Loading...
ORD 06-541ORDINANCE NO. a, -5 r AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON PROVIDING FOR THE ISSUANCE AND SALE OF A LIMITED TAX GENERAL OBLIGATION BOND OF THE CITY IN THE AGGREGATE PRINCIPAL AMOUNT OF $4,100,000 TO FINANCE PUBLIC PROJECTS AND PROVIDE FOR THE TERMS OF AND APPROVING THE SALE OF SUCH BOND. WHEREAS, the City Council (the "Council ") of the City of Federal Way, Washington (the "City"), has determined that it is in the best interest of the City and its residents to issue a limited tax general obligation bond to finance public projects, including property acquisition, demolition, planning, construction and refinancing (collectively, the "Project "); and WHEREAS, Bank of America, N.A. (the "Bank "), has offered to purchase the bond on the terms and conditions set forth herein. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, unless a different meaning clearly appears from the context: "Bank" means Bank of America, N.A. "Bond" means the "City of Federal Way, Washington, Limited Tax General Obligation Bond, 2006" in the principal amount of $4,100,000 authorized by this ordinance. "Bond Account" means the "City of Federal Way Limited Tax General Obligation Bond Account, 2006," established pursuant to Section 6 of this ordinance. "Bond Register" means the books or records maintained by the Bond Registrar for the ORD #-06 S Y1 , PAGE 1 P:WMN\NMN2V2 11/30/06 registration and transfer of the Bond containing the name and mailing address of the owner of the Bond or nominee of such owner and such other information as the Bond Registrar shall determine. "Bond Registrar" means the Management Services Director of the City who will register and authenticate the Bond, maintain the Bond Register, effect transfer of ownership of the Bond and pay principal of and interest on the Bond. "Cit " means the City of Federal Way, Washington, a municipal corporation duly.organized and exiting under the laws of the State of Washington. "Code" means the federal Internal Revenue Code of 1986, as amended from time to time, and the application regulations thereunder. "Council" means the general legislative authority of the City as the same shall be duly and regularly constituted from time to time. "Project" means the public projects, including property acquisition, demolition, planning, construction and refinancing of City property. "Proposal" means the proposal submitted by the Bank to purchase the Bond and attached as Exhibit A. Section 2. Findings and Authorization of the Protect. The City Council hereby finds that it is in the public interest for the City to undertake the Project. The cost of the Project will be financed from the proceeds of sale of the Bond. If the City Council shall determine that it has become impractical to acquire or accomplish any portion of the Project by reason of changed conditions, the City shall not be required to acquire or accomplish such portions of the Project. If any portion of the Project has been acquired or constructed or duly provided for, or found to be impractical, the City Council may apply the Bond proceeds or any portion thereof to the redemption of the Bond or to other capital purposes as the City Council, in its discretion, shall determine. The ORD #10& -,S q1 , PAGE 2 P:WMMNMN2V2 11130/06 estimated cost of the Project and the costs of issuance of the Bond is hereby estimated to be about $5,000,000. Section 3. Authorization of the Bond. The Council hereby authorizes the issuance and sale of a limited tax general obligation bond of the City in the total principal amount of $4,100,000. The bond shall be designated the "City of Federal Way, Washington, Limited Tax General Obligation Bond, 2006," (the "Bond "). The Bond shall be issued in fully registered form, shall be numbered, shall be dated as of its date of delivery to the Bank, shall bear interest at the rate per annum of 3 53 %, until the Bond has been paid or its payment duly provided for and shall mature two years from the date of its delivery. Interest shall be calculated on the basis of a 360 -day year comprised of twelve 30 -day months. Interest shall be payable on the first day of the month that is at least 90 days from the date of closing, and quarterly thereafter, and at maturity or upon prepayment. All principal of the Bond shall be paid at maturity or upon prepayment. Principal of and interest on the Bond shall be payable as described in Section 4 below. If the Bond is not redeemed when properly presented at its maturity or call date, the City shall be obligated to pay interest on the Bond at two percentage points in excess of the rates specified above, from and after the maturity or call date until the Bond, both principal and interest, is paid in full. Section 4. Registration Payment and Transfer. The City's Management Services Director shall act as authenticating trustee, transfer agent, paying agent and registrar for the Bond (collectively, the "Bond Registrar "). Both principal and interest on the Bond shall be payable in lawful money of the United States of America. Installments of pri ncipal of and interest on the Bond shall be paid by check or draft of the Bond Registrar mailed (on the date such interest is due) to the registered owner or nominee at the address appearing on the Bond Register. Upon final payment of ORD # f p-,5(fl , PAGE 3 P:WMNANMN2V2 11/30/06 all installments and interest thereon, the Bond shall be submitted to the Bond Registrar for cancellation and surrender. The Bond may be transferred only on the Bond Register maintained by the Bond Registrar for that purpose upon the surrender thereof by the registered owner or nominee or his/her duly authorized agent and only if endorsed in the manner provided thereon, and thereupon a new fully registered Bond of like principal amount, maturity and interest rate shall be issued to the transferee in exchange therefore. Such transfer or exchange shall be without cost to the registered owner or transferee. Section 5. Prepayment. The City reserves the right to prepay the Bond in whole or in part at any time by paying the principal amount thereof to be prepaid together with accrued interest to the date of prepayment. If the Bond is prepaid, whether by voluntary prepayment or otherwise, the prepayment may result in the imposition of a prepayment fee. The prepayment fee shall be in an amount sufficient to compensate the Bank for any loss incurred by it as a result of the prepayment, as documented by the Bank, including any loss arising from the liquidation or reemployment of funds obtained by it to maintain the funds used to purchase the Bond, or from fees payable to terminate the deposits from which such funds were obtained. The Bank shall be deemed to have funded the purchase of the Bond by a matching deposit or other borrowing in then applicable interbank market, whether or not the Bond was in fact so funded. In no case shall a prepayment fee apply if the Bank's internally derived cost of funds is higher on the date of prepayment than it was on the date the fixed rate of the Bond was set. Section 6. Bond Account. A special account of thcr City to be known as the "City of Federal Way Limited Tax General Obligation Bond Account, 2006" (the "Bond Account ") is hereby authorized to be created by the Management Services Director. The Bond Account shall be drawn ORD # ap 5741 , PAGE 4 P: \NMN\NMN2V2 11/30/06 upon for the sole purpose of paying the principal of and interest on the Bond. Money on deposit in the Bond Account not immediately needed to pay such interest or principal may temporarily be deposited in such institutions or invested in such obligations that are legal investments for City funds. Any interest or profit from the investment of such money shall be deposited in the Bond Account. Any money remaining in the Bond Account after payment in full of the principal of and interest on the Bond may be transferred to the general fund of the City, and the Bond Account shall be closed. The Bond is a general obligation of the City. The City hereby irrevocably covenants that it will include in its budget and levy an ad valorem tax, within and as a part of the tax millage levy permitted to cities without a vote of the people, upon all the property within the City subject to taxation in an amount which will be sufficient, with other money legally available therefore, to pay the principal of and interest on the Bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies may be discharged prior to maturity of the Bond by making full provision for the payment thereof. Section 7. Application of Bond Proceeds. Proceeds received from the Bond shall be deposited in an account designed by the Management Services Director and be used to finance the Project pursuant to Section 2 and pay costs of issuing the Bond. Money in such account shall be invested in legal investments for City funds. Upon completion of such acquisition or a decision not to complete any portion of the proposed property acquisition, any remaining money in the fund shall be transferred to the Bond Account or used for other capital purposes. Section 8. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or destroyed, the Bond Registrar may execute and deliver a new Bond of like date and tenor to the ORD # a, -5 W , PAGE 5 P:WMMNMN2V2 11/30/06 owner upon the owner paying the expenses and charges of the City and upon filing with the Bond Registrar evidence satisfactory to'the Bond Registrar that such Bond was actually lost, stolen or destroyed and of its ownership thereof, and upon furnishing the City with indemnity satisfactory to the City. Section 9. Form and Execution of the Bond. The Bond shall be in substantially the following form: UNITED STATES OF AMERICA NO. R -1 $4,100,000 STATE OF WASHINGTON CITY OF FEDERAL WAY, WASHINGTON LIMITED TAX GENERAL OBLIGATION BOND, 2006 REGISTERED OWNER: BANK OF AMERICA, N.A. INTEREST RATE: IS3 % MATURITY DATE: DECEMBER 28, 2008 PRINCIPAL AMOUNT: FOUR MILLION ONE HUNDRED THOUSAND AND NO 1100 DOLLARS The City of Federal Way, Washington (the "City"), a municipal corporation organized and existing under the laws of the State of Washington, hereby acknowledges itself to owe and for value received promises to pay, but solely from the Bond Account hereinafter identified, to the Registered Owner identified above on December 28, 2008, the principal sum of $4,100,000. Amounts received under this Bond shall bear interest at the rate identified above, as set forth in Ordinance No.a • 5y I of the City, passed on December 19, 2006 (the "Bond Ordinance "). Interest on this Bond shall accrue from the date money is received, until paid and shall be computed on the basis of a 360 -day year and the actual days elapsed. Interest shall be payable quarterly, beginning [April] 1, 2007, and at maturity or upon early prepayment. Principal on this Bond shall be paid on the Maturity Date identified above. Upon payment of this Bond in full, the Registered Owner shall surrender this Bond at the office of the Management Services Director of the City for cancellation. Both principal of and interest on this Bond are payable in lawful money of the United States of America. The City may prepay this Bond in whole or in part at any time by paying the principal amount thereof to be prepaid together with accrued interest to the date of prepayment. A prepayment fee may apply, as set forth in the Bond Ordinance. Interest shall cease to accrue on the date this Bond is ORD # 6 -,5q( , PAGE 6 P:WNI"MNM 11/30/06 prepaid in full. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Registration Certificate hereon shall have been manually signed by the Bond Registrar. Reference is made to the Bond Ordinance for definitions of capitalized terms. This Bond has been designated as a "qualified tax - exempt obligation" for banks, thrift institutions and other financial institution. This Bond is issued pursuant to the Bond Ordinance for the purpose of financing capital projects of the City, all in conformity with the Constitution and laws of the State of Washington. The City has irrevocably covenanted that it will deposit in the Limited Tax General Obligation Bond Account, 2006 of the City authorized to be maintained by the Bond Ordinance, taxes levied, bond proceeds or refunding proceeds, in amounts which, together with other moneys of the City legally available therefore, will be sufficient to pay the principal of and interest on this Bond as the same shall become due. It is hereby certified and declared that this Bond is issued pursuant to and in strict compliance with the Constitution and laws of the State of Washington and ordinances of the City and that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have happened, been done and performed. IN WITNESS WHEREOF, the City of Federal Way, Washington, has caused this Bond to be executed by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the Clerk, and the seal of the City to be imprinted or impressed hereon as of the 28th day of December, 2006. CITY OF FEDERAL WAY /s/ manual or facsimile MAYOR, MICHAEL PARK ATTEST: /s/ manual or facsimile CITY CLERK, LAURA HATHAWAY, CMC ORD # S�/ , PAGE 7 P:WMMNMN2V2 11/30/06 REGISTRATION CERTIFICATE This Bond is registered in the name of the Registered Owner on the books of the City, in the office of the Management Services Director (the "Bond Registrar "), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this Bond shall be made by the City with full acquittance by the Bond Registrar's wire transfer, made payable to the last Registered Owner as shown hereon and on the registration books ofthe Bond Registrar at his/her address noted hereon and on the registration books of the Bond Registrar. Date of Name and Address of Registration Registered Owner Bank of America, N.A. December 28 2006 800 Fifth Avenue, Floor 34 Seattle, WA 98104 Signature of Registrar ft&� LA jt4vM l anagement ervi es Director Section 10. Execution. The Bond shall be executed on behalf of the City with the manual or facsimile signature of its Mayor, shall be attested by the facsimile or manual signature of the City Clerk and shall have the seal of the City impressed or imprinted thereon. Only such Bond as shall bear thereon a Registration Certificate in the form recited above, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Registration Certificate shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered hereunder and is entitled to the benefits of this ordinance. If any officer whose signature appears on the Bond ceases to be an officer of the City authorized to sign bonds before the Bond bearing his or her signature is authenticated or delivered by the Bond Registrar or issued by the City, the Bond nevertheless may be authenticated, delivered and issued and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond may also be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the ORD # D(o -S�fl , PAGE 8 P:WMNWMN2V2 11/30/06 date of issuance of the Bond. ection 11. Sale of the Bond. The Council hereby authorizes the sale of the Bond to the Bank pursuant to the terms of the Bank's Proposal attached hereto and authorizes the Management Services Director to accept a binding offer from the Bank consistent with the Terms of the Proposal. Upon delivery of the Bond, the City shall pay to the Bank a fee and reimburse the Bank for its legal fees as provided in the Bank's Proposal, which payments shall be made by check, wire transfer or other mutually acceptable means. Section 12. Tax Covenant; Special Desi ation. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such Bond pursuant to Section 148 of the Code which will cause the Bond to be an "arbitrage bond" within the meaning of said section and said regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bond) and the applicable regulations thereunder throughout the term of the Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" under Section 141 of the Code. The City hereby designates the Bond as a "qualified tax- exempt obligation" under Section 265(b)(3) of the Code for banks, thrift institutions and other financial institutions. The City does not expect to issue more than $10,000,000 in qualified tax - exempt obligations during calendar year 2006. Section 13. Default. The City hereby covenants with the Bank that the following shall constitute Events of Default: (a) nonpayment of principal, interest, fees or other amounts when due; or (b) failure to maintain the tax - exempt status of the Bond. So long as an Event of Default has occurred and is continuing hereunder, outstanding principal amounts will bear interest at a default ORD # {,� Sy/ , PAGE 9 P:WMN \NMN2V2 11/30/06 rate equal to the Interest Rate (as set forth in the Bond) plus two percentage points. Section 14. Ongoing Disclosure and Reporting Requirements. The City is exempt from the ongoing disclosure requirements of Securities and Exchange Commission Rule 15c2 -12 by reason of the exemption set forth in subsection (d)(i) of that rule with respect to the issuance of securities in authorized denominations of $100,000 or more. The City, however, hereby covenants and agrees for as long as the Bond remains outstanding that it will provide annually to the Bank copies of (a) its audited financial statements for each fiscal year, within 10 days of receipt thereof, (b) the City's internally - prepared, unaudited annual financial statement, within seven months of the end of the fiscal year, and (c) the City's biennial budget for the new period within 45 days of commencement of the new budget cycle. Section 15. Ratification; General Authorization. The Mayor, City Manager or the Management Services Director and other appropriate officers of the City are authorized to take any actions and to execute documents as in their judgment may be necessary or desirable in order to carry out the terms of, and complete the transactions contemplated by, this ordinance. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified. Section 16. Severability. If any provision in this ordinance is declared by any court of competent jurisdiction to be contrary to law, then such ,provision shall be null and void and shall be deemed separable from the remaining provision of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. Section 17. Effective Date. This ordinance shall become effective five days after its passage and publication as required by law. PASSED by the City Council of the City of Federal Way this ffi , day of M. ORD #_DG� Sy/ , PAGE 10 r:wMN\NMN2v2 11/30/06 CITY OF FEDERAL WAY ATTEST: CITk CLERK, LAURA ATHAWAY, CMC APPROVED AS TO FORM: CITY ATTORNEY, PATRICIA A. RICHARDSON FILED WITH THE CITY CLERK: & Lo (p PASSED BY THE CITY COUNCIL: is IR 6(0 PUBLISHED: at -30(10 EFFECTIVE DATE: tak3elk, ORDINANCE NO.: 0G, • 541 ORD #f S q/ ,PAGE 11 P:\NMN\NMNZVZ 11/30/06 CERTIFICATE I, the undersigned, Clerk of the City of Federal Way, Washington (the "City"), and keeper of the records of the City Council (herein called the "Council "), DO HEREBY CERTIFY: That the attached ordinance is a true and correct copy of Ordinance No. - ql of the. Council (herein called the "Ordinance "), duly passed at a regular meeting thereof held on the 19th day of December, 2006. 2. That said meeting was duly convened and held in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been duly fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate. I have hereunto set my hand this /9 #i- day of �ac�ar/ , 20&. CI CLERK, LAURA JIATHAWAY, CMC P:WMNWMN2V2 11/30/06 EXHIBIT "A" BANK'S PROPOSAL Nancy Nuerenberg Senior Vice President November 21, 2006 Ms. Mien Wang Management Services Director City of Federal Way 33325 8th Ave S PO Box 9718 Federal Way, WA 98063 -9718 Re: City of Federal Way, LTGO Note Dearlwen: Bankof America ��W Government Banking WA1- 501 -34 -03 300 51 Avenue, 34h Floor Seattle, WA 98104 Tel 206.358.6279 Fax 206.358.88 18 nancydnuerenberg @bankofameri ca.com Bank of America, N.A. is pleased to provide the attached proposal to provide short -term financing to the City of Federal Way. The proceeds will be used to acquire real estate for future downtown redevelopment. The rates and terms for the Credit Facility are attached to this letter, as Exhibit A, Summary of Terms and Conditions. The terms and conditions are not all-inclusive, but generally describe the proposal offered to the City. We appreciate the opportunity to present you with this proposal and look forward to working with you on this financing. Please call either me at (206) 358 -6279, or Tana Aardal at (206) 358 -8935 to discuss any question or comments you may have regarding this proposal. Sincerely, Bank of America, N.A. Nancy D. Nuerenberg, SVP Senior Credit Products Officer cc: Nancy Neraas, Preston Gates & Ellis LL Alan Schulkin, Schulkin Law Tana Aardal, Bank of America Brennan Church, Bank of America City of Federal Way November 21, 2006irtlttlftteriCa Page 2 of Exhibit A Summary of Terms and Conditions CITY OF FEDERAL WAY, WASHINGTON BORROWER: City of Federal Way, Washington ( "Borrower ") LENDER: Bank of America, N.A. ( "Bank of America ") FORM OF CREDIT: $4,100,000 Tax - Exempt, Bank Oualified, LTGO Note (the "Credit Facility°). PURPOSE: Proceeds of the Credit Facility will be used to purchase land for future downtown redevelopment. MATURITY DATE: Borrower's option of one of the following: Two years from closing, estimated at December 28, 2008; Three years from closing, estimated at December 28, 2009; or Five years from closing, estimated at December 28, 2011. CLOSING DATE: Estimated to close on December 28, 2006. SECURITY: Limited Tax General Obligation of Borrower. INTEREST RATE: A rate per year equal to a Fixed Rate which is set for the full term of the Credit Facility. Indicative Fixed Rates as of November 20, 2006 are as follows: • Two year maturity: 3.68% • Three year maturity: 3.69% • Five year maturity: 3.74% The interest rate may be locked after. Finance Committee recommendation to proceed based on mutual agreement by Borrower and Bank of America, and subject to market costs incurred by Bank of America to provide such a rate lock. Interest is calculated on the basis of a 360 -day year comprised of 30-day months. The pricing indicated above is based on the entire Credit Facility being disbursed to Borrower at closing. REPAYMENT: The Credit Facility shall be repaid in quarterly payments of accrued interest. The outstanding principal balance is due in full on the Maturity Date. ORIGINATION FEE: Borrower agrees to pay Bank of America an origination fee of 0.05% of the amount of the Credit Facility ($2,050), payable at closing. This fee shall be deemed iuly eamed upon closing. City of Federal Way November 21, 2006 Page 3 of d BankofAmenca'', EXPENSES: Borrower will pay all reasonable costs and expenses associated with the preparation and review of all documentation executed in connection with the Credit Facility, including Bank of America's attorney fees (not to exceed $600.00), whether or not the Credit Facility is closed; Borrower's outside legal counsel fees; and any other costs associated with documenting and closing the Credit Facility. PREPAYMENT FEES: Borrower may prepay this Credit Facility in whole or in part prior to its scheduled Maturity Date by paying the principal amount thereof to be prepaid together with accrued interest to the date of prepayment. Any such prepayment may result in the imposition of a prepayment fee. The prepayment fee shall be in an amount sufficient to compensate Bank of America for any loss incurred by it as a result of the prepayment, as documented by the Bank of America, including any loss arising from the liquidation or reemployment of funds obtained by it to maintain the funds used to purchase the Credit Facility or from fees payable to terminate the deposits from which such funds were obtained. For purposes of this paragraph, Bank of America shall be deemed to have funded the purchase of the Credit Facility by a matching deposit or other borrowing in the applicable interbank market, whether or not the Credit Facility was in fact so funded. In no case shall a prepayment fee apply if the Bank of America's internally derived cost of funds is higher on the date of prepayment than it was on the date the fixed rate of the Credit Facility was set. REPRESENTATIONS AND Usual and customary for transactions of this type. In addition, WARRANTIES: Borrower shall provide an unqualified legal opinion of nationally recognized bond counsel, in form and substance acceptable to Bank of America and its legal counsel, that (i) the Ordinance and all documents related to the Credit Facility have been properly adopted, authorized and executed; (ii) the Ordinance and all documents related to the Credit Facility constitute legally binding obligations of the Borrower, enforceable according to their terms; and (iii) interest payable on the Credit Facility is excludable from gross income for purposes of federal income taxes. Bank of America is prepared to accept the opinion of Preston Gates & Ellis LLP as Bond Counsel for Borrower. EVENTS OF DEFAULT: Usual and customary in transactions of this type. If an event of default occurs due to (i) nonpayment of principal, interest, fees or other amounts when due, or (ii) failure to maintain the tax exempt status of the Credit Facility, then Bank may increase the interest rate spread by two percentage points (2.0 %). City of Federal Way November 21, 2008 Page 4 of 4 BankafAmerrca �. t FINANCIAL REPORTING Borrower to provide financial information and statements in form and REQUIREMENTS: content acceptable to Bank of America indicated below: • Annual State Audit Report of Borrower, within 10 days of receipt from State Auditor. • Borrower's internally prepared unaudited annual financial statement within seven months of its fiscal year end. • Borrower's biennial budget, within 45 days of commencement of the new budget cycle. DOCUMENTATION: Borrower agrees to execute loan documents in a form and in substance satisfactory to Bank of America and its legal counsel, Alan Schulkin. Final loan documents may contain terms and conditions that are different from or in addition to those stated in this letter. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.