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
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ATTEST:
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City Clerk
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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
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(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