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HomeMy WebLinkAbout4268 OrdinanceCITY OF PASCO, WASHINGTON ORDINANCE NO. 4268 AN ORDINANCE of the City of Pasco, Washington, relating to contracting indebtedness; providing for the issuance, sale and delivery of a not to exceed $4,025,000 principal amount limited tax general obligation bond to provide funds to repay the City's outstanding loan from the Department of Ecology and to pay the costs of issuance and sale of the bond; fixing or setting parameters with respect to certain terms and covenants of the bond; appointing the City's designated representative to approve the final terms of the sale of the bond; and providing for other related matters. Passed February 16, 2016 This document prepared by: Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447-4400 51491596.4 Section 1 . Section 2 . Section 3 . Section 4 . Section 5 . Section 6 . Section 7 . Section 8 . Section 9 . Section 10 . Section 11 . Section 12 . Section 13 Section 14 Section 15 Section 16 Section 17 Section 18 Exhibit A TABLE OF CONTENTS* Page Definitions............................................................................................................... 1 Findings and Determinations.................................................................................. 2 Authorizationof Bond............................................................................................ 3 Description of the Bond; Appointment of Designated Representative ................... 3 Bond Registrar; Registration and Transfer of Bond ............................................... 3 Formand Execution of Bond.................................................................................. 4 Paymentof Bond..................................................................................................... 5 Bond Fund; Deposit of Proceeds............................................................................ 5 Prepayment............................................................................................................. 5 FailureTo Pay Bond............................................................................................... 5 Pledgeof Taxes....................................................................................................... 5 Tax Covenants; Designation of Bond as "Qualified Tax Exempt Obligations."........................................................................................ Refunding or Defeasance of the Bond ................................................. Sale and Delivery of the Bond............................................................. Supplemental and Amendatory Ordinances ......................................... General Authorization and Ratification ............................................... Severability..............................._.......................................................... Effective Date of Ordinance................................................................ Parameters for Final Terms 6 6 7 7 7 8 8 *The cover page, table of contents and section headings of this ordinance are for convenience of reference only, and shall not be used to resolve any question of interpretation of this ordinance. -i- 51491596.4 CITY OF PASCO, WASHINGTON ORDINANCE NO. 4268 AN ORDINANCE of the City of Pasco, Washington, relating to contracting indebtedness; providing for the issuance, sale and delivery of a not to exceed $4,025,000 principal amount limited tax general obligation bond to provide funds to repay the City's outstanding loan from the Department of Ecology and to pay the costs of issuance and sale of the bond; fixing or setting parameters with respect to certain terms and covenants of the bond; appointing the City's designated representative to approve the final terms of the sale of the bond; and providing for other related matters. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following capitalized terms shall have the following meanings: (a) "Bond" means the Limited Tax General Obligation Bond, 2016, issued pursuant to and for the purposes provided in this ordinance. (b) "Bond Counsel" means the firm of Foster Pepper PLLC, its successor, or any other attorney or firm of attorneys selected by the City with a nationally recognized standing as bond counsel in the field of municipal finance. (c) "Bond Fund" means the Limited Tax General Obligation Bond Fund, 2016, of the City created for the payment of the principal of and interest on the Bond. (d) "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of identifying ownership of the Bond. (e) "Bond Registrar" means the Finance Manager of the City or any successor bond registrar selected by the City. (f) "City" means the City of Pasco, Washington, a municipal corporation duly organized and existing under the laws of the State. (g) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (h) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (i) "Designated Representative" means the officer of the City appointed in Section 4 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). -1- 51491596.4 0) "Final Terms" means the terms and conditions for the sale of the Bond including the amount, date or dates, denominations, interest rate or rates (or mechanism for determining interest rate or rates), payment dates, final maturity, redemption rights, price, and other terms or covenants, including minimum savings for repayment of the loan. (k) "Finance Manager" means the finance manager or such other officer of the City who succeeds to substantially all of the responsibilities of that office. (1) "Government Obligations" has the meaning given in RCW 39.53.010, as now in effect or as may hereafter be amended. (m) "Issue Date" means the date of initial issuance and delivery of the Bond to the Purchaser in exchange for the purchase price of the Bond. (n) "Purchase Offer" means an offer to purchase the Bond, setting forth certain terms and conditions of the issuance, sale and delivery of the Bond, which offer is authorized to be accepted by the Designated Representative on behalf of the City, if consistent with this ordinance. (o) "Purchaser" means the corporation, firm, association, partnership, trust, bank, financial institution or other legal entity or group of entities selected by the Designated Representative to serve as purchaser in a private placement. (p) "Record Date" means the Bond Registrar's close of business on the 15th day of the month preceding an interest payment date. (q) "Registered Owner" means the person in whose name the Bond is registered on the Bond Register. (r) "SRF Loan" means the Department of Ecology Washington State Water Pollution Control State Revolving Fund (SRF) Loan Agreement No. L9400013 dated as of May 26, 1994. (s) "State" means the State of Washington. (t) "System of Registration" means the system of registration for the City's bonds and other obligations set forth in Ordinance No. 2845. Section 2. Findings and Determinations. The City takes note of the following facts and makes the following findings and determinations: Pursuant to Resolution No. 2133, the City entered into the SRF Loan to borrow $3,802,779 for the purpose of paying a part of the cost of constructing certain Waterworks Utility facilities, and subsequent amendments to the SRF Loan Agreement increased the total amount of the SRF Loan to $23,700,000. As of February 16, 2016, there is currently $5,640,749.50 principal amount outstanding on the SRF Loan. After due consideration, it appears to the City Council that the SRF Loan may be repaid by the issuance and sale of the Bond authorized herein so that a savings will be effected by the -2- 51491596.4 difference between the principal and interest cost over the life of the Bond and the principal and interest cost over the life of the SRF Loan but for such repayment. (a) Debt Capacity. The maximum amount of indebtedness authorized by this ordinance is $4,025,000. 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 2016 is $3,937,446,202. (2) As of December 31, 2015, the City has limited tax general obligation indebtedness, consisting of bonds, leases and conditional sales contracts outstanding in the principal amount of $11,256,696, which is incurred within the limit of up to 1 %2% of the value of the taxable property within the City permitted for general municipal purposes without a vote. (3) As of December 31, 2015, the City has unlimited tax general obligation indebtedness for capital purposes only outstanding in the principal amount of $400,000 for general municipal purposes. The indebtedness described in this paragraph has been incurred with the approval of the requisite proportion of the City's qualified voters at an election meeting the minimum turnout requirements, within the limit of up to 2'/2% of the value of the taxable property within the City for general municipal purposes (when combined with the outstanding limited tax general obligation indebtedness). (b) The Bond. For the purpose of providing the funds necessary to pay and redeem the SRF Loan and to pay the costs of issuance and sale of the Bond, the City Council finds that it is in the best interests of the City and its taxpayers to issue and sell the Bond, pursuant to the terms set forth in the Purchase Offer as approved by the City's Designated Representative consistent with this ordinance. Section 3. Authorization of Bond. The City is authorized to borrow money on the credit of the City and issue a negotiable limited tax general obligation bond evidencing indebtedness in a principal amount not to exceed $4,025,000 to provide funds necessary to pay and redeem the SRF Loan and to pay the costs of issuance and sale of the Bond. Section 4. Description of the Bond; Appointment of Designated Representative. The Interim Finance Manager is appointed as the Designated Representative of the City, with the individual authority to conduct the sale of the Bond in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of the Bond, with such additional terms and covenants as the Designated Representative deems advisable, within the parameters set forth in Exhibit A, which is attached to this ordinance and incorporated by this reference. Section 5. Bond Registrar; Registration and Transfer of Bond. Pursuant to RCW 39.46.030(4) the City's Finance Manager shall serve as initial fiscal agent for the City (the "Bond Registrar") with respect to the Bond and is authorized, on behalf of the City, to -3- 51491596.4 authenticate and deliver the Bond in accordance with the provisions of the Bond and this ordinance. The Bond shall be issued only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Bond Registrar (the "Bond Register"). The Bond Register shall contain the name and mailing address of the registered owner of the Bond. Upon a determination by the Finance Manager that maintenance of the duties of the Bond Registrar is no longer convenient, the fiscal agent of the State of Washington shall act as Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its office, sufficient books for the registration, assignment or transfer of the Bond, which books shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bond transferred or exchanged in accordance with the provisions of the Bond and this ordinance, to serve as the City's paying agent for the Bond and to carry out all of the Bond Registrar's powers and duties under this ordinance and the System of Registration. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bond. The Bond may be assigned or transferred only in whole and only if endorsed in the manner provided thereon and surrendered to the Bond Registrar, subject to the Bank's representations or in a certificate to be provided at closing. Any such transfer shall be without cost to the owner or transferee and shall be noted in the Bond Register. The Bond Registrar shall not be obligated to transfer the Bond during the 15 days preceding any installment payment or prepayment date. Section 6. Form and Execution of Bond. (a) Form of Bond; Signatures and Seal. The Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. The Bond 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 Bond ceases to be an officer of the City authorized to sign the bond before the Bond bearing his or her manual or facsimile signature is authenticated by the Bond Registrar, or issued or delivered by the City, the Bond 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 the bond. The Bond also may 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 the bond, although he or she did not hold the required office on its Issue Date. (b) Authentication. Only a Bond bearing a Certificate of Authentication in substantially the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: "Certificate Of Authentication. This Bond is the fully registered City of Pasco, Washington, Limited Tax General Obligation Bond, 2016, described in the Bond Ordinance." The authorized signing of a -4- 51491596.4 Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. Section 7. Payment of Bond. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. Principal and interest on the Bond shall be payable by automatic deposit on the payment date or, if unavailable, by check or draft of the Bond Registrar mailed on or prior to the payment date to the Registered Owner at the address appearing on the Bond Register on the Record Date. The Bond is not subject to acceleration under any circumstances. Section 8. Bond Fund; Deposit of Proceeds. (a) Bond Fund. The Bond Fund is created as a special fund of the City for the sole purpose of paying principal of and interest on the Bond. All amounts allocated to the payment of the principal of and interest on the Bond shall be deposited in the Bond Fund as necessary for the timely payment of amounts due with respect to the Bond. The principal of and interest on the Bond shall be paid out of the Bond Fund. Until needed for that purpose, the City may invest money in the Bond Fund temporarily in any legal investment, and the investment earnings shall be retained in the Bond Fund and used for the purposes of that fund. (b) Bond Proceeds. The Bond Proceeds shall be deposited in the General Fund of the City and used immediately to pay and redeem the SRF Loan and pay costs of issuance of the Bond. Section 9. Prepayment. The City reserves the right and option at any time to prepay and redeem any or all of the principal amount of the Bond outstanding at par plus accrued interest to the date of prepayment upon at least 15 days' advance written notice to the Registered Owner. Any prepayment shall be applied first to accrued and unpaid interest and then to reduce the outstanding principal amount of the Bond. Interest on the principal amount of the Bond called for prepayment shall cease to accrue on the date fixed for prepayment unless the principal amount called for prepayment is not paid on the prepayment date. Upon any partial prepayment, the remaining installment payments of principal and interest shall be recalculated as provided in the Bond. Section 10. Failure To Pay Bond. If the principal of the Bond is not paid when the Bond is properly presented at its maturity or date fixed for redemption, the City shall be obligated to pay interest on the Bond at the same rate provided in the Bond from and after its maturity or date fixed for redemption until the Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund, or in a trust account established to refund or defease the Bond, and the Bond has been called for payment by giving notice of that call to the Registered Owner. Section 11. Pledge of Taxes. The Bond 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 Bond. For as long the Bond 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 -5- 51491596.4 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 Bond 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 Bond and such pledge shall be enforceable in mandamus against the City. Section 12. Tax Covenants; Designation of Bond as "Qualified Tax Exempt Obligations." (a) Preservation of Tax Exemption for Interest on Bond. The City covenants that it will take all actions necessary to prevent interest on the Bond from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bond or other funds of the City treated as proceeds of the Bond that will cause interest on the Bond to be included in gross income for federal income tax purposes. (b) Post -Issuance Compliance. The Finance Manager is authorized and directed to review and update 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 Bond from being included in gross income for federal tax purposes. (c) Designation of Bond as "Qualified Tax -Exempt Obligations." The Bond may be designated as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code, if the following conditions are met: (1) the Bond does not constitute "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 bond 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 Bond is issued will not exceed $10,000,000; and (3) the amount of tax-exempt obligations 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 Bond is issued does not exceed $10,000,000. Section 13. Refunding or Defeasance of the Bond. The City may issue refunding bonds pursuant to State law or use money available from any other lawful source to carry out a refunding or defeasance plan, which may include (a) paying when due the principal of and interest on any or all of the Bond (the "defeased Bond"); (b) redeeming the defeased Bond prior to their maturity; and (c) paying the costs of the refunding or defeasance. If the City sets aside in a special trust fund or escrow account irrevocably pledged to that redemption or defeasance (the "trust account"), money and/or Government Obligations maturing at a time or times and bearing -6- 51491596.4 interest in amounts sufficient to redeem, refund or defease the defeased Bond in accordance with their terms, then all right and interest of the Owners of the defeased Bond in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bond shall cease and become void. Thereafter, the Owners of defeased Bond shall have the right to receive payment of the principal of and interest on the defeased Bond solely from the trust account and the defeased Bond shall be deemed no longer outstanding. In that event, the City may apply money remaining in any fund or account (other than the trust account) established for the payment or redemption of the defeased Bond to any lawful purpose. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance shall be given, and selection of Bond for any partial refunding or defeasance shall be conducted, in the manner prescribed in this ordinance for the redemption of Bond. Section 14. Sale and Delivery of the Bond. (a) Manner of Sale of Bond; Delivery of Bond. The Designated Representative is authorized to sell the Bond by private placement based on the assessment of the Designated Representative of market conditions, in consultation with appropriate City officials and staff, Bond Counsel and other advisors. In accepting the Final Terms, the Designated Representative shall take into account those factors that, in the judgment of the Designated Representative, may be expected to result in the lowest true interest cost to the City. (b) Procedure for Private Placement. For the sale of the Bond by private placement, the Designated Representative shall select one or more Purchasers with which to negotiate such sale. The Purchase Offer for the Bond shall set forth the Final Terms. The Designated Representative is authorized to execute the Purchase Offer on behalf of the City, so long as the terms provided therein are consistent with the terms of this ordinance. (c) Preparation, Execution and Delivery of the Bond. The Bond will be prepared at City expense and will be delivered to the Purchaser in accordance with the Purchase Offer, together with the approving legal opinion of Bond Counsel regarding the Bond. Section 15. Supplemental and Amendatory Ordinances. The City may supplement or amend this ordinance for any one or more of the following purposes without the consent of any Owners of the Bond: (a) To add covenants and agreements that do not materially adversely affect the interests of Owners, or to surrender any right or power reserved to or conferred upon the City. (b) To cure any ambiguities, or to cure, correct or supplement any defective provision contained in this ordinance in a manner that does not materially adversely affect the interest of the Beneficial Owners of the Bond. Section 16. General Authorization and Ratification. The Designated Representative 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 -7- 51491596.4 the prompt delivery of the Bond to the Purchaser thereof and for the proper application, use and investment of the proceeds of the Bond. 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 17. 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 18. 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 Pasco, Washington, at an open public meeting thereof, this 16a` day of February, 2016, Matt Watkins, Mayor TTE T: ebra L. ark, City Clerk. APPROVED AS TO FORM: Foster Pepper PLLC Bond Counsel 51491596.4 Exhibit B EXHIBIT A DESCRIPTION OF THE BOND (a) Principal Amount. The Bond may be issued in an amount not to exceed the principal amount of $4,025,000. (b) Date. The Bond shall be dated its Issue Date, which date may not be later than one year after the effective date of this ordinance. (c) Interest Rate(s). The Bond shall bear interest at fixed or variable rates, provided that the average interest rate on the Bond may not exceed 1.36%, other than as a consequence of any adjustment that may occur upon an event of default or determination of taxability. (e) Payment Dates. Interest must be payable at the rates and on such dates as are acceptable to the Designated Representative. Principal payments shall commence on a payment date acceptable to the Designated Representative and must be payable at maturity or in installments on such dates as are acceptable to the Designated Representative. (f) Final Maturity. The Bond shall mature no later than December 31, 2019. (g) Price. The purchase price for the Bond may be in an amount as is acceptable to the Designated Representative. (h) Savings. The sale of the Bond shall produce a minimum net present value savings of 3% of the outstanding principal amount of the SRF Loan, less the City's contribution of the reserve account amount for the SRF Loan. (i) Other Terms and Conditions. (1) The Bond may not be issued if it would cause the indebtedness of the City to exceed the City's legal debt capacity on the Issue Date. (2) The Designated Representative may accept such additional terms, conditions and covenants as he or she may determine are in the best interests of the City, consistent with this ordinance. A-1 51491596.4 CERTIFICATION I, the undersigned, City Clerk of the City of Pasco, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 4268 (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 February 16, 2016, 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 is February 18, 2016. 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: February 16, 2016. 51491596.4 CITY OF PASCO, WASHINGTON 0 i Debra L. Clark, City Clerk