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
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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
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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
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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
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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
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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
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City Attorney
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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
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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
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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
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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
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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.
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CITY OF YAKJMA, WASHINGTON
By /s/
Director of Finance and Budget
MELLON BANK
By /s/
Title:
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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
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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
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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
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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."
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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.
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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