HomeMy WebLinkAbout4920 CITY OF BREMERTON, WASHINGTON
ORDINANCE NO. 9tC},,~D
AN ORDINANCE of the City of Bremerton, Washington relating to the
incurrence of indebtedness; providing for the sale and issuance of a limited tax generaI
obligation bond, 2004, in a principal amount not to exceed $800,000 to establish a non-
revolving line of credit (converting to term loan) to finance the first year start up costs
of the Kitsap Regional Conference Center; providing for the date, form, terms,
registration privileges, maturity, interest rate and covenants of the bond; establishing a
debt service account for the bond; and providing for the delivery of such bond to Bank
of America, N.A., Seattle, Washington, in exchange for such line of credit.
WHEREAS, the City of Bremerton, Washington (the "City") has constructed the Kitsap
Regional Conference Center (the "Conference Center") in the City which is owned and operated by the
City; and
WHEREAS, RCW 39.46.050 authorizes local governments to establish lines of credit with any
qualified public depository to be drawn upon in exchange for its obligations; and
WHEREAS, the City deems it necessary and advisable that that the City incur indebtedness and
issue its limited tax general obligation bond in a principal mount not to exceed $800,000 to establish a
non-revolving tine of credit to finance the first year start up costs of the Conference Center, with such
line of credit to convert aRer one year to a fully-amortizing six-year term loan; and
WHEREAS, the incurrence of 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, Bank of America, N.A. (the "Bank") has submitted a commitment to establish a
nonrevolving line of credit, converting to a term loan, on the terms and conditions set forth herein in
exchange for the bond; and
WHEREAS, the City Council deems it in the best interests of the City to accept such offer, to
deliver the bond to the Bank and to establish such line of credit; now therefore,
THE CITY OF BREMERTON DOES ORDAIN AS FOLLOWS:
Section 1. Definitions. As used in this ordinance, the following terms shall have the following
meanings:
"Bank" means Bank of America, N.A.
"Bond" means the "City of Bremerton, Washington, Limited Tax General Obligation Bond,
2004" authorized by this ordinance.
"Bond Account" means the Limited Tax General Obligation Bond Account, 2004 created in the
Conference Center Operating Fund in this ordinance.
"Bond Register" means the registration books for the Bond maintained by the City.
"City" means the City of Bremerton, Washington.
"Code" means the Internal Revenue Code of 1986, as amended, together with all applicable
regulations thereunder.
"Conference Center" means the Kitsap Regional Conference Center.
"Draw Request" means the written request by any person authorized to make a draw from the
Line of Credit, as more fully described in Section 4 of this ordinance.
"Finance Director" means the City's Director of Finance.
"Hotel-Motel Taxes" shall mean those revenues received by the City derived from excise taxes
imposed by the City pursuant to chapter 67.28 RCW on charges made for lodging within the City.
"LIBOR Interest Rate Period" means a period between one month and twelve months in length,
but not exceeding the maturity date of the Bond, consisting of one-month increments, specified in a
Request for Draw or a notice of change to the LIBOR Rate Mode. The £u:st day of the LIBOR Interest
Rate Period must be a London Banking Day. The date of the last day of the LIBOR Interest Rate
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 Portion" means each portion of principal of the Outstanding Principal Balance of the
Bond accruing interest in the LIBOR Rate Mode.
"LIBOR Rate" means the average per annum interest rate (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which U.S. dollar deposits would be offered for a period equal to the
LIBOR Interest Rate Period starting on that day by major banks in the London inter-bank market, as
shown on the Telerate Page 3750 (or any successor page) at approximately 11:00 a.m. London time,
two London Banking Days before the commencement of the interest period. If such rate does not
appear on the Telerate Page 3750 (or any successor page), the rate for that LIBOR Interest Rate Period
will be determined by such alternate method as reasonably selected by the Bank. The actual first and
last days of the LIBOR Interest Rate Period will be determined by the Bank using the practices of the
London inter-bank market, taking into account any days on which banks are required or permitted to
be closed in New York or London.
"LIBOR Rate Mode" means the mode during which a LIBOR Portion bears interest at a rate
equal to 65% of the LIBOR Rate, plus a spread of .99%, for the duration of the LIBOR Interest Rate
Period selected, calculated on the basis of actual number of days elapsed over a year of 360 days.
"Line of Credit" means the non-revolving line of credit, to be termed out over six years,
authorized by this ordinance to be established with the Bank.
"London Banking Day" means a day on which Bank's London Banking Center is open for
business and dealing in offshore dollars.
"Net Revenue" means the Revenue less Operation and Maintenance Expenses.
"Operation and Maintenance Expenses" shall mean all reasonable expenses incurred by the
City in causing the Conference Center to be operated and maintained in good repair, working order and
condition, including without limitation: management fees or other payments to third parties payable in
respect of the operation of the Conference Center; personnel costs; the cost of ordinary maintenance
and repair; utilities; supplies; food and beverage service and supply costs; equipment purchase and
lease payments; administrative expenses; the costs of advertising, marketing and business promotion;
deposits, premiums, assessments or other payments for insurance; taxes and assessments; all as
determined in accordance with generally accepted accounting principles applicable to the City and its
operations. The term Operation and Maintenance Expenses does not include any depreciation of or
capital expenditure for the Conference Center.
"Outstanding Principal Balance of the Bond" means the aggregate of all funds that the City has
drawn from the Line of Credit pursuant to the Bond less the aggregate of all principal payments on the
Bond made by the City.
"Owner" means the person who is named as the registered owner of the Bond on the Bond
Register.
"Paying Agent" means the City in its capacity as paying agent for the Bond.
"Prime Rate" means the interest rate designated and published by the Bank as its prime rate, as
such prime rate may change. The Prime Rate is set by the Bank based on various factors, including the
Bank's cost 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 ora change in the Prime Rate.
"Prime Rate Mode" means the mode during which the Outstanding Principal Balance of the
Bond not constituting a LIBOR Portion bears interest at a variable rate equal to 65% of the Prime Rate,
minus a spread of 0.79%, calculated on the basis of actual number of days elapsed over a year of 365-
366 days.
"Project" means the payment of all or part of the start up costs of the Conference Center,
including but not limited to, the first year of the pre-opening management services expenses and
furnishings and equipment for the Conference Center.
"Purchase Offer" means the commitment letter dated November 30, 2004 from the Bank to the
City to provide the Line of Credit in exchange for the Bond under the terms and conditions set forth in
this Ordinance.
"Registrar" means the City in its capacity as registrar and transfer agent for the Bond.
"Revenue" shall mean all earnings, revenue and money received by the City from or on account
of the operation and/or ownership of the Conference Center, including the income from investments of
money in the Conference Center Operating Fund or from any other investment thereof (except the
income from investments irrevocably pledged to the payment of the Bond pursuant to a refunding or
defeasance plan).
Section 2. Finding, Purpose and Description of Bond. The City authorizes the sale and
issuance of its "Limited Tax General Obligation Bond, 2004" (the "Bond"), to finance the Project and
to pay the "incidental costs and costs related to the sale and issuance" (as defined in RCW 39.46.070)
of the Bond.
The Bond shall be issued as a single bond in the principal amount not to exceed $800,000; shall
be dated the date of the first Draw Request thereunder; shall be issued in fully registered form as to
both principal and interest; and shall be numbered in such manner and with any additional designation
as the Registrar, deems necessary for purposes of identification. The Bond shall mature no later than
December 31,2011.
Portions of principal under the Bond shall bear interest in one of two variable rate modes (the
LiBOR Rate Mode or the Prime Rate Mode), as determined by the Finance Director. Amounts drawn
on the Bond pursuant to a Draw Request shall bear interest in the Prime Rate Mode unless the LiBOR
Rate Mode is elected. The City hereby delegates to the Finance Director authority to convert portions
of the Outstanding Principal Balance of the Bond from one interest rate mode to the other as follows:
(a) In order to request a conversion to the LiBOR Rate Mode (or to specify a new LiBOR
Interest Rate Period for the Bond), the Finance Director shall give notice of a mode change or
extension to the Bank no later than 12:00 noon, Pacific time, on a London Banking Day that is at least
three London Banking Days before the new LIBOR Interest Rate Period. Each such LIBOR Portion
shall be an amount in excess of $250,000.
(b) In order to request a conversion to the Prime Rate Mode, the Finance Director shall give
notice of the mode change to the Bank by 1:00 p.m., Pacific time, on the day on which the mode is to
be changed.
Each LIBOR Portion shall automatically be converted to the Prime Rate Mode after the
expiration of the LIBOR Rate Period if no new LIBOR Rate Mode is timely specified in accordance
with this paragraph. The notice ora mode change or extension shall be substantially in the form
attached as Exhibit B. The notice of a conversion to, or extension of a LIBOR Rate Mode shall specify
the selected LIBOR Interest Rate Period, as applicable, and applicable dollar amount.
Interest on the Outstanding Principal Balance of the Bond shall accrue from the date such
principal is drawn under the Bond until paid. Interest shall be payable quarterly, on each March 1,
June 1, September 1 and December 1, beginning March 1, 2005, until maturity or prior prepayment of
the Bond. Interest on any principal prepaid shall be paid upon prepayment. Principal on the
Outstanding Principal Balance of the Bond shall be paid in quarterly installments on each March 1,
June 1, September 1 and December 1, beginning March 1, 2006 to the maturity or prior prepayment of
the Bond. The amount of such principal installments shall be set in an amount equal to the
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Outstanding Principal Balance on the Bond on December 1, 2005, divided by 24.
Section 3. Place, Manner and Medium of Payment. Both principal of and interest on the Bond
shall be payable by the City in lawful money of the United States of America. Interest on the Bond
and principal installment payments and any prepaid principal thereof shall be paid by check or draft
mailed on or before the applicable payment date to the Owner at the address for such Owner appearing
on the Bond Register on the day such payment is made; provided, that the Owner may be paid
principal and interest by wire transfer to an account in the United States, but only if such Owner makes
a written request of the Paying Agent, received before the close of the Paying Agent's business on the
business day immediately preceding the date scheduled for payment of such principal and interest,
which request shall specify the account number and address which request may provide that it remain
in effect until changed or revoked in writing. The final principal installment of the Bond, together with
all interest accrued thereon, shall be paid at maturity to the Owner at the address for such Owner
appearing on the Bond Register on the day such payment is made. Upon request of the City following
receipt of such final principal payment, the Owner shall surrender of the Bond at the office of the
Paying Agent. The Registrar shall keep sufficient books for the registration and transfer of the Bond.
The Outstanding Principal Balance of the Bond on any particular day shall be the agg~'egate of
all funds that the City has drawn from the Line of Credit from the date of the Bond to that day less the
aggregate of all principal payments made by the City on or before that day. Interest on a particular
principal amount so advanced shall be determined from the date of the advance of Bond proceeds
pursuant to a Draw Request.
Section 4. Draw Requests. The City may make multiple Draw Requests under the Line of
Credit for the purpose of obtaining funds to pay the costs of the Project and to pay the incidental costs
and costs related to the sale and issuance of the Bond. The Draw Requests maybe made to be
effective on any business day prior to December l, 2005; provided, that the first Draw Request shall be
accompanied by the Bond and the other documents described in Section 13 hereof. Draw Requests are
not subject to approval by the Bank, but shall be limited to an aggregate outstanding principal amount
of $800,000. No Draw Request may exceed the total Project costs and issuance costs to be paid fi:om
the proceeds of such Draw Request, and such proceeds shall be immediately applied to pay such costs.
Amounts drawn pursuant to Draw Requests shall be recorded in such form as the City and the Bank
shall agree. Any Draw Request to be made in the LIBOR Rate Mode must be in a minimum principal
amount of $250,000.
The Finance Director or such other person as the Finance Director may designate are hereby
authorized to make a request for draw pursuant to the Bond. A Draw Request shall be made in writing
signed by any one of such authorized persons at any time prior to December 1, 2005.
Section 5. Prepayment. The Bond shall be subject to optional prepayment prior to maturity, in
whole or in part on any date, plus accrued interest to the date fixed for prepayment. There shall be no
prepayment fee for prepayment of portions of the Bond bearing interest in Prime Rate Mode or if a
LIBOR Portion is prepaid on an interest rate reset date. The Bond shall be subject to a prepayment fee
ifa LIBOR Portion is prepaid prior to its interest rate reset date. Such prepayment fee shall be
calculated in accordance with Exhibit C hereto.
Section 6. Debt Limit Not Exceeded. The City finds and covenants that the Bond is issued
within all constitutional and statutory debt limitations presently applicable to the City.
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Section 7. Pledge of Full Faith, Credit and Resources; Hotel-Motel Taxes; Revenue of
Convention Center. The Bond is a limited tax general obligation of the City. Unless the principal of
and interest on the Bond is paid from other sources, so long as the Bond is outstanding, the City hereby
irrevocably covenants to make annual levies of taxes upon ail property within the City subject to
taxation without a vote in amounts sufficient, together with any other money legally available therefor,
to pay such principal and interest 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 Bond shall be within and as a part of the tax levy
permitted the City without a vote and that a sufficient portion of each such annual tax levy to be made
so long as the Bond is outstanding, together with any other money legally available therefor, will be
and is hereby set aside, pledged and appropriated for the payment of the principal of and interest on the
Bond as the same shall become due.
The Net Revenue and Hotel-Motel Taxes are hereby pledged, for the equal and ratable benefit
of the Owner of the Bond, as security for payment of the principal of and premium, if any, and interest
on the Bond, subject to the provisions of this Ordinance permitting the application of amounts held
hereunder to the purposes set forth herein. Such pledge is hereby declared to be a prior lien and charge
on the Net Revenue superior to all other liens and charges of any kind or nature whatsoever.
Section 8. Form of Bond. The Bond shall be typewritten, printed or lithographed on good
bond paper in a form consistent with this ordinance and Washington law.
Section 9. Execution of Bond. The Bond 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 of such seal imprinted on the Bond.
In case either or both of the officers who shall have executed the Bond shall cease to be such
officer or officers of the City before the Bond so signed shall have been delivered by the Registrar or
issued by the City, such Bond 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. The Bond also may be signed and attested on
behalf of the City by such persons as at the actual date of execution of the Bond shall be the proper
officers of the City although at the original date of the Bond such persons were not such officers of the
City.
Section 10. Registration; Nontransferabilit¥. The City shall keep, or cause to be kept, at the
Finance Director's office, the Bond Register.
The City may deem and treat the Owner of the Bond as the absolute owner thereof for all
purposes, and the City shall not be affected by any notice to the contrary. Payment of the Bond shall
be made only as described in Section 3 hereof. All such payments made as provided in Section 3
hereof shall be valid and shall satisfy and discharge the liability of the City upon the Bond to the extent
of the amount or amounts so paid.
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The City covenants that, until the Bond shall have been surrendered and cancelled, it will
maintain a system of recording the ownership of the Bond that complies with the provisions of the
Code.
The registered ownership of the Bond may not be transferred, except for transfer to a successor
in interest to the Owner as a result of merger or consolidation.
Section 11. Mutilated, Lost, Stolen or Destroyed Bond. If the Bond becomes mutilated, lost,
stolen or destroyed, the City may authenticate and deliver a new Bond of the same maturity and
interest rate and of like tenor and effect in substitution for such mutilated, lost, stolen or destroyed
Bond, all in accordance with law. If such mutilated, lost, stolen or destroyed Bond has matured, the
City at its option, may pay the same without the surrender of the original Bond. However, no such
substitution or payment shall be made unless and until the applicant shall furnish (a) evidence
satisfactory to the City of the destruction or loss of the original Bond and of the ownership of such
original Bond, and (b) such additional security, indemnity or evidence as may be required by or on
behalf of the City. No substitute Bond shall be furnished unless the applicant shall reimburse the City
and the City for their respective expenses in the furnishing of such substitute Bond. Any such
substitute Bond so furnished shall be equally and proportionately entitled to the security of this
ordinance with any other Bond issued under this ordinance.
Section 12. Defeasance. If money and/or "government obligations" (as such obligations are
defined in Chapter 39.53 RCW, as now in existence or later amended) maturing at such times(s) and
beating such interest to be earned on such obligations (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 all of the principal of and interest on all or a portion of the Bond, when due
in accordance with its terms in accordance with a refunding plan adopted by the City, are set aside in a
special fund (hereinafter called the "trust account") to effect such payment and are pledged irrevocably
for the purpose of effecting such payment, then no further payments need be made into the Bond Fund
for the payment of the principal of and the interest on such Bond, 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 Bond shall
no longer be deemed to be outstanding under this ordinance.
Section 13. Sale ofthe Bond. The Bank has proposed to purchase the Bond under the terms
and conditions provided in the Purchase Offer, a copy of which is attached hereto as Exhibit A, and is
incorporated herein by this reference. The City Council finds that accepting the Purchase Offer is in
the Town's best interest and therefor accepts the offer contained in the Purchase Offer and authorizes
the execution of the Purchase Offer by the Mayor of the City.
The Bond will be prepared at City expense and will be delivered to the Bank in accordance
with the Purchase Offer, together with: (a) the approving legal opinion of Gottlieb, Fisher & Andrews,
PLLC, bond counsel, of Seattle, Washington, and (b) a copy of this Ordinance. 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 Bond. The City shall
pay to the Bank a loan fee of $1,500 upon delivery of the Bond, and pay or reimburse Bank for the
payment of the Bank's legal fees incurred with respect to the Line of Credit.
The proper City officials, including the Finance Director, are authorized and directed to do
everything necessary for the prompt issuance, execution and delivery of the Bond to the Bank in
accordance with the Purchase Offer, and for the proper application and use of the proceeds of the sale
thereof.
Section 14. Deliver,/of Bond. The proper City officials, including the Finance Director, are
authorized and directed to execute and/or approve, as appropriate, all documents, and to do everything
necessary for the preparation and delivery ora transcript of proceedings pertaining to the Bond, and
the preparation, execution and prompt delivery of the Bond to the Bank and for the proper application
and use of the proceeds of the sale thereof.
Section 15. Establishment of Bond Account; Application of Bond Proceeds. There is hereby
created and established in the office of the Finance Director a special account to be designated as the
"Limited Tax General Obligation Bond Account, 2004" (the "Bond Account") in the Conference
Center Operating Fund.
The money and investments in the Bond Account shall be used by the City, together with any
other money legally available and designated therefor, to pay the principal of and interest on the Bond,
when due.
Net principal proceeds of the Bond shall be deposited, upon receipt, in the Conference Center
Operating Fund, and shall be applied solely to pay part of the costs of the Project and the incidental
costs and the costs of issuance of the Bond.
Except as provided by the Code and Section 15 of this ordinance, the interest and profits
derived from the investment of Bond proceeds deposited into the Conference Center Operating Fund
shall be deposited in the Conference Center Operating Fund and applied as described in the preceding
paragraphs.
Except as provided by the Code and Section 16 of this ordinance, if any money allocable to the
Bond proceeds in the Conference Center Operating Fund remains in such fund the after payment of all
the costs of the Project or after termination of the Project by the City, such money shall be transferred
to the Bond Account. Pending application as described in this Section 14 and subject to the
requirements of the Code and Section 16 of this ordinance, money in the Conference Center Operating
Fund may be temporarily deposited in such institutions or invested in such investments as may be
lawful for the investment of City funds.
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 Bond
fi:om 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 Bond 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 Bond or of its other money at any time during the term
of the Bond which would cause the Bond to be an "arbitrage bond" within the meaning of section 148
of the Code.
The City further covenants that, if the City issues more than $5 million in tax-exempt bonds in
the calendar year 2004, the City shall calculate or cause to be calculated, and shall rebate to the United
States, all earnings from the investment of Bond 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 Bond, 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 Bond or any other
funds held under this ordinance which would cause the Bond 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 Bond as a "qualified tax-exempt obligation" 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 2004.
Section 17. Financial Reports. The City agrees to provide the Bank (a) a copy of the City's
annual State Audit Report as soon as such report is available, with unaudited annual fmancial
statements within 180 days of the completion of each fiscal year; (b) a copy of the City's annual
budget within ninety days of the budget cycle; and (c) semi-annual operating statements for the
Conference Center, including Hotel-Motel Taxes and Net Revenue, as of each June 30 and December
31, within 45 days of the end of each such reporting period.
Section 18. Events of Default. Any one or more of the following events shall constitute an
"event of default" under this ordinance: (a) nonpayment of principal, interest, fees or other amounts;
(b) violation of covenants; (c) inaccuracy of representations and warranties; (d) bankruptcy and other
insolvency events; (e) creditor or forfeiture proceedings being instituted by or against the City; and (f)
actual or asserted invalidity of any loan documentation or security interests. If an event of default
occurs due to nonpayment of principal, interest, fees or other amounts when due, then the Bank may
increase the interest rate spread by two (2) percentage points.
Section 19. Contract; Severability. The covenants contained in this ordinance shall constitute a
contract between the City and the Owner of the Bond. The City unconditionally covenants that it will
keep and perform all of the covenants of the Bond and this ordinance. If any one or more of the
provisions of this ordinance shall be declared unconstitutionaI or invalid for any reason, such decision
shall not affect the validity of the remaining provisions of this ordinance or the Bond, and this
ordinance and the Bond shall be construed and enforced as if such unconstitutional or invalid provision
had not been contained in this ordinance.
Section 18. 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, the ~ day of
December, 2004.
PASSED by the City Council of the City of Bremerton, Washington, this ~ day of
December, 2004.
Dar~n Nygren, Council Pres~ent'
PPROVED is/ Cday ofDece _
Cary Bozeman, Mayor
By
~ews, Bond Counsel
PUBLISHED: ~
EFFECTWE DATE:
OPO~ANC~ NO.
10
City of Bremerton BanlkofAme~ica _~.
Conference Center Financing
November 30, 2004 ~
EXHIBIT A
SUMMARY OF TERMS AND CONDITIONS
BORROWER: The City of Bremerton, Washington (the "City" or "Borrower")
LENDER: Bank of America, N.A. (the "Bank")
CREDIT FACILITY: $800,000 Non-Revolving Line of Credit Converting to a Term Loan
effective December 1, 2005. Tax-Exempt, Bank Qualified (the "Credit
Facility).
PURPOSE: Finance start-up expenses for new Bremerton Conference Center.
SECURITY: Borrower to pledge the following security for repayment of all
outstanding principal and interest due on the Credit Facility:
Net revenue pledge of the City's Hotel-Motel taxes.
Net revenue pledge of the City's Conference Center revenues.
Limited tax general obligation pledge of the City.
MATURITY DATE: Seven years from closing, estimated at December 1,2011.
INTEREST RATE: Borrower's option of:
Bank of America Prime Rate:
A tax-exempt rate per year equal to 65% of Bank of America's
Prime Rate minus 79 basis points, changing on the date of any
Prime Rate change.
The Prime Rate is the rate of interest publicly announced from
time to time by Bank of America as its Prime Rate.
Interest is calculated on an Actual/365-day basis.
As an indication only, based on the Prime Rate of 5.00% as of
November 30 2004, 65% of Prime - 79 bp is 2.46%
LIBOR Fixed Rate:
A tax-exempt rate per year equal to 65% of LIBOR plus 99 basis
points, fixed for the interest period selected. Interest periods
available in one-month increments ranging from 1 month to 12
months (see Exhibit B).
As an indication only, based on the 1-month LIBOR of 2.30%as
of November 30, 2004, 65% of LIBQR plus 99 bp is 2.49%
The LIBOR Fixed Rate shall be renewed upon the expiration of
the initial interest period for a like tenor and the rate adjusted to
the applicable LIBOR Fixed Rate in effect at the time of such
renewal, unless Borrower elects a different rate period or
conversion to Prime Rate.
REPAYMENT: Interest only through December 1, 2005. Payable quarterly on the first
day of each March, June, September and December, beginning
March 1, 2005.
Beginning March 1,2006, the Borrower shall make quarterly payments
of principal plus interest, over the remaining six-year term. The
principal payment shall be set in an amount equal to the principal
City of Bremerton
Conference Center Financing
November 30, 2004
balance outstanding on December 1,2005 divided by 24. For
example, if $800,000 is outstanding, the quarterly principal payments
will be set at $33,333.33.
ORIGINATION FEE: An origination fee of $1,500, payable at closing.
LEGAL FEES: Borrower will reimburse Bank of America's attorney's fees
incurred in connection with documentation and closing of the
Credit Facility.
Borrower is responsible for Bond Counsel fees.
PREPAYMENT FEE: Prime Rate draws may be repaid at any time without prepayment
fee.
LIBOR Rate draws may be repaid at the interest rate reset date
without prepayment fee.
A prepayment fee may apply to LIBOR Rate draws repaid prior to
the interest rate reset date. See Exhibit C.
REPORTING Annual Financial Statements. As soon as available, a copy of the
REQUIREMENTS: City's annual financial statement, audited by the State Auditor,
with unaudited annual financial statements to be provided within
180 days of the completion of each fiscal year.
Budget. Within 90 days of commencement of the new budget
cycle, a copy of Borrower's budget for the new period.
Semi-annual operating statement for the Conference Center to
include Net Hotel Motel Tax Revenues and Net Conference
Center Revenues, each June and December, due within 45 days
of the end of the reporting period.
EVENTS OF DEFAULT: Usual and customary in transactions of this type, to include without
limitation: (i) nonpayment of principal, interest, fees or other amounts;
(ii) violation of covenants; (iii) inaccuracy of representations and
warranties; (iv) bankruptcy and other insolvency events; (v) creditor or
forfeiture proceedings; and (vi) actual or asserted invalidity of any loan
documentation or security interests.
If an event of default occurs due to (i) nonpayment of principal,
interest, fees or other amounts when due, then Bank of America may
increase the interest rate spread by two percent (2.0%).
DOCUMENTATION: All documentation, including the form of legal opinion to be
issued by Borrower's legal counsel, is subject to review and
approval by Bank of America's legal counsel. Bank of
America will engage Alan W. Schulkin as its legal counsel.
Documentation to include:
An unqualified legal opinion of nationally recognized bond
counsel, in form and substance acceptable to Bank and
its legal counsel, that (i) the Ordinance and all documents
related to the Credit Facility have been properly adopted,
authorized and executed; and (ii) the Ordinance and all
documents related to the Credit Facility constitute a
City of Bremerton BankofAmeri
Conference Center Financing ~.,,,~..~.~--
November 30, 2004
legally binding obligation of the Borrower, enforceable
according to their terms (subject to standard exceptions).
A copy of the Ordinance passed by Borrower's City
Council authorizing the issuance of the Note;
Receipt of the original signed Note at closing.
This Summary of Terms and Conditions does not constitute a commitment to lend by Bank of
America or any of its affiliates and is presented for discussion purposes only. The actual terms
and conditions upon which Bank of America may extend credit to Borrower is subject to
satisfactory completion of due diligence, necessary credit approval and such other terms and
conditions as determined by Bank of America, in its sole discretion.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT,
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON
If the City wishes to accept this commitment, please sign and return a copy of this letter no later
than December 24, 2004. If the City does not respond by that time, or if the City does respond
but the Credit Facility does not close by January 31, 2005 for any reason, this commitment will
expire.
Accepted and Agreed:
CITY OF BREMERTON
City of Bremerton
Conference Center Financing
November 30, 2004
Exhibit B
LIBOR RATE DEFINITIONS
LIBOR Rate. The election of LIBOR Rates st~all be subject to the following terms:
(a) At the option of the Borrower, the interest period during which the LIBOR Rate will be in
effect will be one, two, three, four, five, six, seven, eight, nine, ten, eleven, or twelve months.
The first day of the interest period must be a day other than a Saturday, or a Sunday on
which Lender is open for business in New York and London and dealing in offshore dollars (a
"LIBOR Banking Day"). The last day of the interest period and the actual number of days
during the interest period will be determined by Lender using the practices of the London
inter-bank market.
(b) Each LIBOR Rate Portion will be for an amount not less than Two Hundred Fifty Thousand
Dollars ($250,000).
(c) "London Inter-Bank Offered Rate" means, for any applicable interest period, the rate per
annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by
Reuters (or other commercially available source providing quotations of BBA LIBOR as
selected by the Bank from time to time) at approximately 11:00 a.m. London time two (2)
London Banking Days before the commencement of the interest period, for U.S. Dollar
deposits (for delivery on the first day of such interest period) with a term equivalent to such
interest period. If such rate is not available at such time for any reason, then the rate for that
interest period will be determined by such alternate method as reasonably selected by the
Bank. A "London Banking Day" is a day on which banks in London are open for business
and dealing in offshore dollars.
(d) Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon Pacific
Standard time on the LIBOR Banking Day preceding the day on which the London Inter-Bank
Offered Rate will be set, as specified above. For example, if there are no intervening
holidays or weekend days in any of the relevant locations, the request must be made at least
three days before the LIBOR Rate takes effect.
As an indication only, LIBOR rates as of November 30, 2004 are as follows:
interest Period Rate as of 11-30-04
1 month 2.30%
2 months 2.34%
3 months 2.41%
4 months 2.49%
5 months 2,53%
6 months 2.63%
7 months 2.70%
8 months 2.77%
9 months 2,83%
10 months 2.88%
11 months 2.93%
12 months 2.99%
City of Bremerton
Conference Center Financing Ba.kof Amerlca~...~
November 30, 2004
Exhibit C
Fixed Rate Prepayment Fee
Under the LIBOR rate option, if principal amounts are prepaid prior to the expiration of the
LIBOR 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 Bank 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 credit facility or from fees payable to
terminate the deposits from which such funds were obtained. The Borrower shall also pay any
customary administrative fees charged by Bank in connection with the foregoing. For
purposes of calculating the prepayment fee, Bank shall be deemed to have funded the note by
a matching deposit or other borrowing in the applicable interbank market, whether or not the
note was in fact so funded.
EXHIBIT B
CITY OF BREMERTON, WASHINGTON
LiNE OF CREDIT
RATE CERTIFICATE NO.
TO: BANK OF AMERICA, N.A.
DATE OF RATE CERTIFICATE:
On behalf of the City of Bremerton, Washington (the "City"), I hereby certify that:
1. I am the Finance Director, or the authorized designee, as defined in Ordinance No.
adopted by the City on December __, 2004 (the "Ordinance"), and that I am authorized
to file this Rate Certificate under Section 3 of the Ordinance and to make the
representations on behalf of the City set forth herein.
The City requests that the dollar amount indicated of the Bond bear interest at (check one of the
following):
[] the Prime Rate Mode beginning at the end of the current LIBOR
Interest Rate Period
the LIBOR Rate Mode as to $ (must be $250,000 or
more) for a __ Month Rate Period
3. If the Draw will bear interest at the LIBOR Rate Mode, the applicable Interest
Rate Period shall begin (check one):
[] At the end of the current LIBOR Interest Rate Period, or
[] On (insert date at least three London Banking Days after this certificate is given to
the Bank).
THE CITY OF BtLEMERTON, WASHiNGTON
By:
Finance Director
EXItIBIT C
Prepayment Fee in LIBOR Rate Mode
Under the LIBOR Rate Mode, if principal amounts are prepaid prior to the expiration of the
LIBOR Interest Rate 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 Bank 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 Portion 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 Bank in connection with the foregoing. For purposes
of calculating the prepayment fee, Bank shall be deemed to have funded the LIBOR Portion by a
matching deposit or other borrowing in the applicable interbank market, whether or not the
LIBOR Portion was in fact so funded.
AFFIDAVIT OF PUBLICATION
No. Ad # 100133540
STATE OF WASHINGTON
COUNTY OF KITSAP
I, Christine Nelson, being first duly sworn on oath, deposes and says: That she is now, and at all times
embraced in the publication herein mentioned was the principal clerk of the printers and publishers of THE
SUN; that said newspaper has been approved as a legal newspaper by order of the Superior Court of the
County of Kitsap, in which County it is published and is now and has been for more than six months prior
to the date of the publication hereinafter referred to, published in the English language continually as a
daily newspaper in Bremerton, Kitsap County, Washington, and is now and during all of said time, was
printed in an office maintained in the aforesaid place of publication of said newspaper; December 11
2004 and that such newspaper was regularly distributed to its subscribers during all of said period. That the
full mount of the fee charged for the foregoing publication is the sum of $48.35 which amount has not been
paid.
..-'~ ~.\.- ..... .
~ .~: ~v - -. ~_ (Signature of Principal Clerk)
_= : MAY 4, 2008
SfiJ~f, ibe~and s'61Dm j~fore me this day of December 16'h, 2004.
~'. UBL~ ..~.?
ORDINANCE NO. 4920'
AN ORDINANCE of the City of Bremerton, Washington relating to the incurrence of indebtedness;
providing for the sale and issuance of a limited tax general obligation bond, 2004, in a principal amount not
to exceed $800,000 to establish a non-revolving line of credit (converting to term loan) to finance the first
year start up costs of the Kitsap Regional Conference Center; providing for the date, form, terms,
registration privileges, maturity, interest rate and covenants of the bond; establishing a debt service account
for the bond; and providing for the delivery of such bond to Bank of America, N.A., Seattle, Washington,
in exchange for such line of credit.-
APPROVED by the City Council the 1 st day of December, 2004.-
PASSED by the City Council the 8th day of December, 2004.-
The full text of this ordinance is available from the City Clerk's Office, 345 6th Street, Bremerton, WA
98337-1873.-
December 11, 2004..#100133540-