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HomeMy WebLinkAboutO-2511 - Water and sewer revenue bond issuance (Special)50420991.04 ~/&~/-t#~ ~tJ- IXILSC!.- CITY OF MARYSVILLE, WASHINGTON ~"~ ORDINANCE NO.c15 II AN ORDINANCE of the City of Marysville, Washington, relating to the Waterworks Utility of the City; specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of that Waterworks Utility; authorizing the issuance of not to exceed $30,000,000 principal amount of its water and sewer revenue bond anticipation note (revolving line of credit) pending the issuance of water and sewer revenue bonds authorized herein; fixing the date, form, maturity, options of setting the interest rate index, terms and covenants of the note; establishing a note redemption fund; and authorizing the issuance and providing for the delivery of the note to Bank of America, N.A.of Seattle, Washington. Passed April 12,2004 This document preparedby: FosterPepper &Shefelman PLLe 1111 Third Avenue,Suite3400 Seattle,Washington 98101 (206)447-4400 ----------------------------------------------~ -r-_5' ,,>" TABLE OF CONTENTS Page Recitals 1 Section 1. Definitions 2 Section 2. Adoption of PIan of Additions 5 Section 3. Authorization of Bonds 5 Section 4. Description of Note 6 Section 5. Designation of Officerto MakeLoanDraws 8 Section 6. Note Registrar;Registrationand Transfer ofNote 8 Section 7. Creation of Note Fund;Payment ofNote 9 Section8. Prepaymentand RedemptionProvisions .10 Section 9. UnusedFee 11 Section 10. Note Form and Execution 11 Section 11. Note Covenants 12 Section 12. Preservation of TaxExemptionforInterestonNote 13 Section 13. Approval of Bank Proposal andDeposit of LoanDraws 13 Section 14. Effective Date of Ordinance 14 -1- 50420991.04 ,--------------------------------------------------- CITY OF MARYSVILLE, WASHINGTON ORDINANCE NO.:;A S II AN ORDINANCE of the City of Marysville, Washington, relating to the Waterworks Utility of the City; specifying, adopting and ordering the carrying out of a system or plan of additions to and betterments and extensions of that Waterworks Utility; authorizing the issuance of not to exceed $30,000,000 principal amount of its water and sewer revenue bond anticipation note (revolving line of credit) pending the issuance of water and sewer revenue bonds authorized herein; fixing the date, form, maturity, options of setting the interest rate index, terms and covenants of the note; establishing a note redemption fund; and authorizing the issuance and providing for the delivery of the note to Bank of America, N.A.of Seattle, Washington. WHEREAS, by Ordinance No. 385, passed on September 2, 1952, the then Town of Marysville, Washington, combined its water distribution system with its sewerage system to create a Waterworks Utility of the Town; and WHEREAS, by Ordinance No. 2245, passed on April 5, 1999, the now City of Marysville, Washington (the "City") created and provided for the operation of a Surface Water Utility; and WHEREAS, by Ordinance No. 2509, passed on March 22, 2004, the City combined its Surface Water Utility with its Waterworks Utility; and WHEREAS, the City is in need of acquiring, constructing, installing and equipping water,wastewater and surface water facilities and appurtenances identified in Exhibit A attached hereto and by reference made a part hereof (the "Improvements"), the estimated cost of which is $41,119,000, and the City does not have available sufficient funds to pay that cost; and WHEREAS, the City Council deems it to be in the best interests of the City to borrow money by the issuance of water and sewer revenue bonds and, pending the issuance of those 50420991.04 1-',r,, ---------------- bonds, issue short-term obligations in accordance with the provisions of chapter 39.50 RCW for the purpose of providing a part of the funds with which to pay the costs of carrying out the Improvements; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MARYSVILLE, WASHINGTON, DO ORDAIN as follows: Section I. Definitions. As used III this ordinance, the following words have the following meanings: "Bank" means Bank of America,N.A. "Bank Proposal" means the letter from the Bank dated February 27, 2004, describing certain terms of the Note and the conditions under which the Bank has offered to accept delivery ofthe Note. "Bonds"means those water and sewer revenue bonds authorized by this ordinance. "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks located in Seattle, Washington, are closed for business. "City" means the City of Marysville, Washington. "Draw or "Loan Draw" means each incremental draw upon the Note. "Improvements" means the water, wastewater and surface water facilities and improvements identified in Exhibit A, attached hereto and by reference made a part hereof. "Interest Period" means each one- to I2-month period (each an increment of one month) beginning on the date designated by the City for a Loan Draw in its request for a Loan Draw under the LIBOR Rate Option, the length to be designated by the City in such request. -2- 50420991.04 r I ,. "LIBOR Fixed Rate" means a fixed rate of interest (rounded upwards,if necessary to the nearest 1/100 of 1%)for a period equal to the Interest Period selected by the City appearing on Telerate Page 3750 (or any successor page) at approximately 11 :00 a.m. London time, two London Banking Days before each LIBOR Reset Date as the London inter- bank offered rate for deposits in United States Dollars, only on a Reset Date for then-applicable reserve requirements, deposit insurance assessment rates and other regulatory costs.If such rate does not appear on the Telerate Page 3750 (or any successor page), the rate for that Interest Period will be determined by such alternate method as reasonably selected by the Bank. The first day of the Interest Period must be a London Banking Day. The date of the last day of the Interest Period and the actual number of days during the Interest Period will be determined by the Bank using the practices of the London inter-bank market. "LIBOR Principal" means all principal of this Note accruing interest under the LIBOR Rate Option. "LIBOR Rate Option" means the interest rate option listed as Option I in Section 4 of this ordinance. "LIBOR Reset Date" means the first day of an Interest Period. "London Banking Day" means any day on which the Bank's London Banking Center is open for business and dealing in offshore dollars. "Note" means the Water and Sewer Revenue Bond Anticipation Note, 2004 (Revolving Line of Credit),of the City issued pursuant to, under the authority of and for the purposes provided in this ordinance. -3- 50420991.04 - ------------------------------------------------ "Note Fund"means the City's Water and Sewer Revenue Bond Anticipation Note Fund, 2004 (Revolving Line of Credit), created by Section 7 of this ordinance for the purpose of paying principal of and interest on the Note. "Note Register" means the books or records maintained by the Note Registrar containing the name and mailing address of the Registered Owner. "Note Registrar" means the Finance Director of the City. "Plan of Additions" means the plan of additions to and betterments and extensions of the Waterworks Utility of the City consisting of the Improvements, as specified, adopted and ordered to be carried out by this ordinance. "Prime Rate" means the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank's Prime Rate. "Prime Rate Option" means the interest rate option listed as Option 2 in Section 4 of this ordinance. "Prime Rate Principal" means all principal of this Note accruing interest under the Prime Rate Option. "Registered Owner" means the Bank, as registered owner of the Note, or any subsequent owner of the Note. -4- 50420991.04 ",,' "Waterworks Utility" means the waterworks utility of the City, including the water distribution system, system of sewerage and surface water utility as parts thereof, and all additions and betterments thereto and extensions thereofat any time made. Section 2. Adoption of Plan of Additions. The Improvements are hereby specified and adopted and ordered to be carried out as a system or plan of additions to and betterments and extensions of the Waterworks Utility. All of the foregoing shall be in accordance with the plans and specifications therefor prepared by the City's consulting engineers. The District may modify the details of the Plan of Additions where, in its judgment, it appears advisable if such modifications do not substantially alter the intended purposes. The life of the improvements comprising the Plan of Additions is declared to be at least thirty (30) years. The estimated cost of the construction, installation and financing of the Plan of Additions is declared to be approximately $41,119,000, of which a portion will be paid from proceeds of the Note. Section 3. Authorization of Bonds. For the purpose of paying a part of the cost of carrying out the Plan of Additions, the City shall issue its water and sewer revenue bonds in the approximate principal amount of $41,119,000. Such bonds shall be payable from the net revenue of the Waterworks Utility and shall, unless otherwise determined by the City Council, be issued as a claim or lien on the net revenues of the Waterworks Utility, subject only to maintenance and operation expenses of the Waterworks Utility. Such 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 dated, 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 guarantee such coverage and -5- 50420991.04 ·: collection of rates, 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. Section 4. Description of Note. For the purpose of providing a part of the funds with which to pay the costs of carrying out the Plan of Additions pending the receipt of the proceeds of the issuance and sale of the limited tax general obligation bonds authorized herein, the City shall issue and deliver its Water and Sewer Revenue Bond Anticipation Note, 2004 (Revolving Line of Credit) (the "Note"), in the principal amount of not to exceed at any time $30,000,000. The Note shall be dated as of the date of its delivery to the Bank ("Date of Issue"); shall mature one year from the dated date of the Note (the "Maturity Date"); shall be issued in fully registered form as to both principal and interest; and shall be numbered R-I,with any additional designation as the Finance Director, as the Note Registrar, deems necessary for purposes of identification. The City may make Draws upon the Note in any amount (so long as the amount of the Draw does not cause the outstanding principal balance of the Note to exceed $30,000,000 at any one time) on any Business Day (subject to restrictions for Draws at the LIBOR Fixed Rate) from the Date of Issue to but excluding the Maturity Date, for the Note purposes identified above. No Draw may exceed the total amount of the costs to be paid from such Draw, and the proceeds of each Draw shall be used immediately to pay those costs. Draws shall be recorded in such form as the City and the Bank may agree. The Note evidences a revolving line of credit, and all Draws that have been repaid may be reborrowed subject to the restrictions of this paragraph. For each Loan Draw, the City may choose from two options for variable rate interest to be assessed against that particular Loan Draw as follows: -6- 50420991.04 .,.. 50420991.04 Option 1.LIBOR Rate Option.If this option is selected by the City, that particular Loan Draw on the Note shall bear interest at a variable rate equal to the sum of (a) 65%of the LIBOR Fixed Rate plus (b) a spread of 1.20%, for the Interest Period designated in the City's written request for a Loan Draw. Written notices of a Loan Draw under the LIBOR Rate Option must be given by the City no later than on the third London Banking Day prior to the date of issue, in the case of a Loan Draw to be made under the LIBOR Rate Option on the date of issue, or otherwise no later than on the third London Banking Day prior to the designated Interest Period. The Note shall bear interest at the Prime Rate Option unless the LIBOR Rate Option is specifically selected. At the termination of any Interest Period, LIBOR Principal shall revert to the Prime Rate Option unless the City directs otherwise pursuant to this Option I of this Section 4. Interest under the LIBOR Rate Option shall be computed on the principal amount of the LIBOR Principal on the basis of a 360-day year and actual days elapsed for the actual number of days the principal amount is outstanding. Option 2. Prime Rate Option.Unless otherwise designated pursuant to The LIBOR Rate Option, each Loan Draw shall bear interest at the rate of 49%of the Prime Rate, and the interest rate to be paid on any such Loan Draw shall be adjusted as of the same day following 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 365/366-day year for the actual number of days the principal amount of the Loan Draw is outstanding. Prime Rate Principal may at -7- , , any time be converted to LIBOR Principal by the City following the procedures set forth under the LIBOR Rate Option, The City Council finds that the use of the above options for setting of the above interest rate indexes is in the best interest of the City, Principal of and interest on the Note are payable on the Maturity Date, If the Note is not paid when properly presented for payment on the Maturity Date, the City shall be obligated to pay interest on each Loan Draw at the Prime Rate from and after its maturity or prior redemption 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, Section 5, Designation of Officer to Make Loan Draws, The City Council has determined it t?be in the best interest of the City that the Finance Director, or such other person as she may designate, be and hereby is authorized to make Loan Draws against the Note, select from Option I and 2 as provided in Section 4 above in the amounts and at the times as she may determine hereafter, those Loan Draws to be made in accordance with the terms and provisions set forth herein, Section 6, Note Registrar; Registration and Transfer of Note, The Finance Director of the City is appointed and designated to serve as the Note Registrar, The Note shall be issued to the Bank only in registered form as to both principal and interest and shall be recorded on books and 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 and the principal amount and number of the Note held by that owner, 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 -8- 50420991.04 '"." 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 'causeto be kept, at his office, sufficient books for the registration of the Note. The Note Registrar shall serve as the City's authenticating trustee, 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 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 Ordinance No. 1405 establishing a system of registration for the City's bonds and obligations. 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 maynot be assigned except onthe Note Register. Section 7. Creation of Note Fund; Payment of Note. There is created and established in the office of the Finance Director a special fund designated as the Water and Sewer Revenue Bond Anticipation Note Fund, 2004 (Revolving Line of Credit) (the ''Note Fund"). 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 water and sewer revenue bonds authorized by this ordinance to be deposited in such fund, other short-term obligations or from other money legally available and to be used therefor, and the City irrevocably pledges to redeem the Note on its Maturity Date from the proceeds of those bonds or other money available for that purpose. -9- 50420991.04 ,.., The Note shall be payable only from the Note Fund as provided herein and shall not be a general obligation of the City, the State of Washingtonor any political subdivision thereof. The Bank shall present to the City at least one week prior to the Maturity Date a statement of principal of and interest due on the Note on that date. The City shall pay the principal of and interest on the Note (i) by check, draft or warrant of the City mailed to the Bank at least five days prior to the Maturity Date or hand-delivered to the Bank on the Maturity Date, or (ii) by electronic or wire transfer to the Bank on or before the Interest Payment Date or Maturity Date, at the option of the City. Prepayments of principal may be made at any time and shall be paid by check, draft or warrant of the City or by wire transfer to the Bank. Note payments shall be recorded on a Loan Payment Record attached to the Note, or in such other form as the City and the Bank may agree. Upon repayment of all principal of and interest on the Note at maturity, the Note shall be presented by the Registered Owner at the office of the Note Registrar in Marysville, Washington, for surrender and cancellation. 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, except as provided below for LIBOR Principal. Written notice to the Bank of any intended prepayment orredemption of the Note shall not be required. Interest on the Note or the portion thereof so prepaid shall cease to accrue onthe date of such prepayment. If the Prime Rate option is selected and in effect,there will be no prepayment fee. If any LIBOR Principal is prepaid prior to the expiration of its applicable Interest Period, whether by voluntary prepayment or otherwise, the prepayment shall be accompanied by a prepayment fee. The prepayment fee shall be in an amount sufficient to compensate the Bank -10- 50420991.04 .... for any loss, cost or expense incurred by it as a result of the prepayment, including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the LIBOR Principal or from fees payable to terminate the deposits from which such funds were obtained. The City shall also pay any customary administrative fees charged by the Bank in connection with the foregoing. For purposes of calculating the prepayment fee, the Bank shall be deemed to have funded the LIBOR Principal by a matching deposit or other borrowing in the applicable interbank market, whether or not the LIBOR Principal was in fact so funded. Section 9. Unused Fee. A fee for the unused commitment (the "Unused Fee") shall be calculated at 17 basis points per annum on the average unused principal amount of the Note for the preceding quarter (the "completed quarter") and payable quarterly in arrears. The Unused Fee will be assessed for the completed quarter only when the average principal amount outstanding on the Note during such completed quarter was less than $10,500,000. Section 10. Note 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 in the corporate name of the City by the facsimile or manual signatures of the Mayor and City Clerk, and the seal of the City (or facsimile thereof) shall be imprinted or impressed 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: -11- 50420991.04 ------------------- ": CERTIFICATE OF AUTHENTICATION This Note is the fully registered City of Marysville, Washington, Water and Sewer Revenue Bond Anticipation Note, 2004 (Revolving Line of Credit), described in the Note Ordinance. 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 hereunder and is entitled to the benefits of this ordinance. If any officer whose signature appears on the Note ceases to be an officer of the City authorized to sign notes before the Note bearing his or her signature is authenticated or delivered by the Note Registrar or issued by the City, that Note nevertheless may be authenticated, delivered and issued and, when authenticated, delivered and issued, shall be as binding upon the City as though that person had continued to be an officer of the City authorized to sign notes. The Note also may be signed and attested on behalf of the City by any person who, on the actual date of the signing of the Note, is an officer of the City authorized to sign notes, although he or she did not hold the required office on the date of issuance ofthe Note. Section II.Note Covenants. The City covenants with the Bank for as long as the Note remains outstanding as follows: (a)It will establish, maintain and collect rates and charges adequate to provide revenues sufficient, with other legally available sources of funds, for payment of debt service on the Note when due. (b)It will establish, maintain and collect rates and charges adequate to provide 1.20 times debt service coverage for principal and interest due on all senior lien debt. -12- 5042099L04 --------------------------------_.._----- (c)It may issue additional subordinate lien revenue debt with a lien position equal to the Bank's, so long as it shall establish, maintain and collect rates and charges adequate to provide 1.00 times coverage of annual debt service due for all outstanding plus proposed additional subordinate lien revenue debt. For purposes of calculating annual debt service for subordinate lien revenue debt, balloon principal payments not yet due will not be included. Section 12. 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 Internal Revenue Code of 1986, as amended (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 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 13. Approval of Bank Proposal and Deposit of Loan Draws. Pursuant to the Bank Proposal, Bank of America, N.A.of Seattle, Washington, has presented to the City a proposal, subject to final credit approval, to extend a revolving line of credit secured by a water and sewer revenue bond anticipation note (the "Bank Proposal"), and proposing to accept the -13- SCl420991.04 ---_.._------------------------------------------" -, Note under the terms and conditions provided in the Bank Proposal, which Bank Proposal is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that accepting a firm commitment on substantially the same terms and conditions of the Bank Proposal is in the City's best interest and therefore the proper City officials are authorized to accept such a commitment. A fee in the amount of $7,500 shall be paid to the Bank upon delivery of the Note and may be paid in the form of a Loan Draw. The amount of not more than $500 shall be paid for the Bank Counsel fee and may be paid in the form of a Loan Draw. The Note will be printed at City expense and will be delivered to the purchaser in accordance with the Bank Proposal, with the approving legal opinion of Foster Pepper & Shefelman PLLC, 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 Loan Draws made pursuant to the Note. The principal proceeds received as a result of Loan Draws on the Note shall be paid into the Utility Fund of the City that has been previously created and established in the office of the Finance Director and used to pay a part of the costs of accomplishing the Plan of Additions. Interest earnings on the amounts,if any, in the Utility Fund shall be retained in that fund and used for the purposes of that fund. However, it is expected that the proceeds will be spent immediately. Section 14. 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. -14- 50420991.04 PASSED by the City Council and APPROVED by the Mayor of the City of Marysville, Washington,at a regular open public meeting thereof,this 12th day of April,2004. BY~~~e DENNIS 1.KENDALL,Mayor M'EST:~ APPROVED AS TO FORM: -15- 50420991.04 ,, EXHIBIT A IMROVEMENTS INCLUDED IN PLAN OF ADDITIONS 50420991.04 D0301 D0302 S0201 S0202 W0304 W0004 MP0324 WOI0l S0004 S0300 S0401 S0402 W0003 W0306 W0204 W0402 W0401 P9405 MasterDrainageBasinPlan Regional DetentionFacility 51stAveLift Station StateAve SewerTrunkExtension Sunnyside 3MGReservoir Edward Springs TreatmentFacility CedarcrestReservoirRoof 240-Zone Reservoir (pre-design) ETP,WWTP2,HDD,EverettUpgrade Wastewater System CompPlan 140thSt.SewerExt.(State-23rd) SoperHillRd. SewerExtension Stillaguamish FiltrationPlant Northwestern Transmission Mains 67thAve.Watermain 132-152 od 67thAve.Watermain 100-132nd Eastside 1-5 Transmission Main Ebey Waterfront Park CERTIFICATION I, the undersigned,City Clerk of the City of Marysville,Washington (the "City"),hereby certify as follows: 1. The attached copy of Ordinance No.15[1 (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 April 12, 2004, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after the title of the ordinance has been published in the City's official newspaper;and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage of the Ordinance. IN WITNESS WHEREOF,I have hereunto set my hand this 12th day of April,2004. CITY OF MARYSVILLE,WASHINGTON ~ :50420991.04