08-22-1960 HUCMX I SPECIAL MEETING
August 22p 1960
Pursuant to due call and notice thereof, a special
meeting of the Hutchinson Utilities Commission of the City
of Hutchinson, Minnesota, was duly held at the office of
the Commission in the City of Hutchinson on Monday,
.August 22, 1960 at 4 otclock P.M.
The following members were present:
Dr. R. I. Sheppard
Dr. A. J. Thompson
Wallace Kurth
And the following members were absent; None
The President announced that the next matter of business
was the consideration of a resolution providing for the
issuance and sale of gas revenue bonds.
o (0
No° Member Thompson introduced the following resolution,
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which said resolution is marked Exhibit A and by reference
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o d art hereto and moved its � made 1- a P adoption.
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E >, R E S O L U T I O N
C) a- C -
O CO) o
0 0 Cl) A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE
OF $650,000 GAS UTILITY REVENUE BONDS OF
0 o Q THE CITY OF HUTCHINSON
o WHEREAS.. Chapter 17 of the Home Rule Charter of the City
o (D a t) of Hutchinson authorizes the Commission t o construct or
L o
cu acquire by purchase a gas utility and to borrow money to
a u) carry out such power and to pledge net earnings for the
a) W =3 o payment of indebtedness incurred, and
XQZti
WHEREAS, the Commission has heretofore determined to
provide such utility and has approved plans and specifi-
cations and has called for bids for laying gas mains to
serve the inhabitants of the city, total cost not exceeding
$650,000, and it is necessary to provide funds by the issu-
ance of bonds of the city, and
WHEREAS, the Commission is given power to fix rates and
adopt rules and regulations for public utility service and to
1
1
12 .
Issue bonds or other obligations payable from revenues of
the public utilities and under the provisions of Chapter
475, Minnesota Statutes, the Commission-is the governing
body with power to initiate proceedings for the issuance
of bonds,
NOW TEEREFORE, BE IT RESOLVED by the Hutchinson
Utilities Commission of the City of Hutchinson, Minnesota,
as follows;
1. It is hereby determined that it is necessary and
expedient to provide gas service by constructing a gas
distribution system and to finance the same by the issu-
ance of revenue bonds as authorized by Chapter 475,
Minnesota Statutes.
2. There is hereby created a Gas Utility Fund and
the following separate accounts therein;
(c) A Bond Sinking and Interest Account out of which
shall be paid all principal of and interest on bonds
issued hereunder including parity bonds. The amounts cred-
ited to said account shall be held as a special deposit in
the official depository bank or may be invested in United
States Government bonds or notes or may be used to purchase
bonds issued hereunder at a price not exceeding par and the
premium required for redemption on the next redemption date.
All such bonds shall be held as an investment of said
account.
(d) A Bond Reserve Account to be kept and maintained
as a reserve for payment of principal of and interest on
bonds issued hereunder or parity bonds in event that such
principal or interest shall become due when there is not a
(a)
An Operating Account to which shall be credited
all revenues
and receipts of the gas utility and out of
which shall be paid all necessary and proper costs of
current
operations of the gas utility.
( b )
A Capital Expenditure Account to which shall be
credited
except as
all of the proceeds from bonds issued hereunder,
otherwise provided in Section 6 hereof. All
costs of
constructing a gas distribution system shall be
charged
against said account. All such construction costs
shall be
paid only upon written approval of the engineer.
In event
that the amount credited to said account is not
exhausted
by payments of such capital improvements, add-
itional
gas mains may be laid and the cost thereof charged
against
said account for a period of two years from Jan-
uary 1,
1960• Any balance remaining in said account on
January
1, 1962 shall be transferred to the Bond Sinking
and Interest
Account.
(c) A Bond Sinking and Interest Account out of which
shall be paid all principal of and interest on bonds
issued hereunder including parity bonds. The amounts cred-
ited to said account shall be held as a special deposit in
the official depository bank or may be invested in United
States Government bonds or notes or may be used to purchase
bonds issued hereunder at a price not exceeding par and the
premium required for redemption on the next redemption date.
All such bonds shall be held as an investment of said
account.
(d) A Bond Reserve Account to be kept and maintained
as a reserve for payment of principal of and interest on
bonds issued hereunder or parity bonds in event that such
principal or interest shall become due when there is not a
* 13.
sufficient balance in the Bond Sinking and Interest
Account to pay the same. The amount credited to said
account shall be held as a special deposit in the offi-
cial depository bank or may be invested in United States
Government bonds or notes .
(e) A Surplus Account to which shall be credited
all surplus net revenues from the utility after the re-
quired payments to the Bond Sinking and Interest Account
and Bond Reserve Account. At the close of each fiscal
,year, an amount equal to 50% of the total amount paid in-
to such account during the current year (but not exceeding
$10,000) shall be credited to the Bond Redemption Account.
Any balance therein may be used in such manner as may be
directed by the Hutchinson Utilities Commission for con-
structing extensions, additions or improvements to the
gas utility or for making extraordinary maintenance re-
pairs, renewals or replacements to the utility or may be
transferred to another account.
(f) A Bond Redemption Account which shall be used
to redeem bonds on the optional date or to purchase bonds
on the open market at a price not exceeding 110% of par
value provided that any amount therein at a time when
there is an insufficient amount in the Bond Sinking and
Interest Account and Bond Reserve Account to pay matured
principal and interest shall be used to pay such principal
and interest on outstanding bonds as herein provided.
The amounts credited to said account shall be held as a
special deposit in the official depository bank. If the
bonds cannot be redeemed or purchased in accordance with
this resolution, until such time as bonds issued here-
under are subject to redemption or obtainable at the price
specified herein, any amount in said account may be in-
vested in United States Government bonds or notes.
3. All income and revenues from the gas utility shall
be deposited in a separate ban.k account with an official
depository bank and credited to the Gas Utility Fund and
the various accounts as herein provided. There shall al-
ways be maintained in the operating account an amount suf-
ficient to pay the estimated costs of current operations,
necessary repairs and maintenance for the ensuing calendar
month. Any balance therein at the end of each month shall
be deemed net revenues and shall be transferred monthly to
the Bond Sinking and Interest Account until there shall be
credited to such account an amount equal to all principal
and interest falling due on the bonds issued hereunder, in-
cluding parity bonds, during the current calendar year. Any
balance of net revenues shall be credited to the Bond Reserve
Account until there shall be credited to such account an
amount equal to the highest amount required in any one of
the ensuing three years for the payment of principal of and
interest on bonds issued hereunder, including parity bonds.
14.
Any remaining balance of net revenues therein shall be
credited to the Surplus Account.
The Commission shall issue and sell Gas Utility
Revenue Bonds of 1960 of the City in the total principal
amount of 650,000, said bonds to be 650 in number and
numbered 1 to 650, both inclusive, and in the denomina-
tion of $1000 each, shall bear date September 1, 1960,
shall bear interest as follows;
bonds maturing in 1960 to 1970 inclusive, 4% per annum and
bonds maturing in 1971 to 1979 inclusive 42% per annum, all
interest payable June 1, 1961 and semiannually thereafter
on June 1 and December 1 in each year and which bonds
mature serially on December 1 in the years and amounts as
follows:
$10,000 in 1961, $15,000 in 1962 and 1963, $20,000 in 1964,
$35,000 in 1965 to 1969, both inclusive, $40,000 in 1970
to 1976, both inclusive, and $45,000 in 1977, 1978 and
1979, all bonds maturing after December 1, 1970, being
subject to redemption on said date and any interest payment
date thereafter in inverse numerical order at par and ac-
crued interest and a premium of $30.
5. The bonds shall be payable at the Citizens Bank of
Hutchinson in the City of Hutchinson, Minnesota. All bonds
of this issue maturing after December 1, 1970, shall be
subject to redemption and prior payment at the option of
the city on said date and any interest payment date there-
after in inverse numerical order at par and accrued interest
and a premium of $30. Thirty days prior notice of redemp-
tion shall be given by mail to the bank where the bonds are
payable to the original purchaser and to the last known
holder. Holders desiring to receive such notice must re-
gister their names, addresses and bond numbers with the
city clerk. All other holders will be deemed to have
waived such mailed notice.
6. The bonds and interest coupons to be thereto at-
tached shall be in substantially the following form;
No.
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF Mc LEOD
CITY OF HUTCHINSON
GAS UTILITY REVENUE BOND OF 1960
$1,000
KNOW ALL MEN BY THESE PRESENTS that the City of Hutch-
inson, McLeod County, Minnesota, hereby acknowledges itself
to be obligated and for value received promises to pay to
bearer out of the Bond Sinking and Interest Account of its
IV :15•.
Gas Utility Fund on the lst day of December, 19 , the
sum of ONE THOUSAND DOLLARS and to pay interest thereon
out of said account from the date hereof until the princi-
pal sum is paid at the rate of four percent ( 4 %) per
annum, interest to maturity payable June 1, 1961, and
semiannually thereafter on the lst day of June and the
lst day of December in each year in accordance with and
upon presentation and surrender of the interest coupons
hereto attached as they severally become due. Both prin-
cipal and interest are payable at Citizens Bank of
Hutchinson in the City of Hutchinson, Minnesota, in any
coin or currency of the United States of America which at
the time of payment is legal tender for public and
private debts.
All bonds of this issue maturing after December 1, 1970
are subject to redemption at the option of the city on
said date and any interest payment date thereafter in in-
verse numerical order at par and accrued interest and a
premium of $30 upon thirty days' prior notice by mail to
the bank where the bonds are payable, to the original pur-
chaser and to the last known holder. Holders desiring
to receive mailed notice must register their names, ad-
dresses and bond numbers with the city clerk. All other
holders will be deemed to have waived such mailed notice.
This bond is one of an issue in the total principal
amount of $650,000, all of like date and tenor except as
to interest rate, maturity and redemption privilege,
which bonds have been issued for the purpose of providing
money to construct the gas utility plant and system of
the city as authorized by Chapter 475, Minnesota Statues,
and the Home Rule Charter of said city, and the principal
and interest thereon are payable only out of the Bond
Sinking and Interest Account of the Gas Utility Fund of
the city created by resolution adopted by the Hutchinson
Utilities Commission entitled "A'Resolution Providing for
the Issuance and Sale of $650,000 Gas Utility Revenue
Bonds of the City of Hutchinson" to which reference is
made for a full statement of rights and privileges hereby
granted. This bond does not constitute an indebtedness
of the city and the taxing powers of the city may not be
used to pay principal hereof or interest hereon. In event
of any deficiency in the special accounts, the amounts
therein will be first used and applied in pro rata pay-
ment of interest on all outstanding bonds of this issue
and the balance in payment of principal in order of
serial numbers.
IT IS HEREBY CERTIFIED AND RECITED that in and by the
authorizing resolution the commission has covenanted and
agreed that the city will continue to own and operate the
gas plant and system free from competition by other like
utilities and free from all liens thereon; that adequate
insurance on said plant and system and suitable fidelity
bonds on employees will be carried; that proper and ade-
quate books of account will be kept showing all receipts
and disbursements relating to the said plant and system;
that it has created a Bond Sinking and Interest Account
into which it will pay out of net revenues of its gas
utility a sum sufficient to pay principal hereof and inter-
est hereon when due and that it will impose and collect
charges for services furnished by such utility sufficient
for such purpose, and that no additional obligations will
be issued or indebtedness incurred payable out of such
revenues except as provided in the authorizing resolution.
IT IS FURTHER CERTIFIED AND RECITED that all acts,
conditions and things required by the Constitution and
Laws of the State of Minnesota and the Home Rule Charter
of the City of Hutchinson to be done, to happen and to be
performed precedent to and in the issuance of this bond
have been done, have happened and have been performed in
due form, time and manner as required by law in order to
make this bond a special obligation of the city according
to its terms.
IN WITNESS WHEREOF, the City of Hutchinson, McLeod
County, Minnesota, by its Hutchinson Utilities Commission,
has caused this bond to be executed in its behalf by the
signatures of the President and Secretary and a fac4mile
of the corporate seal and has caused the interest coupons
hereto attached to be executed and authenticated by the
facsimile signature of said officers, all as of
September 1, 1960.
Secretary
(SEAL)
Presi ent —
Hutchinson Utilities Commission
16 .
1 1.7.
No. (Form of Coupon)
On the is t day of June ( December) , 19 , the City
of Hutchinson, McLeod County, Minnesota, will pay to bear-
er out of the Bond Sinking and Interest Account of its
Gas Utility Fund at Citizens Bank of Hutchinson in the
City of Hutchinson, Minnesota, the sum of DOLLARS
for interest then due on its Gas Utility Revenue Bond of
1960, dated September 1, 1960, No.
(';Z_1/'-
Press ent
Hutchinson Utilities Commission
ecretary
7. The bonds shall be prepared under the direction of
the Secretary and shall be executed on behalf of the city
by the signatures of the President and Secretary of the
Commission and a facsimile of the corporate seal of the
city shall be affixed thereto and the interest coupons shall
be executed and authenticated by the printed facsimile
signatures of said officers.
8. The bonds to be issued hereunder are hereby sold
to Carleton D. Beh Company in accordance with its offer to
purchase said bonds at a price of par and accrued interest.
Cut of the bond proceeds, all accrued interest and the sum
of $60,000 shall be credited to the Bond Sinking and
Interest Account to pay interest during the period before
sufficient service connections have been installed to
provide adequate revenues. The balance shall be credited
to the Capital Expenditure Account.
9. The principal of and interest on the bonds to
be issued hereunder shall be payable from the Bond Sinking
and Interest Account, the Bond Reserve Account and Bond
Redemption Account herein provided and said principal and
interest shall not constitute a general indebtedness of
the city. In event of any shortage in said accounts so
that there is an insufficient amount therein to pay prin-
cipal of and interest on any bonds of this issue then
due, the amount therein shall be first used and applied
in pro rata payment of all interest due thereon including
past due interest, if any, and the balance shall be ap-
plied in payment of outstanding bonds in order of
18.4
serial number, provided that no holder of any bond may
be compelled to accept payment at any time of less than
the full principal amount of such bond and each bond
shall continue to bear interest as herein provided
until full payment is made thereon.
10• The Commission shall cause proper books of
record and account to be kept showings
(a) The total amount of gas purchased, the amount
sold without having been metered and the amount
delivered to each metered customer,
(b) The date and amount of each statement ren-
dered, and any penalty to any customer,
(c) The date and amount of each payment on any
statement or penalty,
(d) The date, amount and purpose of each dis-
bursement on account of the operation, repair or
maintenance of the plant or system,
(e) The amount set aside for operation and
maintenance,
(f) The total amount of revenue bonds then out-
standing and the date and amount of all payments
of interest or principal.
11. For the first three years following the date
of the bonds and thereafter upon request of the purchaser,
the Commission shall furnish monthly reports to the orig-
inal purchaser showing separately the number of meters
connected to the system, the amount of gas used, the
amounts collected on current bills, the amount collected
on delinquent bills, the number of new meters installed,
the total disbursements itemized separately for salaries,
labor, materials, electricity, and supplies, amount de-
posited to the various accounts established hereunder
and the balances in said accounts.
12. The city will permit no free utility service
to be furnished to itself or any other consumer and will
charge for gas services in accordance with the schedule
presented to the Federal Power Commission. In the event
that after two years of operation said rates and charges
are insufficient to produce net revenues after expenses
of operation, repairs and maintenance at least equal to
125% of the maximum annual principal and interest re-
quirements during the next three years on bonds herein
authorized, such rates and charges shall be adjusted and
made sufficient for such purpose so far as permitted by
law provided that nothing herein shall require the city
to increase such rates until the close of the fiscal
year 1962.
't 19.
13• Until all bonds issued hereunder have been
paid or a sufficient amount has been deposited with the
paying agent to pay outstanding bonds and interest there-
on to maturity or to the date of first redemption to-
gether with a sufficient amount to pay any premium re-
quired for redemption, no additional bonds or other
obligations shall be issued by the city which are pay-
able out of net revenues of the gas utility, or which
will be a lien or charge on such revenues on a parity
with bonds of this issue unless the average annual net
revenues as herein defined during the preceding two fis-
cal years shall have been an amount equal to at least
150% of the highest annual principal and interest require-
ments on all bonds issued hereunder including parity
bonds, if any, then outstanding, and such bonds proposed
to be issued; provided further that if any bonds issued
hereunder shall become due at any time when there is an
insufficient amount in the special accounts for their pay-
ment, such bonds may be refunded and the maturity thereof
extended beyond the last maturity of bonds issued here-
-under and such extended bonds or refunding bonds shall
snare on a parity with bonds issued hereunder as to
interest payments.
14. The city, by its Hutchinson Utilities Commission,
covenants and agrees with the holders of bonds issued
hereunder that so long as any of said bonds remain out -
standing and unpaid, the following covenants and agreements
will be enforced;
(a) The Commission will cause the gas utility system
to be installed substantially in accordance with plans
and specifications heretofore approved by the Commission
and will use the proceeds from the bonds for such purpose
and the balance remaining therefrom shall be used and ap-
plied as herein provided.
(b) The city will continue to operate its gas utility
as a public convenience from which a revenue may be derived
free from any lien or encumbrance thereon, and will not
grant any franchise or permit any competing utility to op-
erate within said city. No part of such utility shall be
sold, leased or otherwise disposed of unless replaced by
some other part of equal value and net proceeds from such
sale shall be credited to the Bond Redemption Account.
(c) The Commission will continue to maintain and
efficiently operate the plant and system as a public util-
ity and convenience on a fully metered basis so far as
possible and will cause all revenues from such utility
and extensions thereof to be deposited in the depository
bank and credited to the Gas Utility Fund and the various
accounts as herein provided and it will apportion the
20. 4r-
revenues between said accounts as herein provided and will
make no expenditures from said accounts except for a duly
authorized purpose and in accordance with this resolution.
(d) The city will not issue bonds or other obliga-
tions for any purpose or at any time, which obligations
are to be payable from the net revenues of the gas utility
or which will constitute a lien or charge thereon except
as authorized by this resolution.
(e) The Commission will keep and maintain proper
and adequate books of record and account separate from
all other records of the city in which will be made com-
plete and correct entries as to all transactions relating
to the gas utility plant and system and which shall be open
to inspection and copying by any bondholder, his agent or
attorney at any reasonable time and it will furnish cer-
tified transcripts therefrom upon request and upon pay-
ment of a reasonable fee therefor and that said accounts
shall be audited at least annually by a qualified public
accountant, and statements of each audit and report will be
furnished within 90 days after the close of each fiscal
year to the original purchaser and to all other bond-
holders upon request.
Each annual audit report shall include, in addition to
whatever matters thought proper by the accountants, the
following;
( 1) A. detailed statement of income and expenditures
for each utility.
(2) A. balance sheet for each utility as of the end
of the fiscal year.
(3) Comments regarding the manner in which the - Council
and Commission have carried out the requirements of
this resolution, including establishment of the
various accounts.
(4) A list of insurance policies in force, showing
amount carried, risks covered, the names of insurers
and expiration date.
(5) The number of metered customers and unmetered
customers, if any, for each utility.
(6) Any disposition of bond proceeds and the amount
of outstanding indebtedness.
(f) The Commission will maintain and enforce rates
and charges for all services to the city and to all
other users in accordance with the provisions of
Section 12 hereof and will make all reasonable
21.
efforts to collect such charges, including discontinuance
of service to any customer within 30 days following the
making of any bill, until such bill and penalties have
been paid in full.
(g) The Commission will cause all persons handling
revenues of the gas utility plant and system to be bonded
in reasonable amounts for the protection of the city and
the bondholders and will cause the funds collected on
account of the operations of the public utility plant and
system to be deposited in a depository bank or banks
whose deposits are guaranteed under the Federal Deposit
Insurance Law.
(h) The Commission will keep the gas utility plant
and system insured at all times against loss or damage by
fire, tornado, flood and other risks customarily insured
against, including public liability insurance with an in-
surer or insurers in good standing in such amounts as are
customary for like plants, to protect the holders from
time to time of the bonds issued hereunder and the city
from any loss due to any such casualty and will apply the
proceeds of such insurance to make good any such loss.
(i) At least until January 1, 1963, the city shall
employ a consulting engineer to make annual inspection of
the physical plant of the gas utility and shall request
such engineer's recommendations as to operations of the
gas utility, replacements, improvements and extensions and
any suggestions as to changes in its schedule of rates and
charges. Among other duties, such engineer shall make an
annual report of revenues and expenses, number of con-
nections, amount of gas purchased and sold, line load,
insurance protection, status of the various accounts here-
in created and other pertinent information and will fur-
nish copies of such reports to the original bond purchasers.
(j) The city and each and all of its officers will
punctually perform all duties with reference to the gas
utility plant and system as required by the laws of the
State of Minnesota.
15. In the event that any principal of or interest
on any fond issued hereunder shall become due and remain
unpaid for more than thirty days, such nonpayment shall
constitute a default hereunder and the holder or holders
of a majority in_ principal amount of outstanding bonds is-
sued hereunder, including parity bonds, shall have all
rights granted by the laws of the State of Minnesota for
the enforcement of payment of principal and interest on
behalf of the holders of all of said bonds then outstanding
and unpaid. For such purpose any bond may be declared due
and payable with the consent of the holder thereof.
2.2.x,
16. The holders of eighty percent in principal
amount of the bonds or parity bonds at any time out-
standing (not including in any case any bonds which may
then be held or owned by or for the account of the city,
but including any refunding bonds as may have been issued
for the purpose of refunding any of such bonds if such
refunding bonds shall not then be owned by the city)
shall have the right from time to time to consent to and
approve the adoption by the Commission of any resolution
or resolutions modifying or amending any of the terms
of provisions contained in this resolution; provided,
however, that this resolution may not be so modified or
amended in such manner as to adversely affect the rights
of holders of less than all of the bonds then outstanding,
or to reduce the percentage of the principal amount of
bonds, the consent of the holders of which is required
to effect a further modification.
17. The Secretary of the Commission shall furnish
to the County Auditor of McLeod County a certified copy
of this resolution and such further information as he
shall require and obtain his certificate in accordance
with Section 475.63, Minnesota Statutes, as amended.
18. The Secretary and Treasurer of the Commission
are hereby authorized and directed to furnish to the
purchaser of said bonds and to the attorneys examining
the proceedings and furnishing a legal opinion thereon
to the purchaser, certified copies of all ordinances,
resolutions and records of the city relating to said
bonds or the right, power and authority of the city to
issue the same and such certified copies and certificates
shall be deemed representations of the city as to all
facts stated therein.
19. All of the terms and provisions of this re-
solution shall be and constitute a covenant on the part
of the city to and with each and every holder from time
to time of the bonds issued hereunder. All resolutions
heretofore adopted by the Hutchinson Utilities Commission
are hereby amended in all respects necessary to conform
with the provisions of this resolution.
The motion for the adoption of the foregoing reso-
lution was duly seconded by Wallace Kurth and, upon vote
being taken thereon, the following voted in favor thereof;
Dr. R. I. Sheppard
Dr. A. J. Thompson
Wallace Kurth
2.3.
And the following voted against the same;
None
whereupon said resolution was declared duly passed and
ad opted .
STATE OF MINNESOTA)
COUNTY OF MCLEOD ) S.S.
CITY OF HUTCHINSON) I, the undersigned, being the duly
qualified and acting Secretary of the Hutchinson Utilities
Commission of the City of Hutchinson, Minnesota, do hereby
certify that I have carefully compared the attached and
foregoing extract of minutes of a special meeting of the
Commission held on August 22, 1960 with the original
thereof on file in my office and the same is a full, true
and complete transcript therefrom insofar as the same
relates to the opening of bids for Municipal Natural Gas
System and Gas Service Meters and Regulators.
WITNESS MY hand officially this 22nd day of August 1960.
R. W. Dahl, Secretary
There being no further business the meeting was adjourned.
R. W. Dahl, Secretary
ATTESTED; ., f
R. I. Sheppar , President
1
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