HomeMy WebLinkAbout2787 Use of PUD Funds for Defeasance of Certain Outstanding Water and Sewer BondsORDINANCE NO. 2787
AN ORDINANCE OF THE CITY OF PORT TOWNSEND,
WASHINGTON, PROVIDING FOR THE DEFEASANCE OF
CERTAIN OUTSTANDING WATER AND SEWER
REVENUE BONDS OF THE CITY; AND AUTHORIZING
THE APPOINTMENT OF AN ESCROW AGENT, THE
EXECUTION OF A DEFEASANCE AGREEMENT AND
THE ACQUISITION OF CERTAIN SECURITIES TO
ACCOMPLISH SUCH DEFEASANCE.
WHEREAS, the City of Port Townsend, Washington (the "City"), owns, operates and
maintains a combined water supply and distribution system and a sanitary sewage disposal
system (the "System"); and
WHEREAS, there are currently outstanding $310,000 principal amount of the City's
Water and Sewer Revenue Bonds, 1992 (the "1992 Bonds"), issued pursuant to Ordinance No.
2305, and $5,475,000 principal amount of the City's Water and Sewer Revenue and Refunding
Bonds, i 998 (the "1998 Bonds"), issued pursuant to Ordinance No. 2625, all of which bonds are
secured by revenues of the System; and
WHEREAS, the City has heretofore agreed to sell to Public Utility District No. 1 of
Jefferson County (the "PUD") certain portions of the System; and
WHEREAS, the provisions of Section 11.C of Ordinance No. 2305 and Section 9.C of
Ordinance No. 2625 permit the City to sell a portion of the System only if certain amounts are
deposited into the Bond Fund that secures the 1992 Bonds and the 1998 Bonds; and
WHEREAS, the City wishes to use funds received from the PUD to defease portions of
the 1992 Bonds and the 1998 Bonds, as provided herein;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND,
WASHINGTON, DOES ORDAIN, as follows:
Section 1. Provisions for Defeasance and Refunding. From proceeds of sale of
portions of the System and other funds deposited in the Bond Fund, the City shall provide for the
scheduled payment of interest on and the maturing principal of $310,000 principal amount of
1992 Bonds (the "Defeased 1992 Bonds"), as follows:
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Defeased 1992 Bonds
Maturity Year Principal Interest Redemption Date
(December 1) Amount Rate and Price
2002 $ 310,000 5.90%
Escrowed to Maturity
From proceeds of sale of portions of the System and other funds deposited in the Bond
Fund, the City shall provide for the scheduled payments of interest on and the maturing principal
or redemption price (as applicable) of $1,180,000 principal amount of 1998 Bonds (the
"Defeased 1998 Bonds"), as follow:
Defeased 1998 Bonds
Maturity Year Principal Interest Redemption Date
(December 1) Amount Rate and Price
2002 $ 90,000 4.00%
2011 140,000 4.65
2012 610,000 4.70
2017 340,000 4.80
Escrowed to Maturity
6/1/2008 at 100%
6/1/2008 at 100%
6/1/2008 at 100%
To accomplish the defeasance of the Defeased 1992 Bonds and the Defeased 1998 Bonds
(collectively, the "Defeased Bonds"), the funds designated for such defeasance shall be used to
acquire direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States Government ("Government Obligations"), to
establish a beginning cash balance, as necessary, and to pay all costs incurred in establishing and
implementing the plan of defeasance provided for by this ordinance.
The City hereby irrevocably calls for redemption on June 1, 2008, the Defeased 1998
Bonds maturing on and after December 1, 2008, in accordance with the provisions of Ordinance
No. 2625 authorizing the redemption and retirement of certain of the 1998 Bonds prior to their
fixed maturities.
Section 2. Defeasance Account and Appropriation of Funds. There is hereby created
a fund of the City to be known as the "2001 Defeasance Account" (the "Defeasance Account"),
which fund shall be held by the Escrow Agent appointed pursuant to Section 3 of this ordinance.
The Defeasance Account shall be used solely for the purpose of paying the principal of and
interest on the Defeased 1992 Bonds and paying the principal of and interest on the Defeased
1998 Bonds.
For the purpose of irrevocably providing for the payment of the principal of and interest
on the Defeased Bonds, the City shall deposit into the Defeasance Account the cash and
Government Obligations obtained by application of the funds described in Section 1 of this
ordinance. The Government Obligations deposited in the Defeasance Account shall be
2 Ordinance 2787
noncallable, direct obligations of the United States of America, and such Government
Obligations and the cash deposited with the Escrow Agent shall be sufficient to provide money
to pay the principal of and interest on all of the Defeased Bonds as the same shall become due.
The defeasance of the Defeased Bonds shall be irrevocable after the establishment and
funding of the Defeasance Account and delivery of the Government Obligations to the Escrow
Agent, except as provided below relating to the substitution of securities.
Section3. Escrow Agent. U.S. Bank Trust National Association, Seattle,
Washington, is hereby appointed to act as Escrow Agent for the Defeased Bonds. The Escrow
Agent is hereby authorized and directed to pay to the paying agents for the Defeased Bonds sums
sufficient to pay when due the interest on and maturing principal or redemption price (as
applicable) of the Defeased Bonds, in accordance with the schedule set forth in Section 1 of this
ordinance. All such sums shall be paid from the money and Government Obligations deposited
with the Escrow Agent and the income therefrom and proceeds thereof. All such sums so paid
shall be credited to the Defeasance Account. All money and securities deposited with the
Escrow Agent and any income therefrom shall be held, invested and applied in accordance with
the provisions of this ordinance and the laws of the State of Washington for the benefit of the
City and owners of the Defeased Bonds.
In accordance with the provisions of Ordinance No. 2305, no further payments shall be
made into the Bond Fund securing the Defeased 1992 Bonds. Such Defeased 1992 Bonds shall
cease to be entitled to any lien, benefit or security of Ordinance No. 2305, except the right to
receive payment from the Defeasance Account, and such bonds shall no longer be deemed to be
outstanding.
In accordance with the provisions of Ordinance No. 2625, no further payments shall be
made into the Bond Fund securing the Defeased 1998 Bonds. Such Defeased 1998 Bonds shall
cease to be entitled to any lien, benefit or security of Ordinance No. 2625, except the right to
receive payment from the Defeasance Account, and such bonds shall no longer be deemed to be
outstanding.
Section 4. Defeasance Agreement. To carry out the plan of defeasance and refunding
authorized by this ordinance, the Finance Director of the City is authorized and directed to enter
into an agreement with the Escrow Agent providing for the irrevocable deposit of Government
Obligations and cash for the purposes described in this ordinance and setting forth the duties,
obligations and responsibilities of the Escrow Agent in connection with the payment of the
principal of and interest on the Defeased Bonds as provided herein. Such agreement shall be in
form and substance acceptable to the Finance Director and to the City's bond counsel.
Section 5. Substitution of Obligations in Defeasance Accounts. The City reserves the
right to substitute other Government Obligations for the Government Obligations initially
acquired as provided herein in the event it determines to do so, upon compliance with the
following conditions:
3 Ordinance 2787
Such substitution is accomplished pursuant to ordinance of the Council;
The Government Obligations to be substituted shall be noncallable direct
obligations of the United States of America;
A firm of certified public accountants shall have verified that the
substituted Government Obligations shall bear interest and mature at such
times and in such amounts as to fully replace the Government Obligations
withdrawn and that such substituted Government Obligations together
with remaining Government Obligations and cash are sufficient thereafter
for the payment of the principal of and interest on the Defeased Bonds as
the same shall become due, in accordance with the defeasance plan set
forth in this ordinance; and
An opinion of nationally recognized bond counsel is obtained stating that
such substitution does not affect the tax-exempt status of the Defeased
Bonds.
Section 6. Effective Date. This ordinance shall become effective five days from and
after its passage, approval and publication.
ADOPTED by the City Council of the City of Port Townsend, Washington, at a regular
meeting thereof, held this 3rd day of December, 2001.
Attest:
Approved as to fortn:
Pamela Kolacy, CMC~ City Clff
John P. Watts, City Attomey
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CERTIFICATE OF CITY CLERK
I DO HEREBY CERTIFY that I am the duly qualified, appointed and acting City Clerk
of the City of Port Townsend, Washington (the "City"), and keeper of the records of the City
Council; and
I HEREBY CERTIFY:
1. That the attached ordinance is a true and correct copy of Ordinance No. 2787 of
the City (the "Ordinance"), as finally passed at a regular meeting of the City Council held on the
3ra day of December, 2001, and duly recorded in my office.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
quorum was present throughout the meeting and a legally sufficient number of members of the
City Council voted in the proper manner for the passage of the Ordinance; that all other
requirements and proceedings incident to the proper passage of the Ordinance have been duly
fulfilled, carried out and otherwise observed, and that I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this ~- day of December,
2001.
Pamela Kolacy, CMC, Cit~Jclerk