HomeMy WebLinkAboutR-2002-054 General Obligation Bonds - Convention Center ExpansionRESOLUTION NO. R-2002- 54
A RESOLUTION of the City Council of the City of Yakima,
Washington, approving a proposal for the purchase of
limited tax levy general obligation bonds of the City in the
principal amount of $6,735,000 and fixing the interest rates
of and bond insurance for such bonds.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2002-22
passed on April 16, 2002, authorized the issuance of limited tax levy general obligation bonds of
the City in the aggregate principal amount of not to exceed $6,475,000 (the "Bonds") to provide
funds to make certain capital improvements to the Yakima Convention Center; and
WHEREAS, on May 7, 2002 the City Council passed an ordinance amending Ordinance
No. 2002-22 to increase the principal amount of the bonds to be issued in the aggregate principal
amount of not to exceed $6,800,000; and
WHEREAS, the proposal of Seattle -Northwest Securities Corporation to purchase the
Bonds has been received in accordance with Ordinance No. 2002-22, and it is in the best interest
of the City that the Bonds be sold on the terms set forth in such proposal and as provided in
Ordinance No. 2002-22 and this resolution; and
WHEREAS, Ordinance No. 2002-22 provides that the City shall approve the interest
rates, maturity amounts, redemption provisions, and certain other terms of such Bonds, by
resolution;
NOW, THEREFORE, the City of Yakima does resolve:
Section 1. Bond Terms. The principal amount of the Bonds is $6,735,000. The Bonds
shall be issued under date of June 1, 2002, with interest payable semiannually on the first day of
June and December of each year, commencing December 1, 2002.
Section 2. Redemption. Bonds maturing on and after June 1, 2013, shall be subject to
redemption at the option of the City at any time on and after June 1, 2012, in whole or in part, at
par plus accrued interest to the date of redemption. Bonds maturing on June 1, 2016 and June 1,
2026 shall be subject to mandatory redemption as set forth in the proposal of Seattle -Northwest
Secunties Corporation to purchase the Bonds, attached hereto.
Section 3. Sale of Bonds. The proposal of Seattle -Northwest Securities Corporation to
purchase the Bonds at the price and bearing the interest rates set forth in the purchase offer
attached hereto as Appendix A is hereby accepted and approved and the Bonds shall mature in
such amounts, at such times and shall bear interest rates as set forth therein. Appendix A is
hereby incorporated by reference as if fully set forth herein.
Section 4. Bond Insurance. The City Council hereby approves the commitment of
MBIA Insurance Corporation (the "Bond Insurer") to provide a policy of municipal bond
insurance guaranteeing the payment when due of principal of and interest on the Bonds (the
"Bond Insurance Policy"). The Director of Finance and Budget is hereby authorized to execute
such commitment on behalf of the City. The City Council further authorizes and directs all
proper officers, agents, attorneys and employees of the City to cooperate with the Bond Insurer
in preparing such additional agreements, certificates, and other documentation on behalf of the
City, consistent with the Bond Ordinance and this resolution, as shall be required by such
commitment or as shall be necessary or advisable in providing for the Bond Insurance Policy.
(a) Payments Under the Bond Insurance Policy. In the event that, on the
second business day, and again on the business day, prior to the payment date of the Bonds, the
Bond Registrar has not received sufficient moneys to pay all principal of and interest on the
Bonds due on the second following or following, as the case may be, business day, the Bond
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Registrar shall immediately notify the Bond Insurer or its designee on the same business day by
telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the
deficiency. If the deficiency is made up in whole or in part prior to or on the payment date, the
Bond Registrar shall so notify the Bond Insurer or its designee.
In addition, if the Bond Registrar has notice that any Bondholder has been required to
disgorge payments of principal or interest on the Bonds to a trustee in bankruptcy or creditors or
others pursuant to a final judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such Bondholder within the meaning of any applicable
bankruptcy laws, then the Bond Registrar shall notify the Bond Insurer or its designee of such
fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail.
The Bond Registrar is hereby irrevocably designated, appointed, directed and authorized
to act as attorney-in-fact for Bondholders as follows:
(1) If and to the extent there is a deficiency in amounts required to pay
interest on the Bonds, the Bond Registrar shall (a) execute and deliver to State Street Bank and
Trust Company, N.A., or its successors under the Bond Insurance Policy (the "Insurance Paying
Agent"), in faun satisfactory to the Insurance Paying Agent, an instrument appointing the Bond
Insurer as agent for such Bondholders in any legal proceeding related to the payment of such
interest and an assignment to the Bond Insurer of the claims for interest to which such deficiency
relates and which are paid by the Bond Insurer, (b) receive as designee of the respective
Bondholders (and not as Bond Registrar) in accordance with the tenor of the Bond Insurance
Policy payment from the Insurance Paying Agent with respect to the claims for interest so
assigned, and (c) disburse the same to such respective Bondholders; and
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(2) If and to the extent of a deficiency in amounts required to pay
principal of any Bonds, the Bond Registrar shall (a) execute and deliver to the Insurance Paying
Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Bond
Insurer as agent for such Bondholder in any legal proceeding relating to the payment of such
principal and an assignment to the Bond Insurer of any of the Bonds surrendered to the Insurance
Paying Agent of so much of the principal amount thereof as has not previously been paid or for
which moneys are not held by the Bond Registrar and available for such payment (but such
assignment shall be delivered only if payment from the Insurance Paying Agent is received),
(b) receive as designee of the respective Bondholders (and not as Bond Registrar) in accordance
with the tenor of the Bond Insurance Policy payment therefor from the Insurance Paying Agent,
and (c) disburse the same to such Bondholders.
Payments with respect to claims for interest on and principal of Bonds disbursed by the
Bond Registrar from proceeds of the Bond Insurance Policy shall not be considered to discharge
the obligation of the City with respect to such interest, and the Bond Insurer shall become the
owner of such unpaid interest and claims for the interest in accordance with the tenor of the
assignment made to it under the provisions of this subsection or otherwise.
Irrespective of whether any such assignment is executed and delivered, the City and the
Bond Registrar:
(1) Recognize that to the extent the Bond Insurer makes payments
directly or indirectly (as by paying through the Bond Registrar), on account of principal of or
interest on the Bonds, the Bond Insurer will be subrogated to the rights of such Bondholders to
receive the amount of such principal and interest for the City, with interest thereon as provided
and solely from the sources stated in this resolution and the Bonds; and
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(2) Will accordingly pay to the Bond Insurer the amount of such
principal and interest (including principal and interest recovered under subparagraph (ii) of the
first paragraph of the Bond Insurance Policy, which principal and interest shall be deemed past
due and not to have been paid), with interest thereon as provided in this resolution and the
Bonds, but only from the sources and in the manner provided herein for the payment of principal
of and interest on the Bond to Bondholders, and will otherwise treat the Bond Insurer as the
owner of such rights to the amount of such pnncipal and interest.
(b) Rights of Bond Insurer.
In connection with the issuance of additional general obligation bonds, the City shall
deliver to the Bond Insurer a copy of the disclosure document, if any, circulated with respect to
such additional bonds.
Copies of any amendments made to the documents executed in connection with the
issuance of the Bonds which are consented to by the Bond Insurer shall be sent to Standard &
Poor's Ratings Services, a Division of The McGraw Hill Companies, Inc.
The Bond Insurer shall receive notice of the resignation or removal of the Bond Registrar
and the appointment of a successor, other than the designated state fiscal agent.
The Bond Insurer shall receive copies of all notices required to be delivered to
Bondholders and, on an annual basis (or as soon as available from the office of the State Auditor)
copies of the City's audited financial statements, and annual budget.
Any notice that is required to be given to a holder of Bonds or to the Bond Registrar
pursuant to this resolution shall also be provided to the Bond Insurer. All notices required to be
given to the Bond Insurer under this resolution shall be in writing and shall be sent by registered
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or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New
York 10504 Attention: Surveillance.
The provisions of this section shall be in effect only so long as the Bond Insurance Policy
is in full force and effect.
Section 5. Official Statement. The City approves the preliminary official statement,
dated April 29, 2002, presented to the City Council and ratifies the Underwriter's distribution of
the preliminary official statement in connection with the offering of the Bonds. Pursuant to the
Rule, the City deems the preliminary official statement as final as of its date except for the
omission of information dependent upon the pricing of the Bonds and the completion of the
purchase contract. The City agrees to cooperate with the Underwriter to deliver or cause to be
delivered, within seven business days from the date of the sale of the Bonds and in sufficient
time to accompany any confirmation that requests payment from any customer of the
Underwriter, copies of a final official statement in sufficient quantity to comply with paragraph
(b)(4) of the Rule and the rules of the MSRB. The City authorizes the Underwriter to use the
official statement, substantially in the form of the preliminary official statement, in connection
with the sale of the Bonds. The City Manager and the Director of Finance and Budget are
hereby authorized to review and approve on behalf of the City the final Official Statement
relative to the Bonds with such additions and changes as may be deemed necessary or advisable
to them.
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Section 6. Effective Date. This resolution shall take effect immediately.
ADOPTED at a regular meeting of the City Council of the City of Yakima this 7th day of
May, 2002.
ATTEST:
City Clerk
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CITY OF YAKIMA, WASHINGTON
By
Mayor
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APPENDIX A
[ATTACH BOND PURCHASE AGREEMENT]
May 7, 2002
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$6,735,000 Limited Tax General Obligation Bonds, 2002
Dated: June 1, 2002
Honorable Mayor and City Council:
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from City of Yakima,
Washington ("Seller") all the above-described bonds (the "Bonds") on the terms and based upon the
covenants, representations and warranties set forth below. Appendix A, which is incorporated into this
Bond Purchase Agreement (the "Agreement") by reference, contains a brief description of the Bonds,
including principal amounts, maturities, interest rates, purchase price, and the proposed date and place
of delivery and payment (the "Closing"). Other provisions of this Agreement are as follows:
1. Prior to the Closing, Seller will approve a Preliminary Official Statement, and will pass an
ordinance authorizing the Bonds (the "Bond Ordinance") with such changes as are requested by the
Seller and its counsel. The Purchaser is authorized by Seller to use these documents and the
information contained in them in connection with the public offering of the Bonds and the final
Official Statement in connection with the sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform this
Agreement, to pass the Bond Ordinance and to deliver and sell the Bonds to the Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create a
breach or default under, any existing law, regulation, order or agreement to which Seller is
subject;
(c) no governmental approval or authorization other than the Bond Ordinance which has not been
obtained, or will not be obtained prior to Closing, is required in connection with the sale of
the Bonds to the Purchaser;
(d) the Preliminary Official Statement with corrections, if any, noted by the Seller and its
counsel, as of its date and (except as to matters corrected or added in the final Official
Statement) as of the Closing, is accurate and complete in all material respects as of its date to
the knowledge and belief of the officers and employees of the Seller, after due review;
the Seller has previously provided the Purchaser with a copy of its Preliminary Official
Statement dated April 29, 2002. As of its date, the Preliminary Official Statement has been
"deemed final" by the Seller for purposes of Securities and Exchange Commission
("S.E.C.") Rule 15c2 -12(b)(1), except for the omission of maturity amounts, interest rates,
redemption dates and prices, ratings, underwriter's discount and related terms;
(e)
Honorable Mayor and City Council
City of Yakima, Washington
May 7, 2002
Page 2
(g)
theSell__ _ ..7.L the n --..,.t.,,.,'« +„ permit the D,.r..haser +.. dieli er o
6116 Seller agrees W cooperate W161! 6116 FU1V1laJG1 lV p'411ll1 111V 1 U1 V31"JNl lV 11e11 a or cause
to be delivered, within seven business days after any final agreement to purchase, offer, or
sell the securities and in sufficient time to accompany any confirmation that requests payment
from any customer of the Purchaser, copies of a final Official Statement in sufficient quantity
to comply with paragraph (b)(4) of the S.E.C. Rule 15c2-12 and the rules of the Municipal
Securities Rulemaking Board ("MSRB"). The Purchaser agrees to deliver the required
number of copies of the final Official Statement to the MSRB and to all nationally recognized
municipal securities information repositories on the business day on which the final Official
Statement is available, and in any event no later than ten business days after the date hereof;
the Seller agrees to enter into a written agreement or contract, constituting an undertaking
(the "Undertaking") to provide ongoing disclosure about the Seller for the benefit of the
owners of the Bonds on or before the Closing as required by Section (b)(5)(i) of S.E.C. Rule
15c2-12 (the "Rule"), and in the form as summarized by the Preliminary Oficial Statement,
with such changes as may be agreed to in writing by the Purchaser;
(h) if, at any time prior to the Closing, any event occurs as a result of which the Preliminary
Official Statement might include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the Seller shall promptly notify the Purchaser thereof.
3. The Purchaser shall have the ri 6 to cancel this Agreement to purchase the Bonds bynotifying the
gli. g.. purchase .>'' g
Seller of its election to do so if, after the execution of this Agreement and prior to the Closing:
(a) a decision by a court of the United States or the United States Tax Court shall be rendered, or
a ruling or a regulation (final_ temporary, or proposed) by or on behalf of the Treasury
Department of the United States, the Internal Revenue Service or other governmental agency
shall be issued and in the case of any such regulation, published in the Federal Register, or
legislation shall have been introduced in, enacted by or favorably Teported to either the House
of Representatives or the Senate of the United States, with respect to Federal taxation upon
interest received on bonds of the type and character of any of the Bonds which, in the
reasonable judgment of the Purchaser, materially adversely affects the marketability of the
Bonds or their sale by the Purchaser, at the contemplated public offering prices; or
(b) the United States shall have become engaged in hostilities which have resulted in declaration
of war or national emergency, or other national or international calamity or other event shall
have occurred or accelerated to such an extent as, in the reasonable opinion of the Purchaser,
to have a materially adverse effect on the marketability of the Bonds; or
(c) there shall have occurred a general suspension of trading on the New York Stock Exchange;
or
(d) a general banking moratorium shall have been declared by United States, New York State or
Washington State authorities; or
legislation shall hereafter be enacted, or actively considered for enactment, with an effective
date prior to the date of the delivery of the Bonds, or a decision by a court of the United
States shall hereafter be rendered, or a ruling or regulation by the S.E.C. or other
governmental agency having jurisdiction of the subject matter shall hereafter be made, the
effect of which is that
(e)
Honorable Mayor and Cm, Council
City of Yakima, Washington
May 7, 2002
Page 3
V
(i)
the Bonds are not exempt from the registration, qualification or other
requirements of the Securities Act of 1933, as amended and as then in effect, or
the Securities Exchange Act of 1934, as amended and then in effect, or
(ii) the Bond Ordinance is not exempt from the registration, qualification or other
requirements of the Trust Indenture Act of 1939, as amended and as then in
effect;
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the
effect of which is that the issuance, offering or sale of the Bonds, as contemplated
herein or in the final Official Statement, is in violation of any provision of the
Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act
of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as
amended and as then in effect, and which, in its reasonable judgment, adversely affects
the marketability of the Bonds or the market price thereof; or
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to
the Closing Seller will deliver to the Purchaser allof the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as
bond owner and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence that Standard & Poor's has issued its underlying rating of "A" and
that such rating is in full force and effect on and as of Closing; evidence that the Bonds
have been assigned a rating of "AAA" by Standard & Poor's based on the Seller's
purchase of a bond insurance policy issued by MBIA Insurance Corporation and
evidence of Seller's purchase of such insurance including an opinion of counsel to the
Insurance Provider;
(d) the following documents executed by authorized officers of the Seller: a certificate
setting forth the facts, estimates and circumstances in existence on the date of Closing
which establish that it is not expected that the proceeds of the Bonds will be used in a
manner that could cause the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Internal Revenue Code of 1986, as amended, and any applicable
regulations thereunder;
(e) a certified copy of the Bond Ordinance;
(f) designation of the Bonds as "qualified tax-exempt bonds" for banks, thrift institutions
and other financial institutions, as defined in Section 265 of the Internal Revenue
Code of 1986, as amended; and
such additional certificates, instruments or other evidence as the Purchaser may deem
reasonably necessary or desirable to evidence the due authorization, execution,
authentication and delivery of the Bonds, the truth and accuracy as of the time of the
Closing of the Seller's representations and warranties, and the conformity of the Bonds
and Bond Ordinance with the terms thereof as summarized in the Official Statement,
and to cover such other matters as it reasonably requests.
5. Seller will pay the cost of preparing, printing and executing the Bonds, the fees and
disbursements of Bond Counsel; bond registration and rating fees and expenses; bond
insurance, if any; the cost of printing and distributing the Preliminary and final Official
Statements; travel and lodging expenses of Seller's employees and representatives; and other
expenses of Seller
(g)
Honorable Mayor and City Council
City of Yakima, Washington
May 7, 2002
Page 4
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of
preparation and filing of blue sky and legal investment surveys where necessary, Purchaser's
travel expenses, and other expenses of Purchaser As a convenience to Seller, Purchaser may
from time to time, but only upon the prior written direction from the Seller, make
arrangements for certain items for which Seller is responsible hereunder, such as printing of
the Official Statement and travel or lodging arrangements for Seller's representatives.
Purchaser also may advance for Seller's account when appropriate and when directed in
advance in writing by the Seller, the cost of the items for which Seller is responsible by
making payments to third -parry vendors. In such cases, Seller shall pay such costs or
expenses directly, upon submission of appropriate invoices by Purchaser, or promptly
reimburse Purchaser in the event Purchaser has advanced such costs or expenses for Seller's
account. It is understood that Seller shall be primarily responsible for payment of all such
items and that Purchaser may agree to advance the cost of such items from time to time
solely as an accommodation to Seller and on the condition that it shall be reimbursed in full
by Seller
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations
and warranties shall survive any investigation made by or for the purchase, delivery and
payment for the Bonds, and the termination of this Agreement. Should the Seller fail to
satisfy any of the foregoing conditions or covenants, or if the Purchaser's obligations are
terminated for any reasons permitted under this Agreement, then neither the Purchaser nor
the Seller shall have any further obligations under this Agreement, except that any expenses
incurred shall be borne in accordance with Section 5. v 1
7. This Agreement may be modified or amended by an instrument m writing executed by the
parties hereto.
8. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
Seattle -Northwest Securities Corporation
By:
Yak\ ;.l )1V '`IL—
Lindsay A. Sovdesistant Vice President
Accepted May 7, 2002
City of Yakima, Washington
By: Com=
City of Yakima, Washington
Limited Tax General Obligation Bonds, 2002
Description of Bonds
(a) Principal Amount. $6,735,000
APPENDIX A
(b) Purchase Price. $6,653,189.10 ($98.785287 per $100), representing an original issue discount of
$27,930.90 and an underwriter's discount of $53,880, plus accrued interest from the dated date of June 1,
2002 to date of Closing.
Denominations. $5,000, or integral multiples thereof.
Form. Fully registered in book -entry form only in the name of Cede & Co., as bond owner and nominee
for The Depository Trust Company.
Interest Payment Dates. June 1 and December 1, commencing December 1, 2002.
(f) Maturity Schedule. Bonds shall mature and bear interest as follows:
Due
June 1
(g)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Interest Prices or
Amounts Rates Yields
$ 170.000 3.00% 2.30%
175.000 3.00 2.60
180.000 3.25 3.10
185,000 3.40 3.40
195,000 3.75 3.55
200.000 4.00 3.75
210.000 4.25 4.00
215.000 4.25 4.10
225,000 4.25 4.20
235.000 4.30 4.30
Due Interest Prices or
CUSIP June 1 Amounts Rates Yields CUSIP
984521MD3 2013 $ 245,000 4.35% 4.35% 984521MP6
984521ME1 2014 255,000 4.50 4.50 984521MQ4
984521 MF8
984521MG6 2017 295,000 4.75 4.80 984521MT8
984521MH4 2018 310.000 4.80 4.85 984521MU5
984521MJ0 2019 325.000 4.95 4.95 984521MV3
984521MK7 2020 340,000 5.00 5.00 984521MW1
984521ML5 2021 355.000 5.00 5.03 984521MX9
984521MM3 2022 375,000 5.00 5.05 984521MY7
984521MN1
$550.000 4.70% Term Bonds due June 1, 2016 to yield 4.70%; CUSIP: 984521MS0
$1,695,000 5.00% Term Bonds due June 1, 2026 to yield 5.15%; CUSIP: 984521NC4
Optional Redemption. The Bonds maturing in years 2003 through 2012, inclusive, are not subject to
optional redemption prior to maturity. The Bonds maturing on or after June 1, 2013 are subject to
redemption at the option of the City, prior to their stated maturities on any date on or after June 1, 2012 as
a whole or in part on any date (within one or more maturities selected by the City), at the price of par, plus
accrued interest, if any, to the date of redemption.
(h) Mandatory Redemption. If not previously redeemed as described above, the Term Bonds due on June 1
in the years 2016 and 2026 will be called for redemption (in such manner as DTC will determine) at a
price of par, plus accrued interest on the date of redemption, on June 1 in the years and amounts as
follows:
* Final maturity.
(i)
2016 Term Bonds
Years Amounts
2015 $270,000
2016* 280,000
2026 Term Bonds
Years Amounts
2023 $395,000
2024 410,000
2025 435,000
2026* 455,000
Rating/Insurance. Assignment to the Bonds of an underlying rating of "A" by Standard & Poor's and
that such rating is in full force and effect on and as of Closing; evidence that the Bonds have been
assigned a rating of "AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance
policy issued by MBIA Insurance Corporation and evidence of Seller's purchase of such insurance
including an opinion of counsel to the Insurance Provider;
(j) Closing Date. With definitive Bonds or a temporary Bond on or about June 10, 2002.
(k) Delivery. It is expected that the Bonds will be available for delivery at the facilities of DTC in New
York, New York, or to the Paying Agent on behalf of DTC by Fast Automated Securities Transfer.
m
l'l
Offer Expires. . 1:00 p.m., May ., '200Y
.
(m) Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only:
Net Interest Cost: 4.889575%
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. I 0
For Meeting of May 7. 2002
ITEM TITLE: An ORDINANCE Amending the bond authorization level to not exceed $6,800,000
par value and A RESOLUTION (a) Authorizing the Bond Purchase / Sale Agreement for limited
tax levy general obligation bonds of the City (fixing the interest rates, bond insurance and other
specific bond terms), (b) Ratifying the Official Statement and (c) Amending the date of the bonds
to June 1, 2002.
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE:
SUMMARY EXPLANATION:
On April 16, 2002, the City Council passed Ordinance No. 2002-22 authorizing staff to take all
necessary actions to sell Limited Tax General Obligation (LTGO) Bonds for the purpose of
expanding the City's existing Convention Center.
Rita Anson, Finance Director (#575-6070
Timothy Jensen, Treasury Services Offi#575-6070)
Update: Staff was very optimistic about the,, bond market when we presented the bond ordinance
to Council on Tuesday, April 16, 2002; and the market has continued to improve since that time.
There are strong indications in the market at this time that the City will be able to generate a larger
par value from the sale of bonds, while maintaining the same maximum debt service payments,
than was authorized in the original ordinance.
Therefore, approval of the attached ordinance will amend Ordinance 2002-22 and will increase the
maximum authorization level from $6,475,000 to $6,800,000 par value. (Note: based on a
requirement to achieve a level debt service payment not to exceed $480,000 annually and based
on market conditions on Monday, April 29, 2002, we estimate the principal sum (par value) of this
bond sale to be approximately $6.6 million with an estimated total interest cost of 5.06%; and
proceeds available for construction to be approximately $6.5 million).
continued
Resolution X Ordinance X Other X -> An Official Statement and A Purchase Offer
Contract Mail to (name and address):
Funding Source: PFD Revenues will . • the debt service •a ments on the bonds
APPROVED FOR SUBMITTAL: ,
City Manager
STAFF RECOMMENDATION: Pass Ordinance and Adopt Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION: Ordinance passed. ORDINANCE NO. 2002-27
Resolution adopted. RESOLUTION NO. R-2002-54
The Preliminary Official Statement was approved.
\\ISNT\Users\ranson\Council Agenda\2002 Council Agenda Items105-07-02 Adgenda Stmt - Bond Sale Purch Offer etc.doc
Created on 05/02/02 12:39 PM
Providing bond market conditions remain favorable, we expect to sell the bond iss le nn Mnndav
May 2002 and present the Resolution authorizing the bond nt for _'="'J '-`i '-°_ _'-+ �•/:'-+i+�::: `::`+ Resolution i gUil iVi /Lii i4�. the Aim agreement iCi li. to Council iUf
consideration at the May 7, 2002 regular meeting.
Since receiving Council's authorization to proceed with actions necessary to sell the Limited
Tax General Obligation (LTGO) Bonds on April 16, 2002; staff has taken the following steps:
• Worked with investment advisors and legal counsel to prepare a:
(a) Draft Preliminary Official Statement (which was submitted to Standard & Poor's
rating agency and insurance companies on April 19, 2002).
(b) Preliminary Official Statement (POS); (which was distributed to potential
investors on Monday, April 29, 2002; copy enclosed). (Note: the POS discloses
information regarding the local economy and demographics, the City's financial
position, the purpose for the bond sale and various details about the terms and
conditions to be established for the bond sale.)
• Participated in a credit review and rating interview with Stannard & Pnnr's a
nationally recognized rating agency; (staff and the investment bankers felt this
interview went very well; a status report on the rating agency interview was included
in the 04-30-02 Council packet). As of the time of this printing, we had not yet
received the bond rating from Standard and Poor's.
• Monitored the bond market and the news media for indications of anything that might
have a potential impart on the City's anticipated hnnri sale,
• On Monday, May 6, 2002, staff will finalize the terms and conditions of the bond
purchase / sale proposal with bond underwriters (working with investment bankers
and bond counsel as needed). This proposal will be brought to Council for
consideration on Tuesday, May 7, 2002.
Because the final terms and conditions of the bond purchase / sale proposal will not be known
until after the bonds are sold on May 6`", this information will not be available for Council review
prior to the Council meeting on May 7, 2002. The terms that can not be identified until after the
bond sale date include: Total par vaiue of the bonds; interest rates; Bond terms and maturity
dates; Debt Service Schedule; and the Bond issuance and insurance costs
Note:
1. Preliminary Official Statement (POS) enclosed:
The enclosed copy of the POS is not a draft, it is the official POS. By approving the
enclosed Resolution, Council would be approving the Preliminary Official Statement and
authorizing the City Manager and the Finance Director to review and approve the final
Official Statement on behalf of the City.
2. Ordinance (amends Ordinance #2002-22 passed by Council on April 16, 2002) to increase
the maximum authorized par value of the bond sale to $6.8 million, (final version enclosed).
3. Final drafts of all other documents needing Council action on Tuesday, May 7, 2002 are
enclosed for your review; including:
• Resolution (a) authorizing sale of bonds, (b) ratifying the Official Statement and (c)
amending the date on the bonds (from May 1, 2002 to June 1, 2002)
• Purchase Offer from Seattle Northwest Securities (bond underwriters)
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City of Yakima
ATTACHMENT A
Highlights of Proposed Bond Sale
(Convention Center Expansion)
jAs of May 2 2002)
1. City of Yakima is anticipating issuing bonds the proceeds from which will be used for the
expansion of the Yakima Convention Center
2. Bonds will be sold utilizing a negotiated sale process; anticipated date of sale is Monday, May
6, 2002 (subject to market conditions and other factors)
3. Principal sum of bond sale not to exceed $6.8 million (based on anticipated total interest rate
of approximately 5.06% and a requirement to achieve a level debt service payment not to
exceed $480,000 annually)
4. Bonds will be: (a) 25 year Limited Tax General Obligation Bonds (LTGO), (b) insured
5. Debt service payments on the bonds will be made primarily from revenues received from the
PFD; however, the City is pledging Hotel / Motel tax revenues to the repayment of the bonds;
this will effectively extend the period of tinle in which the City is authorized to assess the 2%
Hotel / Motel tax. (Note: as with all LTGO bonds, the full faith and credit of the City is backing
these bonds.)
6. Bond proceeds will be used to: (a) finance the Convention Center expansion project, (b)
reimburse the City of Yakima for all outstanding pre -development costs, and (c) pay issuance,
insurance and incidental costs.
(Net bond proceeds available to fund the project are estimated to be $6,5 million; based on
market conditions as of April 29, 2002.)
7. After this bond issuance, the City will have approximately 63% (or approximately $31 million)
of its non -voted debt capacity remaining (the assessed valuation of the 40th Avenue, Congdon
and 72' Avenue area annexations were excluded from this calculation)
8. City is utilizing Preston Gates and Ellis law firm as our Bond Counsel
9. City is utilizing Seattle Northwest Securities Corporation as our Investment Banker and Bond
Underwriters
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City of Yakima
ATTACHMENTB
History & Highlights
of
Proposed Convention Center Expansion Project
(As of May 2, 2002)
1. In 2000, the State legislature passed RCW's 35.57 and 82.14; these statutes authorized any
city, or contiguous groups of cities, to form a Public Facilities District (PFD) for the purpose of
building or expanding a regional center(s) and authorized the PFD to impose a sales tax credit of
.033% to fund the construction / expansion of the regional center. (This credit re -directs existing
sales tax revenues from the state to the local economy; this is not a new tax.)
2. 2001 the Cities of Yakima, Union Gap and Seiah jointly formed the Yakima a Regional Public
Facilities District (PFD). The PFD was established for the purpose of:
(a) Transferring sales tax revenues currently going to the state to the PFD, and thus, back
into the local economy (using conservative assumptions, the sales tax credit is
anticipated to generate approximately $480,000 annually.)
(b) Providing a funding mechanism for expansion of the Yakima Convention Center
3. The expansion project will cost at least $1-'0 million, including debt service (this is the minimum
allowable project cost under the state PFD regulations)
A
Yakima issue LTGO (non voted limitari tax general obligation bonds) to fund the cost of
-r. ! aki a will issue L O (non ev......, ... .nx g_.•--- - -
the expansion project. (No revenue bonds will be issued as previously anticipated.)
5. The PFD has imposed a .033% Sales Tax Credit (thereby transferring existing tax revenues
from the state to the PFD). The PFD began receiving these revenues in November 2001 and
will receive them monthly for as long as the bonds to expand the Convention Center are
outstanding (not to exceed 25 years). Per the terms of the Development Agreement between
the City of Yakima and the PFD, the PFD will transfer these revenues to Yakima monthly;
ly;
Yakima will use the PFD funds primarily to make debt service payments on the bonds.
6. Should the Sales Tax Revenues (and any reserves) be insufficient to cover a debt service
payment, Yakima will be obligated to contribute the amount of the deficiency to the Debt
Service Fund, out of whatever resources are available (i.e.: Yakima is pledging the full faith
and credit of the City to make the debt service payments).
7. Yakima has leased the Convention Center to the PFD in fulfillment of the 33% sales tax
revenue match requirement. (The match requirement is approx. $2.4 million; appraised value
of the Convention Center building is approx. $9 million.)
8. Under the original State PFD statute, the construction on the Convention Center expansion
must commence by January 1, 2003 in order to be eligible for the state sales tax credit; the
Governor recently signed a bill that moves this date out, to January 1, 2004 (the project is
expected to go to bid in mid 2002).
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