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HomeMy WebLinkAboutOrdinances - 2021-12 - Relating to contracting indebtedness; issuance, sale and delivery of a limited tax general obligation bond, for a new public works facility and acquire a new police headquarters, City Bond, Foster Garvey, 50 Simon Street - 6/15/2021 FG:54307621.2 CITY OF EAST WENATCHEE, WASHINGTON ORDINANCE NO. 2021-12 AN ORDINANCE of the City of East Wenatchee, Washington, relating to contracting indebtedness; providing for the issuance, sale and delivery of a limited tax general obligation bond to provide funds to construct a new public works maintenance facility and acquire a building for the City’s police headquarters and to pay the costs of issuance and sale of the bond; fixing certain terms and covenants of the bond; approving the sale and providing for the delivery of the bond to Banner Bank; and providing for related matters. Passed June 15, 2021 This document prepared by: Foster Garvey P.C. 1111 Third Avenue, Suite 3000 Seattle, Washington 98101 (206) 447-6264 -i- FG:54307621.2 TABLE OF CONTENTS* Page Section 1. Definitions............................................................................................................... 1 Section 2. Findings and Determinations .................................................................................. 3 Section 3. Authorization of Bond ............................................................................................ 4 Section 4. Description of Bond ................................................................................................ 4 Section 5. Bond Registrar; Registration and Transfer of Bond ............................................... 5 Section 6. Form and Execution of Bond .................................................................................. 5 Section 7. Payment of Bond..................................................................................................... 6 Section 8. Prepayment of Bond ............................................................................................... 6 Section 9. Funds and Accounts; Deposit of Proceeds.............................................................. 6 Section 10. Failure To Pay Installments .................................................................................... 7 Section 11. Pledge of Taxes ....................................................................................................... 7 Section 12. Tax Covenants; Designation of Bond as “Qualified Tax Exempt Obligation.” ............................................................................................................. 7 Section 13. Refunding or Defeasance of Bond .......................................................................... 8 Section 14. Acceptance of Bond Purchase Agreement .............................................................. 8 Section 15. Financial Reporting ................................................................................................. 9 Section 16. Supplemental and Amendatory Ordinances............................................................ 9 Section 17. General Authorization and Ratification .................................................................. 9 Section 18. Severability ............................................................................................................. 9 Section 19. Effective Date of Ordinance ................................................................................. 10 *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. -1- FG:54307621.2 CITY OF EAST WENATCHEE, WASHINGTON ORDINANCE NO. 2021-12 AN ORDINANCE of the City of East Wenatchee, Washington, relating to contracting indebtedness; providing for the issuance, sale and delivery of a limited tax general obligation bond to provide funds to construct a new public works maintenance facility and acquire a building for the City’s police headquarters and to pay the costs of issuance and sale of the bond; fixing certain terms and covenants of the bond; approving the sale and providing for the delivery of the bond to Banner Bank; and providing for related matters. THE CITY COUNCIL OF THE CITY OF EAST WENATCHEE, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following capitalized terms have the following meanings: “Amortization Schedule” means the schedule of principal and interest payments due on the Bond to be prepared by the Registered Owner under Section 4 of this ordinance. The Amortization Schedule shall be based on the aggregate principal amount of all Draws made on the Bond and shall provide for approximately equal payments of combined principal and interest on each December 1, commencing on December 1, 2022 to and including the Maturity Date. “Bond” means the City’s Limited Tax General Obligation Bond, 2021 issued pursuant to and for the purposes provided in this ordinance. “Bond Counsel” means the firm of Foster Garvey P.C., 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. “Bond Fund” means the fund or account designated or created by the Finance Director for the payment of the principal of and interest on the Bond. “Bond Purchase Agreement” means the term sheet, commitment letter, purchase offer or bond purchase agreement from the Bank, dated June 15, 2021, offering to purchase the Bond and setting forth certain terms and conditions of the issuance, sale and delivery of the Bond, which offer is accepted by the City pursuant to this ordinance. “Bond Register” means sufficient books or records maintained by the Bond Registrar for the purposes of registering, transferring and identifying ownership of the Bond, which shall include the name and mailing address of the Registered Owner. “Bond Registrar” means the Finance Director or any successor bond registrar selected by the City. -2- FG:54307621.2 “City” means the City of East Wenatchee, Washington, a municipal corporation duly organized and existing under the laws of the State. “City Council” means the legislative authority of the City, as duly and regularly constituted from time to time. “Code” means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. “Date of Taxability” means the date interest on the Bond was determined to have become includable in the Registered Owner’s gross income for federal income tax purposes pursuant to a Determination of Taxability. “Determination of Taxability” means (i) the receipt by the Registered Owner of written notice of any final determination, all applicable appeal periods with respect to which have expired, made by the Internal Revenue Service or by any court of competent jurisdiction to the effect that interest on the Bond is includable in gross income of the Registered Owner for federal income tax purposes, or (ii) receipt by the Registered Owner of a written opinion of an attorney or firm of attorneys with a nationally recognized standing as bond counsel in the field of municipal finance, selected by the Registered Owner and acceptable to the City, to the effect that interest on the Bond has become, or is, includable in the gross income of the Registered Owner for federal income tax purposes. “Draw” means each incremental draw of principal upon the Bond. “Finance Director” means the finance director of the City or such other officer of the City who succeeds to substantially all of the responsibilities of that office and the office of the City treasurer. “Government Obligations” means noncallable direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United States of America. “Issue Date” means the date of initial issuance and delivery of the Bond to the Purchaser. “Maturity Date” means June 30, 2041. “Projects” means (1) acquiring and constructing a new public works maintenance facility of the City; (2) acquiring a building to be used as the City’s police headquarters; (3) making improvements to, acquiring land for and acquiring, constructing and installing all necessary furniture, equipment, apparatus, accessories, fixtures and appurtenances in or for the foregoing; (4) undertaking other capital purposes, as determined necessary and advisable by the City; (5) paying costs related to the issuance, sale and delivery of the Bond; and (6) paying incidental costs incurred in connection with carrying out and accomplishing the foregoing consistent with RCW 39.46.070. The term “land” includes all real property and improvements and structures thereon and interests therein. -3- FG:54307621.2 “Project Fund” means the fund or account designated or created by the Finance Director for the purpose of carrying out the Projects. “Purchaser” means Banner Bank, Wenatchee, Washington, and its successors and assigns. “Qualified Institutional Buyer” means a “qualified institutional buyer” as defined in Rule 144A, as promulgated under the Securities Act of 1933, as amended. “Registered Owner” means the entity or person named as registered owner of the Bond on the Bond Register, initially the Purchaser. “State” means the State of Washington. “System of Registration” means the system of registration for the City’s bonds and other obligations set forth in Ordinance No. 92-13 of the City. 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 Projects. The City is in need of accomplishing the Projects. Chapter 35A.11 RCW authorizes the City to undertake the Projects. The City Council therefore finds that it is in the best interests of the City to carry out the Projects. (b) Plan of Financing. Pursuant to applicable law, including without limitation chapters 39.36, 39.44, 39.46 RCW, the City is authorized to issue general obligation bonds for the purpose of financing the Projects. The total expected cost of the Projects is approximately $10,180,000, which is expected to be made up of proceeds of the Bond and other available money of the City. (c) Debt Capacity. The maximum amount of indebtedness authorized by this ordinance is $10,000,000. 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 for general municipal purposes: (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 2021 is $1,500,122,945. (2) As of June 15, 2021, the City has authorized or outstanding general obligation indebtedness, consisting of loans and contingent payment obligations in the principal amount of not to exceed $1,120,000, which is incurred within the limit of up to 1½% of the value of the taxable property within the City permitted for general municipal purposes without a vote. (3) As of June 15, 2021, the City has no voted general obligation indebtedness. -4- FG:54307621.2 (d) The Bond. For the purpose of providing the funds necessary to carry out the Projects, the City Council finds that it is in the best interests of the City and its taxpayers to issue and sell the Bond to the Purchaser, pursuant to the terms set forth in the Bond Purchase Agreement consistent with this ordinance. Section 3. Authorization of Bond. The City is authorized to borrow money on the credit of the City and issue the Bond evidencing such indebtedness to provide funds necessary to carry out the Projects. The proceeds of the Bond shall be used to carry out the Projects, or a portion of the Projects, in such order of time as the City determines is advisable and practicable. Section 4. Description of Bond. (a) The Bond shall be issued as a single bond designated the “City of East Wenatchee, Washington, Limited Tax General Obligation Bond, 2021”; shall be issued in the maximum principal amount of $10,000,000; shall be dated the Issue Date; shall be issued in fully registered form; shall be numbered R-1; and shall mature on the Maturity Date. From the Issue Date through and including June 30, 2031, the unpaid principal amount of the outstanding Draws shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) at a fixed rate of 2.34% per annum; provided, upon a Determination of Taxability, the fixed rate during such period shall increase to 3.30% per annum retroactive to the Date of Taxability until cured. From July 1, 2031 through and including the Maturity Date, the unpaid principal amount of the outstanding Draws shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) at a fixed rate of 2.55% per annum; provided, upon a Determination of Taxability, the fixed rate during such period shall increase to 3.59% per annum retroactive to the Date of Taxability until cured. (b) The City may make monthly, or more frequently upon consent of the Registered Owner in its sole discretion, Draws upon the Bond from the Issue Date to and including August 31, 2022 to pay costs of the Projects. The first Draw shall be in the minimum amount of $51,000 and shall be made on the Issue Date. The City shall request Draws by submitting a written request to the Registered Owner (each a “Draw Request”), and each Draw shall be recorded on a “Draw Record” to be attached to the Bond, or in such other form as the City and the Registered Owner may agree; provided, no “Draw Record” shall be required for the Bond if the first Draw thereon is equal to the maximum principal amount of the Bond. Each Draw will be deposited through automated transfer to the City’s bank account three business days after the Registered Owner receives a Draw Request, unless deposited sooner upon consent of the Registered Owner. The aggregate amount of all Draws on the Bond shall be limited to the lesser of (i) $10,000,000 or (ii) the principal sum of all Draws on the Bond made on and before August 31, 2022. The City Council authorizes and directs the Finance Director to determine the date and amount of each Draw and to do all things necessary to make each Draw. Before December 1, 2022, the Registered Owner will provide the City the Amortization Schedule. (c) From the Issue Date to October 1, 2022, interest accrued on the principal amount of outstanding Draws on the Bond will be payable on December 1, 2021, June 1, 2022, and October 1, 2022 or earlier prepayment of the Bond. Unless the Bond is prepaid earlier as permitted herein, commencing on December 1, 2022 and continuing on each December 1 thereafter until the Maturity Date, principal of and interest on the Bond shall be payable in the -5- FG:54307621.2 amounts stated in the Amortization Schedule. Payments shall be applied first to accrued interest and then to principal as of the date such payment is received by the Registered Owner. The final installment payment of principal of and interest on the Bond, whether on the Maturity Date or upon prepayment, shall be in an amount equal to the remaining principal and interest due on the Bond. Section 5. Bond Registrar; Registration and Transfer of Bond. (a) Registration of Bond. The Bond shall be issued only in registered form as to both principal and interest, and the ownership of the Bond shall be recorded on the Bond Register. (b) Bond Registrar; Duties. The City Council appoints the Finance Director as initial Bond Registrar. The Bond Registrar shall keep, or cause to be kept the Bond Register, which 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 each Bond. (c) Transfer and Exchange. The Bond may be assigned or transferred only: (1) in whole; (2) to a single investor that is a Qualified Institutional Buyer; (3) if endorsed in the manner provided thereon and surrendered to the Bond Registrar; and (4) if the transferee provides the Bond Registrar with an executed transfer certificate in substantially the form to be attached to the Bond. Any such transfer shall be without cost to the Registered Owner or transferee (other than any cost incurred by the Registered Owner or transferee in preparing and delivering such transfer certificate) and shall be noted on the Bond Register. The Bond Registrar shall not be obligated to assign or transfer the Bond during the 15 days preceding any annual payment date or prepayment date. Section 6. Form and Execution of Bond. (a) Form of Bond. The Bond shall be prepared in a form consistent with the provisions of this ordinance and State law. The Bond will be prepared at the City’s expense and will be delivered to the Purchaser in accordance with the Bond Purchase Agreement, together with the approving legal opinion of Bond Counsel regarding the Bond. (b) Signatures and Seal. 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 bonds 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 bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of -6- FG:54307621.2 signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on its Issue Date. (c) Authentication. The Bond shall not be valid or obligatory for any purpose, or entitled to the benefits of this ordinance, unless the Bond bears a certificate of authentication manually signed by the Bond Registrar stating: “Certificate of Authentication. This Bond is the fully registered City of East Wenatchee, Washington Limited Tax General Obligation Bond, 2021.” A minor deviation in the language of such certificate shall not void a certificate of authentication that otherwise is substantially in the form of the foregoing. The authorized signing of a 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. The installments of principal of and interest on the Bond shall be payable in lawful money of the United States of America and shall be paid by check, draft or electronic transfer of the Bond Registrar sent to the Registered Owner so that the Registered Owner receives said payments when due at the address appearing on the Bond Register. Upon receipt of the final installment payment of principal of and interest on the Bond, whether on the Maturity Date or upon prepayment in full, the Registered Owner shall present and surrender the Bond to the Bond Registrar to be destroyed or cancelled in accordance with law. The City and the Bond Registrar may deem and treat the Registered Owner of the Bond as the absolute owner of the Bond for the purpose of receiving payment of principal and interest and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary other than proper notice of assignment or transfer. The Bond is not subject to acceleration under any circumstances. Section 8. Prepayment of Bond. The City reserves the right and option to prepay the Bond, in whole or in part, as of any annual installment payment date at par plus accrued interest to the date of prepayment, and without any prepayment penalty. The City shall provide the Registered Owner and the Bond Registrar with written notice of any intended prepayment at least 15 days prior to such prepayment date. Interest on the principal amount of the Bond called for prepayment shall be paid on such prepayment date and shall cease to accrue on the date fixed for prepayment unless the principal amount called for prepayment is not paid on the prepayment date. After any partial prepayment, the annual installment payment amounts in the Amortization Schedule will not change, and the partial prepayment shall be applied to an earlier maturity of the Bond. Following any partial prepayment, a revised payment schedule showing the breakdown between principal and interest on each payment due on the Bond and reflecting the amount and date of the final payment amount shall be provided within a reasonable period of time by the Registered Owner to the City and the Bond Registrar. Section 9. Funds and Accounts; Deposit of Proceeds. (a) Bond Fund. The City Council authorizes the Finance Director to create or designate the Bond Fund as a special fund or account 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 -7- FG:54307621.2 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 or account. (b) Project Fund. The City Council authorizes the Finance Director to create or designate the Project Fund as a fund or account of the City for the purpose of paying costs of the Projects. Proceeds received as a result of Draws on the Bond shall be deposited into the Project Fund and used to pay costs of the Projects. Until needed to pay such costs, the City may invest those proceeds temporarily in any legal investment, and the investment earnings shall be retained in the Project Fund and used for the purposes of that fund, except that earnings subject to a federal tax or rebate requirement (if applicable) may be withdrawn from the Project Fund and used for those tax or rebate purposes. Section 10. Failure To Pay Installments. If any installment of principal of the Bond is not paid when due, the City shall be obligated to pay interest on such installment at the same rate provided in the Bond until such installment, together with 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 principal represented by such installment 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 as 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 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 Obligation.” (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 the Registered Owner’s 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. The City also covenants that it will, to the extent the arbitrage rebate requirements of Section 148 of the Code are applicable to the Bond, take all actions necessary to comply (or to be treated as having complied) with those requirements in connection with the Bond. (b) Post-Issuance Compliance. The City Council authorizes and directs the Finance Director to adopt, implement, 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 -8- FG:54307621.2 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 Obligation.” The City designates the Bond 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 Bond 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 Bond is issued will not exceed $10,000,000; and (3) the amount of tax-exempt obligations, including the Bond, 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 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 any or all installments of principal of and interest on the Bond (the “defeased portion”); (b) redeeming the defeased portion prior to its 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 interest in amounts sufficient to redeem, prepay, refund or defease the defeased portion in accordance with its terms, then all right and interest of the Registered Owner with regard to the defeased portion in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased portion shall cease and become void. Thereafter, the Registered Owner of the defeased portion shall have the right to receive payment of the principal of and interest on the defeased portion solely from the trust account and the defeased portion 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, prepayment or redemption of the defeased portion to any lawful purpose. Unless otherwise specified by the City in a refunding or defeasance plan, notice of refunding or defeasance shall be given in the manner prescribed in this ordinance for the prepayment of the Bond. Section 14. Acceptance of Bond Purchase Agreement. The Purchaser has presented the Bond Purchase Agreement to the City offering to purchase the Bond, which written Bond Purchase Agreement is on file with the Finance Director and incorporated by this reference. The City Council finds that entering into the Bond Purchase Agreement is in the City’s best interest -9- FG:54307621.2 and accepts the offer contained therein and authorizes the Mayor and the Finance Director, each acting independently, to execute as necessary the Bond Purchase Agreement. Section 15. Financial Reporting. The City shall provide financial information as reasonably required by the Registered Owner, including the City’s annual financial statements/reports, audit reports, and audited financial statements, as required to be prepared by law and as available. Section 16. 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 the Registered Owner but with notice thereof: (a) To add covenants and agreements that do not materially adversely affect the interests of the Registered Owner, 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 Registered Owner. Section 17. General Authorization and Ratification. This ordinance may be executed by the Mayor and attested by the City Clerk, in tangible medium, manual, facsimile or electronic form under any security procedure or platform, and notwithstanding any other City ordinance, resolution, rule, policy or procedure, or in any other manner evidencing its passage. The Mayor, the Finance Director, the City Clerk, other proper officers of the City and Bond Counsel are severally authorized to take such actions and to create, accept, execute, send, use and rely upon such documents, records and signatures (including in tangible medium, manual, facsimile or electronic form, under any security procedure or platform, and notwithstanding any other City ordinance, resolution, rule or policy) as in their judgment may be necessary or desirable to carry out the transaction contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Bond to the Purchaser 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 18. 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.