Loading...
HomeMy WebLinkAbout3144 Water and Sewer Capital Improvements Line of Credit Ordinance 3144 Page I of]] ORDINANCE NO. 3144 AN ORDINANCE OF THE CITY OF PORT TOWNSEND,WASHINGTON, ESTABLISHING A LINE OF CREDIT AND PROVIDING FOR THE ISSUANCE AND SALE OF A WATER AND SEWER REVENUE BOND ANTICIPATION NOTE IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $3,000,000 TO EVIDENCE THE LINE OF CREDIT TO BE USED TO PROVIDE INTERIM FINANCING FOR THE CITY'S WATER AND SEWER CAPITAL IMPROVEMENTS; FIXING OR SETTING PARAMETERS WITH RESPECT TO CERTAIN TERMS AND COVENANTS OF THE NOTE; APPOINTING THE CITY'S DESIGNATED REPRESENTATIVE TO APPROVE THE FINAL TERMS OF THE SALE OF THE NOTE; AND PROVIDING FOR OTHER RELATED MATTERS NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND, WASHINGTON, DO ORDAIN as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "Annual Debt Service" for any series of Parity Bonds for any year means all the interest, plus all principal (except principal of Term Bonds due in any Term Bond Maturity Year), and plus all mandatory redemption and sinking fund installments for that year, less all bond interest payable from the proceeds of any such bonds in that year. "Bank" means the bank selected by the Designated Representative pursuant to Section 17 to purchase the Note. "Bond Fund" means that special fund of the City known as the Water and Sewer Revenue Bond Fund created or to be created by the City for the payment of the principal of and interest on any Parity Bonds. "City" means the City of Port Townsend, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. "Code" means the United States Internal Revenue Code of 1986, as amended, and the applicable rules and regulations promulgated thereunder. "Council" means the City Council of the City as the same shall be duly and regularly constituted from time to time. "Coverage Requirement" means Net Revenue, together with the collection of ULID Assessments, at least equal to 1.20 times the Maximum Annual Debt Service in any current year on the Parity Bonds outstanding. "Designated Representative" means the officer of the City appointed in Section 17 of this ordinance to serve as the City's designated representative in accordance with RCW 39.46.040(2). Ordinance 3144 Page 2 of 11 "Final Terms" means the terms and conditions for the sale of the Note including the amount, date or dates, denominations, interest rate or rates (or mechanism for determining interest rate or rates), payment dates, final maturity, prepayment rights, price, and other terms or covenants. "Maintenance and Operation Costs of the System" means the actual and necessary costs of maintaining and operating the System, including reasonable amounts for administration, overhead, insurance and other similar costs, but excluding depreciation, the costs of capital additions, replacements or improvements to the System, payments for debt service or into reserve accounts, municipal taxes, payments to the City in lieu of taxes, or any extraordinary operating expenses including but not limited to tort claim judgments or settlements arising from the operation of the System. "Maturity Date" means the date that is 24 months from the dated date of the Note. "Maximum Annual Debt Service" means the maximum amount of Annual Debt Service which will mature or come due in the current year or any future year. "Net Revenue" means the Revenue of the System less the Maintenance and Operation Costs of the System. "Note" means the City's Water and Sewer Revenue Bond Anticipation Note, 2016, in the principal amount of not to exceed $3,000,000, issued pursuant to this ordinance. "Note Fund" means the Water and Sewer Revenue Bond Anticipation Note Fund, 2016 created by this ordinance. "Note Register" means the books or records maintained by the Note Registrar for the purpose of registration of the Note. "Note Registrar," initially, means the Finance Director of the City. At any time following the issuance of the Note, however, the Finance Director may determine to appoint a different Note Registrar, including, but not limited to the fiscal agent of the State of Washington. The term "Note Registrar" also shall include any successor Note Registrar appointed by the Finance Director as permitted by law. "Parity Bonds" means all water and sewer revenue bonds of the City issued after the date of the issuance of the Note. "Projects" means the construction of a water treatment facility and the five million gallon reservoir and other capital improvements to the City's water and sewer system "Project Fund" means the special account of the City maintained for the purpose of paying costs of the Projects. "Registered Owner" means the person named as the registered owner of the Note in the Note Register. Ordinance 3144 Page 3 of 11 "Request for Draw" means a written request by a Designated Representative for a draw from the revolving line of credit authorized to be established by this ordinance, all as more fully described in Section 3. "Reserve Account" means the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Parity Bonds. The ordinance authorizing any Parity Bonds may establish a separate reserve account for any such series of Parity Bonds or provide that some or all of such Parity Bonds be secured by a common reserve account. "Revenue Fund" means the Water and Sewer Revenue Fund into which fund the City has pledged and bound itself to pay all of the Revenue of the System as collected. "Revenue of the System" means all earnings, revenue and money received by the City from or on account of the operation of the System, except ULID Assessments, and including the income from investments of money in the Revenue Fund, Bond Fund and Note Fund or from any other investment thereof except the income from investments irrevocably pledged to the payment of revenue bonds pursuant to a plan of retirement or refunding. "Revenue of the System" shall also include federal or state reimbursements of operating expenses that are included as Maintenance and Operation Costs of the System. "Senior Bond" means the City's outstanding Water and Sewer Revenue Bond, 1978. "System" means the existing combined water and sewer system of the City as added to, extended and improved for as long as the Note or any Parity Bonds remain outstanding. "Term Bond Maturity Year" means any calendar year in which the Term Bonds are scheduled to mature. "Term Bonds" means those bonds designated as such in the ordinance or certificate authorizing their issuance and sale. "ULID" means a Utility Local Improvement District. "ULID Assessments" means all assessments levied and collected in any ULID of the City created for the acquisition or construction of additions to and extensions and betterments of the System, if such assessments are pledged to be paid into the Bond Fund (less any prepaid assessments permitted by law to be paid into a construction fund or account). ULID Assessments shall include installments thereof and any interest or penalties which may be due thereon. Section 2. Recitals. The Council finds and determines that: 1. The City now owns, operates and maintains the System as a combined water and sewer system. 2. The City has secured permanent grant and loan funding for the Projects. Ordinance 3144 Page 4 of 11 3. The City requires interim financing to fund costs of the Project pending receipt of such permanent grants and loans. 4. The Council has determined it to be in the best interests of the City to issue a Water and Sewer Revenue Bond Anticipation Note, 2016 in the aggregate principal amount of not to exceed $3,000,000 (the "Note")to provide interim financing for the Project. Section 3. Authorization of the Note. For the purpose of providing interim financing for the Projects, and pay interest on and costs of issuing the Note pending receipt of the grants and loans for the Projects, the City shall issue its Water and Sewer Revenue Bond Anticipation Note, 2016, in the principal amount of not to exceed $3,000,000 (the "Note"). The Note shall be in fully registered form, shall be numbered R-1, shall be dated the date of its delivery to the Bank, and shall mature on a date that is 24 months from the date of delivery of the Note to the Bank(the "Maturity Date"). The outstanding principal balance of the Note on any particular day shall be the aggregate of all funds which the City has drawn from the date of the Note 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 Note proceeds pursuant to a Request for Draw by the City. A Request for Draw pursuant to the Note may be made by a Designated Representative in writing to the Bank, at the times as designated by the Designated Representative on or prior to the Maturity Date. Each Request for Draw shall be delivered to the Bank, shall specify the dollar amount requested, the account number to which the drawing shall be deposited and the proposed date of the drawing. The aggregate of all such draws on the Note may not exceed $3,000,000. Principal amounts of the Note that are prepaid may be reborrowed. The City hereby delegates to a Designated Representative authority to make a written Request for Draw pursuant to this ordinance. The initial tax-exempt draw on the Note is subject to the written approval of Bond Counsel and must be accompanied by a tax certificate and an Internal Revenue Service Form 8038-G. Subsequent draws shall not require approval of Bond Counsel. All draws shall require the signature of a Designated Representative, or other authorized officer of the City. The Bank shall incur no liability to the City or to any other person in acting upon any written notice or other communication which the Bank believes in good faith to have been given by an official or other person authorized to borrow on behalf of the City, or otherwise acting in good faith in making advances pursuant to this ordinance. The Note shall be an obligation only of the Note Fund and shall be payable and secured as provided herein. The Note shall not be deemed to constitute a general obligation or a pledge of the faith and credit or taxing power of the City or the State of Washington. Both principal of and interest on the Note shall be payable in lawful money of the United States of America. Upon the final payment of all principal and interest on the Note, the Note shall be surrendered to the Note Registrar for cancellation. Ordinance 3144 Page 5 of 11 Section 4. Note Registrar. The City Finance Director is hereby requested to act as Note Registrar for the Note. The Note Registrar shall keep, or cause to be kept, sufficient books for the registration and transfer of the Note. The Note Registrar shall serve as the City's authenticating agent, transfer agent, registrar and paying agent for the Note and shall comply fully with applicable federal and state laws and regulations respecting the carrying out of those duties. The Note Registrar is authorized, on behalf of the City, to authenticate and deliver the Note in accordance with the provisions of the Note and this ordinance, to serve as the City's paying agent for the Note and to carry out all of the Note Registrar's powers and duties under this ordinance. Section 5. Registration and Transfer of Note; Note Re ig'ster. The Note shall be issued to the Bank only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Note Registrar (the "Note Register"). The Note Register shall contain the name and mailing address of the owner of the Note and the principal amount and number of the Note. The Note shall state on its face that the principal of and interest on the Note shall be paid only to the owner thereof registered as such on the Note Register as of the record date set forth therein and to no other person or entity, and that the Note may not be assigned except on the books of the Note Registrar. The Note may be assigned or transferred only in whole by the registered owner to a single investor that is a financial institution or a person who is reasonably believed to be a qualified institutional buyer or accredited investor within the meaning of the applicable federal securities laws. Any transfer shall be without cost to the owner or transferee, except for governmental charges imposed on any such transfer or exchange. The Note Registrar shall not be obligated to exchange or transfer any Note during the 15 days preceding any prepayment date or the Maturity Date. When the Note has been paid in full, both principal and interest, the Note shall be surrendered to the Note Registrar, who shall cancel the Note. Section 6. Prepay. The City reserves the right and option to prepay and redeem at any time prior to its Maturity Date any or all of the principal amount of the Note outstanding at par plus accrued interest to the date of prepayment upon such terms as designated by the Designated Representative. The City shall provide the Registered Owner with written notice of any intended prepayment prior to such prepayment date. Interest on the principal amount of the Note called for prepayment shall cease to accrue on the date fixed for prepayment unless the principal amount called for prepayment is not paid on the prepayment date. Section 7. Form and Execution of the Note. The Note shall be prepared in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Ordinance 3144 Page 6 of 11 Only the Note bearing a Certificate of Authentication in the following form, manually signed by the Note Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. CERTIFICATE OF AUTHENTICATION This Note is the fully registered City of Port Townsend, Washington, Water and Sewer Revenue Bond Anticipation Note, 2016, described in the Note Ordinance. By L�pecimenl Note Registrar The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Note so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Note shall cease to be such officer of the City before the Note so signed shall have been authenticated or delivered by the Note Registrar, or issued by the City, such Note may nevertheless 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 Note may also 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 any such person shall not have been such officer of the City. Section 8. Note Fund. A special fund or account of the City known as the "Water and Sewer Revenue Bond Anticipation Note Fund, 2016" (the "Note Fund") is hereby authorized to be created and shall be drawn upon for the sole purpose of paying and securing the payment of the Note. The City hereby covenants and agrees to deposit in the Note Fund proceeds of bonds, a refunding note, loans and/or grants, if any received by the City for the Projects, or unencumbered funds remaining in the Project Fund after final acceptance, and, to the extent necessary, Revenue of the System deposited in the Revenue Fund (on a subordinate basis to the City's outstanding Senior Bond or Parity Bonds) in an amount sufficient to pay the principal of and interest on the Note as the same becomes due. The Note shall be an obligation only of the Note Fund of the City. Section 9. Disposition of Drawings Under the Note. The City will maintain a project fund for the purpose of paying costs of the Projects (the "Project Fund"). Following the execution and delivery of the Note, the City shall notify the Bank in writing each time that a draw is required to pay costs of the Projects or costs of issuance of the Note. Such Request for Draw shall include the dollar amount of the draw and the date on which the draw amount will be deposited into the Project Fund. The drawings under the Note shall be deposited in the Project Fund and shall be used, together with other moneys on deposit therein and available therefor, to finance costs of the Projects and for paying all expenses incidental thereto (including but not limited to costs of issuance of the Note, engineering, financing, legal or any other incidental Ordinance 3144 Page 7 of 11 costs) and for repaying any advances heretofore or hereafter made on account of such costs or for redeeming the Note. All money held in the Project Fund may be invested in any legal investment for the City's funds. Interest earned and income or profits derived by virtue of investments of moneys in the Project Fund may remain in the Project Fund and may be used for the payment of costs of the Projects. Upon the completion of the Projects and the payment of all costs thereof, including the payment of all retainages for construction, the balance on hand in the Project Fund shall be transferred to City fund(s) or otherwise disbursed as required under grant/loan contracts, and the Project Fund shall be closed. If the Projects are completed or any portion of the Projects is found to be impractical to complete, any remaining money in the Project Fund may be used to repay the Note or finance other improvements to the System. Section 10. Lost, Destroyed or Mutilated Note. In the event the Note is lost, destroyed, or mutilated, the City will cause to be issued a new Note, substantially similar to the original, to replace the same, in such manner and upon such reasonable terms and conditions as the Note Registrar may from time to time determine. Section 11. Revenue Fund; Flow of Funds. The Revenue Fund has previously been created in the office of the Finance Director as a special fund of the City designated the Water and Sewer Revenue Fund. All of the Revenue of the System shall be deposited in the Revenue Fund as collected. The Revenue Fund shall be held separate and apart from all other funds and accounts of the City, and the Revenue of the System deposited in the Revenue Fund shall be used only for the following purposes and in the following order of priority: (a) To pay the Maintenance and Operation Costs of the System; (b) To pay the interest on any Senior Bond; (c) To pay the principal of and any sinking fund requirement for any Senior Bond; (d) To make all payments required to be made into a reserve account for the Senior Bond; (e) To pay the interest of any Parity Bonds; (f) To pay the principal of and any sinking fund requirements for any Parity Bonds; (g) To make all payments required to be made into the Reserve Account for the Parity Bonds; (h) To pay and secure obligations having a lien upon the Revenue of the System and the money in the Revenue Fund junior and inferior to the lien thereon for the payment of the principal of and interest on any Parity Bonds, including the Note; and (i) To retire by redemption or purchase any outstanding revenue obligations of the City, to make necessary additions, betterments, improvements, replacements and repairs to or extension of the System, or for any other lawful City purposes. Ordinance 3144 Page 8 of 11 Section 12. Pledge of Revenue and Lien Position; Revocation of Right to Issue Prior Lien Bonds. The Net Revenue and ULID Assessments are pledged to the payment of the Note, and the Note shall constitute a lien and charge upon such Net Revenue and ULID Assessments prior and superior to any other charges whatsoever, subject to the prior claim and lien on such Net Revenue pledged to the payment of the Senior Bond and the Parity Bonds. The right of the City to issue bonds on a parity of lien with the Senior Bond is permanently revoked. Section 13. General Covenants. The City hereby covenants and agrees with the owners of Parity Bonds and the Note at any time outstanding, as follows: (a) It will establish, maintain and collect such rates and charges for water and sanitary sewage disposal service so long as the Note or any Parity Bonds are outstanding which will make available for the payment of the principal of and interest on such bonds as the same accrue, together with the collection of other Net Revenue and of ULID Assessments, an amount equal to the Coverage Requirement. (b) It will at all times maintain and keep the System in good repair, working order and condition, and also will at all times operate the System and the business in connection therewith in an efficient manner and at a reasonable cost. (c) It will not sell, lease, mortgage, or in any manner encumber or dispose of all of the property of the System unless provision is made for the payment into the Bond Fund and Note Fund of an amount sufficient to pay the principal of and interest on the Parity Bonds and the Note then outstanding and that it will not sell, lease, mortgage, or in any manner encumber or dispose of any part of the property of the System that is used, useful and material to the operation thereof, unless provision is made for replacement thereof, or for payment into the Bond Fund and Note Fund of the total amount of revenue received from such disposition which shall not be less than an amount which shall bear the same ratio to the amount of the Parity Bonds and Note then outstanding as the Revenue of the System available for debt service for such outstanding bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the System sold, leased, encumbered or disposed of bears to the Revenue available for debt service for the outstanding Parity Bonds and Note from the entire System for the same period. Any such money so paid into the Bond Fund and Note Fund shall be used to retire the Parity Bonds and Note, respectively, at the earliest possible date. (d) While the Note and any Parity Bonds remain outstanding, it will keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to the System, and it will furnish the original purchaser or purchasers of the Note and Parity Bonds or any subsequent owner or owners thereof, at the written request of such owner or owners, operating and income statements of the System in reasonable detail covering any calendar year when they are available. (e) Except to the poor and infirm, it will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge. (f) It will carry the type of insurance on its System property in the amounts normally carried by private water and sewer utility companies engaged in the operation of water Ordinance 3144 Page 9 of 11 and sewerage systems, and the cost of such insurance shall be considered part of the operating and maintaining of such System or, in lieu thereof, may self-insure or participate in a joint intergovernmental insurance pool assuring the same coverage as is carried by such private water and sewerage companies. (g) It will pay all Maintenance and Operation Costs of the System and the debt service requirements of the Parity Bonds and Note and otherwise meet the obligations of the City as set forth in this ordinance. Section 14. Future Parity Bonds. The City reserves the right to issue future Parity Bonds. Section 15. Junior Lien Bonds. Nothing in this ordinance shall prevent the City from issuing water and sewer revenue bonds or like obligations which are a charge upon the Revenue of the System junior or inferior to the charge thereon of the Parity Bonds on a parity with the Note or from pledging the payment of assessments into a fund or account created to pay and secure the payment of the principal of and interest on such junior lien bonds or obligations as long as such assessments are levied in a utility local improvement district or districts created in connection with carrying out the improvements to be constructed from the proceeds of the sale of such junior lien bonds or obligations with the consent of the Bank. Section 16. Tax Covenants. (a) Tax Certificate. The City hereby covenants that it will not make any use of the proceeds of sale of the Note or any other funds of the City which may be deemed to be proceeds of such Note pursuant to Section 148 of the Code and the applicable regulations thereunder which will cause the Note to be an "arbitrage bond" within the meaning of such section and such regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Note) and the applicable regulations thereunder through the term of the Note. The City further covenants that it will not take any action or permit any action to be taken that would cause the Note to constitute a "private activity bond" under Section 141 of the Code. (b) Post-Issuance Compliance. The Finance Director is authorized and directed to 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 the Code that must be satisfied after the issue date to prevent interest on the draws on the Note from being included in gross income for federal tax purposes. (c) Designation of the Note as a "Qualified Tax-Exempt Obligation." The City may designate the Note as a "qualified tax-exempt obligation" for the purposes of Section 265(b)(3) of the Code, if the following conditions are met: (i) the Note is not a "private activity bond" within the meaning of Section 141 of the Code; (ii) 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 Ordinance 3144 Page 10 of 11 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 Note is issued will not exceed $10,000,000; and (iii) the amount of tax-exempt obligations, including the Note, designated by the City as "qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Note is issued does not exceed $10,000,000. Section 17. Sale of the Note. The City Manager and Finance Director are each appointed as the City's Designated Representative and are authorized and directed to conduct the sale of the Note in the manner and upon the terms deemed most advantageous to the City, and to approve the Final Terms of the Note, with such additional terms and covenants as the Designated Representative deems advisable. (a) The Note shall bear interest at fixed or variable rates, as are acceptable to the Designated Representative. (b) Interest must be payable at the rates and on such dates as are acceptable to the Designated Representative. Principal payments shall commence on a payment date acceptable to the Designated Representative and must be payable at maturity or in installments on such dates as are acceptable to the Designated Representative. (c) The purchase price for the Note may be in an amount as is acceptable to the Designated Representative. (d) The Note may be subject to prepayment on the terms as are acceptable to the Designated Representative. (e) The Note shall be dated as of its date of delivery to the Bank, which date may not be later than December 31, 2016. In determining the Final Terms of the Note, the Designated Representative in consultation with other City officials and staff and advisors, shall take into account those factors that, in his or her judgment, will result in the lowest true interest cost on the Note to its maturity, including, but not limited to current financial market conditions and current interest rates for obligations comparable to the Note. The Designated Representative may accept such additional terms, conditions and covenants as he or she may determine are in the best interests of the City, consistent with this ordinance, and enter into an agreement with the Bank to purchase the Note. Section 18. Reporting Requirements. With respect to the Note, the City is exempt from the official statement and ongoing disclosure requirements of the Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934. While the Note is outstanding, the City shall submit its annual financial reports to the Bank along with such additional information as the Bank may reasonably request. Ordinance 3144 Page 11 of 11 Section 19. Governing Law. The Note shall be governed and interpreted according to the laws of Washington. Nothing in this paragraph shall be construed to limit or otherwise affect any rights or remedies of the Bank under federal law. Section 20. General Authorization and Ratification. The Mayor, City Manager, Finance Director and other appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment may be necessary or desirable to carry out the transactions contemplated in connection with this ordinance, and to do everything necessary for the prompt delivery of the Note to the Bank thereof and for the proper application, use and investment of the proceeds of the Note. 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 21. 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. Section 22. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage and five days following its publication as required by law. Adopted by the City Council of the City of Port Townsend, Washington, at a special meeting thereof,held this 19th day of January, 2016. Deborah S. Stinson Mayor Attest: Approved as to form: i Joanna Sanders, CMC Steven L. Gross City Clerk City Attorney