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HomeMy WebLinkAbout3227 Establishing a Revolving Line of Credit and Providing for the Issuance and Sale of a Limited Tax General Obligation Bond Anticipation Note Ordinance 3227 Page I of 7 ORDINANCE NO. 3227 AN ORDINANCE OF THE CITY OF PORT TOWNSEND,WASHINGTON, ESTABLISHING A REVOLVING LINE OF CREDIT AND PROVIDING FOR THE ISSUANCE AND SALE OF A LIMITED TAX GENERAL OBLIGATION BOND ANTICIPATION NOTE IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $1,500,000 TO EVIDENCE THE LINE OF CREDIT TO BE USED TO REPAY THE CITY'S EXISTING LINE OF CREDIT AND TO FINANCE CAPITAL IMPROVEMENTS; AND FIXING THE FORM, COVENANTS AND TERMS OF THE NOTE. THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance,the following capitalized terms shall have the following meanings: (a) "Authorized Officer" means the City Manager or Finance Director. (b) "Bank" means Cashmere Valley Bank, or its successors or assigns. (c) "City"means the City of Port Townsend,Washington,a municipal corporation duly organized and existing under the laws of the State of Washington. (d) "City Council" means the legislative authority of the City, as duly and regularly constituted from time to time. (e) "Code" means the United States Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. (f) "Date of Delivery" means the date of the delivery of the Note to the Bank.. (g) "Note" means the "City of Port Townsend, Washington Limited Tax General Obligation Bond Anticipation Note, 2019 (Revolving Line of Credit)" authorized by this ordinance. (h) "Note Account"means the Limited Tax General Obligation Bond Anticipation Note Account, 2019, of the City created for the payment of the principal of and interest on the Note. (i) "Note Register" means the registration records for the Note maintained by the Registrar. 0) "Outstanding Principal Balance of the Note" means the aggregate of all funds that the City has drawn from the Bank pursuant to the Note less the aggregate of all principal payments on the Note made by the City. Ordinance 3227 Page 2 of 7 (k) "Proposal" means an offer to purchase the Note, setting forth certain terms and conditions of the issuance, sale and delivery of the Note. (1) "Registrar"means the City Finance Director, whose duties include registering and authenticating the Note, maintaining the Note Register, transferring ownership of the Note, and paying the principal of and interest on the Note. (m) "Request for Draw" means a written request by an Authorized Officer for a draw from the line of credit authorized to be established by this ordinance. Section 2. Findings and Deterininat ons. The City takes note of the following facts and makes the following findings and determinations: (a) Repayment of Existing Line of Credit. The City currently has outstanding its Limited Tax General Obligation Bond Anticipation Note, 2014, in the principal amount of not to exceed $1,500,000, which currently matures on May 31, 2019 (the "2014 Note"). The City Council therefore finds that it is in the best interests of the City to repay the 2014 Note prior to its maturity date. (b) Authority and Description of the Project. The City is in need of funding for its capital program (the "Projects"). The City Council therefore finds that it is in the best interests of the City to carry out the Projects. (c) Plan of Financing. The City is authorized to issue limited tax general obligation bonds and, pending the issuance of those bonds, issue short term obligations in accordance with the provisions of chapter 39.50 RCW for the purpose of providing the funds to repay the 2014 Note and to pay the costs of financing the Projects. The total expected cost of the Projects is approximately $1,500,000. (d) Debt Capacity. The maximum amount of indebtedness authorized by this ordinance is $1,500,000. Based on the following facts, this amount is to be issued within the amount permitted to be issued by the City for general municipal purposes without a vote: (1) The assessed valuation of the taxable property within the City as ascertained by the last preceding assessment for City purposes for collection in the calendar year 2019 is $1,655,086,482. (2) As of December 31, 2018, the City has limited tax general obligation indebtedness, consisting of bonds, leases and conditional sales contracts outstanding in the principal amount of$16,884,000, which is incurred within the limit of up to 1'/z% of the value of the taxable property within the City permitted for general municipal purposes without a vote. (3) As of December 31, 2018, the City has unlimited tax general obligation indebtedness outstanding in the principal amount of$3,020,000 for general municipal purposes. The indebtedness described in this paragraph has been incurred with the approval of the requisite proportion of the City's qualified voters at an election meeting the minimum turnout requirements, within the limit of up to 2!/2% of the value of the taxable property within the City for general Ordinance 3227 Page 3 of 7 municipal purposes (when combined with the outstanding limited tax general obligation indebtedness). Section 3. Authorization of the Note• Pa ment,_Registration and Transfer. In order to repay the 2014 Note and to finance the Projects, the City shall establish a revolving line of credit and issue and sell a note to evidence such line. The Note shall be designated the "City of Port Townsend, Washington Limited Tax General Obligation Bond Anticipation Note, 2019 (Revolving Line of Credit)" and issued in the denomination of not to exceed $1,500,000 (the "Note"). The Note shall be dated the date of delivery to the Bank (the "Date of Delivery"). The Note will bear interest at the rate of 2.75% per annum. Each draw pursuant to a Request for Draw on the Note shall bear interest at the time of the draw and shall be in the minimum amount of at least $25,000. Interest on the Note shall accrue from the date money is drawn, pursuant to a Request for Draw, until paid and shall be computed on the principal amount outstanding on the basis of a 360-day year, consisting of 12 30-day months. The Outstanding Principal Amount of the Note shall not exceed the principal amount of$1,500,000 outstanding at any time. Principal repaid may be reborrowed. Interest on the Note shall be repaid in approximately equal semiannual installments, beginning September 1, 2019, and at each March 1 and September 1 thereafter, to and including the maturity date of June 1,2021 (the"Maturity Date"). The Outstanding Principal Balance of the Note shall be due on 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. The Note shall be issued in fully registered form. Both principal of and interest on the Note shall be payable in lawful money of the United States of America by check, warrant, wire transfer or automatic clearinghouse funds,to the registered owner of the Note at the address shown on the Note Register. A Request for Draw pursuant to the Note may be made on any business day by an Authorized Officer in writing. A Request for Draw made prior to 11 a.m. and confirmed by the Bank will be funded on that business day. The City hereby delegates to the Authorized Officers authority to make a written Request for Draw pursuant to this ordinance. The Bank shall incur no liability to the City or to any other person in acting upon any written communication which the Bank believes in good faith to have been given by an official authorized to borrow on behalf of the City, or otherwise acting in good faith in making advances pursuant to this ordinance. Note proceeds shall be deposited into the appropriate City account determined by an Authorized Officer. Se-ctioii 4. Note �ggrstuation and Transfer of the Note. Pursuant to RCW 39.46.030(4) the City's Finance Director shall serve as initial fiscal agent for the City (the "Registrar") with respect to the Note and is authorized, on behalf of the City, to authenticate and deliver the Note in accordance with the provisions of the Note and this ordinance. The Note shall be issued only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Registrar (the "Note Register"). The Note Register shall contain the name and mailing address of the owner of the Note. Ordinance 3227 Page 4 of 7 Upon a determination by the Finance Director that maintenance of the duties of the Registrar is no longer convenient,the fiscal agent of the State of Washington shall act as Registrar. The Registrar shall keep, or cause to be kept, at its office, sufficient books for the registration, assignment or transfer of the Note, which books shall be open to inspection by the City at all times. The Registrar is authorized, on behalf of the City,to authenticate and deliver the Note transferred or exchanged 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 Registrar's powers and duties under this ordinance. The Registrar shall be responsible for its representations contained in the Registrar's Certificate of Authentication on the Note. 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 Registrar shall not be obligated to exchange or transfer the Note during the 15 days preceding any installment or prepayment date. When the Note has been paid in full, both principal and interest, the Bond shall be surrendered to the Registrar, who shall cancel the Note. Section 5. Form and Execution of the Note. (a) Form of the Note; Signatures and Seal. The Note shall be prepared in a form consistent with the provisions of this ordinance and Washington law. The Note shall be signed by the Mayor and the City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. If any officer whose manual or facsimile signature appears on the Note ceases to be an officer of the City authorized to sign bonds before the Note bearing his or her manual or facsimile signature is authenticated by the Registrar, or issued or delivered by the City, the Note nevertheless may be authenticated, issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. The Note also may be signed on behalf of the City by any person who, on the actual date of signing of the Note, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on its Date of Delivery. (b) Authentication. Only the Note bearing a Certificate of Authentication in substantially the following form, manually signed by the 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, Limited Tax General Obligation Bond Anticipation Note, 2019 (Revolving Line of Credit)." 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. Section 6. Note Account. A special fund or account of the City known as the"Limited Tax General Obligation Bond Anticipation Note Account, 2019" (the "Note Account") is hereby Ordinance 3227 Page S of 7 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 Account proceeds of bonds, a refunding note, loans, taxes and/or grants, if any received by the City for the Projects, in an amount sufficient to pay the principal of and interest on the Note as the same becomes due. Section 7. 1"ire a,inenl. The City reserves the right to prepay principal of the Note in advance of the Maturity Date, in whole or in part, at any time, with no prepayment penalty. The City will notify the Bank at least 15 days in advance of its intent to prepay. Section �. Pledge o& Faxes. The Note constitutes a general indebtedness of the City and is payable from tax revenues of the City and such other money as is lawfully available and pledged by the City for the payment of principal of and interest on the Note. For as long as the Note is outstanding,the City irrevocably pledges that it shall,in the manner provided by law within the constitutional and statutory limitations provided by law without the assent of the voters,include in its annual property tax levy amounts sufficient, together with other money that is lawfully available, to pay principal of and interest on the Note as the same become due. The full faith, credit and resources of the City are pledged irrevocably for the prompt payment of the principal of and interest on the Note and such pledge shall be enforceable in mandamus against the City. Section 9, Tax Covenants. (a) Tax Certificate. The City hereby covenants that it will not make any use of the proceeds of draws on 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 Note may be designated as a "qualified tax-exempt obligation" for the purposes of Section 265(b)(3) of the Code, if the following conditions are met: (1) the Note does not constitute a"private activity bond"within the meaning of Section 141 of the Code; (2) the reasonably anticipated amount of tax-exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) that Ordinance 3227 Page 6 of 7 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 (3) 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 10, Sale of the Note. The sale of the Note to the Bank, under the terms and conditions of this ordinance and the Proposal to purchase the Note is hereby approved and confirmed. The Bank will charge a fee of$500 for this loan. Section 11. Re mint Rgggireinents. 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. Section 12. ITroye"tit1 1.. v . 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 13. General Authorization arid 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 14 Scverabilit . 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 15. 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. Ordinance 3227 Page 7 of 7 ADOPTED by the City Council of the City of Port Townsend, Washington, by a vote of the majority of the City Council plus one, at a special meeting thereof, held this 13th day of May 2019, Debmh S. Stftis6ti Mayor Attest: Approved as to Form: .,C"war I A"- JAIM/ .... Joanna San ...... Sanders, MMC e�ic i C� lreenw�od City Clerk City Attorney CERTIFICATION I, the undersigned, City Clerk of the City of Port Townsend, Washington (the "City"), hereby certify as follows: 1. The attached copy of Ordinance No. 3227 (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a special meeting of the City Council of the City held at the regular meeting place thereof on May 13, 2019, as that ordinance appears on the minute book of the City. 2. The Ordinance will be in full force and effect five days after publication in the City's official newspaper, which publication date is expected to be May 22, 2019. 3. A quorum of the members of the City Council was present throughout the meeting and a majority of the members voted in the proper manner for the passage of the Ordinance. Dated: May 13, 2019. CITY OF PORT TOWNSEND, WASHINGTON .._.. City Clerk