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HomeMy WebLinkAboutO-2081 - Bond issuance (Special)CITY OF MARYSVILLE,WASHINGTON ORDINANCE NO.2-0[5;/ AN ORDINANCE of the City of Marysville,Washington, relating to contracting indebtedness;authorizing the issuance of limited tax general obligation bonds to pay the cost of improvements to Cedarcrest Golf Course; authorizing the issuance of a Limited Tax General obligation Bond Anticipation Note,J.996 (Line of credit), in the aggregate principal amount of not to exceed $3,750,000 to pay those costs pending the issuance of those bonds or other sources of repayment;fixing the date,interest rate,form,maturity,terms,covenants and uses of the proceeds of the note;creating a note redemption account and a project account;and providing for the delivery of that note to Bank of America NW, N.A.,doing business as Seafirst Bank,Seattle, Washington. WHEREAS,the city of Marysville,Washington (the "City"),is in need of making improvement;s to Cedarcrest Golf Course (the "Projec::t"),the estimated cost of which is $3,750,000,and the City does not have available sufficient funds to pay the cost;and WHEREAS,the City has determined it to be in the best interest of the City that the city borrow money by the issuance of limited tax general obligation bonds and,pending the issuance of those bonds,issue short-term obligations in accordance with the provisions of RCW 39.58.J.70 for the purpose of providing the funds with which to pay the cost of the Project;and WHEREAS,Bank of America NW,N.A.,doing business as Seafirst Bank,has offered to extend a line of credit to the city evidenced by a limited tax general obligation bond anticipation note under the terms and conditions set forth herein;NOW,THEREFORE, THE CITY COUNCIL OF THE CITY OF MARYSVILLE,WASHINGTON,DO ORDAIN as follows: 0245302.02 Section 1.Definitions.As used in this ordinance,the following words shall have the following meanings: "Bank"means Bank of America NW,N.A.,doing business as Seafirst Bank,of Seattle,Washington. "Business Day"means any day which is not a saturday or Sunday or a day on which commercial banks located in Seattle,Washington, are closed for business. "city"means the City of Marysville,Washington. "Code"means the Internal Revenue Code of 1986,as amended, and applicable rules and regulations promulgated thereunder. "Note"means the Limited Tax General Obligation Bond Anticipation Note,1996 (Line of Credit),of the city in the principal amount of not to exceed $3,750,000,which is authorized to be issued by this ordinance. "Note Account"means that special account of the city created by this resolution in the previously created Cedarcrest Golf Course Fund 420 to be known as the Limited Tax General Obligation Bond Anticipation Note Account,1996 (Line of Credit),created by this ordinance for the payment of the principal of and interest on the Note. "Note Registrar"means the City Finance Director. "Project"means the improvements to and renovation of Cedarcrest Golf Course,a municipal golf course owned by the city. Section 2.Debt capacity.The assessed valuation of the taxable property within the city as ascertained by the last preceding assessment for City purposes for the calendar year 1996 is $966,918,566,and the City has outstanding general indebtedness 0245302.02 -2- evidenced by limited tax general obligation bonds and loans in the principal amount of $776,859 incurred within the limit of up to 1-1/2%of the value of the taxable property within the city permitted for general municipal purposes without a vote of the qualified voters therein,unlimited tax general obligation bonds in the principal amount of $5,595,202 incurred within the limit of up to 2-1/2%of the value of the taxable property within the City for capital purposes only issued pursuant to a vote of the qualified voters of the City,and the amount of indebtedness for which notes are authorized herein to be issued is $3,750,000. section 3.Authorization of Bonds.For the purpose of providing the funds to pay the cost of the Project,the city shall issue limited tax general obligation bonds in the amount of approximately $3,750,000.~uch bonds shall be issued in one or more series at such times as the city shall deem advisable;shall be in such denominations and form,shall be tiated,shall bear such interest rate or rates,shall be payable at such time or times, shall have such option of payment prior to maturity,shall provide for such additional funds and accounts and shall contain and be SUbject to such provisions and covenants as hereafter shall be provided by ordinance.The general indebtedness to be incurred shall be within the limit of up to 1-1/2%of the value of the taxable property within the City permitted for general municipal purposes without a vote of the qualified voters therein. section 4.Authorization and Description of Note.For the purpose of providing the funds with which to pay the cost of the Project and the costs of issuance and delivery of the Note pending 0245302.02 -3- the issuance of limited tax general obligation bonds authorized herein or other sources of repayment,the City may borrow money from time to time pursuant to a line of credit extended by the Bank under the terms of its commitment letter dated May 30,1996 (the "Offer")and consistent with the provisions of this ordinance,and shall issue the Note in an aggregate principal amount not to exceed $3,750,000.The general indebtedness to be incurred shall be within the limit of up to 1-1/2%of the value of the taxable property within the city permitted for general municipal purposes without a vote of the qualified voters therein. The Note shall be designated the Limited Tax General Obligation Bond Anticipation Note,1996 (Line of Credit);shall be dated as of its date of delivery to the Bank;shall be in fully registered form;shall be numbered R-1;and shall mature on April 30,1997. The City may make incremental draws upon the Note (the "Loan Draws")in any amount on any Business Day during the term of the Note to carry out the purposes of the Note.No Loan Draw may exceed the total amount of the costs to be paid from such draw,and the proceeds of each Loan Draw shall be used immediately to pay those costs.Loan Draws shall be recorded on the Loan Draw Record attached to the Note,or in such other form as the City and the Bank may agree.Loan Draws are not SUbject to approval by the Bank,but shall be limited to an aggregate principal amount of $3,750,000. Each Loan Draw shall bear interest at the rate of 54%of the interest rate designated and published by the Bank as its prime 0245302.02 -4- rate,as such prime rate may change from time to time (the "Prime Rate"),and the interest rate to be paid on any Loan Draw shall be adjusted as of the effective date of any adjustment in the Prime Rate.Interest on each Loan Draw shall accrue from the date of that Loan Draw and shall be computed on the principal amount of the Loan Draw outstanding on the basis of a 360-day year of twelve 30- day months for the actual number of days the principal amount of the Loan Draw is outstanding,and shall be payable at maturity or prior repayment.principal and interest shall be payable as described in Section 6 below.If the Note is not redeemed when properly presented at its maturity or call date,the City shall be obligated to pay interest on the Note at the rate specified above from and after the maturity or call date until the Note,both principal and interest,is paid in full or until sUfficient money for that payment in full is on deposit in the Note Fund. The city council finds that the fixing of the above interest rate and rate index is in the best interest of the city and its taxpayers. section 5.Designation of Officers to Make Loan Draws.The city Council has determined it to be in the best interest of the City that the Finance Director,or such other person as the Finance Director may designate,is authorized to make Loan Draws against the Note in the amounts and at the times as he/she may determine, those Loan Draws to be made in accordance with the terms and provisions set forth herein.Loan Draws may be made by telephone or telecopy of the city to the Bank and a transfer of funds shall be made immediately by the Bank to the City's account. 0245302.02 -5-: section 6.Note Fundi payment of Note.The Note Account is created in the office of the Finance pirector as a special account to be known and designated as the Limited Tax General Obligation Bond Anticipation Note Account,1996 (Line of Credit),and used to pay principal and interest on the Note.Both principal of and interest on the Note shall be payable in lawful money of the united States of America solely out of the Note Fund from the proceeds of limited tax general obligation bonds or other short-term obligations to be deposited in such fund or from other money legally available and to be used therefor. Principal of and interest on the Note at maturity or prior repayment is payable at the office of the Fina~ce Director of the City,who is appointed Note Registrar for the Note,in Marysville, Washington,upon presentation and surrender of the Note or at such other place or by such other means as the Finance Director and the Bank shall agree. Section 7.Pledge to Redeem Note and Levy Taxes.The City irrevocably pledges to redeem the Note from the proceeds of a sufficient amount of limited tax general obligation bonds authorized herein,from the proceeds of additional short-term obligations,or from other.money of the city legally available for such purpose,and to include in its bUdget and levy taxes annually within the constitutional and statutory tax limitations provided by law without a vote of the electors of the city on all of the taxable property within the city in an amount sUfficient,together with other money legally available and to be used therefor,to pay when due the principal of and interest on the Note.The full 0245302.02 -6- faith,credit and resources of the City are pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest. section 8.Prepayment and Redemption Provisions.The city reserves the right and option to prepay and redeem at any time prior to its stated maturity date any or all of the principal amount of the Note outstanding at par plus accrued interest to the date of prepayment and redemption.written notice to the Bank of any intended prepayment or redemption of the Note shall not·be required.Interest on the Note or the portion thereof so prepaid shall cease to accrue on the date of such prepayment. section 9.Form and Execution.The Note shall be printed, lithographed,typed or mUlticopied on good bond paper in a form consistent with the provisions of this ordinance,shall be signed by the Mayor and 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. The Note shall bear thereon a certificate of Authentication in the following form,manually signed by the Note Registrar,and only if so executed shall the Note 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 Marysville,Washington,Limited Tax General Obligation 0245302.02 -7- Bond Anticipation Note,1996 (Line of Credit),described in the Note Ordinance. By -,.---,_----,_ Finance Director City of Marysville,Washington Note Registrar 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 10.Registration and Transfer of Note;Note Registrar.The Note shall be issued to the Bank only in registered form as to both principal and interest and recorded on the books or records maintained by the Note Registrar (the "Note Register"). The Note Register shall contain the name and mailing address of the owner of the Note.The Note may not be assigned or transferred by the Bank,except that the Bank may assign or transfer the Note to any successor to the business and assets of the Bank.When the Note has been paid in full,both principal and interest,the Note shall be surrendered by the Bank to the Note Registrar,who shall cancel the Note. The Note Registrar shall keep,or cause to be kept,at his office,sufficient books for the registration of the Note.The Note Registrar shall serve as the city's authenticating trustee, transfer agent,registrar and paying agent for the Note and shall comply fully with all applicable federal and state laws and regulations respecting the carrying out of those duties.The Note Registrar is authorized,on behalf of the City,to authenticate and deliver the Note in accordance with the provisions of the Note and 0245302.02 -8- this ordinance,to serve as the City's paying agent for the Note and to carry out all of the Note Registrar's powers and duties under this ordinance and City Ordinance No.1405 establishing a system of registration for the City's bonds and obligations.No assignment or transfer of the Note shall be effective until the name of the new owner and the new owner's mailing address,together with such other information deemed appropriate by the NOte Registrar,shall be recorded on the Note Register. The Note shall state on its face that the principal of and interest on the Note shall be paid only to the owner thereof registered as such on the Note Register as of the record date set forth therein and to no other person or entity,and that the Note may not be assigned except on the Note Register. Section 11.Preservation of Tax Exemption for Interest on Note.The city covenants that it will take all actions necessary to prevent interest on the Note 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 Note or other funds .of the city treated as proceeds'of the Note at any time during the term of the Note which will cause interest on the Note to be included in gross income for federal income tax purposes. The city also covenants that it will,to the extent the arbitrage rebate requirement of Section 148 of the Code is applicable to the Note,take all actions necessary to comply (or to be treated as having complied)with that requirement in connection with the Note, inclUding the calculation and payment of any penalties that the City has elected to pay as an alternative to calculating rebatable 0245302.02 -9- arbitrage,and the payment of any other penalties if required under Section 148 of the Code to prevent interest on the Note from being included in gross income for federal income tax purposes.The City certifies that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. section 12.Designation of Note as a "Oualified Tax-Exempt Obligation."The City has determined and certifies that (a)the Note is not a "private activity bond"within the meaning of Section 141 of the Code;(b)the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds)which the City and any entity subordinate to the City (inclUding any entity which the City controls,which derives its authority to issue tax-exempt obligations from the City or which 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 (c)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.The city designates the Note as a "qualified tax-exempt obligation"for the purposes of Section 265(b)(3)of the Code. Section 13.Pro;ect Account;Deposit of Note Proceeds.There was created and established in the office of the Finance Director a special fund designated as the Cedarcrest Golf Course Fund 420, and there is created in that fund a special account to be known ~s 024S302.02 -10- the Project Account.The Loan Draws shall be paid into the Project Account and used for the purposes specified in section 4 of this ordinance. section 14.Sale of Note.The Bank has submitted an offer to accept delivery of the Note under the terms and conditions of its Offer,which Offer is on file with the city Clerk and incorporated herein by this reference.The city council finds that it is in the city's best interest that the "Line of Credit with Variable Interest Rates"terms of such Offer be accepted and accepts the same,as more fully set forth in the terms of this ordinance. The Note will be prepared at City expense and will be delivered to the Bank in accordance with the Offer,with the approving legal opinion of Foster Pepper &shefelman,municipal bond counsel of Seattle,Washington,regarding the Note.The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Note to the Bank and for the proper application and use of the proceeds of the sale thereof. Section 15.Effective Date of Ordinance.This Qrdinance shall take effect and be in force from and after its passage and five (5)days following its publication as required by law. 0245302.02 -11- cit erk APPROVED AS TO FORM: city Attorney 0245302.02 -12- Mayor