ORD 14-777ORDINANCE NO. 14 -777
AN ORDINANCE of the City of Federal Way, Washington, establishing
a term loan and providing for the issuance and sale of a limited tax
general obligation bond anticipation note in the principal amount of not
to exceed $8,500,000 to evidence the loan to be used to purchase land for
city purposes; and fixing the form, covenants and terms of the note.
THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DO
ORDAIN AS FOLLOWS:
Section 1. Definitions. As used in this ordinance, the following capitalized terms
shall have the following meanings:
(a) "Authorized Officer" means the Mayor or Finance Director.
(b) "Bank" means KeyBank National Association.
(c) "City" means the City of Federal Way, Washington, a municipal corporation duly
organized and existing under the laws of the State of Washington.
(d) "City Council" means the legislative authority of the City, as duly and regularly
constituted from time to time.
(e) "Code" means the United States Internal Revenue Code of 1986, as amended, and
applicable rules and regulations promulgated thereunder.
(f) "Date of Delivery" means the date of the delivery of the Note to the Bank.
(g) "Interest Rate" means 1.51 %.
(h) "Note" means the "City of Federal Way, Washington Limited Tax General
Obligation Bond Anticipation Note, 2014" authorized by this ordinance.
(i) "Note Account" means the Limited Tax General Obligation Bond Anticipation
Note Account, 2014, of the City created for the payment of the principal of and interest on the
Note.
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(j) "Note Register" means the registration records for the Note maintained by the
Note Registrar.
(k) "Note Registrar" means the City Finance Director, whose duties include
registering and authenticating the Note, maintaining the Note Register, transferring ownership of
the Note, and paying the principal of and interest on the Note.
(1) "Outstanding Principal Balance of the Note" means the principal amount of the
loan evidenced by the Note less the aggregate of all principal payments on the Note made by the
City.
(m) "Proposal" means a proposal to purchase the Note, setting forth certain terms and
conditions of the issuance, sale and delivery of the Note.
(n) "Request for Draw" means a written request by an Authorized Officer for a draw
from the loan authorized to be established by this ordinance.
Section 2. Findings and Determinations. The City takes note of the following facts
and makes the following findings and determinations:
(a) Authority and Description of the Project. The City is in need of land for City
purposes, which may include building a new city hall (the "Project "). The City Council therefore
finds that it is in the best interests of the City to carry out the Project.
(b) Plan of Financing. The City is authorized to issue limited tax general obligation
bonds and, pending the issuance of those bonds, issue short term obligations in accordance with
the provisions of chapter 39.50 RCW for the purpose of providing the funds to pay the costs of
financing the Project or reimbursing the City for the cost of the Project. The total expected cost
of the Project is approximately $8,500,000.
(c) Debt Capacity. The maximum amount of indebtedness authorized by this
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ordinance is $8,500,000. Based on the following facts, this amount is to be issued within the
amount permitted to be issued by the City for general municipal purposes without a vote:
(1) The assessed valuation of the taxable property within the City as ascertained by
the last preceding assessment for City purposes for collection in the calendar year 2014 is
$7,386,015,527.
(2) As of October 31, 2014, the City has limited tax general obligation indebtedness,
consisting of leases and conditional sales contracts outstanding in the principal amount of
$27,016,400, which is incurred within the limit of up to 11 /2% of the value of the taxable property
within the City permitted for general municipal purposes without a vote.
(3) As of October 31, 2014, the City has no unlimited tax general obligation
indebtedness outstanding.
Section 3. Authorization of the Note; Payment, Registration and Transfer. In order to
finance the Project, the City shall establish a term loan and issue and sell a note to evidence such
line. The Note shall be designated the "City of Federal Way, Washington Limited Tax General
Obligation Bond Anticipation Note, 2014" and issued in the denomination of not to exceed
$8,500,000 (the "Note "). The Note shall be dated the date of delivery to the Bank (the "Date of
Delivery ").
It is expected that the City will make a single draw up to $8,500,000 on the Date of
Delivery. The Note will bear interest at the Interest Rate. Interest on the Note shall accrue from
the date money is drawn, pursuant to a Request for Draw, until paid and shall be computed on the
principal amount outstanding on the basis of a 360 -day year composed of twelve 30 -day months.
Interest on the Outstanding Principal Balance of the Note shall be payable semiannually,
on each June 1 and December 1, commencing June 1, 2015. The Note matures on, and all
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outstanding principal and interest on the Note must be paid by, a date that is three years from the
Date of Delivery (the "Maturity Date "). The Note is a single- advance term loan, so that principal
amounts previously advanced and repaid may not be drawn again.
Interest under the Note shall be determined from the Date of Delivery.
Notwithstanding the foregoing, so long as an event of default (as defined in Section 11)
has occurred and is continuing hereunder, outstanding principal amounts will bear interest at a
default rate three percentage points in excess of the interest rate otherwise applicable under the
Note (the "Default Rate ")
The Note shall be issued in fully registered form. Both principal of and interest on the
Note shall be payable in lawful money of the United States of America by check, warrant, wire
transfer or automatic clearinghouse funds, to the registered owner of the Note at the address
shown on the Note Register.
Note proceeds disbursed by the Bank to the City on the Date of Delivery shall be
deposited into the appropriate City account determined by an Authorized Officer.
The Note may be assigned or transferred only in whole and only if endorsed in the
manner provided thereon and surrendered to the Note Registrar in return for a new Note showing
the transferee as registered owner, subject to the Bank's representations that it is assigning or
transferring the Note, in a certificate to be provided on the Date of Delivery. Any such transfer
shall be without cost to the owner or transferee and shall be noted in the Note Register. The Note
may only be assigned by the Bank to another qualified investor satisfying the requirements set
forth in the certificate to be signed by the Bank on the Date of Delivery.
Section 4. Form and Execution of the Note.
(a) Form of the Note; Signatures and Seal. The Note shall be prepared in a form
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consistent with the provisions of this ordinance and Washington law. The Note shall be signed
by the Mayor and the City Clerk, either or both of whose signatures may be manual or in
facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or
printed thereon. If any officer whose manual or facsimile signature appears on the Note ceases to
be an officer of the City authorized to sign bonds before the Note bearing his or her manual or
facsimile signature is authenticated by the Note Registrar, or issued or delivered by the City, the
Note nevertheless may be authenticated, issued and delivered 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. The Note also may be signed on behalf of the City by any
person who, on the actual date of signing of the Note, is an officer of the City authorized to sign
bonds, although he or she did not hold the required office on its Date of Delivery.
(b) Authentication. Only the Note bearing a Certificate of Authentication in
substantially the following form, manually signed by the Note Registrar, shall be valid or
obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate of
Authentication. This Note is the fully registered City of Federal Way, Washington, Limited Tax
General Obligation Bond Anticipation Note, 2014." The authorized signing of a Certificate of
Authentication shall be conclusive evidence that the Note so authenticated has been duly
executed, authenticated and delivered and is entitled to the benefits of this ordinance.
Section 5. Note Account. A special fund or account of the City known as the
"Limited Tax General Obligation Bond Anticipation Note Account, 2014" (the "Note Account ")
is hereby authorized to be created and shall be drawn upon for the sole purpose of paying and
securing the payment of the Note. The City hereby covenants and agrees to deposit in the Note
Account proceeds of bonds, a refunding note, loans, taxes and /or grants, if any received by the
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City for the Project, in an amount sufficient to pay the principal of and interest on the Note as the
same becomes due.
Section 6. Prepay The City reserves the right to prepay principal of the Note in
advance of the scheduled payment, in whole, at any time, with no prepayment penalty. The City
may prepay the Note in part (a) from proceeds of the sale of a portion of the property purchased
or reimbursed with proceeds of the Note or (b) if required by federal tax regulations. The City
will notify the Bank at least 30 days in advance of its intent to prepay.
Section 7. Pledge of Taxes. The Note constitutes a general indebtedness of the City
and is payable from tax revenues of the City and such other money as is lawfully available and
pledged by the City for the payment of principal of and interest on the Note. For as long as the
Note is outstanding, the City irrevocably pledges that it shall, in the manner provided by law
within the constitutional and statutory limitations provided by law without the assent of the
voters, include in its annual property tax levy amounts sufficient, together with other money that
is lawfully available, to pay principal of and interest on the Note as the same become due. The
full faith, credit and resources of the City are pledged irrevocably for the prompt payment of the
principal of and interest on the Note and such pledge shall be enforceable in mandamus against
the City.
Section 8. Tax Covenants.
(a) Tax Certificate. The City hereby covenants that it will not make any use of the
proceeds of sale of the Note or any other funds of the City that may be deemed to be proceeds of
such Note pursuant to Section 148 of the Code and the applicable regulations thereunder that will
cause the Note to be an "arbitrage bond" within the meaning of such section and such
regulations. The City will comply with the requirements of Section 148 of the Code (or any
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successor provision thereof applicable to the Note) and the applicable regulations thereunder
through the term of the Note. The City further covenants that it will not take any action or permit
any action to be taken that would cause the Note to constitute a "private activity bond" under
Section 141 of the Code.
(b) Post - Issuance Compliance. The Finance Director is authorized and directed to
adopt and implement the City's written procedures to facilitate compliance by the City with the
covenants in this ordinance and the applicable requirements of the Code that must be satisfied
after the issue date to prevent interest on the draws on the Note from being included in gross
income for federal tax purposes.
(c) Designation of the Note as a "Qualified Tax- Exempt Obligation." The City
designates the Note as a "qualified tax - exempt obligation" for the purposes of Section 265(b)(3)
of the Code, and makes the following findings and determinations:
(1) the Note does not constitute a "private activity bond" within the meaning of
Section 141 of the Code;
(2) the reasonably anticipated amount of tax - exempt obligations (other than private
activity bonds and other obligations not required to be included in such calculation) that the City
and any entity subordinate to the City (including any entity that the City controls, that derives its
authority to issue tax - exempt obligations from the City, or that issues tax - exempt obligations on
behalf of the City) will issue during the calendar year in which the Note is issued will not exceed
$10,000,000; and
(3) the amount of tax - exempt obligations, including the Note, designated by the City
as "qualified tax - exempt obligations" for the purposes of Section 265(b)(3) of the Code during
the calendar year in which the Note is issued does not exceed $10,000,000.
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Section 9. Sale of the Note. The sale of the Note to the Bank, under the terms and
conditions of this ordinance and the Proposal to purchase the Note is hereby approved and
confirmed. Upon delivery of the Note, the City shall reimburse the Bank's counsel fee in an
amount not to exceed $1,500.
Section 10. Reporting Requirements. While the Note is outstanding, the City shall
submit its annual financial reports to the Bank within 30 days after receipt of such annual
financial report from the Washington State Auditor, with such additional information as the Bank
may reasonably request.
Section 11. Default. The following events shall constitute a default under the Note:
(a) nonpayment of principal, interest, fees or other amounts under the Note when due,
(b) if the City fails to perform or observe any covenant of this ordinance,
(c) if the City has given the Bank any material representation or warranty that proves
to have been incorrect when made or confirmed,
(d) if a default occurs under other material agreements and indebtedness of the City,
(e) if the City voluntarily or involuntarily goes into bankruptcy, insolvency, debt
moratorium, etc., or
(f) if the City is unable to pay its debts.
Provided, that no payment default shall be deemed to occur until the Bank has
given written notice to the City of its failure to make such payment and five calendar days have
passed, and no other default shall be deemed to occur until the Bank has given written notice to
the City of its failure to comply with a covenant and 30 calendar days have passed. If any default
occurs as delineated in this section, (a) the interest rate may be increased to the Default Rate and
(b) the Bank may pursue any other remedies to which it is entitled under the Note and this
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ordinance, at law or in equity.
Section 12. Governing The Note shall be governed and interpreted according to
the laws of Washington. Nothing in this paragraph shall be construed to limit or otherwise affect
any rights or remedies of the Bank under federal law.
Section 13. General Authorization and Ratification. The Mayor, Finance Director,
City Clerk and other appropriate officers of the City are severally authorized to take such actions
and to execute such documents as in their judgment may be necessary or desirable to carry out
the transactions contemplated in connection with this ordinance, and to do everything necessary
for the prompt delivery of the Note to the Bank thereof and for the proper application, use and
investment of the proceeds of the Note. All actions taken prior to the effective date of this
ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the
terms of this ordinance are ratified and confirmed in all respects.
Section 14. Severability. The provisions of this ordinance are declared to be separate
and severable. If a court of competent jurisdiction, all appeals having been exhausted or all
appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as
to any person or circumstance, such offending provision shall, if feasible, be deemed to be
modified to be within the limits of enforceability or validity. However, if the offending provision
cannot be so modified, it shall be null and void with respect to the particular person or
circumstance, and all other provisions of this ordinance in all other respects, and the offending
provision with respect to all other persons and all other circumstances, shall remain valid and
enforceable.
Section 15. Corrections. The City Clerk and the codifiers of this ordinance are
authorized to make necessary corrections to this ordinance including, but not limited to, the
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correction of scrivener /clerical errors, references, ordinance numbering, section/subsection
numbers and any references thereto.
Section 16. Ratification. Any act consistent with the authority and prior to the effective
date of this ordinance is hereby ratified and affirmed.
Section 17. Effective Date of Ordinance. This ordinance shall take effect and be in
force from and after its passage and five days following its publication as required by law.
PASSED by the City Council and APPROVED by the Mayor of the City of Federal Way,
Washington, at an open public meeting thereof, this 18th day of November, 2014.
ATTEST:
CITY OF FEDERAL WAY
;16(/WL
C TY ERK, STEPHANIE CO NEY, CMC
APPROVED AS TO FORM:
0 #4 L4a W
CITY A RNEY, AMY JO PEARSALL
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.:
Ordinance No. 14 -777
11/14/2014
11/18/2014
11/21/2014
11/26/2014
14 -777
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CERTIFICATION
I, the undersigned, City Clerk of the City of Federal Way, Washington (the "City "), hereby
certify as follows:
1. The attached copy of Ordinance No. 14- 777(the "Ordinance ") is a full, true and correct
copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the
regular meeting place thereof on November 18, 2014, as that ordinance appears on the minute book
of the City.
2. The Ordinance will be in full force and effect five days after publication in the City's
official newspaper, which publication date was November 21, 2014.
3. A quorum of the members of the City Council was present throughout the meeting and a
majority of the members voted in the proper manner for the passage of the Ordinance.
Dated: November 18, 2014.
CITY OF FEDERAL WAY, WASHINGTON
LERK, STEPHANIE COtVTNEY, CMC
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