HomeMy WebLinkAbout2002-027 Bond Authorization for Conveniton Center Expansion t
ORDINANCE NO. 2002-17
AN ORDINANCE of the City of Yakima, Washington, amending
Ordinance No. 2002 -22.
WHEREAS, the City Council of the City of Yakima, Washington (the "City ") has passed
Ordinance No. 2002 -22 on April 16, 2002, authorizing the issuance of limited tax general
obligation bonds of the City in the principal amount of not to exceed $6,475,000 for the purpose
of providing funds to finance the convention center project and providing the form and terms of
the bonds; and
WHEREAS, the City Council deems it necessary to amend Ordinance No. 2002 -22 to
increase the principal amount of the bonds to be issued to the aggregate principal amount of not
•
to exceed $6,800,000;
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as
follows:
Section 1. Section 1 of Ordinance No. 2002 -22 is hereby amended to read as follows
(additions are double underlined and deletions are stricken):
SECTION 1. Definitions. As used in this ordinance, the following words
shall have the following meanings, unless a different meaning clearly appears
from the context:
"Arbitrage and Tax Certification" means the certificate executed by the
Director of Finance and Budget or her designee setting forth the requirements of
the Code for maintaining the tax - exemption of interest on the Bonds.
"Bond Register" means the registration records for the Bonds maintained
by the Bond Registrar.
"Bond Registrar" means the fiscal agency of the State of Washington,
currently in New York, New York, for the purposes of registering and
authenticating the Bonds maintaining the Bond Register, effecting transfer of
ownership of the Bonds and paying principal of and interest on the Bonds.
"Bonds" means the not to exceed $6,800,000 principal amount
of the City of Yakima, Washington, Limited Tax General Obligation Bonds,
2002, issued pursuant to this ordinance.
"CEDE & Co." means the nominee of The Depository Trust Company.
"City" means the City of Yakima, Washington, a municipal corporation
duly organized and existing under and by virtue of the Constitution and laws of
the State of Washington.
"City Council" means the legislative authority of the City as the same
shall be duly and regularly constituted from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, together
with corresponding and applicable final, temporary or proposed regulations and
revenue rulings issued or amended with respect thereto by the United States
Treasury Department of the Internal Revenue Service, to the extent applicable to
the Bonds.
"Commission" means the Securities and Exchange Commission.
"Convention Center Capital Fund" means the Convention Center Capital
Fund No. 370.
"Debt Service Fund" means the "LTGO Convention Center Debt Service
Fund, 2002" authorized to be created by Section 6.
"DTC" means The Depository Trust Company of New York, as
depository for the Bonds, or any successor or substitute depository for the Bonds.
"Letter of Representations' means the Blanket Letter of Representations
from the City to DTC.
"MSRB" means the Municipal Securities Rulemaking Board or any
successor to its functions.
"NRMSIR" means a nationally- recognized municipal securities
information repository.
"Project" means the approximately 20,000 square foot expansion of the
Yakima Convention Center and the renovation of the existing Center.
"Registered Owner" means the person in whose name a Bond is registered
on the Bond Register. For so long as the City utilizes the book -entry system for
the Bonds, DTC shall be deemed to be the Registered Owner.
"Rule" means the Securities and Exchange Commission's Rule 15c2 -12
under the Securities Exchange Act of 1934.
"Sale Resolution" means the resolution to be adopted by the City Council
setting the final terms of the Bonds.
"SID" means a state information repository for the State of Washington (if
one is created).
Section 2. Section 3 of Ordinance No. 2002 -22 is hereby amended to read as follows
(additions are double underlined and deletions are stricken):
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p
SECTION 3. Authorization of Bonds. The City shall issue and sell the
Bonds in the aggregate principal amount of not to exceed $6,475,000 $6,800,000
to provide money to finance the Project described in Section 2, including
reimbursing the City for predevelopment costs related to the Project, capitalize
six months of interest and to pay all costs incidental thereto and to the issuance of
the Bonds. The Bonds shall be general obligations of the City; shall be
designated "City of Yakima, Washington, Limited Tax General Obligation Bonds,
2002 "; shall be dated as provided in the Sale Resolution; shall be issued in fully
registered form in the denomination of $5,000 or any integral multiple thereof,
provided that no Bond shall represent more than one maturity; shall be numbered
separately and in such manner and with any additional designation as the Bond
Registrar deems necessary for purposes of identification and control; shall bear
interest (calculated based on a 360 -day year of 12 30 -day months) at the rates set
forth in the Sale Resolution from their date, until the Bonds have been paid or
their payment duly provided for, payable on December 1, 2002, and semiannually
thereafter on the first day of each June and December and shall mature on June 1
of the years and in the amounts set forth in the Sale Resolution.
Section 3. Effective Date. 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 7th day of May, 2002.
CITY OF YAKIMA, WASHINGTON
)7 ? Mayor
ATTEST
Sam 4
City Clerk
APPROVED AS TO FORM:
A 2 rx eie, Pd-dede
City Attorney
First Reading: hi /A
Publication Date: 5 - 10 - 2002
Effective Date: 6 - - 2002
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-3-
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
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: Rita Anson, Finance Director ( #575- 6070�
Timothy Jensen, Treasury Services Offi 0' #575 -6070)
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.
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.
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Providing bond market conditions remain favorable, we expect to sell the bond issue on Monday,
May 6, 2002 and present the Resolution authorizing the bond sale agreement to Council for
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 Standard & Poor'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 impact on the City's anticipated bond 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 value 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)
(As 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 time 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 40' Avenue, Congdon
and 72n 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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J •4
City of Yakima
ATTACHMENT B
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 Selah jointly formed the Yakima 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 $10 million, including debt service (this is the minimum
allowable project cost under the state PFD regulations)
4. Yakima will issue LTGO (non- voted, limited tax general obligation bonds) to fund the cost of
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;
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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