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HomeMy WebLinkAbout4645 CITY OF BREMERTON, WASHINGTON ORDINANCE NO. 4645 AN ORDINANCE of the City of Bremerton Washington relating to the incurrence of indebtedness; providing for the sale and issuance of $1,250,000 principal amount tax anticipation notes, 1999, to pay City expenses pending for the receipt of general City taxes; providing for the date, denominations, form, terms, registration privileges, maturity, interest rates and covenants of the notes; and providing for the sale and delivery of such notes to NationsBanc Montgomery Securities LLC WHEREAS, the City Council of the City of Bremerton (the "City") finds that the periodic collections of sales, excise and general ad valorem taxes and other revenue in 1999 will not be sufficient to meet necessary City expenses as they are incurred in 1999, and WHEREAS, the City Council of the City deems it to be in the best interest of the City that the City borrow money and issue and sell a short-term obligation in the form of tax anticipation notes pursuant to chapter 39.50 RCW for the purpose of financing such expenses pending receipt of taxes and other revenue collected by the City; and WHEREAS, the incurrence of such indebtedness by the City will not cause the total indebtedness of the City to be incurred without the assent of the voters of the City to exceed the limitations set forth in Chapter 39.36 RCW; and WHEREAS, NationsBanc Montgomery Securities LLC (the "Purchaser") has offered, by way of the Purchase Agreement (the "Purchase Agreement"), to purchase such limited tax anticipation notes upon the terms and conditions hereinafter set forth; NOW, THEREFORE, THE CITY OF BREMERTON DOES ORDAIN AS FOLLOWS: Section 1. Finding, Purpose and Description of Notes. The City authorizes the sale and issuance of its "Tax Anticipation Notes, 1999" (the "Notes") for the purpose of financing City expenses pending receipt of taxes and other revenue collected by the City and to pay certain "incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070) of the Notes. The Notes shall be in the aggregate principal amount of $1,250,000; shall be dated February 1, 1999; shall mature on January 31, 2000; shall bear interest (computed on the basis of a 360-day year of twelve 30-day months) from their date at the rate of 3.25% per annum, payable at maturity. The Notes shall be issued in fully registered form as to both principal and interest; shall be in the denomination of $50,000 each or any integral multiple thereof; shall be numbered separately in such manner and with any additional designation as the fiscal agencies of the State of Washington in Seattle, Washington, and New York, New York (collectively, the "Registrar"), deem necessary for purposes of identification. If any Note is not paid upon proper presentment at its maturity date, the City shall have the obligation to pay interest at the same rate from and after such maturity date until such Note, both principal and interest, is paid in full. The Notes shall be negotiable instruments to the extent provided by RCW 62A.8-102 and RCW 62A. 8-105. On the date of issue of the Notes, all Notes maturing in the same maturity year shall be issued in the form ora single certificate, which certificate shall be registered in the name of The Depository Trust Company or any successor thereto engaged to operate a book-entry system for recording the beneficial ownership of the Notes, as Custodian (the "Custodian"), or its nominee, and delivered to the Custodian. The Custodian shall hold each such Note certificate in fully immobilized form for the benefit of the beneficial owners of the Notes (the "Beneficial Owners") pursuant to the Blanket Issuer Letter of Representations, dated November 19, 1997, between the City and the Custodian (the "Letter of Representations"), until the earliest to occur of either (1) the date of maturity of the Notes evidenced by such certificate, at which time the Custodian shall surrender such certificate to the Registrar for payment of the principal of and interest on such Notes coming due on such date, and the cancellation thereof; (2) the fiPth business day following the date of receipt by the Registrar of the City's request to terminate the book- entry system of registering the beneficial ownership of the Notes (the "Book-Entry Termination Date"); or (3) the date the City determines to utilize a new Custodian for the Notes, at which time the old Custodian shall (provided the City is not then in default of any payment then due on the outstanding Notes) surrender the immobilized certificates to the Registrar for transfer to the new Custodian and cancellation as herein provided. For so long as any outstanding Notes are registered in the name of the Custodian or its nominee and held by the Custodian in fully immobilized form as described in this Section 1, the rights of the Beneficial Owners shall be evidenced solely by an electronic and/or manual entry made from time to time on the records established and maintained by the Custodian in accordance with the Letter of Representations, and no certificates evidencing such Notes shall be issued and registered in the name of any Beneficial Owner or such Beneficial Owner's nominee. The City may terminate the "book-entry" system of registering ownership of the Notes at any time (provided the City is not then in default of any payment then due on the outstanding Notes) by delivering to the Registrar: (a) a written request that it issue and deliver Note certificates to each Beneficial Owner or such Beneficial Owner's nominee on the Book-Entry Termination Date; (b) a list identifying the Beneficial Owners as to both name and address; and (c) a supply of Note certificates, if necessary for such purpose. Upon surrender to the Registrar of the immobilized certificates evidencing all of the then outstanding Notes, the Registrar shall issue and deliver new certificates to each Beneficial Owner or such Beneficial Owner's duly appointed agent, naming such Beneficial Owner or such Beneficial Owner's nominee as the Owner thereof. Such certificates may be in any integral multiple of $50,000. Following such issuance, the Owners of such Notes may transfer and exchange such Notes in accordance with Section 9 hereof. Neither the City nor the Registrar shall have at any time any responsibility or liability to any Beneficial Owner of any Notes or to any other person for any error, omission, action or failure to act on the part of the Custodian with respect to payment, when due, to the Beneficial Owner of the principal and interest on the Notes, proper recording of beneficial ownership of Notes, proper transfers of such beneficial ownership, or any notices to Beneficial Owners or any other matter pertaining to the Notes, Section 2. Place, Manner and Medium of Payment. Both the principal of and interest on the Notes shall be payable in lawful money of the United States of America. Prior to the Book-Entry Termination Date, the principal and interest on the Notes shall be paid by the Registrar to the Custodian as the Owner (hereinafter defined) thereof, for the benefit of the Beneficial Owners thereof, in accordance with the Letter of Representations. From and after the Book-Entry Termination Date, principal of and interest on the Notes shall be paid to the persons who are named as the registered owners of the Notes (the "Owners") on the registration books for the Notes (the "Note Register") maintained by the Registrar only upon presentation and surrender of such Owners' Notes upon maturity, at the principal corporate trust office of either Registrar, at the option of the Owners. Section 3. No Redemption; Open Market Purchase. The Notes shall not be subject to redemption prior to maturity. The City reserves the right to purchase any or all of the Notes on the open market at any time and at any price. All Notes purchased by the City shall be surrendered to the Registrar for cancellation. Section 4. Debt Limit Not Exceeded. The City finds and covenants that the Notes are issued within all constitutional and statutory debt limitations presently applicable to the City. Section 5. Pledge of Full Faith, Credit and Resources. The Notes are limited tax general obligations of the City. The City hereby irrevocably covenants to include in its budgets and to make annual levies of taxes upon all property within the City subject to taxation without a vote in amounts which, together with any other money legally available therefor, shall be sufficient to pay the principal and interest on the Notes as the same shall become due. The City hereby irrevocably pledges its full faith, credit and resources to the annual levy and collection of such taxes and for the prompt payment of such principal and interest. The City hereby irrevocably covenants that the annual tax provided for herein to be levied for the payment of the principal of and interest on the Notes shall be within and as a part of the tax levy permitted the City without a vote of the people and that a sufficient portion of each such annual tax levy to be made so long as the Notes are outstanding, together with any other money legally available therefor, shall be and is hereby set aside, pledged and appropriated for the payment of the principal of and interest on the Notes as the same shall become due. Section 6. Form of Notes. The Notes shall be typewritten, printed or lithographed on good bond paper in a form consistent with this ordinance and Washington law. Section 7. Execution of Notes. The Notes shall be signed on behalf of the City with the facsimile or manual signatures of the Mayor and the City Clerk, and shall have the seal of the city impressed or a facsimile thereof imprinted thereon. In case either or both of the officers who shall have executed any Note shall cease to be such officer or officers of the City before the Note so signed shall have been authenticated or delivered by the Registrar or issued by the City, such Note nevertheless may be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. Any Note also may be signed and attested on behalf of the City by such persons as at the actual date of execution of such Note shall be the proper officers of the City although at the original date of such Note such persons were not such officers of the City. Section 8. Authentication and Delivery_ of Notes by Registrar. The Registrar are authorized and directed, on behalf of the City, to authenticate and deliver Notes initially issued or transferred or exchanged in accordance with the provisions of such Notes and this ordinance. Only such Notes as shall bear thereon a "Certificate of Authentication" manually executed by an authorized signatory of the Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Notes so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. The Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Notes. Section 9. Registration; Transfer and Exchange. The Registrar shall keep, or cause to be kept, the Note Register at its principal corporate trust office. The City and the Registrar, each in its discretion, may deem and treat the Owner of each Note as the absolute owner thereof for all purposes, and neither the City nor the Registrar shall be affected by any notice to the contrary. Payment of any such Note shall be made only as described in Section 2 hereof, but such registration may be transferred as herein provided. All such payments made as provided in Section 2 hereof shall be valid and shall satisfy and discharge the liability of the City upon such Note to the extent of the amount or amounts so paid. The registered ownership of any Note may be transferred. Prior to the Book- Entry Termination Date, the beneficial ownership of the Notes may only be transferred on the records established and maintained by the Custodian. On and after the Book-Entry 7 Termination Date, no transfer of any Note shall be valid unless it is surrendered at any principal corporate trust office of the Registrar, with the assignment form appearing on such Note duly executed by the Owner or such Owner's duly authorized agent, in a manner satisfactory to the Registrar. Upon such surrender, the Registrar shall cancel the surrendered Note and shall authenticate and deliver, without charge to the Owner or transferee therefor (other than any governmental fees or taxes payable on account of such transfer), a new Note or Notes (at the option of the new Owner), of the same maturity and interest rate and for the same aggregate principal amount, in any authorized denomination, naming as Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Note, in exchange for such surrendered and cancelled Note. On and after the Book-Entry Termination Date, any Note may be surrendered at the principal corporate trust office of the Registrar and exchanged, without charge, for an equal aggregate principal amount of Notes, in any authorized denomination. The Registrar shall not be obligated to transfer or exchange any Note during the ! 5 days preceding the maturity date. The Registrar may become the Owner of any Note with the same rights it would have if it were not a Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of the Owners of the Notes. The City covenants that, until all Notes shall have been surrendered and cancelled, it will maintain a system of recording the ownership of each Note that 8 complies with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). Section 10. Mutilated, Lost, Stolen or Destroyed Notes. If any Note becomes mutilated, lost, stolen or destroyed, the Registrar may authenticate and deliver a new Note of the same maturity and interest rate and of like tenor and effect in substitution therefor, all in accordance with law. If such mutilated, lost, stolen or destroyed Note has matured, the City at its option, may pay the same without the surrender thereof. However, no such substitution or payment shall be made unless and until the applicant shall furnish (a) evidence satisfactory to the Registrar of the destruction or loss of the original Note and of the ownership thereof, and (b) such additional security, indemnity or evidence as may be required by or on behalf of the City. No substitute Note shall be furnished unless the applicant shall reimburse the City and the Registrar for their respective expenses in the furnishing thereof. Any such substitute Note so furnished shall be equally and proportionately entitled to the security of this ordinance with all other Notes issued hereunder. Section 11. Defeasance. If money and/or "Government Obligations" (as such obligations are defined in Chapter 39.53 RCW, as now in existence or hereafter amended) maturing at such times(s) and bearing such interest to be earned thereon (without any reinvestment thereof) as will provide a series of payments which shall be sufficient, together with any money initially deposited, to provide for the payment of the principal of and interest on all or a portion of the Notes, when due in accordance with their terms in accordance with a refunding plan adopted by the City, are set aside in a special fund (hereinaRer called the "trust account") to effect such payment and are pledged irrevocably for the purpose of eff'ecting such payment, then no further payments need be made into the Note Fund for the payment of the principal of and the interest on such Notes, the Owners thereof shall cease to be entitled to any lien, benefit or security of this ordinance except for the right to receive the money and the principal and interest proceeds on the obligations set aside in the trust account, and such Notes shall no longer be deemed to be outstanding hereunder. Section 12. Sale of the Notes. The Purchaser has presented the Purchase Agreement to the City pursuant to which the Purchaser has offered to purchase the Notes, under the terms and conditions provided in the Purchase Agreement, which written Purchase Agreement is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Purchase Agreement is in the City's best interest and therefore accepts the offer contained in the Purchase Agreement and authorizes the execution of the Purchase Agreement by City officials. The Notes will be prepared at City expense and will be delivered to the Purchaser in accordance with the terms of the Purchase Agreement with the approving legal opinion of the City's bond counsel relative to the issuance of the Notes printed on each Note or attached thereto. Bond counsel has not been engaged to participate in the preparation or review of, or express any opinion concerning the completeness or accuracy of the official statement or other disclosure documentation used in connection with the offer or sale of the Notes by any person, and bond counsel's opinion shall so state. Bond counsel has not been retained to monitor, and shall not be responsible for monitoring, the City's compliance with any federal law or regulations to maintain the tax-exempt status of the interest on the Notes. 10 Section 13. Delivery_ of Notes; Temporary_ Notes. The proper City officials are authorized and directed to execute and/or approve, as appropriate, all documents, including but not limited to, the final Official Statement pertaining to the Notes, and to do everything necessary for the preparation and delivery of a transcript of proceedings pertaining to the Notes, and the printing, execution and prompt delivery of the Notes to the Purchaser and for the proper application and use of the proceeds of the sale thereof. If definitive Notes are not ready for delivery by the date established for closing (the "Closing"), the City Treasurer, upon the approval of the Purchaser, may cause to be issued and delivered to the Purchaser one or more temporary Notes with appropriate omissions, changes and additions. Any temporary Note or Notes shall be entitled and subject to the same benefits and provisions of this ordinance with respect to the payment, security and obligation thereof as definitive Notes authorized hereby. Such temporary Note or Notes shall be exchangeable without cost to the Owners thereof for definitive Notes when the latter are ready for delivery. Section 14. Application of Note Proceeds. The accrued interest on the Notes received by the City upon the sale of the Notes, if any, shall be deposited into the General Fund and shall be applied to the payment of interest coming due on the Notes. The principal proceeds of the Notes shall be deposited in the General Fund of the City and used solely for the purpose of paying the cash flow deficits in the City's General Fund resulting from budgeted expenditures, and any interest received from the deposit or investment of such proceeds shall be applied and used solely for such purposes. Section 15. Permitted Financing of Cumulative Cash Flow Deficit. Based upon the reasonably expected amounts of sales, excise and general ad valorem property taxes 11 and other revenue to be collected in 1999 (including investment proceeds of the Notes) and that are expected to be available to make General Fund expenditures in 1999 (computed by treating a reasonably working capital reserve in an amount not exceeding 5% of the total General Fund expenditures in the prior fiscal year as not being available to make those expenditures), the City Council finds that the principal amount of the Notes does not exceed the maximum anticipated "cumulative cash flow deficit" (as defined by Section 148 of the Code, and applicable Treasury Regulations thereunder) expected to occur in the City's General Fund during 1999 and that is to be financed with the proceeds of the Notes. Section 16. Tax-Exemption Covenants. The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exclusion of the interest on the Notes from gross income for purposes of federal income taxation, and will take or require to be taken such acts as may be permitted by Washington law and as may from time to time be required under applicable law to continue the exclusion of the interest on the Notes from gross income for purposes of federal income taxation. Without limiting the generality of the foregoing, the City will not invest or make or permit any use of the proceeds of the Notes or of its other money at any time during the term of the Notes which would cause the Notes to be "arbitrage bonds" within the meaning of Section 148 of the Code. The Notes are intended to qualify for the $5,000,000 small governmental issuer exception to the arbitrage rebate requirement, set forth in the Code. The City covenants that, if the City issues more than $5 million in tax-exempt bonds in the calendar year 1999 and all the proceeds of the Notes have not been spent within six months from the date of issuance of the Notes, it will calculate or cause to be calculated, and shall rebate to the United States, all earnings from the investment of Note proceeds that are in excess of the amount that would have been earned had the yield on such investments been equal to the yield on the Notes, plus income derived from such excess earnings, to the extent and in the manner required by Section 148 of the Code. The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the City is a bond issuer the arbitrage certifications of which may not be relied upon. The City will take no actions and will make no use of the proceeds of the Notes or any other funds held under this ordinance which would cause any Note to be treated as a "private activity bond" (as defined in Section 141(b) of the Code) subject to treatment under said Section 141(b) as an obligation not described in Section 103(a) of the Code, unless the tax exemption thereof is not affected. The City hereby designates the Notes as "qualified tax-exempt obligations" for purposes of Section 265 of the Code (relating to the deduction by financial institutions of the interest incurred to carry tax-exempt debt), and authorizes and directs the proper City officials to execute and deliver all documents necessary to evidence such designation to any and all interested parties. The City further covenants not to issue more than $10,000,000 of such "qualified tax-exempt obligations" during 1999. Section 17. Preliminary Official Statement Declaration. The City has been provided with copies of a preliminary official statement dated January 12, 1999 (the "Preliminary Official Statement"), prepared in connection with the sale of the Notes. For the sole purpose of the Purchaser's compliance with Securities and Exchange 13 Commission Rule 15 c2-12(b)(1), the City "deems final" the Preliminary Official Statement, as of its date, except for the omission of information on offering prices, interest rates, selling compensation, delivery dates, ratings, other terms of the Notes dependent on such matters. Section 18. Undertaking to Provide Continuing Disclosure. This section constitutes the City's written undertaking for the benefit of the Owners and the Beneficial Owners of the Notes required by subsection (d)(2)(ii) of Rule 15c2-12 (the "Rule") of the United States Securities and Exchange Commission (the "SEC"). The City hereby agrees to provide or cause to be provided upon request to any person or at least annually to the State Information Depository ("SID"), if one is created: (a) financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units, as such principles may be changed from time to time and as permitted by State law; which statements will not be audited, except that if and when audited financial statements are otherwise prepared and available to the City, they will be provided; and (b) other operating data that may be prepared by the City (the "Financial Information"). In its provision of such Financial Information, the City may cross-reference to any "final official statement" (as defined in the Rule) available from the Municipal Securities Rulemaking Board (the "MSRB") or any other documents theretofore provided to each then existing nationally recognized municipal securities information repository designated by the SEC ("NRMSIR") or the S1D, if one is created. 14 The City further agrees to provide or cause to be provided, in a timely manner, to the SID, if one is created, and to either the MSRB or each then existing NRMSI1K, notice of any of the following events with respect to the Notes, if material: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Notes; 7. Modifications to rights of the Owners of the Notes; 8. Optional redemptions of the Notes; 9. Defeasances of the Notes; 10. Release, substitution or sale of property securing repayment of the Notes; and 11. Rating changes. After the issuance of the Notes, so long as the interests of the Owners or Beneficial Owners of the Notes will not be materially impaired thereby, as determined by a party unaffiliated with the City (including, without limitation, a trustee for the Owners, nationally recognized bond counsel or other counsel familiar with the federal securities 15 law), or pursuant to a favorable "no-action letter" issued by the SEC, this Section 18 may only be amended in connection with any change in legal requirements, change in law, or change in the identity, nature or status of the obligated person, or type of business conducted, and only in such a manner that the undertaking of the City, as so amended, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances. The City's obligations to provide Financial Information and notices of certain events shall terminate without amendment upon the defeasance, prior redemption or payment in full of all of the then outstanding Notes. This Section 18 or any provision hereof, shall be null and void if the City (i) obtains an opinion of nationally recognized bond counsel or other counsel familiar with the federal securities laws to the effect that those portions of the Rule which require this Section 18 or any such provision are invalid, have been repealed retroactively or otherwise do not apply to the City; and (ii) notifies and provides the SID, if any, and either the MSRB or each then existing NRMSIR with copies of such opinion. The right of each Owner and Beneficial Owner of Notes to enforce the provisions of this Section 18 shall be limited to the right to obtain specific enforcement of the City's obligations under this Section 18, and any failure by the City to comply with the provisions of this undertaking shall not be a default with respect to the Notes under this ordinance. 16 The City Treasurer is authorized and directed to take such further action on behalf of the City as may be necessary, appropriate or convenient to carry out the requirements of this Section 18. Section 19. Contract; Severability. The covenants contained in this ordinance shall constitute a contract between the City and the Owners of each and every Note. The City unconditionally covenants that it will keep and perform all of the covenants of the Notes and this ordinance. If any one or more of the provisions of this ordinance shall be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining provisions of this ordinance or the Notes, and this ordinance and the Notes shall be construed and enforced as if such unconstitutional or invalid provision had not been contained herein. Section 20. Effective Date. This ordinance shall take effect and be in full force ten days after passage and publication of an approved summary, consisting of the title. APPROVED by the City Council of the City of Bremerton, Washington, this 13th day of January, 1999. PASSED by the City Council of the City of Bremerton, Washington, this 20th day of January, 1999. MiKE SHEPHERD, Council President APPROVED thisoTgb(,day of January, 1999. HORTON, Mayor 17 ATTEST: Kathleen McCluskey, City Clerk APPROVED AS TO FORM: By Judith Andrews, Bond Counsel PUBLISHED: /-,A/- q~ EFFECTIVE DATE: l- ,y/ ORDINANCE NO. 4645 18 ORDINANCE NO. 4645 SUMMARY AN ORDINANCE of the City of Bremerton Washington authorizing the issuance of $1,250,000 principal amount tax anticipation notes, 1999, for the purpose of paying City expenses pending the receipt of general City taxes; providing for the date, denominations, form, terms, registration privileges, maturity, interest rate and covenants of the notes; and providing for the sale and delivery of such notes to NationsBanc Montgomery Securities LLC of Seattle, Washington. APPROVED by the City Council of the City of Bremerton, Washington, this 13th day of January, 1999. PASSED by the City Council of the City of Bremerton, Washington, this 20th day of January, 1999. The full text of this ordinance is available in the City Clerk's office, 239 Fourth Street, Bremerton, Washington 98337.