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HomeMy WebLinkAboutR-1996-002 LTGO BondsRESOLUTION NO. R-96-02 A RESOLUTION of the City Council of the City of Yakima, Washington, approving acceptance of a proposal for the purchase of limited tax levy general obligation bonds of the City in the principal amount of $6,000,000, and fixing the interest rates of such bonds. WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 95-53 passed and approved on October 17, 1995, authorized the sale and issuance of limited tax levy general obligation bonds of the City in the aggregate principal amount of $6,000,000 (the "Bonds") to provide funds to make certain capital improvements for the City; and WHEREAS, the proposal of Seattle -Northwest Securities Corporation to purchase the Bonds has been received in accordance with Ordinance No. 95-53, 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. 95-53 and this resolution; and WHEREAS, Ordinance No. 95-53 provides that the City shall approve the interest rates, price, 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 $6,000,000. They shall be issued under date of January 1, 1996, with interest payable semiannually on the first days of May and November of each year, commencing May 1, 1996. Section 2. Redemption. Bonds maturing on and after November 1, 2008, shall be subject to redemption at the option of the City at any time on and after November 1, 2006, in whole or in part (maturities to be selected by the City and by lot within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date of redemption. Bonds shall be subject to mandatory redemption as set forth in the proposal of Seattle -Northwest Securities 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 Exhibit 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. Exhibit A is hereby incorporated by reference as if fully set forth herein. Section 4. Security for the Bonds. The City hereby affirms its covenants contained in Ordinance No. 95-53 securing the Bonds and further irrevocably covenants with the purchasers and owners of the Bonds, that, to the full extent permitted by law, it will levy hotel -motel taxes pursuant to RCW 67.28, including, without limitation, taxes provided for by RCW 67.28.180 and RCW 67.28.240, at not less than the maximum rate permitted by law at the time the Bonds are issued, in order to adequately secure the Bonds, and pledges in accordance with RCW Ch. 67.28, including, without limitation, RCW 67.28.150 and RCW 67.28.210, to apply amounts collected thereunder, subject to their use for other authorized purposes, to the extent necessary to pay and secure the payment of the principal of and interest on the Bonds. Section 5. Capitalized Interest. Of the Bond proceeds deposited into the Convention Center Capital Improvement Fund (Fund No. 370), an amount equal to six months interest on the Bonds may be treated and applied as and for capitalized interest, as authorized by RCW 39.46.070. 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 9th day of January, 1996. CITY OF YAKIMA, WASHINGTON -2- /Mayor J: \FW W 125739-00.023\03R3TF. DOC ATTEST: c wt City Clerk -3- MEMORANDUM January 9, 1996 TO: Honorable Mayor and Members of the City Council FROM: John Hanson, CMFA, Director of Finance & Budget Tim Jensen, CPA, Accountant SUBJ: Bond Sale --Convention Center Expansion Bonds The purpose of this memorandum is to update the City Council on marketing of the City's Convention Center Bonds, notify the City Council of a minor change in structure, and recommend their sale to Seattle Northwest Securities, the City's lead underwriter. The bond sale was another stellar success for the City. The bonds were marketed at slightly above par at 100.977. The total par amount of the Bond issue is $6.0 million. By issuing above PAR, this results in the Convention Center Project Fund receiving a full allocation of $6.0 million for their expansion. Costs of the sale, bond insurance, bond issuance costs and underwriter's discount are paid from premium issue dollars. City staff and the lead underwriter, in an effort to achieve the overall lowest interest cost to the City, made some minor adjustments in the structure of the issue just prior to the sale which resulted in approximately $277,000 in interest cost savings over the life of the issue, and shortened the final maturity by three (3) years. Accordingly, the Final Official Statement, Purchase Offer from the underwriter and Final Resolution from Bond Counsel have been modified to reflect the changes from draft versions. FI1)B/Daily Tim Jensen/10 The chart below summarizes final pricing: NIC (net interest cost PAR Value of Bonds Production (amount received) Bid 100.977 LTGO Convention Center Bonds 5.2286% $6.0 mm $6.125 mm This net interest cost for the issue of 5.2268% is excellent. Bond insurance was included in final bond pricing of a cost of .265% ($28,168). The underwriter's discount is .797% ($47,820) as described in the proposal for underwriting services presented by Seattle Northwest Securities. Staff believes the bond purchase offer from Seattle Northwest Securities for $6.0 million par amount is an excellent offer. Accordingly, we recommend Council adopt the attached resolution prepared by Preston, Gates and Ellis (Bond Counsel) which authorizes acceptance of the offer by Seattle Northwest Securities. HDB/Daily Tim Jensen/1l SEATTLE -NORTHWEST SECURITIES CORPORATION January 9, 1996 1 420 Fifth Avenue Suite 4300 Seattle, Washington 98101 (206)628-2882 Mayor and City Council City of Yakima 129 North Second Street Yakima, Washington 98901 Re: City of Yakima, Washington $6,000,000 Limited Tax General Obligation Convention Center Bonds, 1996 Dated: January 1, 1996 Honorable Mayor and City Council: Seattle -Northwest Securities Corporation (the "Purchaser") offers to purchase from the 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; Honorable Mayor and City Council City of Yakima January 9, 1996 Page 2 (e) the Seller has previously provided the Purchaser with a copy of its Preliminary Official Statement dated January 3, 1996. 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(bX1); and (f) the Seller agrees to cooperate with the Purchaser to permit the Purchaser to deliver 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. The Purchaser agrees to deliver three copies of the final Official Statement to a nationally recognized municipal securities information repository on the business day on which the final Official Statement is available, and in any event no later than seven business days after the date hereof. (g) The Seller agrees to enter into a written agreement or contract, constituting an undertaking (the "Undertaking") to provide ongoing disclosure about the City of Yakima, Washington, for the benefit of the owners of the Bonds on or before the Closing as required by Section (b)(5Xi) of S.E.C. Rule 15c2-12 (the "Rule"), and in the form as summarized by the Preliminary Official 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 mate- rial 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 mislead- ing, the Seller shall promptly notify the Purchaser thereof. 3. The Purchaser shall have the right to cancel this Agreement to purchase the Bonds by notifying the 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 reported 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 Honorable Mayor and City Council City of Yakima January 9, 1996 Page 3 (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 (e) 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 (1) 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 (2) 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, or (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. 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 all of the following: (a) the Bonds, in definitive form and duly executed, or a temporary bond; (b) the approving opinion of Bond Counsel dated the Closing date; (c) issuance of a municipal bond insurance policy by AMBAC Indemnity Corporation and assignment to the Bonds of a rating of Aaa by Moody's Investors Service and AAA by Standard & Poor's Ratings Group; and (d) the following documents executed by authorized officers of the Seller: (1) a "Closing Certificate," dated the Closing date in substantially the form of Appendix B hereto, which is incorporated herein by this reference; and Honorable Mayor and City Council City of Yakima January 9, 1996 Page 4 (2) a certificate setting forth the facts, estimates and circumstances in existence on the date of Closing which establish that it is notexpected 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 regu- lations thereunder; (e) a certified copy of the Bond Ordinance; and (f) such additional certificates, instruments or opinions 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, 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. 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, as Seller's agent, 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 the cost of the items for which Seller is responsible by making payments to third -party 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 repre- sentations and warranties shall survive any investigation made by or for the Purchaser, 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 mcurred shall be borne in accordance with Section 5. Honorable Mayor and City Council City of Yakima January 9, 1996 Page 5 7. This offer expires on the date, and at the time, set forth on Appendix A. Respectfully submitted, SEATTLE -NORTHWEST SECURITIES CORPORATION By: AiWpk_ John Rose, Vice esident and Manager of Public Finance Accepted January 9, 1996 CITY OF Y WASHIN TON 0 C CT NO: C!T A Ck-qC9A) (a) (b) (c) (d) APPENDIX A Description of Bonds Purchase Price: $6,058,621.75 ($100.977029 per $100), plus accrued interest from the dated date of January 1, 1996 to date of Closing. Denominations: $5,000, or integral multiples thereof. Form: Fully registered. Interest Payment Dates: May 1 and November 1, commencing May 1, 1996. (e) Maturity Schedule: as follows: Due Nov.1 Amounts 1996 $ 150,000 1997 135,000 1998 145,000 1999 150,000 2000 160,000 2001 170,000 2002 180,000 2003 190,000 Bonds shall mature November 1 of each year and bear interest Interest Rates 5.75% 5.75 5.75 5.75 5.75 5.50 5.50 5.50 Due Nov. 1 2004 2005 2006 2007 2008 2009 2010 2011 Amounts $ 200,000 210,000 220,000 235,000 245,000 255,000 270,000 285,000 Interest Rates 5.50% 5.50 5.50 5.50 4.85 5.00 5.10 5.10 $1,295,000 5.200% Term Bonds due November 1, 2015 $1,505,000 5.375% Term Bonds due November 1, 2019 (f) Optional Redemption: The Bonds maturing in years 1996 through 2007, inclusive, are not subject to redemption prior to maturity. The Bonds maturing on and after November 1, 2008, are subject to redemption at the option of the City on and after November 1, 2006, in whole or in part at any time (maturities to be selected by the City and by lot within a maturity in such manner as the Bond Registrar shall determine) at a price of par plus accrued interest, if any, to the date of redemption. (g) Mandatory Redemption: The Term Bonds due on November 1, 2015 and November 1, 2019 will be called for redemption by lot (in such manner as the Bond Registrar shall determine) at par plus accrued interest on November 1 in years and amounts as follows: 2015 Term Bonds 2019 Term Bonds Years Amounts Years Amounts 2012 $300,000 2016 $365,000 2013 315,000 2017 385,000 2014 330,000 2018 405,000 2015 350,000 2019 350,000 Closing Date: With definitive Bonds or a temporary Bond on or about January 22, 1996. Offer Expires: 11:00 p.m., January 9, 1996. Bond Counsel: Preston Gates & Ellis. For Information Purposes Only: Net Interest Cost: 5.226806% APPENDIX B Closing Certificate of City of Yakima The undersigned hereby certifies and represents to Seattle -Northwest Securities Corporation (the "Purchaser") that he/she is the duly appointed and acting of the City of Yakima, Washington (the "City"), authorized to execute and deliver this Certificate and further certifies on behalf of the City to the Purchaser as follows: (1) This Certificate is delivered in connection with the offering and sale of the $6,000,000 Limited Tax General Obligation Convention Center Bonds, 1996 (the "Bonds"). (2) The representations and covenants of the City set forth in Section 2 of the Bond Purchase Agreement for the Bonds (the "Agreement"), dated January 9, 1996, between the City and the Purchaser, were true and correct when made and remain true and correct as of this date. (3) No litigation or other proceedings are pending or threatened in any way affecting the issuance, sale or delivery of the Bonds. (4) Execution of this Certificate shall constitute execution by the City of the Final Official Statement for the Bonds. (5) I have reviewed the Final Official Statement and, to my knowledge and belief, the Final Official Statement does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading. (6) The City has entered into a written agreement or contract constituting an undertaking for the benefit of the owners of the Bonds to provide ongoing disclosure about the City and the Bonds as required by Rule 15c2-12(b)(5)(i), as amended, of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, in the form summarized by the Preliminary Official Statement and the Final Official Statement. IN WITNESS WHEREOF, I have hereunto set may hand thisday of , 1996. City of Yakima, Washington By: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. / 3 For Meeting Of 1/9/96 ITEM TITLE: Resolution Approving Acceptance of a Proposal to Purchase Limited Tax General Obligation Bonds of the i -- Convention Center Bonds SUBMITTED BY: Department of Finance and Budget/ i f CONTACT PERSON/TELEPHONE: John R. Hanson, Ditector/575-6070 SUMMARY EXPLANATION: J This past October the City Council authorized the issue of $6 million in bonds for the Convention Center Expansion Project. The funding for repayment of the debt was to be from the State (2%) Hotel/Motel Sales Tax credit, and from a portion of the Local Option 3% Hotel/Motel Tax. The Annual Debt Service is projected at approximately $450,000 for principal and interest for 25 years. The $450,000 represents projected State Sales Tax Hotel/Motel credit of $340,000 in 1996 dollars, and $110,000 or approximately two-thirds of one percent of the Local Option Tax. This is the same financing package contemplated at the time the bonds were authorized in October of 1995. The attached Resolution and Draft Purchase Offer from Seattle Northwest Securities, the lead underwriter (the City requested that Seattle Northwest Securities co -manage the issue with SeaFirst Bank), completes the transaction to issue the bonds as previously authorized. Also included as Attachment I is a copy of the Preliminary Official Statement used to market the bonds. The plan is to market the bonds on January 8, 1996. The actual purchase offer and any final changes to the Resolution required by the final bond pricing structure will be presented to Council at the meeting on Tuesday. It appears interest rates will once again be favorable to the City. Resolution X Ordinance Contract Other (Specify) Draft Purchase Offer Funding Source APPROVED FOR SUBMITTAL: \, : ThCity Manager STAFF RECOMMENDATION: Pass Resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: JH -- Agenda Cony Center Bonds