in the judgment of either or both, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Series 1991 Bonds. PENDING LEGAL PROCEEDINGS, SOVEREIGN IMMUNITY AND INSURANCE Litigation There is not now pending or threatened, litigation of any nature seeking to restrain or enjoin, or in any manner questioning: the issuance and delivery of the Series 1991 Bonds; the proceedings and authority under which the Series 1991 Bonds are issued or affecting the validity of the Series 1991 Bonds thereunder; the power and authority of the City or the Board to fix and establish and collect adequate rates and charges for the System; or the right and authority of the City or the Board to operate the System; and neither the corporate existence nor the boundaries of the City or the title of its present officers to their respective offices is being contested. -37- WP94002- 051/154 There is not now pending toward the City or the Board, City, the Board or the System covered by insurance. Sovereign Immunity any litigation which, if determined adversely would have a material adverse effect on the or City's or the Board's finances which is not The Colorado Governmental Immunity Act, Part 1 of Article 10 of Title 24, of the Colorado Revised Statutes, as amended (the "Immunity Act "), provides that, with certain specified exceptions, sovereign immunity acts as a bar to any action against a public entity, such as the City and the Board, for injuries which lie in tort or could lie in tort. The Immunity Act provides that sovereign immunity is waived by a public entity for injuries occurring as a result of certain specified actions or conditions, including: the operation of a non- emergency motor vehicle, owned or leased by the public entity; a dangerous condition of any public buildings; the operation of any public water facility; and a dangerous condition of a public highway, road or street as provided in the Immunity Act. In such instances, the public entity may be liable for injuries arising from an act or omission of the public entity, or an act or omission of its public employees, which are not willful and wanton, and which occur during the performance of their duties and within the scope of their employment. The maximum amounts that may be recovered under the Immunity Act, whether from one or more public entities and public employees, are as follows: (a) for any injury to one person in any single occurrence, the sum of $150,000; (b) for an injury to two or more persons in any single occurrence, the sum of $400,000; except in such instance, no person may recover in excess of $150,000. The City may, by resolution, increase any maximum amount that may be recovered from the City for the type of injury described in the resolution. The City has not adopted such a resolution. However, the City and the Board may not be held liable either directly or by indemnification for punitive or exemplary damages unless the City and the Board, as appropriate, voluntarily pay such damages in accordance with State law. The City and the Board may be subject to civil liability and may not be able to claim sovereign immunity for actions founded upon various federal laws. Examples of such civil liability include suits filed pursuant to 42 U.S.C. § 1983 alleging the deprivation of federal constitutional or statutory rights of an individual. In addition, the City and the Board may be enjoined from engaging in anti - competitive practices which violate the antitrust laws. However, the Immunity Act provides that it applies to any action brought against a public entity or a public employee in any State court having jurisdiction over any claim brought pursuant to any federal law, if such action lies in tort or could lie in tort. Insurance Coverage Since February 1, 1986, the City has been a member of the Colorado Intergovernmental Risk Sharing Agency ( "CIRSA"), a property and liability risk -38- WP94002- 051/154 pool established for State municipalities on January 1, 1982. CIRSA provides liability coverage, including errors and omissions, property coverage and specific catastrophe coverage, which are renewable annually on January 1st. An actuarial estimate is made each year of claims expected and a "loss fund" is established in that amount. If the value of the loss fund is exceeded by claims submitted in any year, aggregate supplemental coverage takes effect. The City's participation in CIRSA is subject to annual appropriations by the City. In light of generally rising insurance costs for public entities, there can be no assurance that the City will continue to maintain this level of coverage. The Board carries its own property, liability and errors and omissions insurance for the System. Current limitations include $40,575,828 for property (exclusive of automobiles) primarily written on a replacement cost basis with an agreed amount endorsement on the real and personal property portion of the policy. The Board's primary liability insurance coverage has a combined single limit of $1,000,000 with an aggregate policy limit of $1,000,000 and its public officials liability coverage has a $3,000,000 limit with a $3,000,000 aggregate. Deductibles on the insurance policies range from $5,000 to 425,000. TAX MATTERS In the opinion of Kutak Rock & Campbell, Bond Counsel, to be delivered at the time of original issuance of the Series 1991 Bonds, under existing laws, regulations, rulings and judicial decisions, interest on the Series 1991 Bonds is not includable in gross income for federal or State of Colorado income tax purposes or in the calculation of alternative minimum taxable income for purposes of the Colorado alternative minimum tax. The Internal Revenue Code of 1986, as amended (the "Tax Code "), imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal tax purposes of interest on obligations, such as the Series 1991 Bonds. The City has covenanted in the Ordinance to comply with certain guidelines designed to assure that interest on the Series 1991 Bonds will not become includable in gross income. Failure to comply with these covenants may result in interest on the Series 1991 Bonds being included in federal and Colorado gross income from the date of issue of the Series 1991 Bonds. The opinion of Bond Counsel assumes compliance with the covenants. Bond Counsel has opined that interest on the Series 1991 Bonds is not a specific preference item for purposes of the alternative minimum tax provisions contained in the Tax Code; however, for taxable years after 1989 interest on the Series 1991 Bonds will be included in the adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 750 of the excess of a corporation's adjusted current earnings over its alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses). -39- WP94002- 051/154 Although Bond Counsel has rendered an opinion that interest on the Series 1991 Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Series 1991 Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient's particular tax status or other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences. Purchasers of the Series 1991 Bonds, particularly purchasers that are corporations (including S corporations, foreign corporations operating branches in the United States and corporations subject to the environmental tax imposed by Section 59A of the Code), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security or Railroad Retirement benefits or, under certain currently pending federal legislation, individuals who itemize deductions are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Series 1991 Bonds. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Series 1991 Bonds, and Bond Counsel expresses no opinion as of any date subsequent thereto or with respect to any pending legislation. EXPERTS The audited financial statements of the Board, included as Appendix A hereto, have been examined by Schmidt, McCormack & Associates, Inc., independent certified public accountants, whose report thereon appears in Appendix A, and have been so included in reliance upon the report of Schmidt, McCormack & Associates, Inc., given upon their authority as experts in accounting and auditing. The audited financial statements of the City, included as Appendix B hereto, have been audited by McDonald, Holligan & McPherson, Inc., independent certified public accountants, whose report thereon appears in Appendix B, and have been so included in reliance upon the report of McDonald, Holligan & McPherson, Inc., given upon their authority as experts in accounting and auditing. APPROVAL OF LEGAL PROCEEDINGS Legal matters incident to the authorization, issuance and sale by the City of the Series 1991 Bonds and with regard to the tax - exempt status thereof are subject to the unqualified approving opinion of Kutak Rock & Campbell, Denver, Colorado, Bond Counsel. Copies of such opinion will be available at the time of the delivery of the Series 1991 Bonds. Certain legal matters will be passed upon for the Underwriter by Kutak Rock & Campbell, Denver, Colorado, for the City by Thomas E. Jagger, Esq., as City Attorney and by William Matoon, Esq. as counsel to the Board. -40- WP94002- 051/154 MISCELLANEOUS The references in this Official Statement to the Ordinance, statutes, resolutions, contracts, and other documents are brief outlines or partial excerpts of certain provisions of those documents. These outlines or excerpts do not purport to be complete, and reference is made to the documents for full and complete statements of their provisions. All estimates used in this Official Statement, including estimates of expected construction costs, are intended only as estimates and not as representations. The execution and delivery of this Official Statement by the President of the City Council of the City has been duly authorized by the City Council of the City of Pueblo, Colorado. CITY OF PUEBLO, COLORADO By !s/ Michael Occhiato President, City Council -41- WP94002- 051/154 APPENDIX A Audited Financial The Board of Water Works As of December 31, 1990 Statements For The 5 Statements of of Pueblo, Colorado and 1989 and Related ears Then Ended A -1 WP94002- 051/154 PA , APPENDIX B Audited Combined Financial Statements of The City of Pueblo, Colorado As of and For The Year Ended December 31, 1990 B -1 APPENDIX C Form of Bond Insurance Policy C -1 WP94002- 051/154 Fill j KUTAK & rA!� ESCROW AGREEMENT Between CITY OF PUEBLO, COLORADO, City and PUEBLO BANK AND TRUST COMPANY, Escrow Agent Dated as of January 14, 1992 WP94002-051/157 ESCROW AGREEMENT THIS ESCROW AGREEMENT is dated as of January 14, 1992 (this "Escrow Agreement "), and is made by and between the City of Pueblo, Colorado (the "City "), a municipality duly organized and existing under the Constitution and laws of the State of Colorado and the City's home rule charter, and Pueblo Bank and Trust Company, a banking corporation duly organized and existing under the laws of the State of Colorado, as escrow agent (the "Escrow Agent "). W I T N E S S E T H: WHEREAS, the City, pursuant to Ordinances duly adopted by the City Council (together, the "Refunded Bonds Ordinance "), issued its General Obligation Water Refunding Bonds, Series 1984A, in the aggregate principal amount of $19,115,000, of which $11,025,000 of the presently outstanding principal amount will be refunded and called for early redemption on May 1, 1992 (the "Refunded Series 1984A Bonds "), and its General Obligation Water Bonds, Series 1986, in the aggregate principal amount of $7,320,000, of which $7,320,000 is currently outstanding (the "Series 1986 Bonds "), respectively (the Series 1984A Bonds and the Series 1986 Bonds are occasionally collectively referred to herein as the "Refunded Bonds "); and WHEREAS, the City, pursuant to a Ordinance adopted on second reading on December 9, 1991 (the "Ordinance "), has issued its General Obligation Water Refunding Bonds, Series 1991, in the aggregate principal amount of $ 2 20,005,000 (the "Series 1991 Bonds ") for the primary purpose of providing funds to advance refund the Refunded Bonds as provided herein; and WHEREAS, there has been deposited with the Escrow Agent the sum of $ 19,696,050.89 from the proceeds of the Series 1991 Bonds to be invested pursuant to this Escrow Agreement; and WHEREAS, the amount initially invested pursuant to this Escrow Agreement together with interest accrued thereon is expected to be sufficient to pay (i) the interest due on the Refunded Bonds on each interest payment date from this date until their maturity or earlier redemption, as set forth herein, and (ii) the principal amount of and premium of the Refunded Bonds on their maturity or earlier redemption, as set forth herein; and WP94002- 051/157 WHEREAS, United Bank of Denver National Association is the Paying Agent for the Refunded Series 1984A Bonds (the "Series 1984A Bonds Paying Agent "); and WHEREAS, Pueblo Agent for the Series Paying Agent "); NOW, THEREFORE, the mutual covenants hereto agree as foll Bank and Trust Company is the Paying 1986 Bonds (the "Series 1986 Bonds in consideration of the foregoing and of hereinafter set forth, the parties ows: 1. Ordinance Reference The Ordinance is hereby incorporated as a part hereof in the same manner and with the same effect as if the Ordinance were fully set forth herein. 2. Creation of the Escrow Fund There are hereby created and established with the Escrow Agent a special and irrevocable fund designated "City of Pueblo 1991 Water Refunding Escrow Fund" (the "Escrow Fund "), to be held in the custody of the Escrow Agent and applied solely as provided herein. 3. Deposits to the Escrow Fund Concurrently with the execution and delivery of this Escrow Agreement, the City has caused to be deposited with the Escrow Agent, by virtue of the provisions of the Ordinance, and the Escrow Agent acknowledges receipt of, immediately available funds in the amount of $ 19,696,050.89 from the proceeds of the Series 1991 Bonds, in the Escrow Fund. Such moneys are to be invested in the scrow Agent's own name, on behalf of the City, pursuant to this Escrow Agreement. 4. Creation of Lien The escrow created hereby shall be irrevocable. The City hereby grants to the registered owners of the Refunded Series 1984A Bonds and the Series 1986 Bonds, a lien on and security interest in the Escrow Fund to secure payment of any principal of and premium and interest on the Refunded Series 1984A Bonds and the Series 1986 Bonds which is not paid when due. 5. Investment Obligations and Use of Moneys in the Escrow Fund (a) Proceeds of the Series 1991 Bonds deposited the Escrow Fund shall be used (i) to purchase a $ 11,605,000 ^ Tpar amount ZUnited States T Treasury ,T Bill in and ( together, the "Treasury Securities ") and (ii) to establish a beginning cash balance of $ 2,393.75 . The -2- WP94002- 051/157 Treasury Securities to be purchased for the Escrow Fund shall mature on the dates, be of the principal amounts and bear interest at the rates set forth in Exhibit A attached hereto. (b) On each interest payment date for the Refunded Series 1984A Bonds, the Escrow Agent shall use moneys available in the Escrow Fund to transfer to the Series 1984A Bonds Paying Agent for the Refunded Series 1984A Bonds, funds sufficient to pay the interest and premium, if any, on and principal of the Refunded Series 1984A Bonds becoming due and payable on such interest payment date, in such amounts as are set out in Exhibit B attached hereto, and on each interest payment date for the Series 1986 Bonds, the Escrow Agent shall use moneys available in the Escrow Fund to transfer to the Series 1986 Bonds Paying Agent for the Series 1986 Bonds, funds sufficient to pay the interest and premium, if any, on and principal of the Series 1986 Bonds becoming due and payable on such interest payment date, in such amounts as are set out in Exhibit C attached hereto. 6. Notice of Redemption for Refunded Series 1984A Bonds The City hereby directs the Series 1984A Bonds Paying Agent to call Refunded Series 1984A Bonds maturing on November 1, 1992 and thereafter in the principal amount of $11,025,000 for early redemption on May 1, 1992 at a redemption price equal to the principal amount of such Refunded Series 1984A Bonds plus a premium of 1% plus accrued interest to the redemption date. The Series 1984A Bonds Paying Agent shall give notice of the redemption of the Refunded Series 1984A Bonds, on behalf of the City, by sending a copy of said notice to Boettcher & Company, Inc. and to the registered owners of all Refunded Series 1984A Bonds, by certified or registered first -class United States mail, at least 30 days prior to the redemption date. The notice shall state the numbers of the Refunded Series 1984A Bonds to be redeemed, the place and date of redemption, and that interest on the Refunded Series 1984A Bonds shall cease to accrue after the date of proposed payment. 7. Notice of Redemption for Series 1986A Bonds The City hereby directs the Series 1986 Bonds Paying Agent to call the Series 1986 Bonds maturing on November 1, 1999 and thereafter in the principal amount of $7,320,000 for early redemption on November 1, 1993 at a redemption price equal to the principal amount of such Series 1986 Bonds, plus a premium of 1% and accrued interest to the redemption date. The Series 1986 Bonds Paying Agent for the Series 1986 Bonds shall give notice of such redemption, on behalf of the City, -3- WP94002- 051/157 F by publication of the notice of redemption at least once, not less than 30 days prior to the redemption date, in a newspaper of general circulation in the City and by sending a copy of said notice to the registered owners of all Series 1986 Bonds and to Boettcher & Company, by certified or registered first -class United States mail, at least 30 days (but not more than 60 days) prior to the redemption date. The notice shall state the numbers of the Series 1986 Bonds to be redeemed, the place and date of redemption, and that interest on such Series 1986 Bonds shall cease to accrue after the date of proposed payment. 8. Escrow Verification Set forth as Exhibit D hereto is a copy of the report prepared by Jerry L. Lacy, Certified Public Accountant, showing (a) the payments of the principal of and interest on the Treasury Securities, (b) the total of the principal of and interest on the Refunded Bonds required to be paid in each year indicated, and (c) the cumulative balance in the Escrow Fund after each payment is made from the Escrow Fund. With the report, Jerry L. Lacy has delivered his opinion that if the interest on the Treasury Securities purchased and the principal thereof are paid as interest and principal become due, the proceeds from the collection of such interest and principal, together with the beginning cash balances, will be sufficient to permit the prompt payment of the Refunded Bonds as the same become due and payable in accordance with the debt service schedules in Exhibits B and C. 9. Liability of Escrow Acrent. (a) The Escrow Agent shall not be liable for any loss resulting from any investment made pursuant to this Escrow Agreement in compliance with the provisions hereof. The Escrow Agent hereby acknowledges payment of $ in full payment for all its services hereunder and shall have no lien whatsoever on the moneys on deposit in the Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Agent under this Escrow Agreement. (b) The Escrow Agent shall not be liable for the accuracy of the calculations as to the sufficiency of the moneys received to pay the principal of and the interest and premium on the respective Refunded Bonds. So long as the Escrow Agent applies the moneys received as provided herein, and complies fully with the terms of this Escrow Agreement, the Escrow Agent shall not be liable for any deficiencies in the amounts necessary to make such payments. The liability of the Escrow Agent -4- WP94002- 051/157 to make any of the transfers required by Section 5 hereof shall be limited to the moneys in the Escrow Fund. (c) The City agrees that if for any reason the moneys available in the Escrow Fund to pay the principal of and the premium and interest on the respective Refunded Bonds are insufficient therefor, the City shall continue to be liable therefor under the terms of the Refunded Bonds. (d) While the Escrow Fund is held by the Escrow Agent, all of the moneys received by the Escrow Agent shall be and remain the property of the City in trust for the registered owners of the outstanding Refunded Bonds, as and to the extent herein provided, and if for any reason such moneys are not applied as herein provided, the assets of the Escrow Agent under this Escrow Agreement shall be impressed with a trust for the amount thereof until the required application shall be made. 10. Resignation or Removal of Escrow Agent; Successor Escrow Agent The Escrow Agent may at any time resign and be discharged from its obligations hereunder by giving written notice to the City not less than.sixty (60) days prior to the date when the resignation is proposed to take effect. Such resignation shall take effect immediately upon the appointment of a successor Escrow Agent (which may be a temporary Escrow Agent) by the City, without the consent of the Paying Agents, and the acceptance by such successor Escrow Agent of the terms, covenants and conditions of this Escrow Agreement, to be deemed conclusively shown by the transfer of the Escrow Fund, including the moneys held therein, to such successor Escrow Agent. The City shall use its best efforts to appoint a successor Escrow Agent by the proposed resignation date. The resignation of the Escrow Agent shall not be effective prior to the appointment of a successor Escrow Agent. The City may remove the Escrow Agent for cause at any time and without cause upon at least sixty (60) days' written notice. In the event the Escrow Agent shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Escrow Agent shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, the City may appoint a temporary Escrow Agent to fill such vacancy until a successor Escrow Agent shall be appointed by the City in the manner above provided, and any such temporary Escrow Agent so -5- WP94002- 051/157 IIlium appointed by the City shall immediately and without further act be superseded by the successor Escrow Agent so appointed. No successor Escrow Agent shall be appointed unless such successor Escrow Agent shall be a corporation with trust powers organized under the banking laws of the United States or any state of the United States and shall have at the time of appointment capital and surplus of not less than $50,000,000. Every successor Escrow Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor, the respective Paying Agents and the City, an instrument in writing accepting such appointment hereunder and thereupon such successor Escrow Agent, without any further act, deed or conveyance, shall become fully vested with all the rights, immunities, powers, trusts, duties and obligations of its predecessor, but such predecessor shall, nevertheless, on the written request of such successor Escrow Agent, the Paying Agents or the City, execute and deliver an instrument transferring to such successor Escrow Agent all the estates, properties, rights, powers and trusts of such predecessor hereunder, and every predecessor Escrow Agent shall deliver all moneys held by it to its successor. Should any transfer, assignment or instrument in writing from the Paying Agents or the City be required by any successor Escrow Agent for more fully and certainly vesting in such successor Escrow Agent the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor Escrow Agent, any such transfer, assignment and instruments in writing shall, on request, be executed, acknowledged and delivered by the Paying Agents or the City, as the case may be. Any corporation into which the Escrow Agent, or any successor to it in the trusts created by this Escrow Agreement, may be merged or converted or with which it or any successor to it may be consolidated, or any corporation resulting from any merger, conversion, consolidation or tax -free reorganization to which the Escrow Agent or any successor to it shall be a party, shall be the successor Escrow Agent under this Escrow Agreement without the execution or filing of any paper or any other act on the part of the parties hereto, anything herein to the contrary notwithstanding. 11. Reinvestment Except as provided in Section 12 below, the Escrow Agent shall not reinvest any cash or redeem and reinvest the proceeds of the Treasury Securities or the Zero SLGS (as defined below) held in the Escrow Fund unless and until the City requests that such reinvestment be made. -6- WP94002- 051/157 11 n®E1111 i Any such reinvestment must be in noncallable securities constituting bills, certificates of indebtedness, notes or bonds which are direct obligations of, or the principal of and interest on which obligations are unconditionally guaranteed by, the United States of America. Prior to any request for such redemption and reinvestment of any proceeds of the Treasury Securities or the Zero SLGS held in the Escrow Fund, the City shall provide to the Escrow Agent: (a) an opinion by an independent certified public accountant that after such reinvestment the principal amount of the new securities purchased with the reinvested proceeds, plus any remaining Treasury Securities or Zero SLGS, together with the earnings thereon and other available moneys, will be sufficient to pay, as the same become due, all principal of, premium, if any, and interest on the Refunded Bonds which have not then previously been paid, and (b) an unqualified opinion of nationally recognized municipal bond counsel to the effect that (i) such reinvestment will not cause the Series 1991 Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and the regulations in effect thereunder on the date of such reinvestment, and (ii) such reinvestment complies with the Constitution and laws of the State of Colorado and the provisions of all relevant documents relating to the issuance of the Refunded Bonds. 12. Zero SLGS Notwithstanding any contrary provisions of the preceding Section 11, amounts received by the Escrow Agent representing receipts of principal and interest on the Treasury Securities in the Escrow Fund shall be reinvested in United States Treasury Certificates /Notes /Bonds - -State and Local Government Series bearing interest at the rate of zero percent (the "Zero SLGS ") on the purchase dates, in the principal amounts and maturing on the dates set forth in Exhibit E Attached hereto, until the redemption of the final outstanding Refunded Series 1984A Bonds and Series 1986 Bonds, whether at maturity or early redemption, or until reinvested pursuant to Section 11 above. (The Treasury Securities, the Zero SLGS and any securities purchased pursuant to Section 11 above are collectively referred to hereinafter as the "Escrow Securities. "). The City hereby directs the Escrow Agent to complete subscription forms for the Zero SLGS and to file such forms with the Federal Reserve Bank not less than 15 days nor more than 60 days prior to each purchase date of the Zero SLGS in accordance with the regulations published by the United States Department of the Treasury, Bureau of the Public Debt, then in effect with respect to the purchase of such obligations, as such regulations may be amended from time to time, until such time (if ever) as reinvestment is made pursuant to Section 11 above. -7- WP94002- 051/157 13. Reports On or within 15 days after each December 31 beginning with December 31, 1991 and continuing until the termination of the Escrow Fund for which provision is herein made, the Escrow Agent shall submit to the City a report covering all money it shall have received and all payments it shall have made or caused to be made hereunder during the preceding 12 months or portion thereof. Such report shall also list all securities held in the Escrow Fund and the amount of money existing in the Escrow Fund as of each such December 31. 14. Title to Escrow Securities and Cash It is recognized that title to the Escrow Securities and moneys held in the Escrow Fund from time to time shall remain vested in the City but subject always to the prior charge and lien thereon of this Escrow Agreement and the use thereof required to be made by the provisions of this Escrow Agreement. The Escrow Agent shall hold all such money and securities in special trust funds and accounts separate and wholly segregated from all other funds and securities of the Escrow Agent, and shall never commingle such money or securities with other money or securities. All uninvested money held at any time in the Escrow Fund shall be continuously secured by the deposit in a Federal Reserve Bank of direct obligations of the United States of America in a principal amount always not less than the total amount of such uninvested money. It is understood and agreed that the responsibility of the Escrow Agent under this Escrow Agreement is limited to the safekeeping and segregation of the funds and securities held in such Escrow Fund, the collection of and accounting for the principal and interest payable with respect thereto and the payment of the principal of, premium, if any, and interest on the Refunded Bonds in accordance with the provisions of this Escrow Agreement. 15. Benefit of this Agreement This Escrow Agreement is made by the City for the benefit of the registered owners of the Refunded Bonds, and is not revocable by the City, and the Escrow Securities and moneys held in the Escrow Fund and all income therefrom have been irrevocably appropriated for the payment of the Refunded Bonds in accordance with this Escrow Agreement. No amendment or revocation shall be made which is incompatible with the preceding sentence without the consent of the registered owners of 100% of the aggregate par amount of the then outstanding Refunded Bonds. This Escrow Agreement shall constitute a third party beneficiary contract for the benefit of the registered owners of the Refunded Bonds. Said third party beneficiaries shall be entitled to enforce performance and observance by the City and the Escrow Agent of the respective agreements and covenants herein -8- WP94002- 051/157 contained as fully and completely as if such third party beneficiaries were parties hereto. 16. Termination This Escrow Agreement shall terminate when all transfers or payments required to be made by the Escrow Agent under the provisions hereof shall have been made. Any moneys remaining in the Escrow Fund at the time of such termination shall be distributed to the City. Such amounts shall be used by the City solely for capital improvements and not for debt service on the Series 1991 Bonds. 17. Severability If any one or more of the covenants or agreements provided in this Escrow Agreement on the part of the City or the Escrow Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Escrow Agreement. 18. Successors and Assigns All of the dovenants, promises and agreements in this Escrow Agreement contained by or on behalf of the City or the Escrow Agent shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not. 19. Notice of Refunding The City shall publish or cause to be published a notice of refunding of the Refunded Bonds in substantially the form attached hereto as Exhibit E. 20. Governing Law This Escrow Agreement shall be governed by the applicable laws of the State of Colorado. 21. Headings Any headings preceding the text of the several Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Escrow Agreement, nor shall they affect its meaning, construction or effect. 22. Counterparts This Escrow Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as one original and shall constitute and be but one and the same instrument. WP94002- 051/1.57 IN WITNESS WHEREOF, the parties hereto have each caused this Escrow Agreement to be executed by their duly authorized officers and their seals to be hereunder affixed and attested as of the date first above written. [SEAL] Attest: PUEBLO BANK AND TRUST COMPANY, as Escrow Agent By Title: Title: [SEAL] CITY OF PUEBLO, COLORADO By Attest: President, City Council City Clerk -10- WP94002- 051/157 EXHIBIT A SCHEDULES OF TREASURY SECURITIES IN ESCROW FUND A -1 WP94002- 051/157 EXHIBIT B DEBT SERVICE ON THE REFUNDED SERIES 1984A BONDS B -1 WP94002- 051/157 EXHIBIT C DEBT SERVICE ON THE SERIES 1986 BONDS C -1 WP94002- 051/157 4 111111011111111 11 EXHIBIT D VERIFICATION REPORT See Transcript Document No. _ D -1 WP94002- 051/157 M".4 MSIM ZERO COUPON SLGS FOR THE ESCROW FUND E -1 WP94002- 051/157 EXHIBIT F NOTICE OF REFUNDING of CITY OF PUEBLO, COLORADO GENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1984A GENERAL OBLIGATION WATER BONDS, SERIES 1986 PUBLIC NOTICE IS HEREBY GIVEN that certain general obligation water refunding bonds of the City of Pueblo, Colorado (the "City "), have been issued by action of the City Council of the City, and there are now deposited under the control of Pueblo Bank and Trust Company, Pueblo, Colorado, under an Escrow Agreement between the City and said bank, direct obligations of the United States of America, or obligations unconditionally guaranteed by the United States of America, the maturing principal of and interest on which, together with cash held in escrow, will be sufficient to pay the principal of and interest and premium on the City's General Obligation Water Refunding Bonds, Series 1984A maturing on and after November 1, 1992, through their early redemption on June 1, 1992 and the City's General Obligation Water Bonds, Series 1986 through their early redemption on November 1, 1993. THIS NOTICE GIVEN by order of the City Council of the City of Pueblo, Colorado, as of this 14th day of January 1992. [SEAL] CITY OF PUEBLO, COLORADO By Finance Director F -1 WP94002- 051/157 c City of Pueblo, Colorado General Obligation Water Refunding BoW; 51991 Series 1991 BOND PURCHASE AGREEMENT December 9, 1991 City of Pueblo One City Hall Place Pueblo, CO 81003 Ladies and Gentlemen: On the basis of the representations, warranties and covenants contained in this Bond Purchase Agreement and upon the terms and conditions contained in this Bond Purchase Agreement, the undersigned, Piper, Jaffray & Hopwood Incorporated (the "Underwriter "), hereby offers to purchase from the City of Pueblo, Colorado ( "you" or the "City ") $20,005.000 aggregate principal amount of your General Obligation Water Refunding Bonds, Series 1991 (the "Bonds "), to be issued under and pursuant to your Bond Ordinance, as finally adopted on December 9, 1991 (the "Ordinance "). SECTION 1. YOUR REPRESENTATIONS, WARRANTIES AND AGREEMENTS. By your acceptance hereof you hereby represent and warrant to, and agree with, the Underwriter that: (a) The City is a municipality duly organized and existing under the Constitution and laws of the State of Colorado (the "State ") and under the City's home rule charter (the "Charter "). To the best of your knowledge, the City is authorized to adopt the Ordinance, issue the Bonds and, by and through the Board of Water Works of Pueblo, Colorado, collect the user rates and charges and general (ad valorem) taxes levied against all property within the City, without limitation as to rate or amount, and to apply the moneys collected to the payment of the Bonds. WP94002- 051/171 (b) To the best of your knowledge, you have complied with all provisions of the Constitution and laws of the State, and with your Charter, and have full power and authority to collect such taxes, issue general obligation water refunding bonds to refund bonds issued to finance the acquisition, improvement and extension of a portion of the City's water system and to consummate all transactions contemplated by this Bond Purchase Agreement, the Bonds, the Ordinance, the Registration and Paying Agency Agreement dated as of December 1, 1991 (the "Paying Agency Agreement ") between you and Pueblo Bank and Trust Company, as paying agent, transfer agent and registrar (the "Registrar "), the Escrow Agreement dated as of January 14, 1992 (the "Escrow Agreement ") between you and Pueblo Bank and Trust Company, as Escrow Agent, and any and all other agreements relating thereto. (c) To the best of your knowledge, you have duly authorized all necessary action to be taken by you for: (i) the issuance and sale of the Bonds upon the terms set forth herein and in the Preliminary Official Statement and the final Official Statement prepared for use in connection with the sale of the Bonds, and in any amendment or supplement that may be authorized by you for use with respect to the Bonds (herein collectively referred to as the "Official Statement "); (ii) the adoption of the Ordinance providing for the issuance of and security for the Bonds; (iii) the refunding of the Series 1984A Bonds and the Series 1986 Bonds (as defined in the Ordinance; together, the "Refunded Bonds "); (iv) the execution, delivery, receipt and due performance of this Bond Purchase Agreement, the Bonds, the Paying Agency Agreement, the Escrow Agreement and any and all such other agreements and documents as may be required to be executed, delivered and received by you in order to carry out, give effect to and consummate the transactions contemplated hereby and by the Official Statement; and (v) the carrying out, giving effect to and consummation of the transactions contemplated hereby and by the Official Statement. Executed counterparts of the Ordinance, the Escrow Agreement and the Paying Agency Agreement will be delivered to the Underwriter by you at the Closing Time (as defined herein). (d) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending and for which you have been served, or, to the best of your knowledge, threatened against or affecting you (or to the best of your knowledge any basis therefor), wherein an -2- WP94002- 051/171 A unfavorable decision, ruling or finding would adversely affect the pledge of moneys and securities pursuant to the Escrow Agreement or the collection of charges, fees, rates, tolls or other amounts by the Board of Water Works of Pueblo, Colorado (the "Board ") or the collection of ad valorem taxes by, or the pledge of the full faith and credit of, the City or the transactions contemplated hereby or by the Official Statement or the validity of the Bonds, the Ordinance, this Bond Purchase Agreement, the Paying Agency Agreement, the Escrow Agreement or any other agreement or instrument to which you are a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby or by the Official Statement. (e) To the best of your knowledge, the execution and delivery of the Official Statement, this Bond Purchase Agreement, the Paying Agency Agreement, the Bonds, the Ordinance, the Escrow Agreement and the other agreements contemplated hereby and by the Official Statement, and compliance with the provisions thereof, will not conflict with or constitute on your part a breach of or a default under any existing law, court or administrative regulation, decree or order or any agreement, indenture, mortgage, lease or other instrument to which you are subject or by which you are or may be bound. (f) You have not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that you are a bond issuer whose arbitrage certifications may not be relied upon. (g) Any certificate signed by any of your authorized officers and delivered to the Underwriter shall be deemed a representation and warranty by you to the Underwriter as to the statements made therein. (h) The City hereby represents and warrants that it has deemed the Preliminary Official Statement to have been final as of its date within the meaning of Rule 15c2 -12 ( " Rule 15c2 -12 ") under the Securities Exchange Act of 1934, as amended and now in effect. The City agrees to deliver to the Underwriter as promptly as practicable but in no event later than seven business days after the date hereof, such number of copies of the final Official Statement as the Underwriter may reasonably require in order for the Underwriter to comply with Rule 15c2 -12 and the rules of the Municipal Securities Rulemaking Board ( "MSRB ") including, without limitation, Rule G -32. -3- WP94002- 051/171 (i) As of the date of this Bond Purchase Agreement and (unless an event occurs of the nature described in Section 1(k) hereof) at all times subsequent thereto during the period from the date of this Bond Purchase Agreement to and including the date which is twenty -five (25) days following the End of the Underwriting Period for the Bonds (as determined in accordance with Section 9 hereof), the information contained in the Official Statement which is descriptive of the City and its waterworks system does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statement contained therein, in the light of the circumstances under which they were made, not misleading. (j) If the Official Statement is supplemented or amended, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended) at all times subsequent thereto during the period from the date of this Bond Purchase Agreement to and including the date which is twenty -five (25) days following the End of the Underwriting Period for the Bonds (as determined in accordance with Section 9 hereof), the information in the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. (k) If during the period from the date of this Bond Purchase Agreement to and including the date which is twenty -five (25) days following the End of the Underwriting Period for the Bonds (as determined in accordance with Section 9 hereof) the City becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, it shall notify the Underwriter, and if in the opinion of the Underwriter such fact or event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will, at its expense, supplement or amend the Official Statement in a form and in a manner approved by the Underwriter and furnish to the Underwriter (i) a reasonable number of copies of the -4- WP94002- 051/171 supplement or amendment, and (ii) if such notification shall be subsequent to the Closing Date, such legal opinions, certificates, instruments, and other documents as the Underwriter may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. SECTION 2. PURCHASE, SALE AND DELIVERY OF THE BONDS. On the basis of the representations, warranties and covenants contained herein, and subject to the terms and conditions herein set forth, at the Closing Time (hereinafter defined) the Underwriter agrees to purchase from you and you agree to sell to the Underwriter the Bonds for a price of $20,005,000 plus accrued interest, if any, from the date of the Bonds to the date of payment and delivery. The Bonds shall be issued under and secured as provided in the Ordinance, and the Bonds shall have the maturities and interest rates and be subject to redemption as set forth in the Ordinance and the Official Statement. Payment for the Bonds shall be made by certified or official bank check or draft in immediately available federal funds or by wire transfer of funds, payable to your order or for your account, at the offices of Kutak Rock & Campbell in Denver, Colorado, at 10:00 a.m. Denver Time, on January 14, 1992, or at such other place, time or date as shall be mutually agreed upon by you and the Underwriter. The date of such delivery and payment is herein called the "Closing Date," and the hour and date of such delivery and payment is herein called the "Closing Time." The delivery of the Bonds shall be made in definitive form (provided neither the printing of a wrong number on any Bond nor the failure to print a number thereon shall constitute cause to refuse delivery of any Bond) and shall be available for examination and packaging by the Underwriter at least twenty -four (24) hours prior to the Closing Time. SECTION 3. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS. The Underwriter's obligations hereunder shall be subject to the due performance by you of your obligations and agreements to be performed hereunder at or prior to the Closing Time and to the accuracy of and compliance with your representations and warranties contained herein, as of the date hereof and as of the Closing Time, and are also subject to the following conditions: WP94002- 051/171 -5- �I (a) The Bonds and the Ordinance shall have been duly authorized, executed and delivered in the form heretofore approved by the Underwriter with only such changes therein as shall be mutually agreed upon by you and the Underwriter. (b) At the Closing Time the Underwriter shall receive: (i) The opinions, dated the Closing Date, of (A) Thomas E. Jagger, Esq., your counsel, relating to your due organization and existence, the due authorization, execution and delivery by you of the Ordinance, the Paying Agency Agreement, the Escrow Agreement and this Bond Purchase Agreement, the due authorization of the collection of the general ad valorem taxes and various other matters; (B) Peterson & Fonda, counsel to the Board, relating to the Board's due organization and existence, the due adoption by the Board of certain resolutions in connection with the Bonds, the due authorization of the collection of user rates, fees, tolls and charges and various other matters; and (C) Kutak Rock & Campbell, Bond Counsel, relating to the valid authorization and issuance of the Bonds and various other matters; (ii) A certificate, satisfactory to the Underwriter, of the President of the City Council attested by your City Clerk or of any other of your duly authorized officers satisfactory to the Underwriter, dated as of the Closing Date, stating, to the best of his knowledge, that: (A) you have duly performed all of your obligations to be performed at or prior to the Closing Time and that each of your representations and warranties contained herein is true as of the Closing Time; (B) you have authorized, by all necessary action, the execution, delivery, receipt and due performance of the Bonds, the Ordinance, the Paying Agency Agreement, this Bond Purchase Agreement, the Escrow Agreement and any and all such other agreements and documents as may be required to be executed, delivered and received by you to carry out, give effect to and consummate the transactions contemplated hereby and by the Official Statement; (C) no litigation is pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the ad valorem taxes, -6- WP94002- 051/171 the Ordinance or your existence or powers or your right to use the proceeds of the Bonds to refund the Series 1984A Bonds and the Series 1986 Bonds; and (D) the execution, delivery, receipt and due performance of the Bonds, the Ordinance, the Paying Agency Agreement, this Bond Purchase Agreement, the Escrow Agreement and the other agreements contemplated hereby and by the Official Statement under the circumstances contemplated hereby and thereby and your compliance with the provisions thereof and hereof will not conflict with or constitute on your part a breach of or a default under any existing law, court or administrative regulation, decree or order or any agreement, indenture, lease or other instrument to which you are subject or by which you are or may be bound; (iii) The report of Jerry L. Lacy, certified public accountant, in form and substance satisfactory to the Underwriter and to Bond Counsel, verifying the mathematical accuracy of the computations relating to the sufficiency of the escrow account to meet the debt service on the Refunded Bonds; (iv) The municipal bond insurance policy, issued by Municipal Bond Investors Assurance Corporation, insuring the payment of the principal of and interest on the Bonds; (v) Confirmation that the Bonds have been rated "AAA" by Standard & Poor's Corporation and "Aaa" by Moody's Investor Service; and (vi) Such additional certificates and other documents as the Underwriter may reasonably request to evidence performance of or compliance with the provisions hereof and the transactions contemplated hereby and by the Official Statement, all such certificates and other documents to be satisfactory in form and substance to the Underwriter. SECTION 4. THE UNDERWRITER'S RIGHT TO CANCEL. The Underwriter shall have the right to cancel its obligation hereunder to purchase the Bonds (and such cancellation shall not constitute a default for purposes of Section 7 hereof) by notifying you in writing or by telegram of its election so to do between the date hereof and the Closing Time, if at any time hereafter and prior to the Closing Time: -7- WP94002- 051/171 (a) A tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States of America, or legislation shall be favorably reported by such a committee or be introduced by amendment or otherwise in, or be passed by, the House of Representatives or the Senate, or recommended to the Congress of the United States of America for passage by the President of the United States of America, or be enacted by the Congress of the United States of America, or a decision by a court established under Article III of the Constitution of the United States of America, or the Tax Court of the United States of America, shall be rendered, or a ruling, regulation or order of the Treasury Department of the United States of America or the Internal Revenue Service shall be made or proposed having the purpose or effect of imposing federal income taxation or any other event shall have occurred which results in the imposition of federal income taxation upon revenues or other income of the general character to be derived by you or by any similar body or upon interest received on obligations of the general character of the Bonds, or the Bonds, which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; (b) Any legislation, ordinance, rule or regulation shall be introduced in or be enacted by any governmental body, department or agency in the State, or a decision by any court of competent jurisdiction within the State shall be rendered which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; (c) A stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all the underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of any provision of the federal securities laws, the Securities Act of 1933, as amended and as then in effect, or the registration provisions of the Securities Exchange Act of 1934, as amended and as then in effect, or the qualification provisions of the Trust Indenture Act of 1939, as amended and as then in effect; -8- WP94002- 051/171 (d) Legislation shall be enacted by the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, to the effect that obligations of the general character of the Bonds, or the Bonds, including all the underlying obligations, are not exempt from registration under or from other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Ordinance is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; (e) Any event shall have occurred, or information become known, which, in the Underwriter's opinion, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement as originally circulated contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (f) Additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (g) Any national securities exchange, or any governmental authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; (h) A general banking moratorium shall have been established by federal, New York or State authorities; (i) Any rating of the Bonds shall have been downgraded or withdrawn by a national rating service, which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; or trading in any securities of the City shall have been suspended on any national securities exchange; or any proceeding shall be pending or threatened by the Securities and Exchange Commission against you; or WP94002- 051/171 (j) A war involving the United States of America shall have been declared, or any conflict involving the armed forces of the United States of America shall have escalated, or any other national emergency relating to the effective operation of government or the financial community shall have occurred, which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds. SECTION 5. CONDITIONS OF YOUR OBLIGATIONS. Your obligations hereunder are subject to the Underwriter's performance of its obligations hereunder and receipt of the report specified in Section 3(c)(iii) hereof. SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All of your representations, warranties and agreements shall remain operative and in full force and effect, regardless of any investigations made by the Underwriter on its behalf, and shall survive delivery of the Bonds to the Underwriter. SECTION 7. PAYMENT OF EXPENSES. Whether or not the Bonds are sold by you to the Underwriter (unless such sale is prevented at or before the Closing Time by the Underwriter's default), the Underwriter shall be under no obligation to pay any expenses incident to the performance of your obligations hereunder, nor shall you be obligated to pay any such expenses except from the proceeds of the Bonds or as set forth in the next succeeding sentence. All expenses and costs to effect the authorization, preparation, issuance, delivery and sale of the Bonds (including, without limitation, the fees and disbursements of Kutak Rock & Campbell, as Bond Counsel, the fees and disbursements of your counsel and the expenses and costs for delivery of the Bonds, the Official Statement, the Ordinance, this Bond Purchase Agreement, the Escrow Agreement and all other agreements and documents contemplated hereby) shall be paid by you, but only out of the proceeds of the Bonds. In the event that the Bonds are not sold by you to the Underwriter by reason of default by the Underwriter, then the foregoing costs and expenses shall be paid by the Underwriter. -10- WP94002- 051/171 SECTION 8. USE OF OFFICIAL STATEMENT. You hereby acknowledge the Underwriter's use and distribution of the Preliminary Official Statement; and you acknowledge the proposed use and distribution of the Official Statement by the Underwriter in connection with the sale of the Bonds and you warrant the same to be true and correct. SECTION 9. DETERMINATION OF END OF UNDERWRITING PERIOD. For purposes of this Bond Purchase Agreement, the ''End of the Underwriting Period" for the Bonds shall mean the later of (a) the Closing Date, unless the City has been notified in writing to the contrary by the Underwriter on or prior to the Closing Date, or (b) the date on which the End of the Underwriting Period for the Bonds has occurred under Rule 15c2 -12; provided, however, that the City shall be entitled to treat as the End of the Underwriting Period for the Bonds the date specified in the notice from the Underwriter stating the date which is the End of the Underwriting Period. You may request from the Underwriter from time to time, and the Underwriter shall provide to you upon such request, such information as may be reasonably required in order to determine whether the End of the Underwriting Period for the Bonds has occurred under Rule 15c2 -12 with respect to the unsold balances of Bonds that were originally sold to the Underwriter for resale to the public and which are held by the Underwriter for resale to the public. If in the opinion of the Underwriter, for purposes of Rule 15c2 -12, the Underwriter does not retain for sale to the public any unsold balance of Bonds originally sold to the Underwriter pursuant to this Bond Purchase Agreement, then the Underwriter shall promptly notify you in writing that, in its opinion, the End of the Underwriting Period for the Bonds under Rule 15c2 -12 has occurred on a date which shall be set forth in such notification. SECTION 10. UNDERWRITER'S DISCLOSURE. Attached hereto as an exhibit and incorporated herein by reference is certain financial information relating to the Bonds and other matters provided by the Underwriter in satisfaction of its obligations under the provisions of Section 11- 56- 104.5, Colorado Revised Statutes, as amended. Included among the information attached hereto as an exhibit is a disclosure by the Underwriter as to the entire income, from all sources, which the Underwriter anticipates receiving -11- WP94002- 051/171 in connection with its purchase and sale of the Bonds, all sources and amounts of such income, expenses which the Underwriter anticipates the City will incur in connection with the issuance of the Bonds and the refunding of the Refunded Bonds, a comparison of annual debt service requirements before and after the refunding, by year and amount, including funds which are required in addition to Bond proceeds, the present value of all annual differences in debt service requirements, using the net effective interest rate on the Bonds as a discount factor and all other funds to be provided by the City. By executing this Bond Purchase Agreement, the City acknowledges disclosure by the Underwriter of all such information. SECTION 11. NOTICE. Any notice or other communication to be given to you under this Bond Purchase Agreement may be given by mailing or delivering the same in writing at your address set forth above; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Piper, Jaffray & Hopwood Incorporated, 1050 Seventeenth Street, Suite 2100, Denver, Colorado 80265. SECTION 12. APPLICABLE LAW; NONASSIGNABILITY; COUNTERPARTS. This Bond Purchase Agreement shall be governed by the laws of the State. This Bond Purchase Agreement shall not be assigned by the City. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. -12- WP94002- 051/171 Very truly yours, Accepted as of the date first above written: CITY OF PUEBLO, COLORADO PIPER, JAFFRAY & HOPWOOD INCORPORATED By Vice President By President of City Council -13- WP94002- 051/171 KUTAK POCK cue CAMPBELL REGISTRATION AND PAYING AGENCY AGREEMENT between CITY OF PUEBLO, COLORADO and PUEBLO BANK AND TRUST COMPANY Dated as of December 1, 1991 WP94002- 051/172 REGISTRATION AND PAYING AGENCY AGREEMENT THIS REGISTRATION AND PAYING AGENCY AGREEMENT dated as of December 1, 1991, and any amendments or supplements hereto made in accordance herewith (collectively, this "Agreement "), is made by and between the CITY OF PUEBLO, COLORADO (the "City "), a municipality duly organized and existing under the Constitution and laws of the State of Colorado and the City's home rule charter, and PUEBLO BANK AND TRUST COMPANY, Pueblo, Colorado (the "Bank "), a Colorado banking corporation, with its principal corporate trust office in Pueblo, Colorado, or its successors or assigns, serving in the capacity of paying agent, transfer agent and bond registrar hereunder; W I T N E S S E T H: WHEREAS, the City is a municipality duly organized and existing under the Constitution and laws of the State of Colorado and the City's home rule charter; and WHEREAS, the City proposes to issue $20,QO5,000 aggregate principal amount of its General Obligation Water Refunding Bonds, Series 1991 (the "Bonds "), pursuant to the provisions of the Colorado Public Securities Refunding Act, Section 11 -56 -101, et seq., Colorado Revised Statutes, as amended, and the ordinance approved and adopted by the City Council of the City on December 9, 1991 (the "Ordinance "); and WHEREAS, the City has arranged for payment on the Bonds to be insured by an insurance policy (the "Policy ") issued by Municipal Bond Investors Assurance Corporation (the "Insurer "); and WHEREAS, the City desires to have the Bank act as paying agent, transfer agent and bond registrar for the Bonds pursuant to the Ordinance and under the terms and conditions and in the manner hereinafter set forth; and WHEREAS, the Bank is familiar with the provisions of the Ordinance and the Policy and desires to act as paying agent, transfer agent and bond registrar for the Bonds; NOW, THEREFORE, in consideration of the foregoing, and the following covenants and other provisions, the City and the Bank hereby agree as follows: WP94002- 051/172 Section 1. Definitions All words and phrases defined in the Ordinance shall have the same meanings in this Agreement. Section 2. Acceptance of Responsibilities by the Bank As set forth in the Ordinance, the Bank is appointed as the bond registrar, transfer agent and paying agent by the City for the Bonds. The Bank hereby accepts such responsibilities and agrees to perform such services for and on behalf of the City, including, but not limited to, the selection of Bonds for redemption, when and if appropriate, and carrying out its responsibilities under Section 16 hereof regarding the Policy. The principal of and premium, if any, on the Bonds are payable to the Registered Owners of the Bonds, as set forth on the Bond Register required to be maintained by the Bank pursuant to Section 6 hereof, upon surrender thereof at the principal corporate trust offices of the Bank or at the office of any successor paying agent appointed by the City. Interest on the Bonds is payable by the Bank, on behalf of the City, to the Registered Owner or Registered Owners thereof at his or her or their address as it appears on the Bond Register of the Bank, such payment to be made by check or draft of the Bank or, upon request of any Registered Owner and upon making arrangements satisfactory to the Bank for the payment of the fees and expenses of the Bank, by wire transfer to such Registered Owner. The fees of the Bank for the performance of such services shall be as set forth in Exhibit A attached hereto and hereby incorporated by reference in this Agreement and any amendments thereto as may be agreed upon by the City and the Bank. Section 3. Remittance of Funds to the Paying Agent The City agrees that it shall remit to the Bank, not less than two Business Days prior to any interest or principal payment date for the Bonds, an amount sufficient to pay the principal of, premium, if any, and interest on the Bonds coming due on such date, whether as a result of maturity, redemption prior to maturity or otherwise. Amounts so remitted by the City to the Bank shall be deposited by the Bank in a special fund created with the Bank by the City pursuant to the Ordinance and identified therein as the Bond Fund. Section 4. Use of Moneys in the Bond Fund Amounts from time to time on deposit in the Bond Fund shall be used solely for the purpose of paying the principal of, premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Ordinance and this Agreement. -2- WP94002- 051/172 Section 5. Forms of Bonds: Authentication The Bonds shall be in the form and shall be dated in the manner set forth in the Ordinance. Each Bond shall be executed and authenticated in the manner set forth in the Ordinance. The Bank's certificate of authentication on any Bond as paying agent shall be deemed to have been executed by the Bank if signed by any authorized agent of the Bank, but it shall not be necessary that the same agent execute the certificate of authentication on all of the Bonds. Section 6. Bond Register As set forth in the Ordinance, the Bank has been appointed bond registrar of the City with respect to the Bonds. The Bank shall keep and maintain, on behalf of the City, a Bond Register for the registration of and for the transfer of the Bonds as required by the Ordinance. At reasonable times and under reasonable regulations established by the Bank, such books may be inspected and copied by the City, the Original Purchaser or the Registered Owners (or a designated representative thereof) of 15% or more in aggregate principal amount of Bonds then outstanding. The responsibilities of the Bank hereunder may be performed by an agent of the Bank which is approved by the City. Section 7. Registration, Transfer and Exchange of Bonds As set forth in the Ordinance, the Bonds are subject to registration, transfer and exchange in the manner hereinafter set forth. In the event any Bond is surrendered for transfer or exchange, the City shall execute and the Bank shall authenticate and deliver, in the name of the transferee or transferees, a new fully registered Bond or Bonds of authorized denominations of the same maturity, and for the aggregate principal amount which the Registered Owner or Registered Owners are entitled to receive, and bearing interest at the same rate per annum as the Bond or Bonds presented for exchange. Bonds to be transferred or exchanged shall be surrendered at the principal corporate trust office of the Bank, and the Bank shall authenticate and deliver in exchange therefor the Bond or Bonds which the Bondowners making the exchange shall be entitled to receive. All Bonds delivered in exchange shall be dated in accordance with the Ordinance. All Bonds which are presented for transfer, exchange, registration, redemption or payment (if so required by the Bank) shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Bank, duly executed by the Registered Owner or Registered Owners or by his or her duly authorized attorney. -3- WP94002- 051/172 A reasonable and customary service charge may be made for any exchange, transfer, registration or discharge from registration of Bonds; the Bank shall require payment from the Registered Owners of all such charges, together with a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. New Bonds delivered upon any transfer or exchange shall be valid obligations of the City, evidencing the same debt as the Bonds surrendered, shall be secured as set forth in the Ordinance, and shall be entitled to all of the security and benefits of the Ordinance to the same extent as the Bonds surrendered. The City and the Bank shall not be required (a) to issue, register, transfer or exchange any Bonds during a period beginning at the opening of business on the Record Date next preceding any interest payment date and ending at the close of business on the interest payment date or (b) to register, transfer or exchange any Bonds previously selected and called for redemption in whole or in part. Section 8. Registered Ownership of Bonds The City and the Bank may deem and treat the Registered Owner of any Bond (whether or not such Bond shall be overdue) as the absolute owner of such Bond for the purpose of receiving payment of or on account of the principal thereof and interest due thereon and for all other purposes, and neither the City nor the Bank shall be affected by any notice to the contrary. Section 9. Mutilated, Lost, Stolen or Destroyed Bonds In the event any Bond is mutilated, lost, stolen or destroyed, the City shall execute, and the Bank shall authenticate, a new Bond of like date, maturity and denomination to that mutilated, lost, stolen or destroyed, provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Bank, and in the case of any lost, stolen or destroyed Bond, there first shall be furnished to the City and the Bank evidence of such loss, theft or destruction satisfactory to the City and the Bank, together with an indemnity satisfactory to them. In the event any such Bond shall have matured, instead of issuing a duplicate Bond, the Bank may pay the same without surrender thereof, making such requirements as it deems fit for its protection, including a lost instrument bond. The City and the Bank may charge the Registered Owner of such Bond with their reasonable fees and expens -s for such service. WP94002- 051/172 -4- Section 10. Cancellation All Bonds which have been paid, replaced or exchanged by the Bank shall not be reissued but shall be cancelled and cremated or otherwise destroyed by the Bank, and the Bank shall certify to the City as to any such cancellation, cremation or other destruction. Section 11. Partial Redemption If Any, of the Bonds Upon surrender of any Bond for redemption in part only, the City shall execute, and the Bank shall authenticate and deliver to the Registered Owner thereof, a new Bond or Bonds of the same series and the same maturity, of authorized denominations, in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. Section 12. Successor Paving Agent Any corporation or association into which the Bank may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall be and become the successor Bank hereunder and vested with all of the powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 13. Resignation by the Paying Agent The Bank or any successor Bank may at any time resign from the duties hereby created by giving thirty (30) days' written notice by registered or certified mail to the City and to the Registered Owner of each Bond as shown by the Bond Register, but such resignation shall not take effect until the appointment of a successor Bank by the Bondowners or by the City as set forth in Section 15 hereof. Section 14. Removal of the Paying Agent The Bank may be removed at any time by the City or by an instrument or concurrent instruments in writing delivered to the Bank and to the City and signed by the Registered Owners of a majority in aggregate principal amount of Outstanding Bonds. Section 15. Appointment of Successor Paying Agent If the Bank shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the Registered Owners of a majority in WP94002- 051/172 -5- aggregate principal amount of Bonds by an instrument or concurrent instruments in writing signed by such Registered Owners, or by their attorneys in fact duly authorized, a copy of which shall be delivered personally or sent by registered mail to the City. In case of any such vacancy, the City, by an instrument executed, attested and sealed on behalf of the City, may appoint a temporary Bank to fill such vacancy until a successor Bank shall be appointed by the Registered Owners in the manner above provided; and such temporary Bank so appointed by the City shall immediately and without further act be superseded by the Bank appointed by the Registered Owners; provided, however, that in the event the temporary Bank appointed by the City shall not be superseded by a Bank appointed by the Registered Owners within six (6) months from the effective date of appointment by the City, the right of the Registered Owners to appoint a successor Bank shall be deemed to be waived and the Bank appointed by the City shall be deemed to be the Bank hereunder. Notice of the appointment of a successor Bank shall be given in the same manner as provided in Section 13 hereof with respect to the resignation of a Bank. Section 16. Payments Under the Polic A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Bonds, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Bonds due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notify the Issuer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. C. In addition, if the Paying Agent has notice that any Registered Owner has been required to disgorge payments of principal or interest on a Bond to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Registered Owner within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. WP94002- 051/172 D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Registered Owners of the Bonds as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Bonds, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Policy (the "Insurance Paying Agent "), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Registered Owners in any legal proceeding related to the paying of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Registered Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Registered Owners; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Bonds, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Registered Owner in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Bond surrendered to the Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Registered Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Registered Owners. E. Payments with respect to claims for interest on and principal of Bonds disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the City with respect to such Bonds, and the Insurer shall become the owner of such unpaid Bond and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. -7- WP94002- 051/172 F. Irrespective of whether any such assignment is executed and delivered, the City and the Paying Agent hereby agree for the benefit of the Insurer that, 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Bonds, the Insurer will be subrogated to the rights of such Registered Owners to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Indenture and the Bonds; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Agreement and the Bond, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Bonds to Registered Owners, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Bonds, the City shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the documents executed in connection with the issuance of the Bonds which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. I. The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Registered Owners and, on an annual basis, copies of the City's audited financial statements and Annual Budget. Any notice that is required to be given to a Registered Owner of a Bond or to the Paying Agent pursuant to this Agreement shall also be provided to the Insurer. All notices required to be given to the Insurer under this Agreement shall be -8- WP94002- 051/172 I 1 in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Surveillance. Section 17. Amendments and Waivers No amendment or waiver of any provision of this Agreement, nor consent to any departure herefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing, no amendment or waiver of this Agreement which shall materially adversely affect the rights and benefits of the Registered Owners shall be effective until approved in writing by all the Registered Owners. Section 18. Notices All notices and other communications provided for hereunder between the Bank and the City shall be in writing, shall be deemed given when received and, except as otherwise provided, shall be mailed by registered or certified mail, return receipt requested, or hand - delivered and receipt thereof acknowledged, to the following addresses: if to the Bank, at 301 West 5th Street, Pueblo, Colorado 81003, Attention: Corporate Trust Department; and if to the City, at the City of Pueblo, Colorado, One City Hall Place, Pueblo, Colorado 81003, Attention: City Manager. The Bank and the City may, by written notice given hereunder, designate any further or different addresses to which subsequent notices or other communications between the Bank and the City shall be sent. All notices or other communications from the Bank or the City to the Registered Owners shall be in writing and mailed by certified or registered mail to the Registered Owners at their addresses appearing on the registration books for the Bonds kept by the Bank and shall be effective three (3) days after the date of deposit in the mails, addressed as aforesaid. Section 19. Termination This Agreement shall terminate upon the payment of all of the principal of, premium, if any, and interest on the Bonds. Section 20. Severability Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or lack of authorization without affecting the validity, enforceability or legality of such provision in any other jurisdiction and the validity, enforceability and legality of all other provisions. -9- WP94002- 051/172 Section 21. Governing Law This Agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado. Section 22. Execution in Counterparts This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 23. Headings Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this separate Agreement for any other purpose. -10- WP94002- 051/172 IN WITNESS WHEREOF, the parties hereto have caused this separate Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. [SEAL] CITY OF PUEBLO, COLORADO By Attest: City Clerk President, City Council [SEAL] PUEBLO BANK AND TRUST COMPANY By Attest: By Authorized Officer Authorized Officer -11- WP94002- 051/172 EXHIBIT A PAYING AGENT'S FEE SCHEDULE A -1 WP94002- 051/172 KUTAK ROCK & CAMPBELL A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS 2400 ARCO TOWER 707 SEVENTEENTH STREET DENVER. COLORADO 80202 -3424 (303) 297 -2400 FACSIMILE: (303) 292 -7799 December 5, 1991 Ms. Marian D. Mead City Clerk City of Pueblo One City Hall Place Pueblo, CO 81003 $20,005,000 City of Pueblo, Colorado General Obligation Water Refunding Bonds Series 1991 Dear Ms. Mead: ATLANTA BATON ROUGE LOS ANGELES NEW YORK OKLAHOMA CITY OMAHA PHOENIX WASHINGTON Enclosed for your distribution and use are various documents in connection with the consideration by the Pueblo City Council at its meeting next Monday, December 9, 1991, of the Bond Ordinance for the above - captioned bonds. Specifically, enclosed are 17 copies of the Bond Ordinance, 7 of which are punched for inclusion in three -ring binders, and 2 copies each of the current drafts of the Bond Purchase Agreement, the Escrow Agreement, the Registration and Paying Agency Agreement and the Official Statement. We are sending one copy of each of these to Tom Jagger. Please call me if you have any questions concerning this matter. We appreciate your assistance. Sincerely, William C. Gorham sf Enclosures: cc: Thomas Jagger, Esq. h f / STATE OF COLORADO ] ] ss. COUNTY OF PUEBLO ) The Board of Water Works of Pueblo, Colorado (the "Board "), of the City of Pueblo, duly constituted under the City's Charter, met in special session at 319 West 4th Street, in the City of Pueblo, Colorado on Monday, December 9, 1991, at 8:30 A.M. There were present at said meeting the following members of the Board: President: Secretary- Treasurer: Other Members: Verdon L. Johnson Michael W. Stillman Claudia Johnson - Smith Kevin F. McCarthy Dwight G. Robbe Absent: Claudia Johnson - Smith, Vice President , constituting all the members thereof. There were also present: Alan C. Hamel, Executive Director; William F. Mattoon, Board Attorney; Jerry J. Cantrell, Director of Administrative Services; Terry R. Book, Director of Operations; and, Steve Clark, Managing Director of Piper, Jaffray & Hopwood. Member Dwight G. Robbe, Vice President introduced and moved the adoption of the following resolution, to wit: WP94002- 051/176 RESOLUTION NO. 91 -11 CONCERNING THE ISSUANCE BY THE CITY OF PUEBLO, COLORADO, OF ITS GENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1991. WHEREAS, Section 15 -2 of the Charter of the City of Pueblo, Colorado (the "City "), provides that title to the properties of the former districts now consolidated and any property of the water works (the "System ") is in the City, and that the entire control, management and operation thereof shall be exercised by an independent board named "Board of Water Works of Pueblo, Colorado" (the "Board "), over which the Council of the City (the "Council ") shall have no jurisdiction or control, and the Council shall adopt all ordinances requested by the Board which shall be reasonably necessary to assist the Board in the management of the System; and WHEREAS, the Board has determined that it is necessary and in the best interest of the City and its residents that there be authorized to be issued the City's General Obligation Water Refunding Bonds, Series 1991, in the principal amount of $20,005,000 (the "Series 1991 Bonds ") for the purpose of paying the principal of and premium and interest on the City's General Obligation Water Refunding Bonds, Series 1984A, dated April 15, 1984 maturing on and after November 1, 1992 (the "Series 1984A Bonds "), and advance refunding the City's presently outstanding General Obligation Water Bonds, Series 1986, dated July 1, 1986 (the "Series 1986 Bonds ") (the Series 1984A Bonds and the Series 1986 Bonds being referred to together herein as the "Refunded Bonds "); and WHEREAS, the Board has determined that it is in the best interest of the City and its residents that the repayment of the Series 1991 Bonds as to principal, premium, if any, and interest, be secured by net revenues of the System after payment of operation and maintenance expenses, which net revenues result from the control, management and operation of the System by the Board as specified in the Charter; and WHEREAS, it is further determined to be in the best interest of the City and its residents that the repayment of the Series 1991 Bonds as to principal, premium, if any, and interest, be additionally secured by the levy by the City of direct annual taxes on all taxable property within the City, as and when necessary; and WP94002- 051/176 WHEREAS, pursuant to a resolution (the "November Resolution ") of the Board adopted on November 19, 1991, the Council passed on first presentation on November 25, 1991, an ordinance (the "Ordinance ") authorizing the issuance of the Series 1991 Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF WATER WORKS OF PUEBLO, COLORADO, THAT: Section 1. The Board requests that the Council adopt on final presentation an Ordinance in the form set forth as Exhibit A to this Resolution, which form of Ordinance is hereby incorporated by reference and which contains certain amendments to the Ordinance as passed on first presentation by the Council. The Board requests the Council to issue the Series 1991 Bonds, on behalf of the City, pursuant to the Ordinance. Section 2. The Board hereby reaffirms all of its pledges, covenants, agreements and representations contained in the November Resolution as if they had been made anew herein. Section 3. This Resolution is, and shall constitute, a legislative measure of the Board, and after the Series 1991 Bonds are issued, sold and are outstanding, this Resolution shall constitute a contractual obligation of the Board to and for the benefit of the City and the registered owners of the Series 1991 Bonds, and shall be and remain irrepealable until the Series 1991 Bonds, and the interest accruing thereon shall have been fully paid, satisfied and discharged. Section 4. This Resolution shall take effect immediately upon passage and a certified copy thereof shall be transmitted forthwith by the Executive Director of the Board to the City Council. Section 5. The Board shall timely perform all acts to be performed by the City under the Ordinance for which acts the power to perform is vested in the Board under Section 15 -2 of the Charter of the City. The officers of the Board are hereby authorized and directed to take all action necessary or appropriate to effectuate the provisions of this Resolution. Section 6. The Board has determined and does hereby again certify that the Series 1991 Bonds and proceeds thereof are to refund bond issues, the original proceeds of which were used for the acquisition, extension or improvement of the System. -2- WP94002- 051/176 .'IMMM ADOPTED AND SIGNED this 9th day of December 1991. (SEAL) ATTEST: Secr tary reasurer President, Board f Water Works of Pueblo, Colorado -3- WP94002- 051/176 The motion to adopt the foregoing resolution was duly seconded by Board Member Michael W. Stillman, Secretary- Treasure put to a vote and unanimously carried, all members present voting YES on the adoption of said resolution, the vote being as follows: Those voting YES: Board Members: Verdon L. Johnson Michael W. Stillman Dwight G. Robbe Kevin F. McCarthy Those voting N0: Absent Claudia Johns Snmith ATTEST: Secretary - easurer o�- President -4- WP94002- 051/176 STATE OF COLORADO ) ss. COUNTY OF PUEBLO ) I, Michael W. Stillman, the duly elected, qualified and acting Secretary- Treasurer of the Board of Water Works of Pueblo, Colorado, do hereby certify: 1. That the foregoing pages numbered 2 through 4, inclusive, are a true, perfect and complete copy of the record of proceedings of the Board had and taken at a special meeting of said Board held at 319 West 4th Street in the City of Pueblo, Colorado, on Monday, December 9, 1991, commencing at the hour of 8:30 A.M., so far as said proceedings relate to a resolution concerning the sale and issuance of the City of Pueblo, Colorado, General Obligation Water Refunding Bonds, Series 1991, as recorded in the regular official record book of the proceedings of the Board kept in my office. 2. That said proceedings were duly held and the persons therein named were present at said meeting as therein shown. 3. That each of the five members of the Board was duly notified of said meeting. 4. That the meeting was open to members of the general public after proper notice to the extent required by the laws of the State of Colorado. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of said Board this 9th day of December 1991. (SEAL) Secre ary- Treasurer -5- WP94002- 051/176 STATE OF COLORADO l ] ss. COUNTY OF PUEBLO ] The Board of Water Works of Pueblo, Colorado (the "Board "), of the City of Pueblo, duly constituted under the City's Charter, met in regular session at 319 West 4th Street, in the City of Pueblo, Colorado on Tuesday, November 19, 1991, at 2:00 P.M. There were present at said meeting the following members of the Board: President: Secretary- Treasurer: Other Members: Verdon L. Johnson Michael W. Stillman Claudia Johnson -Smith Kevin F. McCarthy Dwight G. Robbe Absent: N/A , constituting all the members thereof. There were also present: N/A Member Claudia Johnson -Smith introduced and moved the adoption of the following resolution, to wit: WPNEW— new /544 RESOLUTION NO. 91 -10 CONCERNING THE ISSUANCE BY THE CITY OF PUEBLO, COLORADO, OF ITS G ENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1991. WEERF.A Section 16 -2 of the Charter of the City of Pueblo, Colorado. (the "City "), provides that title to the properties of the former districts now consolidated and any property of the water works (the "System ") is in the City, and that the entire control, management and operation thereof shall be exercised by an independent board named "Board of Water Works of Pueblo, Colorado" (the "Board "), over which the Council of the City (the "Council ") shall have no jurisdiction or control, and the Council shall adopt all ordinances requested by the Board which shall be reasonably necessary to assist the Board in the management of the System; -and WHEREAS, the Board has determined that it is necessary and in the best interest of the City and its residents that there be authorized to be issued the City's General Obligation Water Refunding Bonds, Series 1991, in the principal amount of approximately $19,930,000 (the "Series 1991 Bonds ") for the purpose of paying the principal of and premium and interest on the City's General Obligation Water Refunding Bonds, Series 1984A, dated April 15, 1984 maturing on and after November 1, 1992 (the "Series 1984A Bonds"), and advance refunding the City's presently outstanding General Obligation Water. Bonds, Series 1986, dated July 1, 1986 (the "Series 1986 Bonds ") (the Series 1984A Bonds and the Series 1986 Bonds being referred to together herein as the "Refunded Bonds "); and WHEREAS, the Board has determined that it is in the best interest of the City and its residents that the repayment of the Series 1991 Bonds as to principal, premium, if any, and interest, be secured by net revenues of the System after payment of operation and maintenance expenses, which net revenues result from the control, management and operation of the System by the Board as specified in the Charter; and WHEREAS, it is further determined to. be in the best interest of the City and its residents that the repayment of the Series 1991 Bonds as to principal, premium, if any, and interest, be additionally secured by the levy by the City of direct annual taxes on all taxable property within the City, as and when necessary; and WHEREAS, in order for the City to validly pledge the net revenues of the System to the repayment of the Series 1991 Bonds, it is necessary for the Board to affirmatively undertake for the benefit of the City and the registered owners from time to time of the Series 1991 Bonds certain covenants and obligations regarding the operation, maintenance and management of the System, the setting of rates with respect thereto and certain other matters; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF WATER WORKS OF PUEBLO, COLORADO, THAT: , Section 1. The Board requests that the Council adopt an Ordinance in the form set forth as Exhibit A to this Resolution, which form of Ordinance is hereby incorporated by reference. The Board requests the Council to issue the Series 1991 Bonds, on behalf of the City, pursuant to the Ordinance, so long as the final maturity of the Series 1991 Bonds does not exceed 15 years from the date of issuance, the aggregate principal amount of the Series 1991 Bonds does not exceed $22,000,000, and the net effective interest rate on the Series 1991 Bonds does not exceed 6.50 %, all as shall be determined by the Council upon advice of Piper, Jaffray & Hopwood Incorporated, which is hereby selected by the Board as the original purchaser of the Series 1991 Bonds. Section 2. The Board hereby irrevocably pledges to pay the principal of, premium, if any, and the interest on the Series 1991 Bonds from the net revenues of the municipal waterworks system (the "System "). The Board hereby reserves the right to secure, without restriction, any water bonds and refunding water bonds or other obligations hereafter issued by the Board (or by the City pursuant to a request by the Board) from revenues of. the System equally and ratably with the Series 1991 Bonds. The Board also hereby covenants to fix annually and to maintain rates and charges for water and services furnished by the Board through the System which, together with moneys on hand and available therefor, will be sufficient to pay operation and maintenance expenses of the System and the principal of, premium, if any, and interest on all bonds and other obligations of the System, including the Series 1991 Bonds, as they respectively become due. The term "net revenues" as used herein refers to the gross revenues of the System after the payment of operation and maintenance expenses. The term "operation and maintenance expenses" as used herein means all current reasonable and necessary expenses of operating, maintaining and repairing the System, but does not include any allowance for depreciation or capital replacements and improvements. -2- WPNEW- new /544 Section 3. The terms "municipal waterworks system" or "system" as used herein shall include not only the property comprising the System at the present time, but all additions and betterments thereto and improvements and extensions thereto which may hereafter be constructed or acquired by the City. Section 4. The Board hereby additionally irrevocably covenants and agrees that so long as any of the Series 1991 Bonds remain outstanding: (a) it will continue to operate and manage the System in an efficient and economical manner and keep and maintain separate accounts of the receipts and disbursements thereof in such manner that the revenues thereof may at all times be readily and accurately determined; (b) it will not sell or alienate any of the property constituting any part or all of the System in any manner or to any extent as might reduce the security provided for the payment of the Series 1991 Bonds, but the Board may sell any portion of such property which shall have been replaced by other similar property of at least equal value, or which shall cease to be necessary for the efficient operation of the System; (c) the rates for all services rendered by the Board through the System to the City and its inhabitants and to all consumers within or without the boundaries of the City shall be reasonable and just, taking into account and consideration the cost and value of the System and the proper and necessary allowances for the depreciation thereof and capital improvements thereto and the amounts necessary for the retirement of all bonds and other obligations payable from the revenues of the System, and the interest accruing thereon; (d) there shall be charged against all purchasers of service from the System such rates, charges and other amounts as shall produce revenues from the System adequate to meet the requirements of this and the preceding sections of this Resolution; (e) the Board shall cause all rates, fees and service charges appertaining to the System to be collected as soon as reasonable, shall prescribe and enforce rules and regulations for the payment hereof and for the connection of properties with and the disconnection of properties from the System, and shall provide methods of collection and penalties, including but not limited to denial of service for nonpayment of such rates, fees and service charges, to the end that net revenues of the System shall be adequate to meet the requirements hereof; -3- WPNEW- new /544 (f) at regular periods each year the Board will render bills for water services furnished and, until paid, all water rates, fees, tolls and charges shall constitute a lien on the property served; and the Board shall take whatever action is legally permissible promptly to enforce and collect delinquent water rates, fees, tolls and charges and to enforce said liens; (g) at least once each year the Board will furnish to Piper, Jaffray & Hopwood Incorporated a complete statement of the receipts and disbursements of and for the System for the fiscal year immediately preceding such statement; (h) the Board in its own name or in cooperation with the City, will carry worker's compensation, public liability and other forms of insurance on insurable System property, in such amounts as is customarily carried on prudently operated systems of similar character and size; (i) the Board will promptly transmit net revenues of the System and such additional funds at such times and in such amounts as shall be sufficient to pay promptly (i) the principal of, premium, if any, and the interest, whether at maturity or upon early redemption or otherwise, on the Series 1991 Bonds, (ii) all funds in addition to proceeds of the Series 1991 Bonds required to be deposited or paid by the City into the Escrow Fund or otherwise required to be paid by the City under the Escrow Agreement and the Registration and Paying Agency Agreement, and (iii) all costs and expenses incurred in connection with the issuance of the Series 1991 Bonds including the preparation, publication and issuance of supplements or amendments to the Official Statement. Such net revenues of the System and additional funds will be included in the annual appropriation and budget resolutions of the Board; and. (j) the Board will not sell or alienate any of the property constituting any part or all of the System in any manner or to any extent as might reduce the security provided for the payment of the Series 1991 Bonds, but the Board may sell any portion of such property which shall have been replaced by other similar property of at least equal value, or property which shall cease to be necessary for the efficient operation of the System. Section 5. The Board covenants and agrees that it will make no use of the proceeds of the Series 1991 Bonds which might cause such obligations to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, and the Regulations proposed and in effect WPNEW— new /544 -4- thereunder (the "Code ") and that the gross proceeds of the Series 1991 Bonds shall not be used in a manner which will cause the Series 1991 Bonds to be considered "private activity bonds" within the meaning of Section 141 of the Code. Section 6. The Board acknowledges that in connection with the payment of the principal of and premium on the Series 1984A Bonds on May 1, 1992 upon a call for early redemption and the advance refunding of the Series 1986 Bonds, the City will establish an escrow account from the proceeds of the sale of the Series 1991 Bonds, which escrow account will be utilized to pay or redeem the Refunded Bonds, as set forth in the Escrow Agreement. The amounts in said escrow account, together with investment income earned on such amounts, are calculated to be sufficient to pay the principal of, premium, if any, and interest on such Refunded Bonds, as set forth in the Escrow Agreement. Nevertheless, if for any reason, at any time, the funds on hand in such escrow account shall be insufficient to meet the payments required with respect to the Refunded Bonds, as the same shall be about to become due and payable, the Board shall forthwith forward to the City such additional funds as may be required fully to meet the amount which is about to become due and payable with respect to the Refunded Bonds. Section 7. This Resolution is, and shall constitute, a legislative measure of the Board, and after the Series 1991 Bonds are issued, sold and are outstanding, this Resolution shall constitute a contractual obligation of the Board to and for the benefit of the City and the registered owners of the Series 1991 Bonds, and shall be and remain irrepealable until the Series 1991 Bonds, and the interest accruing thereon shall have been fully paid, satisfied and discharged. Section 8. This Resolution shall take effect immediately upon passage and a certified copy thereof shall be transmitted forthwith by the Executive Director of the Board to the City Council. Section 9. The distribution and use of the Preliminary Official Statement and final Official Statement in connection with the offering and sale of the Series 1991 Bonds are in all respects hereby confirmed and approved. Section 10. The Board shall timely perform all acts to be performed by the City under the Ordinance for which acts the power to perform is vested in the Board under Section 15 -2 of the Charter of the City. The officers of the Board are hereby authorized and directed to take all action necessary or appropriate to effectuate the provisions of this Resolution. -5- WPNEW— new /544 Section 11. The Board has determined and does hereby certify that the Series 1991 Bonds and proceeds thereof are to refund bond issues, the original proceeds from which were used for the acquisition, extension, or improvement of the system. ADOPTED AND SIGNED this 19th day of November 1991. 0 - �=� � -�_._ President, Board of Water Works of Pueblo, C lorado (SEAL) ATTEST: Secretary -T easurer -6- The motion, to adopt the foregoing resolution was duly seconded by Board Member Kevin F. McCarthy , put to a vote and unanimously carried, all members present voting YES on the adoption of said resolution, the vote being as follows: Those voting YES: Board Members: Verdon L. Johnson Dwight G. Robbe Michael W. Stillman Those voting NO: N/A Absent: N/A ATTEST: Secretary reasurer President -7= WPNEW -new /544 STATE OF COLORADO ] ] ss. COUNTY -OF PUEBLO ] I, Michael W. Stillman, the duly elected, qualified and acting Secretary- Treasurer of the Board of Water Works of Pueblo, Colorado, do hereby certify: 1. That the foregoing pages numbered 2 through z, inclusive, are a true, perfect and complete copy of the record of proceedings of the Board had and taken at a regular meeting of said Board held at 319 West 4th Street in the City of Pueblo, Colorado, on Tuesday, November 19, 1991, commencing at the hour of 2:00 P.M., so far as said proceedings relate to a resolution concerning the sale and issuance of the City of Pueblo, Colorado, General Obligation Water Refunding Bonds, Series 1991, as recorded in the regular official record book of the proceedings of the Board kept in my office. 2. That said proceedings were duly held and the persons therein named were present at said meeting as therein shown. 3. That each of the five members of the Board was duly notified of said meeting. 4. That the meeting was open to members of the general public after proper notice to the extent required by the laws of the State of Colorado. IN WITNESS WHEREOF, I have hereunto set my hand and the seal of said Board this 19th day of November 1991. (SEAL Secre ary -T asurer -s- WPNEW— new /544 KUTAK ROCK A PARTItaKsHIP INCLUOINO PROP6BBIONAL CORPORATiONB 2400 ARCO TOWER 707 SEVENTEENTH STREET DENVER. COLORADO $0202 -3424 (303) 297 -2400 FACSIMILE: (303) 292 -7799 OPINION OF BOND COUNSEL January 14, 1992 Piper, Jaffray & Hopwood Suite 2100 1050 Seventeenth Street Denver, CO 80265 City of Pueblo One City Hall Place Pueblo, CO 81003 Board of Water Works of Pueblo, Colorado 319 West Fourth Street Pueblo, CO 81003 Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 $20,005,000 City of Pueblo, Colorado General Obligation Water Refunding Bonds Series 1991 Ladies and Gentlemen: We have acted as Bond Counsel in connection with, and have examined a certified copy of Ordinance No. 5719 (the "Ordinance "), adopted by the City of Pueblo, Colorado (the "City ") on second reading on December 9, 1991, relating to, the issuance by the City of its General Obligation Water Refunding Bonds, Series 1991, in the aggregate principal amount of $20,005,000, dated December 1, 1991 (the "Series 1991 Bonds "), in the denominations of $5,000 each or any integral multiple thereof. The Series 1991 Bonds are being issued pursuant to the Ordinance. Interest on the Series 1991 Bonds is payable semiannually on May 1 and November 1 of each year, commencing May 1, 1992. The Series 1991 Bonds will mature each May 1 and November 1, beginning May 1, 1992, and will bear interest as set forth in the Ordinance. ATLANTA BATON ROUOB LOS ANOBLAS lVBVy YORK OKLAHOMA CRY OMAHA PHOBNIX WASHINGTON KUTAK ROCK Piper, Jaffray & Hopwood City of Pueblo Board of Water Works Municipal Bond Investors Assurance Corporation Page 2 The Series 1991 Bonds are not subject to redemption prior to maturity. We have examined a form of the executed Series 1991 Bonds and have found the same to have been executed in the manner required by law. In addition, we have examined certain certificates of the City and the Board of Water Works of Pueblo, Colorado (the "Board "), the opinion of the City's legal counsel and the Board's legal counsel, each dated the date hereof, and such other certificates, opinions and documents as we deemed relevant and necessary in rendering this opinion. From our examination it is our opinion that the Series 1991 Bonds have been legally and validly issued and constitute binding general obligations of the City payable, as to principal and interest, from revenues of the Board and, if necessary, from ad valorem taxes levied without limitation as to rate or amount on all taxable property within the City. The obligations of the City with respect to the Series 1991 Bonds, however, may be subject to general principles of equity which may permit the exercise in the future by the State of Colorado and its governmental bodies of the police power inherent in the sovereignty of the State, are subject to the provisions of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights now or hereafter in effect, and are subject to the exercise by the United States of America of the powers delegated to it by the United States Constitution. We are further of the opinion that, under existing laws, regulations, rulings and judicial decisions, interest on the Series 1991 Bonds is excluded from gross income for federal and State of Colorado income tax purposes. The Internal .Revenue Code of 1986, as amended (the "Code ") imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations, such as the Series 1991 Bonds. The City has covenanted in the Ordinance and certain other documents to comply with certain guidelines and limitations designed to assure that interest on the Series 1991 Bonds will not become includable in gross income. Failure to comply with these covenants may result in interest on the KUTAK ROCK Piper, Jaffray & Hopwood City of Pueblo Board of Water Works Municipal Bond Investors Assurance Corporation Page 3 Series 1991 Bonds being included in gross income from the date of issue of the Series 1991 Bonds. Our opinion assumes compliance with such covenants. We are further of the opinion that interest on the Series 1991 Bonds is not a specific preference item for purposes of the alternative minimum tax provisions contained in the Code or for purposes of the State of Colorado alternative minimum tax; however, for certain corporations interest on the Series 1991 Bonds is included in the "adjusted current earnings" (i.e., alternative minimum taxable income as adjusted for certain items, including those items that would be included in the calculation of a corporation's earnings and profits under Subchapter C of the Code) for taxable years beginning after 1989, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of each such corporation's adjusted current earnings over its alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses). The accrual or receipt of interest on the Series 1991 Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient's particular tax status or other items of income or deduction. We specifically express no opinion regarding any such consequences. Purchasers of the Series 1991 Bonds, particularly purchasers that are corporations (including S corporations, foreign corporations operating branches in the United States, and corporations subject to the environmental tax imposed by Section 59A of the Code), property or casualty insurance companies, banks, thrifts, or other financial institutions, or certain recipients of Social Security or Railroad Retirement benefits or, under certain pending federal legislation, individuals who itemize deductions, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Series 1991 Bonds. The opinions expressed herein are based upon existing legislation as of the date of issuance and delivery of the Series 1991 Bonds, and we express no opinion as of any date subsequent hereto or with respect to any pending legislation. very truly yours, Ott gtt--� CLOSING MEMORANDUM TO: Closing Participants FROM: Jim Manir Piper, Jaf ray Hopwood Incorporated DATE: January 8, 1992 SUBJECT: Closing Details $20,005,000 CITY OF PUEBLO, COLORADO GENERAL OBLIGATION WATER REFUNDING BONDS SERIES 1991 1. Time of Closing: 9:00 a.m. Tuesday, January 14, 1992 2. Location: Kutak Rock & Campbell 2400 ARCO Tower 707 17th Street Denver, CO 80202 Participants who have signed the required documents in advance need not be present at the closing. 3. Piper, Jaffray & Hopwood Incorporated ( "the Underwriter ") will pay the City of Pueblo, Colorado ( "the City ") for its legally issued General Obligation Water Refunding Bonds, Series 1991, dated December 1, 1991 ( "the Bonds "), the amount computed as follows: Original Principal Amount $ 20,005,000.00 LESS: Underwriting Discount (150.037.50 $ 19,854,962.50 PLUS: Accrued Interest (December 1, 1991 to January 14, 1992) 131, 398.74 Net to be Paid by Underwriter $ 19,986,361.24 PIPER, MY & HOPWOOD City of Pueblo Closing Memo January 6, 1992 4. The Underwriter will pay $19,986,361.24 as follows: a. $80,000.00 will be wire transferred to Citibank, N.A., New York, NY, ABA no. 021 - 0000 -89 for Municipal Bond Investors Assurance Corporation's account number 30261594, re: Policy number 10669. b. $19,906,361.24 will be wire transferred to Pueblo Bank & Trust, Pueblo, CO, ABA No. 107 - 0000 -68, Attn: Trust Department, re: City of Pueblo Water Refunding Bonds. 5. The Underwriter will deliver against payment the U.S. Government Securities ( "Escrow Securities ") described in Exhibit A through DTC no. 2360 to First Interstate Bank Denver, Fed Routing No. 102 - 0000 -18 for credit to account 001 -18261 for Court Street Company. Payment for the Escrow Securities in the amount of $19,693,634.58 will be made by Pueblo Bank & Trust from the monies received per paragraph 4b above. The Pueblo Bank & Trust will deposit the escrowed securities to the Escrow Fund created in connection of this transaction to be held by them under the terms of the Escrow Agreement. 6. In addition to acquisition of the Escrow Securities described in Paragraph 5, Pueblo Bank & Trust will deposit $2,400 to the Escrow Fund to establish the initial cash balance. Pueblo Bank & Trust will deposit $131,398.74 of the remaining funds to the Bond Fund created in conjunction with this issue, with the remaining $78,927.92 available to pay issuance costs incurred by the Board of Water Works. 7. The net result of this transaction will be as follows: Original Principal Amount PLUS: Accrued Interest TOTAL FUNDS AVAILABLE LESS: Cost of Escrow Bond Insurance Premium Underwriting Discount Issuance Expenses Deposit to Bond Fund 1 11 111 11 131.398.74 $ 20,136,398.74 (19,696,034.58) (80,000.00) (150,037.50) (78,927.92) (131,398.74) 1 11 8. A final maturity schedule is attached to this memorandum. Any questions should be addressed to Jim Manire at (303) 820 -5825. PIPER, JAFFRAY & HOPWOOD $20,005,000 City of Pueblo, Colorado General Obligation Water Refunding Bonds Series 1991 DISTRIBUTION LIST Ms. Fay Kastelic President, City Council Mr. Lew Quigley City Manager Ms. Marian Mead City Clerk Mr. Billy Martin Finance Director City of Pueblo One City Hall Place Pueblo, CO 81003 Ms. Cheryl Hamilton Ms. Mary Jo Fredrick Pueblo Bank & Trust 301 West Fifth Street Pueblo, CO 81003 Ms. Loretta Torres Safekeeping Department First Interstate Bank - Denver 633 Seventeenth Street Denver, CO 80270 Tom Jagger, Esq. 127 Thatcher Building Pueblo, CO 81003 Mr. Kevin McCarthy Board President Mr. Michael Stillman Secretary- Treasurer Mr. Alan Hamel Executive Director Mr. Jerry Cantrell Finance Director Board of Water Works of Pueblo, Colorado 319 West Fourth Pueblo, CO 81003 Bill Mattoon, Esq. Petersen & Fonda 650 Thatcher Bldg. Pueblo, CO 81003 Bill Gorham, Esq. Dave Caprera, Esq. Don Stover, Esq. Kutak Rock & Campbell 2400 ARCO Tower 707 17th Street Denver, CO 80202 Mr. David Dubin Mr. James Kissane Municipal Bond Investors Assurance Corporation 113 King Street Armonk, NY 10504 Mr. Steve Clark Mr. Donald Kam Mr. Paul Ferry Ms. Jill Sanchez Piper, Jaffray & Hopwood Incorporated Suite 2100 1050 17th Street Denver, CO 80265 Mr. Tim Couture Mr. Marol Maki Piper, Jaffray & Hopwood Incorporated 222 South Ninth Street Minneapolis, MN 55402 PIPER, JAFFRM& HOPWOOD I� I I ;UI I I'M I I - -1=1 XLD 1 NI:UI' L I CP 93038205891 P.02 P UEBLO RANI; [TEE FOR GUARD Or NAtER 141JRK5 CITY Ur I'U.EDLU CULURAl)U EXHIBIT A,` hl) BOX 639 PUEBLO CU elm 13 OUG111 11,605,000 US TREASURY GILLS RATE 0.000 MATURITY 04/30/92 5/0 01/14/92 pX 9B.- 7360056 L1058PI06.29 20 t2oo -o goo 912794-YL -2 .)UGBLU BANK T 1 EC rUR BOARD OF NAY ER WORKS CITY OF PUEBLO CULURAUU PO BOX 639 PUMO CO 01002 I3 I 799159000 102.f►li9 61108#838-35 1� 20 -OA 12 00 -U 9uo 912 1327 -tL -9 US TREASURY M UTES RATE 7.750 MATURITY 10/31/92 S/U 01/14/92 1NT FRM 10 /31/91 PX 102.449 1260309.94 UATEU UATE- 1 INTEREST PAYMENT OATE.S- APR, UCT 119458,406.29 01/14/9.2' 15 12/10/91 01 /14/ 92 TOTAL P.03 PIPER, JAFFRAY & HOPWOOD $20,005,000 CITY OF PUEBLO, COLORADO GENERAL OBLIGATION WATER REFUNDING BONDS, SERIES 1991 --------------------- --------------------- DEBT SERVICE SCHEDULE --------------------- --------------------- DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL 5/ 1192 130,000.00 11/ 1/92 760,000.00 5/ 1/93 1,070,000.00 11/ 1/93 1,090,000.00 5/ 1/94 1,120,000.00 11/ 1/94 1,150,000.00 5/ 1/95 1,180,000.00 11/ 1/95 1,205,000.00 5/ 1/96 725,000.00 11/ 1/96 780,000.00 5/ 1/97 275,000.00 11/ 1/97 260,000.00 5/ 1/98 630,000.00 11/ 1/98 660,000.00 5/ 1/99 1,610,000.00 11/ 1/99 1,655,000.00 5/ 1/ 0 1,705,000.00 11/ 1/ 0 1,750,000.00 5/ 1/ 1 1,110,000.00 11/ 1/ 1 1,140,000.00 20,005,000.00 ACCRUED 20,005,000.00 4.300000 4.300000 4.700000 4.700000 5.050000 5.050000 5.250000 5.250000 5.350000 5.350000 5.550000 5.550000 5.750000 5.750000 5.900000 5.900000 6.000000 6.000000 6.050000 6.050000 458,367.71 547,246.25 530,906.25 505,761.25 480,146.25 451,866.25 422,828.75 391,853.75 360,222.50 340,828.75 319,963.75 312,332.50 305,117.50 287,005.00 268,030.00 220,535.00 171,712.50 120,562.50 68,062.50 34,485.00 6,597,833.96 131,398.74 6,466,435.22 588,367.71 588,367.71 1,307,246.25 1,307,246.25 1,600,906.25 1,600,906.25 1,595,761.25 1,595,761.25 1,600,146.25 1,600,146.25 1,601,866.25 1,601,866.25 1,602,828.75 1,602,828.75 1,596,853.75 1,596,853.75 1,085,222.50 1,085,222.50 1,120,828.75 1,120,828.75 594,963.75 594,963.75 572,332.50 572,332.50 935,117.50 935,117.50 947,005.00 947,005.00 1,878,030.00 1,878,030.00 1,875,535.00 1,875,535.00 1,876,712.50 1,876,712.50 1,870,562.50 1,870,562.50 1,178,062.50 1,178,062.50 1,174,485.00 1,174,485.00 26,602,833.96 131,398.74 26,471,435.22 Dated 121 1/91 with Delivery of 1/14/92 PRESENTED BY PIPER, JAFFRAY & HOPWOOD PIPER, JAHRM& HOPWOOD