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HomeMy WebLinkAbout2002-031 Amending Ordinance 97-29 (Limited Tax General Obligation Revloving Line of Credit w/ Key Bank) ORDINANCE NO. 2002-31 AN ORDINANCE of the City of Yakima, Washington, amending Ordinance No. 97 -29 and the terms of the City's Limited Tax General Obligation Bond, 1997. WHEREAS, the City Council of the City of Yakima, Washington (the "City ") passed Ordinance No. 97 -29 on May 6, 1997 establishing a line of credit in the aggregate principal amount of not to exceed $5,000,000 to provide funds for various City capital projects; and WHEREAS, the City issued its Limited Tax General Obligation Bond, 1997 (KeyBank Line of Credit), dated June 9, 1997 (the "Bond "), to KeyBank National Association (the "Bank ") to evidence the line of credit; and WHEREAS, the City has received an offer from the Bank to amend the terms of the Bond; and WHEREAS, it is in the best interest of the City to amend the terms of the Bond and to extend the maturity of the Bond to June 1, 2007; NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as follows: Section 1. Section 2 of Ordinance No. 97 -29 is hereby amended to read as follows (additions are double underlined and deletions are stricken): Section 2. Authorization of Bond. The City shall now issue and sell to the Bank its limited tax general obligation bond in the principal amount of not to exceed $5,000,000 (the "Bond ") to establish a line of credit with the Bank for the purpose of providing funds to pay the costs of acquiring ind constructing various City capital projects ( "the Property :1 and the costs of issuance of the Bond. The Bond shall be designated "City of Yakima, Washington, Limited Tax General Obligation Bond, 1997 (KeyBarc Line of Credit)," shall be dated as of the date of its delivery to the rank, shall be fully registered as to both principal and interest, shall be in the denomination of not to exceed $5,000,000, and shall be numbered in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification. Draws on the line of credit established by the sale of the Bond to the Bank shall be made in accordance with the provisions of Section 11 hereof. The Outstanding Principal Balance shall bear interest initially at a per annum rate equal to seventy -nine and 12/100 percent (79.12 %) !of the LIBOR rate until the date of delivery of a replacement Bond and, commencing on such date, the Bond shall bear interest at a rate equal to one hundred percent (100 %) of the LIBOR rate in effect on the day of closing and delivery of the replacement Bond. - . of credit established hereunder. The interest rate applicable to the Outstanding Principal Balance shall be reset each June 1 thereafter to a per annum rate equal to 100% 79.12% of the LIBOR rate in effect on such June 1, and the Outstanding Principal Balance shall thereafter bear interest at such rate through the following May 31 30. The jinterest X to applicable to en-4 particular principal amount drawn under the Bond shall be 100% of the LIBOR rate in effect determined from the date the Bank honors such draw until such rate is reset. Interest shall be calculated on the basis of a year ofQ 3366 days and actual days elapsed. Interest shall be payable annually on. every June 1 and December ' , commencing en June 1, 2002 December 1, 1997. The Outstanding Principal Balance shall be due and payable at final maturity of the Bond on June. 1, 2007. 2002. Section 2. Section 4 of Ordinance No. 97 -29 is hereby amended to read as follows (additions are double underlined and deletions are stricken): Section 4. Prepayment. The City may prepay all or a portion of the principal amount owing on the Bond on any interest payment date at any-time-without penalty. Section 3. The City shall issue a new Bond, dated the date of delivery to the Bank in exchange for the Bond dated June 9, 1997, reflecting the amended terms herein and subject to the terms of the Bank's commitment letter which is attached as Exhibit A and incorporated herein by this reference 1 All other provisions of Ordinance No. 97 -29 shall remain unchanged. Section 4. The Director of Finance and Budget is authorized to take any action necessary to implement this ordinance. -2- K:\25739 \00031\ZCF\ZCF N21E6 Section 5. This ordinance shall be effective thirty days after its publication as provided by law. PASSED by the City Council of the City of Yakima at a regular meeting thereof, held this 21 day of May, 2002. CITY OF YAKIMA, WASHINGTON Mayor ATTEST C1lu -►�- .,4 , Gv►►c City Clerk APPROVED AS TO FORM: / / / City ttorney First Reading: N/A Publication Date: 5 - 24 - 2002 Effective Date: 6 - 23 - 2002 - 3 - K:\25739 \00031\ZCF\ZCF N21E6 iEXHIBIT ;[ATTACH KEYBANK COMMITMENT LETTER]]] • Commitment Letter Key Bank WA -31 -18 -0548 601 -108 Avenue NE P.O. Box 90027 Bellevue, WA 98009 May 16, 2002 Phone: 425-709-4541 Fax: 425- 709 -4547 Tim Jensen City of Yakima 129 North Second Street Yakima, Washington 98901 Re: City of Yakima Credit Request Dear Tim: Thank you for the opportunity to respond to your request for the current financing needs of the City of Yakima (the "City "). This letter provides the terms of the credit commitment of the Bank to extend the City's current line of credit that expires on June 1, 2002. This commitment will expire on June 10, 2002. Borrower: City of Yakima (the "City ") Facility: $5,000,000 Limited Tax General Obligation Line of Credit Security: Pledge of general revenue of the City Interest Rate: Bank Qualified Tax Exempt: 100% of one year LIBOR, set on the date of closing, reset annually thereafter. Maturity: Five (5) years from the date of closing Repayment: Interest due annually, Principal due at maturity Origination Fee: $5,000 Prepayment: LIBOR Option: Prepayment only on annual reset date. Financial Data Required: The Bank will be provided, for the life of the Facility, annual unaudited financial statements by May 31 after each fiscal year end and audited financial statements within 10 days of the receipt of the Audited Financial Statements. And upon request, the City will provide annual budgets within 30 days of adoption and quarterly financials reports within 45 days of each quarter end. This Commitment Letter is for use by addressee only and is not to be relied upon by third parties Commitment Letter Additional Terms and Conditions: All required documentation for the Facility or Facilities including the borrowing ordinance and the enforceability, tax and validity opinion, will be prepared by bond counsel acceptable to the Bank and Bank counsel and delivered prior to or at closing. All legal fees for this documentation will be assessed to the account of the Borrower. Bank legal fees to be paid by Borrower. Legal fees not to exceed $1,500. All interest calculations will be based on actual / 360 day basis. This letter is solely for your benefit and is not to be relied upon, or shared, with any third parties. I look forward to continuing to work with you, the City, and bond counsel on this project. Please call me at 425 -709 -4541 or Carolyn Nelson at 425 - 709 -4540 with any questions. Sincerely, Kim Monson Vice President This Commitment Letter is for use by addressee only and is not to be relied upon by third parties CITY OF YAKIMA, WASHINGTON LIMITED YB � OF CREDIT) OBLIGATION $5,000,000 1997 ( � ORDINANCE NO. 97- 2 AN ORDINANCE of the City of Yakima, Washington, providing for the issuance and sale of a limited tax general obligation bond of the City in the aggregate principal amount of 55,000,000, for the purpose of establishing a line of cc to provide funds for various lawful City purposes and to pay costs o issuance of said bond; providing the date, form, and repayment terms of said bond and for the pledge of funds to pay the principal thereof and interest thereon; and approving the sale of such bond APPROVED ON MAY 6, 1997 PREPARED BY: PRESTON GATES & ELLIS LLP 5000 Columbia Center • 701 Fifth Avenue Seattle, Washington 98104 -7078 Table of Contents' Page Section 1. Definitions 1 Section 2. Authorization of Bond 2 Section 3. Registration and Payments 3 Section 4. Prepayment 3 Section 5. • Form of Bond 3 Section 6. Execution of Bond 5 Section 7. Application of Bond Proceeds 6 Section 8. Pledge of Funds and Credit 6 Section 9. Tax Covenants and Designation 6 Section 10. Sale of the Bond 7 Section 11 Procedures for Draws on the Bond 7 Section 12. Severability 7 Section 13 Effective Date 8 This table of contents is not a part of this resolution; it is included for convenience of the reader only ORDINANCE NO. 97- 2 3 AN ORDINANCE of the City of Yakima, Washington, providing for the issuance and sale of a limited tax general obligation bond of the City in the aggregate principal amount of S5,000,000, for the purpose of establishing a line of credit to provide funds for various lawful City purposes and to pay the costs of and repayment terms of said the date, form, issuance of said bond, providing bond and for the pledge of funds to pay the principal thereof and interest thereon; and approving the sale of such bond. WHEREAS, the City Council (the "Council ") of City of Yakima, Washington (the "City "), has determined that it is in the best interest of the City to establish a line of credit to finance the costs of City projects pending the availability of permanent funding therefor; and WHEREAS, the City is authorized, pursuant to RCW 39.46.050, to establish a line of credit with a qualified public depositary to be drawn upon in exchange for a bond of the City, and WHEREAS, the City has received the offer of KeyBank National Association, Seattle, Washington (the "Bank "), to establish a line of credit in the principal amount of not to exceed $5,000,000 in exchange for a limited tax general obligation bond of the City in the principal amount of $5,000,000 (the "Bond "), and the Council wishes to accept such offer on the terms and conditions set forth herein and in the Bank's offer to purchase the Bond and establish the line of credit, NOW, THEREFORE, THE CITY OF YAKIMA, WASHINGTON, DO ORDAIN, as follows. Section I . Definitions. As used in this ordinance, the following words shall have the following meanings' "Authorized Officer" means the Director of Finance and Budget of the City, or his designee. "Bank" means KeyBank National Association, Seattle, Washington, and any business successor thereto. "City ouncil" means the duly constituted City Council as the general legislative authority of the City. "$ond Remstr means the Treasurer, for the purposes of registering and authenticating the Bond, maintaining the Bond Register, and paying installments of principal and interest on the Bond. "Bond" means the City of Yakima, Washington, Limited Tax General Obligation Bond, 1997 (KeyBank Line of Credit), in the principal amount of S5,000,000, issued pursuant to this ordinance "Code" means the federal Internal Revenue Code of 1986, as amended from time to time, and the applicable regulations thereunder "Cites" .means City of Yakima, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. "LIBOR" means the one -year London Inter -Bank Offered Rate as set forth on the Bank's daily cost of funds rate sheet, as obtained from the Reuters Monitor Money Rates Service "Outstanding Principal Balance" of the Bond means on any particular day the aggregate of all funds that the City has drawn from the Bank under the Bond to that day, less the aggregate of all pnncipal payments on the Bond made by the City on or before that day. "Treasurer" means the Director of Finance and Budget of the City, or any successor to the functions of such officer. Section 2 Authorization of Bond. The City shall now issue and sell to the Bank its limited tax general obligation bond in the principal amount of not to exceed 55,000,000 (the "Bond ") to establish a line of credit with the Bank for the purpose of providing funds to pay the costs of acquiring the Property and the costs of issuance of the Bond. The Bond shall be designated "City of Yakima, Washington, Limited Tax General Obligation Bond, 1997 (KeyBank Line of Credit)," shall be dated as of the date of its delivery to the Bank, shall be fully registered as to both principal and interest, shall be in the denomination of not to exceed $5,000,000, and shall be numbered in such manner and with any additional - 2- J• DONI +OMEriaknnt doe designation as the Bond Registrar deems necessary for purposes of identification. Draws on the line of credit established by the sale of the Bond to the Bank shall be made in accordance with the provisions of Section 11 hereof The Outstanding Principal Balance shall bear interest initially at a per annum rate equal to seventy -nine and 12/100 percent (79.12 %) of the LIBOR rate in effect on the day of the initial draw on the line of credit established hereunder. The interest rate applicable to the Outstanding Principal Balance shall be reset each June 1 thereafter to a per annum rate equal to 79.12% of the LIBOR rate in effect on such June 1, and the Outstanding Principal Balance shall thereafter bear interest at such rate through the following May 30. Interest on a particular principal amount drawn under the Bond shall be determined from the date the Bank honors such draw. Interest shall be calculated on the basis of a year of 365 /366 days and actual days elapsed. Interest shall be payable every June 1 and December 1, commencing on December 1, 1997. The Outstanding Principal Balance shall be due and payable at final maturity of the Bond on June 1, 2002. Sejion 3. Re i n d P ea ts The Treasurer shall act as authenticating agent, paying agent and registrar for the Bond (collectively, the "Bond Registrar "). Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. Payments of principal of and interest on the Bond shall be made by check or draft of the Bond Registrar . mailed five calendar days prior to the date such interest is due or by electronic funds transfer made on the date such interest is due to the Bank at the address appearing on the Bond Register. Upon final payment of all principal and interest thereon, the Bond shall be submitted to the Bond Registrar for cancellation and surrender The Bond is not transferable. Section 4. PreQayment. The City may prepay all or a portion of the principal amount owing on the Bond at any time without penalty. Secton 5. Form of Bond. The Bond shall be in substantially the following form? UNITED STATES OF AMERICA NO. S5,000,000 -3- J: DO w WIkt,„. eoc (Drawn as provided herein) STATE OF WASHINGTON CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION BOND, 1997 INTEREST RATE: A per annum rate equal to seventy -nine and 12/100 percent (79.12 %) of LIBOR (as defined in the Bond Resolution) from time to time, as provided herein REGISTERED OWNER: KeyBank National Association PRINCIPAL AMOUNT. FIVE MILLION AND NO /100 DOLLARS (Drawn as provided herein) THE CITY OF YAKIMA, WASHINGTON (the "City "), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, the Outstanding Principal Balance (as defined below) of this bond, in an amount not to exceed the Principal Amount specified above. The Outstanding Principal Balance on any particular day shall be the aggregate of all funds that the City has drawn from the date of this bond to that day less the aggregate of all principal payments made by the City on or before that day The Outstanding Principal Balance shall bear interest initially at a per annum rate equal to 79.12% of the Bank's one -year LIBOR rate in effect on the day of the initial draw on the line of credit established hereunder The interest rate applicable to the Outstanding Principal Balance shall be reset each June 1 thereafter at a per annum' rate equal to 79.12% of the one -year LIBOR rate in effect on such June 1, and the Outstanding Principal Balance shall thereafter bear interest at such rate through the following May 30 Interest on a particular principal amount drawn under the Bond shall be determined from the date the Bank honors such draw. Interest shall be calculated on the basis of a year of 365/366 days and actual days elapsed. Interest shall be payable every June 1 and December 1, commencing on December 1, 1997. The Outstanding Principal Balance shall be due and payable at final maturity of the Bond on June 1, 2002 Both principal of and interest on this bond are payable in lawful money of the United States of America. Installments of the principal of and interest on the Bond shall be paid by check or draft of the Director of Finance and Budget of the City (the "Bond Registrar ") mailed five calendar days prior to the date such interest is due or by electronic funds transfer made on the date such interest is due to the registered owner or nominee at the address appearing on the Bond Register. Upon final payment of all installments of principal and interest thereon, this note shall be submitted to the Bond Registrar for cancellation and surrender. THIS BOND IS NOT TRANSFERABLE. -4- J 071.00140MSTiguren , doe Both principal of and interest on this bond are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of such principal and interest. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk as of this day of 1997 CITY OF YAKIMA, WASHINGTON B /s/ Mayor ATTEST: /5/ City Clerk REGISTRATION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City, in the office of the Director of Finance and Budget (the "Bond Registrar "), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City with full acquittance by the Bond Registrar's check or warrant, made payable to the Registered Owner as shown hereon and on the registration books of the Bond Registrar and delivered to such owner or mailed to him at his/her address noted hereon and on the registration books of the Bond Registrar. Date of Name and Address of Signature of Registration Registered Owner Registrar mo tion 6. Execution Qf Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signatures of the Mayor and City Clerk. Only such Bond as shall bear -5- J:\D01WOFIOMEIraYcM eoc thereon a Registration Certificate in the form hereinbefore recited, manually executed by or on behalf of the Bond Registrar or its duly designated agent, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Bond shall cease to be an officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond 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. Any Bond may also be signed and attested on behalf of the City by such persons who are at the actual date of delivery of such Bond are the proper officers of the City although at the original date of such Bond any such person shall not have been such officer of the City. Section 7 Application of Bond Proceeds. The money derived from draws on the line of credit established by the sale of the Bond shall be deposited in the appropriate fund of the City and shall be expended for lawful City purposes and the costs of issuing and selling the Bond, as authorized herein. Section 8 Pledge of Funds and credit. Both principal of and interest on the Bond are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in amounts that, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the prompt payment of such principal and interest. Section 9. Tax t and Designation (a) Covenants Regarding Arbitrage and Private Activity. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City that may be deemed to be proceeds of such Bond pursuant to Section 148 of the Code that will cause the Bond to be an "arbitrage bond" within the meaning of said section and said regulations. The City will comply with the requirements of Section 148 of the Code (or any successor -6- Zor0ro+00rao'+o e« / provision thereof applicable to the Bond) and the applicable Regulations thereunder throughout the term of the Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" under Section 141 of the Code. (b) Bond Designated "Qualified Tax- Exempt Obli a tions." The City hereby designates the ' Bon at a qualified ax-exempt obligation for purchase by financial institutions pursuant to Section 265(b) of the Code. The City does not anticipate that it will issue more than $10,000,000 in qualified tax - exempt obligations during the year 1997. $ ection 10. Sale of the Bond. The offer of the Bank Oiled May 2, 1997, to purchase the Bond on the terms specified therein and in this ordinance is hereby in all respects accepted and approved The proper City officials are hereby authorized and directed to do everything necessary for the prompt execution and delivery of the Bond to the Bank and for the proper application and use of the proceeds of sale thereof. Section 11. Procedures for Draws on the Bond. A request for draw pursuant to the Bond may be made in writing by an Authorized Officer in any manner approved by the Bank and the Authorized Officer; provided, however, that each draw shall be in a minimum amount of 510,000 (unless it is the final draw or this requirement is otherwise waived by the Bank) and shall . be subject to the written approval of Preston Gates & Ellis LLP or any other nationally recognized bond counsel firm satisfactory to the City and acceptable to the Bank. Section 12. Severability. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. -7- J.�oanwHoMYik.ma.doc • Section 13. Effective Date. This ordinance shall become effective from and after its passage and publication in accordance with law PASSED by the City Council of the City of Yakima, Washington, at a regular meeting thereof held this 6th day of May, 1997. Lynn Buchanan, yor ATTEST: r�, I.,, `CA M S. ROBERTS, CMC z City Clerk -8- r0OnvFgMOYaid %ICC CITY CLERKS CERTIFICATE I, the undersigned, City Clerk of the City of Yakima, Washington (the "City ") and keeper of the records of the City Council (the "Council "), DO HEREBY CERTIFY: 1 That the attached Ordinance is a true and correct copy of Ordinance No. 97- 2 9 of the City (the "Ordinance "), duly passed at a regular meeting of the Council held on the 6th day of May, 1997. 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 legal quorum was present throughout the meeting and a legally sufficient number of members of the 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 May, 1997. ltl KAREN S. ROBERTS, CHIC City Clerk, City of Yakima 1 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. I a" For Meeting Of 5/21/2002 ITEM TITLE: An Ordinance of the City of Yakima, Washington amending Ordinance No. 97- 29 and the terms of the City's Limited Tax General Obligation Bond - Line of Credit, 1997. SUBMITTED BY: Department of Finance & Budget a_ CONTACT PERSON /TELEPHONE: Rita Anson, Finance Director 575 -607 Tim Jensen, Treasury Services Officer 5 5 070 SUMMARY EXPLANATION: This Council action will extend the City's existing $5,000,000 Limited Tax General Obligation Revolving line of credit from it's original maturity date of June 1St 2002 to June 1St, 2007. The Line of Credit is used to make small borrowings when traditional bond financing is not cost effective. The proceeds are drawn down as needed rather than in a lump sum as in traditional bonding. For instance it has been used in the past, to finance the construction of the Probation Center and various Irrigation Division capital improvements. Additionally it would be available for short -term "bridge financing" to begin larger projects prior to traditional bonding. The current balance of the line is $88,500, owed by the Irrigation Division. If Council approves this ordinance, the $88,500 balance will roll over to the extended line of credit. During the 5 years that the City has maintained the current line, the total outstanding balance has never been over one -half million dollars. (Continued) Resolution _Ordinance X Contract _Other (Specify) Bank Commitment Letter and Ordinance 97 -29 Funding Source N/A APPROVED FOR SUBMITTAL: ` > ' City Manager STAFF RECOMMENDATION: Pass Ordinance BOARD/ COMMISSION RECOMMENDATION: N/ A COUNCIL ACTION: Ordinance passed. ORDINANCE NO. 2002 -31 Line of Credit Agenda Statement (Cont.) Procedure: The procedure required to accomplish this bond issue and line of credit is very simple compared to traditional bond financing, because this bond is being sold to only one sophisticated investor and the Securities and Exchange Act of 1934 does not apply. This bond is not transferable. Approval of the new Bond Ordinance, amending the original Ordinance No. 97 -29 (attached) will give the Finance Director authority to enter into this agreement. Highlights of borrowing: • Authority to establish a five million dollar line of credit with Key Bank • Interest rate is 100% of 1 -year LIBOR, (London Inter Bank Offer Rate, currently 2.70625 %); rate resets each June 1St • Interest due annually, any outstanding balance due June 1St, 2007 • Full Faith and Credit of the City of Yakima is pledged • Prepayment of any outstanding principal balance allowed on any reset date without penalty • Only outstanding amounts effect the City's debt capacity Documents enclosed: • Amending Ordinance (blacklined for ease of comparison) • Bank Commitment Letter • 1997 ordinance 97 -29 Conclusion: Staff believes this transaction is in the best interest of the City of Yakima and recommends passage of this Ordinance extending the Line of Credit Bond.