ORDINANCE NO OF THE BOROUGH COUNCIL OF THE BOROUGH OF EPHRATA LANCASTER COUNTY, PENNSYLVANIA

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1 ORDINANCE NO OF THE BOROUGH COUNCIL OF THE BOROUGH OF EPHRATA LANCASTER COUNTY, PENNSYLVANIA APPROVING CERTAIN PROJECTS BEING UNDERTAKEN BY THE EPHRATA BOROUGH AUTHORITY (THE AUTHORITY ), CONSISTING, INTER ALIA, OF THE REFUNDING OF CERTAIN OUTSTANDING BONDS OF THE AUTHORITY; DESCRIBING THE PROJECTS FOR WHICH SUCH PRIOR BONDS WERE ISSUED, RATIFYING AND CONFIRMING THE ESTIMATED USEFUL LIFE THEREOF AND SETTING FORTH THE ESTIMATED COMPLETION DATE FOR THE PROJECTS; AUTHORIZING THE INCURRENCE OF LEASE RENTAL DEBT BY THE BOROUGH EVIDENCED BY THE SEWER BONDS GUARANTY AGREEMENT, AS SUCH PHRASE IS DEFINED HEREIN, IN CONNECTION WITH THE GUARANTEED SEWER REVENUE BONDS BEING ISSUED BY THE AUTHORITY; AUTHORIZING OFFICERS OF THE BOROUGH TO PREPARE AND CERTIFY A DEBT STATEMENT AND BORROWING BASE CERTIFICATE AND DIRECTING THE SECRETARY TO FILE SUCH STATEMENT AND BORROWING BASE CERTIFICATE, TOGETHER WITH A CERTIFIED COPY OF THIS ORDINANCE AND PROOFS OF PUBLICATION, WITH THE PENNSYLVANIA DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT AND TO PAY ANY NECESSARY FILING FEES; APPROVING THE FORM OF GUARANTY AGREEMENT AMONG THE BOROUGH, THE AUTHORITY AND THE TRUSTEE AND AUTHORIZING AND DIRECTING THE EXECUTION AND DELIVERY THEREOF; STATING THE ANNUAL AMOUNTS OF PRINCIPAL AND INTEREST TO BE PAID UNDER THE GUARANTY AGREEMENT, COVENANTING THE PAYMENT THEREOF AND PLEDGING THE FULL FAITH, CREDIT AND TAXING POWER OF THE BOROUGH THEREFOR; AUTHORIZING AND DIRECTING THE PREPARATION OF A SELF-LIQUIDATING DEBT REPORT AND THE FILING THEREOF AND THE PREPARATION AND FILING OF ANY OTHER STATEMENTS AND REPORTS REQUIRED TO QUALIFY THE LEASE RENTAL DEBT INCURRED HEREBY OR ANY PORTION THEREOF FOR EXCLUSION FROM THE APPROPRIATE DEBT LIMIT OF THE BOROUGH AS SELF- LIQUIDATING; AUTHORIZING THE OFFICIALS OF THE

2 BOROUGH TO TAKE OTHER APPROPRIATE ACTION; REPEALING ALL ORDINANCES INCONSISTENT HEREWITH; SEVERABILITY OF PROVISIONS AND STATING EFFECTIVE DATE WHEREAS, the Ephrata Borough Authority (the Authority ) is a body corporate and politic originally organized as the Municipal Authority of the Borough of Ephrata by the Borough of Ephrata, Pennsylvania (the Borough ) and is governed by the Pennsylvania Municipality Authorities Act, 53 Pa. Cons. Stat , as amended (the Authorities Act ); and WHEREAS, the Authority, pursuant to power and authority vested in it by law, has acquired and constructed in increments a sewage collection and treatment system, which by a Sewer System Lease dated as of June 1, 1986, as amended and supplemented (the 1986 Lease ) it has leased to the Borough, including any real estate thereafter acquired for or in connection therewith (collectively called the Sewer System ); and WHEREAS, the Authority, at the request of the Borough, has undertaken to finance a project (the Sewer System Project ) consisting of, among other things, all or any of the following: (i) the current refunding of a portion of the Authority s outstanding Guaranteed Sewer Revenue Bonds, Series of 2010 (the 2010 Bonds ); (ii) the current refunding of the Authority s outstanding Guaranteed Sewer Revenue Bond, Series of 2014 (the 2014 Bond ), and (iii) payment of the costs and expenses associated with the issuance of the hereinafter defined Sewer Bonds; and WHEREAS, the Authority has determined to issue its Guaranteed Sewer Revenue Bonds in the maximum aggregate principal amount of $12,255,000 (the Sewer Bonds ), the proceeds of which will be applied to the costs of the Sewer System Project and which will benefit the Borough; and WHEREAS, the Sewer Bonds will be issued under and secured by a Third Supplemental Trust Indenture (the Third Supplemental Indenture ), amending and supplementing that certain Trust Indenture dated as of August 5, 2010, as amended and supplemented (the Original Sewer Indenture, and together with the Third Supplemental Indenture, the Sewer Indenture ), each from the Authority to Fulton Bank, National Association, as trustee (the Sewer Bonds Trustee ); and WHEREAS, in order to secure the payment of the principal of, and interest on, the Sewer Bonds, the Authority, as Lessor, will enter into the Twelfth Supplemental Lease and Assignment, with the Borough, as Lessee (the Twelfth Supplemental Lease ), which further supplements and amends the 1986 Lease (the 1986 Lease, as so supplemented and amended by the Twelfth Supplemental Lease, the Lease ), and the Authority has assigned and pledged the Lease and all rentals payable thereunder to the Trustee under the Indenture; and WHEREAS, in order to further secure payment of the Sewer Bonds, the Borough will enter into a guaranty agreement with the Authority and the Sewer Bonds Trustee (the Sewer Bonds Guaranty Agreement ), as authorized by the Pennsylvania Local Government -2-

3 Unit Debt Act, 53 Pa. Cons. Stat et seq., as amended (the Debt Act ), providing for the unconditional guarantee by the Borough of the timely payment of the principal of, and interest on, the Sewer Bonds and the pledge by the Borough of its full faith, credit and taxing power to discharge all of its obligations under the Sewer Bonds Guaranty Agreement; and WHEREAS, the Authority will cause to be prepared and submitted to the Borough a report (the Self-Liquidating Debt Report ) in accordance with Section 8026(a) of the Debt Act to qualify all of the debt of the Borough incurred pursuant to the Sewer Bonds Guaranty Agreement as self-liquidating debt under the Debt Act and to exclude such debt from the debt limit of the Borough; and WHEREAS, the execution of the Sewer Bonds Guaranty Agreement and the Supplemental Lease constitutes the incurrence of lease rental debt by the Borough within the meaning of the Debt Act; and WHEREAS, the Borough desires to formally approve the Sewer System Project and the financing thereof by the Authority, to authorize the incurrence of lease rental debt under the Debt Act, and the execution and delivery of the Sewer Bonds Guaranty Agreement and the Supplemental Lease. NOW, THEREFORE, BE IT ORDAINED AND ENACTED BY THE BOROUGH COUNCIL OF THE BOROUGH OF EPHRATA, LANCASTER COUNTY, PENNSYLVANIA, AS FOLLOWS: Section 1. Approval of Sewer System Project and Financing Thereof; Prior Projects; Ratifying the Remaining Useful Life Thereof; and Estimated Project Completion Date. The Borough hereby approves the Sewer System Project, as described above, and the financing thereof. The 2010 Bonds were issued to finance certain capital improvements to the Sewer System. The realistic estimated useful lives of the projects financed or refinanced with the 2010 Bonds were determined at the time of issuance of the 2010 Bonds. Such determination is hereby ratified and confirmed and the principal amount of the Sewer Bonds equal to the cost of the Sewer System Project have been scheduled to mature prior to the unexpired useful life thereof. The 2014 Bond was issued to finance certain capital improvements to the Sewer System. The realistic estimated useful lives of the projects financed or refinanced with the 2014 Bond was determined at the time of issuance of the 2014 Bond. Such determination is hereby ratified and confirmed and the principal amount of the Sewer Bonds equal to the cost of the Sewer System Project have been scheduled to mature prior to the unexpired useful life thereof. Section 2. Amount of Sewer Bonds Secured by the Sewer Bonds Guaranty Agreement; Incurrence of Lease Rental Debt. The maximum aggregate principal amount of the Sewer Bonds to be issued by the Authority and secured by the Sewer Bonds Guaranty Agreement and the Twelfth Supplemental Lease is $12,255,000. The Borough hereby authorizes and directs the incurring of lease rental debt of the Borough, pursuant to the Debt Act, in the maximum aggregate principal amount of -3-

4 $12,255,000 to be evidenced by the Sewer Bonds Guaranty Agreement among the Borough, the Authority and the Sewer Bonds Trustee and by the Twelfth Supplemental Lease by and between the Authority and the Borough. Section 3. Debt Statement and Borrowing Base Certificate; Debt Proceedings. The President or Vice President of this Governing Body and the Secretary of the Borough (or other authorized officers or officials of the Borough) are hereby authorized and directed to prepare and verify the debt statement required by Section 8110 of the Debt Act and to prepare or cause to be prepared a borrowing base certificate and the Secretary or Assistant Secretary of the Borough is hereby authorized and directed to certify to the Pennsylvania Department of Community and Economic Development, in accordance with the Debt Act, a complete and accurate copy of the proceedings taken in connection with the increase of debt authorized hereunder and to pay any filing fees necessary in connection therewith. Section 4. Approval of Sewer Bonds Guaranty Agreement. The President or Vice President of this Governing Body (or other authorized officers or officials of the Borough) is hereby authorized and directed, upon receipt of approval from the Pennsylvania Department of Community and Economic Development, to execute the Sewer Bonds Guaranty Agreement, in such form as the Borough s solicitor and McNees Wallace & Nurick LLC, bond counsel to the Borough may advise and the officers executing the same may approve, the execution of the Guaranty Agreement to be conclusive evidence of such approval, and the Secretary of the Borough is hereby authorized and directed to affix thereto the corporate seal of the Borough, to attest the same and to deliver the Sewer Bonds Guaranty Agreement to the Sewer Bonds Trustee and the Authority. Section 5. Approval of Supplemental Lease. The President or Vice President of the Borough is hereby authorized and directed to execute the Supplemental Lease, in such form as the Borough s solicitor and McNees Wallace & Nurick LLC, bond counsel to the Borough may advise and the officers executing the same may approve, the execution of the Supplemental Lease to be conclusive evidence of such approval, and the Secretary of the Borough is hereby authorized and directed to affix thereto the corporate seal of the Borough and to attest the same. The President or Vice President of the Borough is further authorized and directed to acknowledge the same on behalf of the Borough and to deliver the Supplemental Lease to the Authority and the Sewer Bonds Trustee. The Borough shall include rentals for each fiscal year in which sums are payable under the Supplemental Lease in its budget for such year, such lease rentals to be paid from its current revenues. Such lease rental payments are as set forth in Schedule I attached hereto and made a part hereof. Section 6. Covenant to Pay Guaranty. The annual amounts of principal and interest covenanted to be paid by the Borough under the Sewer Bonds Guaranty Agreement are as set forth in Schedule I attached hereto and made a part hereof. It is covenanted with the registered owners of the Sewer Bonds that the Borough shall (i) include the amounts payable in respect of its guaranty for each fiscal year in which such sums are payable in its budget for that year; (ii) appropriate such amounts from its general fund -4-

5 for the payment of the amounts payable in respect of its guaranty; and (iii) duly and punctually pay, or cause to be paid from such revenues, to the extent of its obligations under the Sewer Bonds Guaranty Agreement, the amounts payable in respect of its guaranty, at the dates and places and in the manner stated in the Sewer Bonds Guaranty Agreement, according to the true intent and meaning thereof. For such budgeting, appropriation and payment in respect of its guaranty of the Sewer Bonds and its lease payment obligations, the Borough pledges its full faith, credit and taxing power. This covenant shall be specifically enforceable; subject, however, as to the enforceability of remedies, to any applicable bankruptcy, insolvency, moratorium or other laws or equitable principles affecting the enforcement of creditors rights generally. Nothing in this Section shall be construed to give the Borough any taxing power not granted by another provision of law. Section 7. Authorization for Exclusion of Lease Rental Debt as Self-Liquidating Debt. The President or Vice President of this Governing Body and the Secretary or Assistant Secretary of the Borough (or other authorized officers or officials of the Borough) are each further authorized and directed to prepare, or cause to be prepared, and file the Self-Liquidating Debt Report and any statements required under Section 8026(a) of the Debt Act, which are necessary to qualify all or any portion of the lease rental indebtedness incurred hereby and described herein for exclusion as self-liquidating debt. Section 8. Incidental Actions. The proper officers of the Borough are hereby authorized, directed and empowered on behalf of the Borough to execute any and all papers and documents, and to do or cause to be done any and all acts and things necessary or proper for the carrying out of the provisions of this Ordinance and in connection with the application by the Authority for, and the issuance of, municipal bond insurance. Section 9. Repealer. All ordinances or parts of ordinances inconsistent herewith be and the same hereby are repealed. Section 10. Severability. In case any one or more of the provisions of this Ordinance shall, for any reason, be held to be illegal or invalid, such illegality or invalidity shall not affect any other provisions of this Ordinance and this Ordinance shall be construed and enforced as if such illegal or invalid provisions had not been contained herein. Section 11. Effective Date. This Ordinance shall become effective on the earliest date permitted by the Debt Act. -5-

6 DULY ENACTED by the Borough Council of the Borough of Ephrata, Lancaster County, Pennsylvania, this 11 th day of April, [SEAL] Attest: Secretary President, Borough Council Approved by me this 11 th day of April, Mayor -6-

7 SCHEDULE I to Ordinance of the Borough Council of the Borough of Ephrata, Lancaster County, Pennsylvania Enacted April 11, 2016 Maximum Annual Amounts Payable Under Supplemental Lease Year Amount 2016 $ 580, $ 1,233, $ 1,667, $ 1,650, $ 1,605, $ 1,565, $ 1,514, $ 1,477, $ 1,429, $ 1,384, $ 1,344, $ 1,308,200.00

8 Maximum Annual Amounts Payable Under Sewer Bonds Guaranty Agreement

9 I HEREBY CERTIFY that the foregoing is a true and correct copy of an Ordinance duly enacted by the affirmative vote of a majority of the members of the Borough Council of the Borough of Ephrata, Lancaster County, Pennsylvania, at a public meeting held the 11 th day of April, 2016; that proper notice of such meeting was duly given as required by law; and that said Ordinance has been spread upon the Minutes of said Board, showing how each member voted thereon, and has been duly advertised as required by law. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said Borough this 11 th day of April, (SEAL) Secretary