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HomeMy WebLinkAboutR-1996-141 Water and Sewer Revenue BondsCITY OF YAKIMA, WASHINGTON RESOLUTION NO. R-96-141 A RESOLUTION authorizing the execution and delivery of a contract for purchase of the City's second lien water and sewer revenue bonds, 1996, in the aggregate principal amount of $3,320,000, fixing certain terms of the bonds, providing for the refunding of certain outstanding revenue bonds, approving the form of the official statement therefor and the distribution thereof, and ratifying certain acts and proceedings. WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 96-40 passed May 7, 1996, authorized the issuance of the City's Water and Sewer Revenue Refunding Bonds, 1996 (the "Bonds"); and WHEREAS, certain terms of the Bonds were to be determined by subsequent resolution of the Council; and WHEREAS, the Director of Finance and Budget of the City has, with the approval of the Council, entered into negotiations for the sale of $3,320,000 aggregate principal amount of the Bonds; and WHEREAS, such negotiations have been completed and the Director of Finance and Budget recommends that the City accept the offer to purchase the Bonds made by Seattle Northwest Securities Corporation (the "Purchaser") which offer is set forth in the Purchase Contract for the Bonds dated October 15, 1996 (the "Purchase Contract"), a. copy of which has been presented at this meeting and is on file with the City Clerk; NOW, TIT REFORE, BE IT RESOLVED by the City of Yakima, Washington, as follows: Section 1. Definitions. Capitalized terms used herein and not otherwise defined shall have the same meanings, respectively, in this resolution as such terms are given in Section 1.1 of Ordinance No. 96-40. Section 2. Acceptance of Offer. The Council hereby finds and determines that the Purchase Contract is fair and reasonable and in the best interest of the City and that the Bonds shall be sold upon the terms and conditions set forth in the Purchase Contact and upon the basis of the representations therein set forth. The Council further finds and determines that all conditions precedent to or concurrent with the acceptance of the Purchase Contract by the Council have been met. The Council hereby accepts the Purchase Contract and hereby authorizes and directs the Director of Finance and Budget to execute the Purchase Contract and deliver it to the Purchaser. The Bonds shall be issued and delivered to the Purchaser upon payment of the purchase price specified in the Purchase Contract, plus accrued interest from their date to the date of their delivery. Section 3. Schedule of Maturities and Interest Rates. The Bonds shall mature on December 1 of the following years in the following amounts and shall bear interest as follows: Maturity Date Amount Rate 1996 $ 65,000 4.000% 1997 210,000 4.000% 1998 215,000 4.150% 1999 225,000 4.350% 2000 235,000 4.500% 2001 250,000 4.600% 2002 260,000 4.600% 2003 270,000 4.650% 2004 290,000 4.750% 2005 300,000 4.850% 2006 315,000 5.000% 2007 -6- 335,000 5.100% 2008 350,000 5.200% Section 4. Optional Redemption. The Bonds maturing in the years 1996 through 2006 shall not be subject to redemption prior to their stated maturity dates. The Bonds maturing on or -2- J:1FW 1M25739 -00.029W 3R4LW. DOC after December 1, 2007, shall be subject to redemption prior to their stated maturities at the option of the City on and after December 1, 2006, in whole or in part at any time (maturities to be selected by the City and by lot within a maturity), at 100% of the principal amount thereof plus accrued interest to the date of redemption. Section 5. Execution and Delivery of the Bonds. The proper officers of the Council and the Director of Finance and Budget of the City are hereby authorized and directed to do all things necessary or proper for the printing, execution and delivery of the Bonds to the Purchaser in accordance with the terms of the Purchase Contract and Ordinance No. 96-40, as well as this resolution, and for the proper application and use of the proceeds of such sale. Section 6. Official Statement; Use of Documents. The Director of Finance and Budget is authorized and directed to execute and deliver to the Purchaser copies of an Official Statement in substantially the form of the Preliminary Official Statement dated October 4, 1996; provided, however, that the Director of Finance and Budget is authorized to supplement or amend the Official Statement as the Director of Finance and Budget, with the approval of bond counsel to the City, deems necessary or appropriate. The Council represents and warrants to the Purchaser that the Preliminary Office Statement is "deemed final" by the City as of the date hereof within the meaning of paragraph 17 C.F.R. § 240.15c2-12 promulgated by the Securities and Exchange Commission ("Rule 15c2-12"), except for the omission of such information as may be permitted by Rule 15c2-12. The Council approves and authorizes the use of such Official Statement (including any such supplements and amendments thereto) in connection with the public offering and sale of the Bonds by the Purchaser. Section 7. Refunding Account. There is hereby authorized and established a special account of the City to be maintained with the Refunding Agent to be known as the "City of Yakima 1996 Refunding Account" (the "Refunding Account"), which account shall be drawn upon for the sole purpose of paying the principal of and interest on the Refunded Bonds maturing -3- J:WW W257'JQ00.028103R4LW. DOC after 1996 and of paying costs related to issuance of the Bonds and refunding such Refunded Bonds. Money in the Refunding Account shall be used immediately upon receipt thereof to defease such Refunded Bonds and discharge the other obligations of the City relating thereto under Ordinance No. 2231 of the City, by providing for the payment of the principal of and interest on the Refunded Bonds maturing after 1996 as set forth below. The City shall defease such bonds and discharge such obligations by the use of money in the Refunding Account to purchase certain "Government Obligations," as such obligations are defined in Chapter 39.53 RCW as now or hereafter amended (which obligations so purchased, are herein called "Acquired Obligations"), bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of: (a) the interest on the Refunded Bonds maturing after 1996 due and payable on December 1, 1996; (b) the redemption price (100% of the principal amount) payable on December 1, 1996, of the Refunded Bonds maturing after 1996. Such Acquired Obligations shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding bond issues. In order to carry out the refunding and defeasance of the Refunded Bonds, the Finance Director is hereby authorized to appoint as escrow agent a bank or trust company qualified by law to perform the duties described herein (the "Refunding Agent"). Any beginning cash balance and the Acquired Obligations shall be irrevocably deposited with the Refunding Agent in an amount sufficient to defease and redeem the Refunded Bonds maturing after 1996 in accordance with this resolution. Any amounts described in subparagraphs (a) through (b) of this section that are not provided for in full by such beginning cash balance and the purchase and deposit of the Acquired -4-. J:1FW W125739 00.028103R4LW. DOC Obligations described in this section shall be provided for by the irrevocable deposit of the necessary amount out of the proceeds of sale of the Bonds or any other money of the City legally available therefor with the Refunding Agent. The proceeds of the Bonds remaining in the Refunding Account after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired Obligations and the costs of issuing the Bonds. The City may, from time to time, transfer, or cause to be transferred, from the Refunding Account any money not thereafter required for the purposes set forth in subparagraphs (a) through (b) above, subject to verification in writing by an independent certified public accountant that such transfer will not result in inadequate funds being available to make the required payments therefrom. Section 8. Redemption of Refunded Bonds. The City hereby irrevocably sets aside sufficient funds through the purchase of Acquired Obligations and an initial cash deposit to make the payments specified in subparagraphs (a) through (b) of Section 7 above. The City hereby irrevocably calls for redemption on December 1, 1996, the Refunded Bonds maturing after 1996 in accordance with the provisions of Ordinance No. 2231. Said defeasance and call for redemption of such Refunded Bonds shall be irrevocable after the final establishment of the Refunding Account and delivery of the Acquired Obligations and the requisite cash deposit, if any, to the Refunding Agent. The Refunding Agent is hereby authorized and directed to notify the fiscal agent to give notice of the redemption of such Refunded Bonds in accordance with the applicable provisions of Ordinance No. 2231. The Director of Finance and Budget is authorized and requested to provide whatever assistance is necessary to accomplish such redemption and the giving of notice therefor. The costs of publication of such notice shall be an expense of the City. The Refunding Agent is hereby authorized and directed to pay to the fiscal agency or agencies of the State of Washington, sum sufficient to pay, when due, the payments specified in subparagraphs (a) through (b) of Section 7 above. All such sums shall be paid from the money -5- J: FW W125730-00.026 O3RQW.DOC and Acquired Obligations deposited with said Refunding Agent pursuant to Sections 7 and 8 of this resolution, and the income therefrom and proceeds thereof. All such sums so paid shall be credited to the Refunding Account. All money and Acquired Obligations deposited with said bank and any income therefrom shall be held, invested and applied in accordance with the provisions of this resolution and with the laws of the State of Washington for the benefit of the City and owners of such Refunded Bonds. The City will take such actions as are found necessary to see that all necessary and proper fees, compensation and expenses of the Refunding Agent shall be paid when due. The proper officers and agents of the City are directed to obtain from the Refunding Agent an agreement setting forth the duties, obligations and responsibilities of the Refunding Agent in connection with the redemption and retirement of such Refunded Bonds as provided herein and making provision for payment of the fees, compensation and expenses of such Refunding Agent as may be satisfactory to it. Such agreement shall be in substantially the form set forth in Exhibit A attached to this resolution and incorporated herein by this reference. The Director of Finance and Budget is authorized to execute and deliver such agreement on behalf of the City. Section 9. Findings of Savings and Defeasance. The Council hereby finds and determines that the issuance and sale of the Bonds at this time will effect a savings to the City and its taxpayers. In making such finding and determination, the Council has given consideration to the interest on and the fixed maturities of the Bonds and such Refunded Bonds, the costs of issuance of the Bonds and the known earned income from the investment of the proceeds of sale of the Bonds pending redemption and payment of such Refunded Bonds. The Council hereby also finds and determines that the Acquired Obligations to be deposited with the Refunding Agent and the income therefrom, together with any necessary beginning cash balance, are sufficient to redeem such Refunded Bonds and will discharge and satisfy the obligations of the City under the ordinance authorizing the issuance of such Refunded Bonds and the pledges of the City therein. Immediately upon the delivery of such Acquired -6- J:FW IA257 9.00.o2o3Ruw.DOC • Obligations to the Refunding Agent and the deposit of any necessary beginning cash balance, such Refunded Bonds shall be deemed not to be outstanding under Ordinance No 2231 of the City and shall cease to be entitled to any lien, benefit or security under such ordinance except the right to receive payment from the Acquired Obligations and beginning cash balance so set aside and pledged. Section 10 1992 Loan Agreement. The obligations of the City pursuant to its loan agreement with the State of Washington Department of Ecology entered into pursuant to Ordinance No 3454 of the City, passed on May 19, 1992, shall be Second Lien Parity Bonds for all purposes, pursuant to Ordinance No. 3454 and Ordinance No. 96-40 Section 11 Ratification of Past Acts. All actions and proceedings heretofore taken by the officers, agents, attorneys and employees of the City in connection with the issuance and sale of the Bonds are hereby ratified, approved and confirmed. Section 12. Book Entry Form and Bond Insurance. The provisions of Exhibit B, relating to the use of book entry form registration for the Bonds and to bond insurance, are incorporated by reference herein. Section 13 Effective Date. This resolution shall be in effect from and after its adoption in accordance with law ADOPTED at a regular meeting of the City Council of the City of Yakima this 15th day of October, 1996 ATTEST IGuks-,J c -y1-1 c --- City Clerk APPROVED AS TO FORM. CITY OF YAKIMA, WASHINGTON By HN PUCCINELLI, ASSISTANT MAYOR -7- J Www aao.oa aw.DOC City Attorney -8- J:1FWW125739-00.029103R4L W. DOC EXHIBIT A ESCROW AGREEMENT THIS ESCROW AGREEMENT, made and entered into as of the day of November, 1996, by and among the City of Yakima, Washington (the "City") and Mellon Bank, Seattle, Washington (the "Refunding Agent"); WITNES SETH: Section 1. Recitals. The City has heretofore issued and sold its Water and Sewer Revenue Bonds, 1978 pursuant to Ordinance No. 2231. The City by Ordinance No. 96940, passed May 7, 1996, and Resolution No. , passed on October 15, 1996 (together the "Ordinance"), has determined to pay and redeem on December 1, 1996, the 1978 Bonds maturing after December 1, 1996, (the "Refunded Bonds") by the issuance of refunding bonds in the aggregate principal amount of $3,320,000 to be issued under date of October 1, 1996 (the "Bonds"). Reference is made to the Ordinance for a detailed description of the plan of refunding. Section 2. Provisions for Refunding the Refunded Bonds. To accomplish the refunding of the Refunded Bonds in the manner set forth in the Ordinance, the City hereby agrees that, simultaneously with the issuance and delivery of the Bonds, it will irrevocably deposit with the Refunding Agent, in trust for the security and benefit of the owners of the Refunded Bonds, obligations or evidence thereof or subscription rights thereto ("Acquired Obligations") as described in Annex A attached hereto, and a beginning cash balance of $ , sufficient to provide for the payment of: (a) the interest on the Refunded Bonds due and payable on December 1, 1996; and (b) the redemption price (100% of the principal amount) payable on December 1, 1996, of the Refunded Bonds. Such Acquired Obligations shall be paid for out of the proceeds of sale of the Bonds and out of other moneys of the City now on hand and available. On or before the delivery of the Bonds to the initial purchaser thereof, the City agrees that it will cause to be ilvered to the Refunding Agent statements setting forth the maturity schedule of the Refunded Bonds by CUSIP number, amount, date of maturity and interest rates, the amount of interest to be paid on each semiannual interest payment date, and the amount of the principal to be paid on the date that the Refunded Bonds are to be redeemed. The City by the Ordinance has directed to be set aside sufficient money to purchase Acquired Obligations that will be used to pay interest on the Refunded Bonds as the same falls due. The City by the Ordinance has irrevocably called the Refunded Bonds for redemption and -9- J:1FW W12573a00.028b3R4LW.DOC prepayment on their respective call dates. Said provisions for defeasance, payment, redemption and prepayment of the Refunded Bonds shall be irrevocable upon the final establishment of the escrow account and delivery of the Acquired Obligations to the Refunding Agent. The Refunding Agent, in concert with the Finance Director of the City, shall provide for publication and mailing of the proper notices of such redemption and prepayment in accordance with the provisions of the Ordinance. The cost of such publication and mailing shall be paid by the City. Section 3. Investments and Disbursements. The City reserves the right at or prior to delivery of the Bonds to substitute for a temporary period until receipt of Acquired Obligations on Annex A other direct United States obligations or cash for any of the Acquired Obligations if (a) in the opinion of Preston Gates & Ellis, bond counsel for the City, the Bonds will remain exempt from federal income taxation under Section 103 of the Internal Revenue Code of 1986, as amended, and (b) such substitution shall not impair the timely payment of the amounts required to be paid under the plan of refunding specified in- Section 2 hereof. Acquired Obligations substituting for securities held, when received, will be received free with income accrued from the date of closing and delivery of the Bonds. Upon that event, the substituted securities will be returned to the supplier with accrued interest or any interest received. The Refunding Agent shall present for payment on the due dates thereof any Acquired Obligations so deposited with it and shall apply the proceeds derived therefrom and the interest paid thereon in accordance with the provisions of the Ordinance and this agreement. Money shall be transferred, in a timely manner, by the Refunding Agent to the fiscal agency or agencies of the State of Washington, as paying agent and registrar of the Refunded Bonds (the "Bond Registrar"), in amounts sufficient for the payments specified in subparagraphs (a) and (b) of Section 2 of this agreement. Section 4. Custody and Safekeeping of Obligations and Notice of Insufficiency. On or before January 20, 1997, the Refunding Agent shall render a statement as of the last day of the prior month to the Bond Registrar and City, which statement shall set forth the cash and Acquired Obligations held by the Refunding Agent, any of such Acquired Obligations that have matured and the amounts received by the Refunding Agent by reason of such maturity, the interest earned on any of such Acquired Obligations, a list of any investments or reinvestments made by the Refunding Agent in other obligations and the interest and/or principal derived therefrom, the amounts of cash delivered to the Bond Registrar and the dates of the use thereof for the payment of the principal of and interest on the Refunded Bonds as the same shall become due and payable, and any other transactions of the Refunding Agent pertaining to its duties and obligations as set forth herein. All Acquired -Obligations, money and investment income deposited with or received by the Refunding Agent pursuant to this agreement shall be trust funds for the specific purposes set forth herein and may not be used for any other purpose. The Refunding Agent shall be liable for the preservation and safekeeping thereof; provided, however, it shall not be responsible for any depreciation in value of any of the Acquired Obligations. In the event the maturing principal of and interest on the Acquired Obligations and other money held by the Refunding Agent pursuant to this agreement shall be insufficient or shall be -10- J:IFWW125739-00.026103RILW.DOC projected to become insufficient at any time in the future to make a payment described in Section 2, the Refunding Agent shall give the City prompt notice of such insufficiency or projected insufficiency. Section 5. Duties and Obligations of the Refunding Agent. The duties and obligations of the Refunding Agent shall be as prescribed by the provisions of this agreement and the Ordinance, and the Refunding Agent shall not be liable except for the performance of its duties and obligations as so specifically set forth and to act in good faith in the performance thereof, and no implied duties or obligations shall be incurred by the Refunding Agent other than those specified herein. The Refunding Agent may consult with counsel of its choice, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or not taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. If any controversy arises between the parties hereto, the Refunding Agent shall not be required to determine the same, but it may, in its discretion, institute such interpleader or other proceedings in connection therewith as it may deem proper, and in following either course, it shall not be liable, except as provided above. Nothing in this paragraph is intended to create or expand upon any right that the Refunding Agent would otherwise have available to it under applicable law to commence an interpleader action or to alter the obligations of the Refunding Agent under this Escrow Agreement. Section 6. Compensation of Refunding Agent. The arrangements heretofore made for the payment to the Refunding Agent of the sum of $ for services rendered by it (except for costs of publication of redemption notices) pursuant to the provisions of this agreement are satisfactory to it, and such payment is inclusive of all fees, compensation and expenses of the Refunding Agent. Such arrangement for compensation and expenses is intended as compensation for the ordinary services as contemplated by this agreement, and in the event that the Refunding Agent renders any service hereunder not provided for in this agreement, or the Refunding Agent is made a party to or intervenes in any litigation pertaining to this agreement or institutes interpleader proceedings relative hereto, the Refunding Agent shall be compensated reasonably by the City for such extraordinary services and reimbursed for all fees, costs; liability and expenses (including reasonable attorneys' fees) occasioned thereby. In no event shall the Refunding Agent be entitled to payment of any fee or cost out of, or ever assert any lien against, the money or securities held by it -in trust hereunder. Section 7. Surplus Money in Escrow. If at any time during the term of the escrow created pursuant to this agreement, there are Acquired Obligations, Substitute Obligations and/or money held by the Refunding Agent in excess of that required to make all of the payments described in Section 2 in accordance with the initial verification or any subsequent verification furnished to the Refunding Agent, when due, considering the earnings to be realized on the investment of such obligations, and the City requests that such surplus obligations or the proceeds -11- J:1FW W125730.00.028103R4LW.DOC thereof or such surplus money be returned by the Refunding Agent to the City or requests that such surplus be applied to any fees of the Refunding Agent, then the Refunding Agent shall do so at the times requested by the City. Before the return of any surplus to the City, the Refunding Agent may require the City to furnish the Refunding Agent a verification or opinion of the amount of such surplus satisfactory to the Refunding Agent. Section 8. Limitation of Refunding Agent Duties. None of the provisions contained in this agreement shall require the Refunding Agent to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. The Refunding Agent shall be under no liability for the payment of interest on any funds or other property received by it hereunder except to the extent the Refunding Agent is required by the express terms of this agreement to invest such funds. The Refunding Agent's liabilities and obligations in connection with this agreement are confined to those specifically described herein. The Refunding Agent is authorized and directed to comply with the provisions of this agreement and is relieved from all liability for so doing notwithstanding any demand or notice to the contrary by any party hereto. The Refunding Agent shall not be responsible or liable for the sufficiency, correctness, genuineness or validity of the Acquired Obligations deposited with it; the performance or compliance by any party other than the Refunding Agent with the terms or conditions of any such instruments; or any loss which may occur by reason of forgeries, false representations or the exercise of the Refunding Agent's discretion in any particular manner unless such exercise is negligent or constitutes willful misconduct. Section 9. Remission of Funds When Refunded Bonds are Paid in Full. At such time as the Refunding Agent shall have completed all of the payments described in Section 2, the Refunding Agent shall remit to the City any remaining Acquired Obligations, any Substitute Obligations and money held pursuant to this agreement. Section 10. Trust Fund. The Refunding Agent shall at all times hold the escrow account, the Acquired Obligations and all other assets of the escrow account wholly segregated from all other funds and securities on deposit with the Refunding Agent; it shall never allow the Acquired Obligations or any other assets of the escrow account to be commingled with any other funds or securities of the Refunding Agent and it shall hold and dispose of the assets of the escrow account only as set forth herein. The Acquired Obligations and other assets of the escrow account shall always be maintained by the Refunding Agent as trust funds for the benefit of the owners of the Refunded Bonds; and a special account thereof shall at all times be maintained on the books of the Refunding Agent. The owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the escrowed securities, the proceeds thereof, and all other assets of the escrow account to which they are entitled as owners of the Refunded Bonds. The amounts received by the Refunding Agent under this agreement shall not be considered as a banking deposit by the City, and the Refunding Agent shall have no right to any lien or title with respect thereto except as a trustee and agent under the terms of this agreement. The amounts received by -12- 3:1FWW 2573400.028103R4LW.DOC the Refunding Agent under this agreement shall not be subject to warrants, drafts or checks drawn by the City or, except to the extent expressly herein provided, by the Bond Registrar. Section 11. Notices. All notices, requests or reports required or permitted to be given hereunder shall, until further notice in writing, be given in writing at the following addresses: To the City: City of Yakima 129 No. 2nd Street Yakima, Washington 98901 Attention: Director of Finance and Budget To the Refunding Agent: Mellon Bank 1111 - 3rd Avenue Seattle, WA 98101 Attention: Corporate Trust Section 12. Miscellaneous. This agreement is governed by Washington law and may not be modified except in writing signed by the parties. In the event any one or more of the provisions contained in this agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this agreement, but this agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. IN WITNESS WHEREOF, the parties have executedand delivered this agreement pursuant to due and proper authorization, all as of the date and year first above written. -13- CITY OF YAKJMA, WASHINGTON By /s/ Director of Finance and Budget MELLON BANK By /s/ Title: J:IFWW 2579a0Q028103R/LW.DOC EXHIBIT B Book Entry Form. The Bonds initially shall be held in fully -immobilized form by the Depository Trust Company ("DTC") acting as depository pursuant to the terms and conditions set forth in the form of letter of representations now on file with the City. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City shall execute and deliver a letter of representations. The Director of Finance & Budget is hereby authorized to execute the letter of representations in the form attached with such changes as may hereafter be approved by such officer, and such approval shall be conclusively presumed by such officer's execution thereof. The Bonds shall be issued in denominations equal to the aggregate principal amount of each maturity and initially shall be registered in the name of CEDE & Co., as the nominee of DTC. Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the accuracy of any records maintained by DTC or any DTC participant as to the Bonds, the payment by DTC or any DTC participant of any amount in respect of the principal or redemption price of or interest on the Bonds, any notice that is permitted or required to be given to registered owners under this resolution (except any such notices as shall be required to be given by the City to the Bond Registrar or to DTC), the selection by DTC or any DTC participant of any person to receive payment in the event of a partial redemption of the Bonds or any consent given or other action taken by DTC as the registered owner of the Bonds. For so long as any Bonds are held in fully -immobilized form hereunder, DTC or its successor depository shall be deemed to be the registered owner for all purposes hereunder, and all references in this resolution to registered owners, bondowners or the like shall mean DTC or its nominee and shall not mean the owners of any beneficial interests in the Bonds. A. The Bonds shall be registered initially in the name of "CEDE & Co.," as nominee of DTC, with one Bond maturing on each of the maturity dates set forth in the purchase contract for the Bonds in a denomination corresponding to the total principal amount therein designated to mature on such date. Purchases of the Bonds may be made through brokers and dealers, who must be or act through participants in DTC, in principal amounts of $5,000 and integral multiples thereof. Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be transferred except (i) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) to any substitute depository appointed by the City pursuant to subsection B below or such substitute depository's successor; or (iii) to any person as provided in subsection D below. B. Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository, or a determination by the City that it is no longer in the best interests of owners of beneficial interests in the Bonds to continue the system of book -entry transfers through DTC or its successor (or any substitute depository or its successor), the City may appoint a substitute depository or terminate the use of a depository. Any such -14- J:WFW 25739.00.028103R4LW.DOC substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. C. In the case of any transfer pursuant to clause (i) or (ii) of subsection A above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf' of the City, issue a single new Bond for each maturity of such Bonds then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the City. D. In the event that (i) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository or (ii) the City determines that it is in the best interests of the City or the beneficial owners of the bonds that they be able to obtain bond certificates, the ownership of Bonds may then be transferred to any person or entity as herein provided, and the Bonds shall no longer be held in fully -immobilized form. The City shall deliver a written request to the Bond Registrar together with a supply of definitive Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt of all then outstanding Bonds by the Bond Registrar together with a written request on behalf of the City to the Bond Registrar, new Bonds shall be issued in such denominations and registered in the names of such persons as are specified in such written request. E. As long as DTC or its successor (or substitute depository or its successor) is not the registered owner of the Bonds, any Bond may be transferred pursuant to its provisions at the principal office for such purpose of the Bond Registrar by surrender of such Bond for cancellation, accompanied by a written instrument of transfer, in form satisfactory to the Bond Registrar, duly executed by the registered owner in person or by his duly authorized attorney, and thereupon the City will issue and the Bond Registrar will authenticate and deliver at the principal office of the Bond Registrar (or send by registered or first class insured mail to the owner thereof at his expense), in the name of the transferee or transferees, a new Bond of the same interest rate, principal amount and maturity, and on which interest accrues from the last interest payment date to which interest has been paid so that there shall result no gain or loss of interest as a result of such transfer, upon payment of any applicable tax or governmental charge. To the extent of denominations authorized in respect of any such Bond by the terms of this resolution, one such Bond may be transferred for several such Bonds of the same interest rate and maturity, and for a like aggregate principal amount, and several such Bonds of the same interest rate and maturity may be transferred for one or several such Bonds, respectively, of the same interest rate and maturity and for a like aggregate principal amount. Upon the request of the City, the Bond Registrar shall notify the City of all registrations of Bonds and all changes in registrations of Bonds. As provided in Ordinance No. 96-40, the Bond Registrar shall maintain the registration books on behalf of the City and make copies thereof available to the City on request. In every case of a transfer of any Bonds, the surrendered Bonds shall be canceled by the Bond Registrar and a certificate evidencing such cancellation shall be promptly transmitted by the -15- J: FWW257'3900.028103R4LW.DOC Bond Registrar to the City. As a condition of any such transfer, the City, at its option, may require the payment by the transferor or a sum sufficient to reimburse it for any tax or other governmental charge that may be imposed thereon. All Bonds executed, authenticated and delivered in exchange for or upon transfer of Bonds so surrendered shall be valid obligations of the City evidencing the samedebt as the Bonds surrendered, and shall be entitled to all the benefits and protection of this resolution to the same extent as the Bonds upon transfer of which they were executed, authenticated and delivered. Bond Insurance. As used herein, the term "Bond Insurance Policy" means the municipal bond insurance policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds. The term "Bond Insurer" means Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto. The Bond Insurer shall be deemed to be the sold holder of the Bonds insured by it for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to Articles VIII through X of Ordinance No. 96-40 (the "Ordinance"). No amendment or supplement to the Ordinance or this resolution may become effective except upon obtaining the prior written consent of the Bond Insurer. Copies of any modification or amendment to the Ordinance or this Resolution shall be sent to Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc., at least 10 days prior to the effective date thereof. The rights of the Bond Insurer to direct or consent to City or Bondholder actions under the Ordinance shall be suspended during any period in which the Bond Insurer is in default in its payment obligations under the Bond Insurance Policy (except to the extent of amounts previously paid by the Bond Insurer and due and owing to the Bond Insurer) and shall be of no force or effect in the event the Bond Insurance Policy is no longer in effect or the Bond Insurer asserts that the Bond Insurance Policy is not in effect or the Bond Insurer shall have provided written notice that it waives such rights. The rights granted to the Bond Insurer under the Ordinance to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Bond Insurance Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of the Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Bond Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Bond Insurer. Amounts paid by the Bond Insurer under the Bond Insurance Policy shall not be deemed paid for purposes of the Ordinance and shall remain Outstanding and continue to be due and owing until paid by the City in accordance with the Ordinance. The Ordinance shall not be discharged unless all amounts due or to become due to the Bond Insurer have been paid in full. Claims Upon the Bond Insurance Policy and payments by and to the Bond Insurer shall be made as follows: If, on the third business day prior to the related scheduled interest payment date or principal payment date ("Payment Date") there is not on deposit in the Bond Fund with the paying agent, after making all transfers and deposits required under the Ordinance; moneys sufficient to pay the principal of and interest on the Bonds due on such payment date, the City -16- J:IFWW125739.00.028103R41 W.DOC shall give notice to the paying agent, to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent') by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such business day. If, on the second business day prior to the related payment date, there is a deficiency in the amount available to pay the principal of and interest on the Bonds due on such payment date, the paying agent shall make a claim under the Bond Insurance Policy and give notice to the Bond Insurer and the Insurer's Fiscal Agent' (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of notice of claim and certificate delivered with the Bond Insurance Policy. The paying agent shall keep a complete and accurate record of all funds deposited by the Bond Insurer into a policy payment account and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the paying agent. Upon payment of a claim under the Bond Insurance Policy the paying agent shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the paying agent shall have exclusive control and sole right of withdrawal. The paying agent shall receive any amount paid under the Bond Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the paying agent to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the Sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Funds held in the Policy Payments Account shall not be invested. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Bond Insurer. The Bond Insurer shall, to the extent it makes any payment of principal of or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy. The Bond Insurer shall be entitled to pay principal or interest on the Bonds that shall become due for payment but shall be unpaid by reason of nonpayment by the City (as such terms as defined in the Bond Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with this Bond Ordinance, whether -or not the Bond Insurer has received a Notice (as defined in the Bond Insurance Policy) of nonpayment or a claim upon the Bond Insurance Policy. The notice address of the Bond Insurer is: Financial Security Assurance, Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director -- Surveillance -- Re: Policy No. Telephone: (212) 826-0100; Telecopier: )212) 339-3529. In each case in which notice or other communication shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication shall also be sent to the attention of General Counsel and shall be marked to indicate "Urgent Material Enclosed." -17- J:IFWVV125739-00.028W3R4LW.DOC The Bond Insurer shall be provided with the following information: (a) Annual audited financial statements within 280 days after the end of the City's fiscal year and the City's annual budget within 180 days after the approval thereof or sooner if available; (b) Notice of any draw upon the Reserve Account within two business days after knowledge thereof other than (i) withdrawals of amounts in excess of the debt service reserve requirement and (ii) withdrawals in connection with a refunding of Bonds; (c) Notice of any default known to the paying agent within five business days after knowledge thereof; (d) Prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (e) Notice of the resignation or removal of the paying agent or bond registrar and the appointment of, and acceptance of duties by, any successor thereto; (f) the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (g) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; (h) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Ordinance; and (i) Ordinance. All reports, notices and correspondence to be delivered under the terms of the Notwithstanding satisfaction of other conditions to the issuance of additional bonds contained in the Ordinance, no such issuance may occur should any Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless -such default shall be cured upon such issuance. -18- J:1FW W125739-00.028103R41W.DOC Blanket Issuer Letter of Representations [Tc be Completed by Issuer] City of Yakima, Washington [Name of Issuer; Attention: Underwriting Department — Eligibility The Depository Trust Company 35 Water Street; 50th Floor New York, NY 10041-0099 Date Ladies and Gentlemen: This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer shall request be made eligible for deposit by The Depository Trust Company ("DTC"). To induce DTC to accept the Securities as eligible for deposit at DTC, and to act in accordance with DTC's Rules with respect to the Securities, Issuer represents to DTC that Issuer will comply with the requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. Note: Very truly yours, Schedule A contains statements that DTC believes accurately describe DTC, the method of effectingbook- entry transfers of securities distributed through DC, and certain related matters. City of Yakima By: (Issuer) (Authorized officer's Signature) Received and Accepted: John R. Hanson, Director of Finance & Budget (Typewrite Name & Title) THE DEPOSITORY TRUST COMPANY 129 North 2nd (Street Address) Bv: Yakima, WA 98901 (City) tState) (Zip( (509) 575-6070 (Phone Number) SCHEDULE A SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK -ENTRY -ONLY ISSUANCE (Prepared by DTC—bracketed material may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede Sr Co. (DTC's partnership nominee). One fully -registered Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds S200 million, one certificate will be issued with respect to each S200 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, excrpt in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications b% DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. [6. Redemption notices shall be sent to Cede & Co. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. will consent or vote with respect to Securities. Under its usual procedures. DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Principal and interest payments on the Securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to the [Tender/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to the [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with a demand for purchase or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records.] 10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonable notice to the Issuer or the Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and delivered. 11. The Issuer may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities -depository). In that event, Security certificates will be printed and delivered. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. CERTIFICATE I, the undersigned, Clerk of the City of Yakima, Washington (the "City"), and keeper of the records of the City Council (herein called the "Council"), DO HEREBY CERTIFY: 1. That the attached Resolution No. is a true and correct copy of a resolution of the City Council, as finally adopted at a regular meeting of the Council held on the 15th day of October, 1996, and duly recorded in my office. 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 said Resolution; that all other requirements and proceedings incident to the proper adoption of said Resolution have been fully 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 15th day of October, 1996. City Clerk ' (SEAL) BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 1 1 For Meeting Of 10/15/96 ITEM TITLE: Resolution of the City Council of Yakima, Washington approving acceptance of a proposal from the City's underwriters, Seattle Northwest Securities, for the purchase of Water/Sewer Revenue Refunding Bonds of the City of Yakima, in a principal amount of $3,320,000, and fixing the interest rate o such bonds. SUBMITTED BY: Department of Finance & Budget CONTACT PERSON/TELEPHONE: John Hanson, Director of Fi► -nce : B : get 575-6070 Tim Jensen, Acca • to 6-6639 SUMMARY EXPLANATION: On May 21,1996 the City Council passed ordinance 96-40 authorizing the Finance Department to issue Water/Sewer refunding bonds at such time in the future when our savings goals could be realized. The Department had set 5% savings of the refunded bonds as a minimum target. On October 1, a window period opened allowing a current refunding (the most desirable type) to be accomplished. Coincidentally, interest rates suddenly, and temporarily we believe, moved lower. We therefore proceeded with the refunding, selling the bonds on Thursday October 11. The sale produced savings of 6.54% of the refunded bonds. Total savings to the City will be just over 207,000 at present value. The refunding (new) bonds carry a net interest cost of 5.01%, have a final maturity in 2008, and are second lien debt to the system. Resolution X Ordinance Contract X Other (Specify) Purchase offer from Seattle Funding Source N/A Northwest Securities APPROVED FOR SUBMITTAL: IV' nager STAFF RECOMMENDATION: Approve Resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: The Resolution was adopted. Resolution No. R-96-141 TO: FROM: SUBJECT: MEMORANDUM OCTOBER 15, 1996 The Honorable Mayor and Members of the City council Dick Zais, City Manager John Han Tim Je n, Acco ant finance and Budget City Council Item #17, October 15, 1997 Re: Sale/Purchase Water/Sewer Refunding Bonds After analyzing the cost/benefit of insuring our $3.320 million Water/Sewer Refunding Bonds, the City's underwriter, Seattle Northwest Securities, has recommended we insure this bond issue. Since Orange County's bankruptcy most all municipal debt issued, including the City's, has been insured regardless of the underlying credit rating. The cost is already included in the purchase offer before you. To accomplish this the insurer, Financial Security Assurance, Inc., requires additional language in the City's purchase offer resolution being considered by Council today. The City's Bond Counsel, Preston, Gates & Ellis, has prepared the additional language and a copy of the entire revised resolution is attached, including "new" Exhibit B. The modifications relate to the form the bonds will take (book entry), which will eliminate the cost of printing bonds, and the addition of the insurance company to the list of organizations receiving annual financial data. Neither the purchase offer from Seattle Northwest Securities or the form of the bond ordinance passed in May will change. Please replace the resolution in your packet with this updated version. Thank you! TD -17 TJ.1