AN ORDINANCE OF THE CITY OF GARNETT, KANSAS, AUTHORIZING THE EXECUTION OF A GENERATING CAPACITY CONTRACT, BETWEEN THE CITY OF GARNETT, KANSAS, AND THE KANSAS MUNICIPAL ENERGY AGENCY RELATING TO THE ACQUISITION OF CERTAIN GENERATION FACILITIES AND MAKING CERTAIN COVENANTS AND AGREEMENTS TO PROVIDE FOR THE PAYMENT AND SECURITY THEREOF AND AUTHORIZING CERTAIN OTHER DOCUMENTS AND ACTIONS IN CONNECTION THEREWITH.

WHEREAS, the Kansas Municipal Energy Agency ("KMEA") is a municipal energy agency organized and existing under the laws of the State of Kansas, including K.S.A. 12-885 et seq.; and

WHEREAS, the City of Garnett, Kansas (the "City") owns or operates a utility furnishing electricity (the "System") and the City is a member in good standing of KMEA; and

WHEREAS, in order to secure an additional source of energy and capacity to meet the City's load requirement, KMEA intends to acquire two (2) enclosed Caterpillar Cl 75-16 Tier 4 Final diesel generator sets, including any related software (embedded therein or otherwise) and any and all related general intangibles, replacements, repairs, additions, attachments, accessories and accessions for installation at the City (the "Project"); and

WHEREAS, the governing body of the City has directed KMEA to pursue financing options in order to obtain funding for the Project; and

WHEREAS, KMEA has identified certain financing alternative structures in which KMEA will issue its revenue bonds or enter into a lease purchase agreement in order to obtain funds to acquire, equip and install the Project (such financing arrangements are collectively referred to as the "Bonds"); and

WHEREAS, the City is authorized to enter into contracts for the supply of electricity from any person, film, corporation or other municipality for a period not in excess of forty (40) years under K.S.A. 12-825j; and

WHEREAS, the City desires to enter into a Generating Capacity Contract with KMEA relating to the City's purchase of electricity generated in connection with the operation of the Project (the "Power Contract"), which payments made pursuant to the Power Contract shall be sufficient to: (a) provide for the operation of the Project, including establishing any necessary reserves; and (b) make all payments on the Bonds, including associated financing costs; and

WHEREAS, the City owns the real property upon which the Project will be located (the "Real Property") and desires to enter into a Site Lease (the "Site Lease") of the Real Property to KMEA for the installation and operation of the Project.

NOW, THEREFORE, BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF GARNETT, KANSAS:

SECTION 1. AUTHORIZATION OF POWER CONTRACT AND SITE LEASE.

The Power Contract and Site Lease are hereby approved in substantially the form presented to the governing body this date with such changes and modifications as may be necessary to confmm the Power Contract to the final terms of the financing documents relating to the Project and the Bonds. Upon the receipt of suitable financial terms relating to the Bonds as determined by the Mayor, and upon the recommendation of KMEA, the Mayor is authorized to execute the Power Contract. The Mayor and Clerk are also authorized and directed to execute any and all other documents or certificates necessary to effect the purposes set forth in this Ordinance, the Power Contract and the Site Lease.

SECTION 2. PLEDGE OF REVENUES; OBLIGATION TO MAKE PAYMENTS.

Subject to the satisfaction of the conditions set forth herein, the governing body of the City hereby pledges the gross revenues (the "Revenues") of the System to the City's payment obligations under the Power Contract. The payments by the City for Electricity, as such term is defined in the Power Contract, shall constitute operating expenses of the System and shall be payable on a parity with the other operating expenses of the System. The obligation of the City to make payments to KMEA under the Power Contract, whether or not reduced to judgment, shall not constitute general obligations of the City, and the City shall not be required to make such payments from any source other than the Revenues of the System.

SECTION 3. RATE COVENANT.

Upon the execution of the Power Contract, the City will fix, establish, maintain and collect such rates, fees and charges for the use and services furnished by or through the System, including all repairs, alterations, extensions, reconstructions, enlargements or improvements thereto hereafter constructed or acquired by the City, as will produce Revenues sufficient to pay all operating expenses of the System, including the obligation to make the payments required by the Power Contract and provide reasonable and adequate reserves for the general protection and benefit of the System.

(07-24-2023)