HomeMy WebLinkAboutR-2003-086 SunDome Expansion Bonds / 1994 Refunding BondsRESOLUTION NO. R- 2003 - 86
A RESOLUTION of the City Council of the City of Yakima,
Washington, approving a proposal for the purchase of
limited tax general obligation and refunding bonds of the
City in the principal amount of $5,585,527.65 and fixing
the terms and insurance for such bonds.
WHEREAS, the City of Yakima, Washington (the "City"), by Ordinance No. 2003-24
passed on May 6, 2003 (the "Ordinance"), authorized the issuance of limited tax general
obligation and refunding bonds of the City in the aggregate principal amount of not to exceed
$6,000,000 (the "Bonds") to provide funds to finance certain improvements to the SunDome and
to refund certain outstanding Limited Tax General Obligation Bonds, 1994; and
WHEREAS, the proposal of Seattle -Northwest Securities Corporation to purchase the
Bonds has been received in accordance with Ordinance No. 2003-24, and it is in the best interest
of the City that the Bonds be sold on the terms set forth in such proposal and as provided in
Ordinance No. 2003-24 and this resolution; and
WHEREAS, Ordinance No. 2003-24 provides that the City shall approve the interest
rates, maturity amounts, redemption provisions, and certain other terms of such Bonds, by
resolution;
NOW, THEREFORE, the City of Yakima does resolve:
Section 1. Bond Terms. The Bonds shall be issued in two series designated Limited
Tax General Obligation Bonds, 2003 Series A (the "Series A Bonds") and the Limited Tax
General Obligation Refunding Bonds, 2003, Series B (the "Series B Bonds"). The Series A
Bonds shall be in the initial principal amount of $1,430,527.65 (with an Accreted Value at
Maturity of $2,500,000) and the Series B Bonds shall be in the principal amount of $4,155,000.
The Bonds shall be fully registered as to both principal and interest, and shall be numbered
separately in such manner and with any additional designation as the Bond Registrar deems
necessary for purposes of identification.
The Series A Bonds shall be dated as of their date of delivery to the initial purchasers,
shall mature on December 1 in the years and have the Accreted Values at Maturity as set forth
below, and shall bear interest payable at maturity at the yield to maturity set forth below,
compounded semiannually from date of issue on each June 1 and December 1 (in amounts per
$5,000 of Accreted Value at Maturity determinable by reference to the Accreted Value Table set
forth in Appendix A).
Maturity Years
(December 1)
SERIES A BONDS
Accreted Value at Maturity - $2,500,000
Original
Principal Amount
Final Maturity
Amount
Yield
2007 $ 67,614.75 $ 75,000 2.34%
2008 64,860.75 75,000 2.68
2009 124,240.50 150,000 2.94
2010 118,125.00 150,000 3.23
2011 112,419.00 150,000 3.44
2015 387,979.20 630,000 3.93
2019 310,762.65 635,000 4.39
2023 244,525.80 635,000 4.72
The Series B Bonds shall be in the denomination of $5,000 each, or any integral multiple
thereof, provided no Bond shall represent more than one maturity, shall be dated June 1, 2003,
shall bear interest at the rates set forth below, payable on December 1, 2003, and semiannually
thereafter on the first days of each succeeding December and June and shall mature on
December 1, in years and amounts as set forth below:
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SERIES B BONDS
Maturity Year
(December 1) Amount Interest Rate
2003 $ 35,000 2.00%
2004 60,000 2.00
2005 415,000 2.00
2006 420,000 2.00
2007 425,000 2.00
2008 440,000 2.25
2009 450,000 2.50
2010 455,000 2.75
2011 470,000 3.00
2012 485,000 3.00
2013 500,000 3.125
Section 2. Redemption.
(a) Optional Redemption. The Bonds are not subject to optional redemption prior to
their schedule maturities.
(b) Mandatory Redemption. The Series A Bonds maturing in the years 2015, 2019
and 2023 shall be term bonds subject to mandatory redemption on December 1 in the following
years and in the original principal amounts set forth below, together with interest accrued to the
date fixed for redemption (in amounts per $5,000 of Accreted Value at Maturity determinable by
reference to the Accreted Value Table set forth in Appendix A herein):
Series A 2015 Term Bond
Original Final Maturity
Year Principal Amount Amount
*Final maturity.
2012 $ 101,613.60 $ 165,000
2013 98,534.40 160,000
2014 95,455.20 155,000
2015* 92,376.00 150,000
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Series A 2019 Term Bond
Original Final Maturity
Year Principal Amount Amount
*Final maturity.
2016 $ 83,196.30 $ 170,000
2017 78,302.40 160,000
2018 75,855.45 155,000
2019* 73,408.50 150,000
Series A 2023 Term Bond
Original Final Maturity
Year Principal Amount Amount
2020 $ 65,463.60 $ 170,000
2021 61,612.80 160,000
2022 59,687.40 155,000
2023* 57,762.00 150,000
*Final maturity.
Section 3. Sale of Bonds. The proposal of Seattle -Northwest Securities Corporation
to purchase the Bonds at the price and bearing the interest rates set forth in the purchase offer
attached hereto as Appendix B is hereby accepted and approved and the Bonds shall mature in
such amounts, at such times and shall bear interest rates as set forth therein. Appendix B is
hereby incorporated by reference as if fully set forth herein.
Section 4. Bond Insurance.
(a) Acceptance of Insurance. The City Council hereby approves the commitment of
MBIA Insurance Corporation (the "Insurer") to provide a policy of municipal bond insurance
guaranteeing the payment when due of principal of and interest on the Bonds (the "Bond
Insurance Policy"). The Director of Finance and Budget is hereby authorized to execute such
commitment on behalf of the City. The City Council further authorizes and directs all proper
officers, agents, attorneys and employees of the City to cooperate with the Insurer in preparing
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such additional agreements, certificates, and other documentation on behalf of the City,
consistent with the Bond Ordinance and this resolution, as shall be required by such commitment
or as shall be necessary or advisable in providing for the Bond Insurance Policy.
(b) Payments Under the Bond Insurance Policy. In the event that, on the payment
date of the Bonds, the City or the Bond Registrar determines that there will not be sufficient
money available in the Debt Service Fund to pay all principal of and interest on the Bonds due
on such payment date, the City or the Bond Registrar shall immediately notify the Insurer or its
designee on the same day by telephone or telegraph, confirmed in writing by registered or
certified mail, of the amount of the deficiency. If the deficiency is made up in whole or in part,
the Bond Registrar shall so notify the Insurer or its designee.
In addition, if the Bond Registrar has notice that any Bondholder has been required to
disgorge payments of principal or interest on the Bonds to a trustee in bankruptcy or creditors or
others pursuant to a final judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such Bondholder within the meaning of any applicable
bankruptcy laws, then the Bond Registrar shall notify the Insurer or its designee of such fact by
telephone or telegraphic notice, confirmed in writing by registered or certified mail.
The Bond Registrar is hereby irrevocably designated, appointed, directed and authorized
to act as attorney-in-fact for Bondholders as follows:
(1) If and to the extent there is a deficiency in amounts required to pay interest
on the Bonds, the Bond Registrar shall (a) execute and deliver to U.S. Bank Trust National
Association, or its successors under the Bond Insurance Policy (the "Insurance Paying Agent"),
in form satisfactory to the Insurance Paying Agent, an instrument appointing the Insurer as agent
for such Bondholders in any legal proceeding related to the payment of such interest and an
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assignment to the Insurer of the claims for interest to which such deficiency relates and which
are paid by the Insurer, (b) receive as designee of the respective Bondholders (and not as Bond
Registrar) in accordance with the tenor of the Bond Insurance Policy payment from the Insurance
Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to
such respective Bondholders; and
(2) If and to the extent of a deficiency in amounts required to pay principal of
any Bonds, the Bond Registrar shall (a) execute and deliver to the Insurance Paying Agent in
foim satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for
such Bondholder in any legal proceeding relating to the payment of such principal and an
assignment to the Insurer of any of the Bonds surrendered to the Insurance Paying Agent of so
much of the principal amount thereof as has not previously been paid or for which moneys are
not held by the Bond Registrar and available for such payment (but such assignment shall be
delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee
of the respective Bondholders (and not as Bond Registrar) in accordance with the tenor of the
Bond Insurance Policy payment therefor from the Insurance Paying Agent, and (c) disburse the
same to such Bondholders.
Payments with respect to claims for interest on and principal of Bonds disbursed by the
Bond Registrar from proceeds of the Bond Insurance Policy shall not be considered to discharge
the obligation of the City with respect to such Bonds, and the Insurer shall become the owner of
such unpaid interest and claims for the interest in accordance with the tenor of the assignment
made to it under the provisions of this subsection or otherwise.
Irrespective of whether any such assignment is executed and delivered, the City and the
Bond Registrar hereby agree for the benefit of the Insurer that:
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(1) They recognize that to the extent the Insurer makes payments directly or
indirectly (as by paying through the Bond Registrar), on account of principal of or interest on the
Bonds, the Insurer will be subrogated to the rights of such Bondholders to receive the amount of
such principal and interest for the City, with interest thereon as provided and solely from the
sources stated in the Ordinance, this resolution and the Bonds; and
(2) They will accordingly pay to the Insurer the amount of such principal and
interest (including principal and interest recovered under subparagraph (ii) of the first paragraph
of the Bond Insurance Policy, which principal and interest shall be deemed past due and not to
have been paid), with interest thereon as provided in the Ordinance, this resolution and the
Bonds, but only from the sources and in the manner provided herein for the payment of principal
of and interest on the Bond to Bondholders, and will otherwise treat the Insurer as the owner of
such rights to the amount of such principal and interest.
(c) Rights of Insurer.
(1) In connection with the issuance of additional general obligation bonds, the
City shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect
to such additional bonds.
(2) Copies of any amendments made to the documents executed in connection
with the issuance of the Bonds which are consented to by the Insurer shall be sent to Standard &
Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc.
(3)
The Insurer shall receive notice of the resignation or renewal of the Bond
Registrar and the appointment of a successor, other than the designated state fiscal agent.
(4) The Insurer shall receive copies of all notices required to be delivered to
Bondholders and, on an annual basis (or as soon as available from the office of the State Auditor)
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copies of the City's audited financial statements, and annual budget.
(5)
Any notice that is required to be given to a holder of Bonds or to the Bond
Registrar pursuant to the Ordinance and this resolution shall also be provided to the Insurer. All
notices required to be given to the Insurer under the Ordinance and this resolution shall be in
writing and shall be sent by registered or certified mail addressed to MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance.
(6) The City agrees to reimburse the Insurer immediately and unconditionally
upon demand, to the extent permitted by law, for all reasonable expenses, including reasonable
attorneys' fees and expenses, incurred by the Insurer in connection with (i) enforcement by the
Insurer of the City's obligations, or the preservation or defense of any rights of the Insurer, under
the Ordinance and this resolution and any other document executed in connection with the
issuance of the Bonds, and (ii) any consent, amendment, waiver or other action with respect to
the Ordinance and this resolution or any related document, whether or not granted or approved,
together with interest on all such expenses from and including the date incurred to the date of
payment at Citibank's Prime Rate plus 3% or the maximum interest rate permitted by law,
whichever is less. In addition, the Insurer reserves the right to charge a reasonable fee in
connection with its review of any such consent, amendment or waiver, whether or not granted or
approved.
The provisions of this section shall be in effect only so long as the Bond Insurance Policy
is in full force and effect.
Section 5. Official Statement. The City approves the preliminary official statement,
dated May 27, 2003, presented to the City Council and ratifies the Underwriter's distribution of
the preliminary official statement in connection with the offering of the Bonds. Pursuant to the
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Rule, the City deems the preliminary official statement as final as of its date except for the
omission of information dependent upon the pricing of the Bonds and the completion of the
purchase contract. The City agrees to cooperate with the Underwriter to deliver or cause to be
delivered, within seven business days from the date of the sale of the Bonds and in sufficient
time to accompany any confirmation that requests payment from any customer of the
Underwriter, copies of a final official statement in sufficient quantity to comply with
paragraph (b)(4) of the Rule and the rules of the MSRB. The City authorizes the Underwriter to
use the official statement, substantially in the form of the preliminary official statement, in
connection with the sale of the Bonds. The City Manager and the Director of Finance and
Budget are hereby authorized to review and approve on behalf of the City the final Official
Statement relative to the Bonds with such additions and changes as may be deemed necessary or
advisable to them.
Section 6. Disposition of Bond Proceeds; Refunding Plan.
(a) Refunding Plan. For the purpose of realizing a debt service savings, the City
Council proposes to apply the proceeds of the Series B Bonds for the purpose of providing for
the payment of the principal of and interest on all of the outstanding $3,870,000 of the 1994
Bonds maturing in the years 2005 through 2013 (the "Refunded Bonds"). The Refunded Bonds
shall be called for redemption at a price of 100% on December 1, 2004.
(b) Refunding Account. There is hereby authorized to be created in the Debt Service
Fund an account known as the "Refunding Account," which account is to be drawn upon for the
sole purpose of paying the principal of and interest on the Refunded Bonds until their respective
dates of redemption and of paying costs related to the refunding of the Refunded Bonds.
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The proceeds of sale of the Series B Bonds shall be credited to the Refunding Account.
Money in the Refunding Account shall be used immediately upon receipt to defease the
Refunded Bonds as authorized by the Ordinance and to pay costs of issuance. The City shall
defease the Refunded Bonds and discharge such obligations by the use of money in the
Refunding Account to purchase certain Government Obligations (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:
(1) interest on the Refunded Bonds due and payable through and including
December 1, 2004; and
(2) the redemption price of the Refunded Bonds (100% of the principal
amount thereof) on December 1, 2004.
Such Acquired Obligations shall be purchased for the Refunded Bonds at a yield not
greater than the yield permitted by the Code and regulations relating to acquired obligations in
connection with refunding bond issues.
(c)
Escrow Agent/Escrow Agreements. To carry out the refunding and defeasance of
the Refunded Bonds, the Director of Finance and Budget is hereby authorized to appoint as
escrow agent a bank or trust company qualified by law to perform the duties described herein
(the "Escrow Agent"). A beginning cash balance, if any, and Acquired Obligations shall be
deposited irrevocably with the Escrow Agent on the date of issuance of the Series B Bonds in an
amount sufficient to defease the Refunded Bonds. The proceeds of the Series B 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
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safekeeping of the Acquired Obligations and expenses of the issuance of the Bonds.
In order to carry out the purposes of this section, the Director of Finance and Budget is
authorized and directed to execute and deliver to the Escrow Agent, an Escrow Deposit
Agreement for the Series B Bonds.
(d) Implementation of Refunding Plan. The City will irrevocably set aside sufficient
funds out of the purchase of Acquired Obligations from proceeds of the Series B Bonds to make
the payments described in subsections A and B of this section.
The City hereby irrevocably calls the Refunded Bonds for redemption on
December 1, 2004 in accordance with the provisions of Ordinance No. 93-108, authorizing the
redemption and retirement of the Refunded Bonds prior to their fixed maturities. Said
defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the final
establishment of the applicable escrow account and delivery of the applicable Acquired
Obligations to the Escrow Agent. The Escrow Agent is hereby authorized and directed to
provide for the giving of notice of the redemption of the Refunded Bonds in accordance with the
applicable provisions of Ordinance No. 93-108.
Section 7. General Authorization. The officers, employees and agents of the City are
authorized to do all things necessary to proceed with the sale, issuance and delivery of the Bonds
and the use of the proceeds of the Bonds in accordance with the Ordinance and this resolution.
Section 8. Ratification. All actions taken by the officers, employees and agents of
the City with respect to the sale, issuance and delivery of the Bonds, including the distribution of
the Preliminary Official Statement, is hereby ratified and confirmed.
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Section 9. Effective Date. This resolution shall take effect immediately.
ADOPTED at a regular meeting of the City Council of the City of Yakima this 3rd day of
June, 2003.
ATTEST:
K
City Clerk
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CITY OF YAKIMA, WASHINGTON
By
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APPENDIX A
[ BOND ACCRETED VALUE TABLE 1
Appendix A - 1
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APPFNDTX A
Date
BOND ACCRETED VALUE TABLE
City of Yakima, Washington
LTGO Bonds, 2003 Series A (deferred interest)
FINAL NUMBERS
Deferred Deferred Deferred Deferred Deferred
Interest Interest Interest Interest Interest Deferred Deferred Deferred
Serial Bonds, Serial Bonds, Serial Bonds, Serial Bonds, Serial Bonds, Interest 2015 Interest 2019 Interest 2023
Series A Series A Series A Series A Series A Term Bond, Term Bond, Term Bond,
12/01/2007 12/01/2008 12/01/2009 12/01/2010 12/01/2011 Series A Series A Series A
2.34% 2.68% 2.94% 3.23% 3.44% 3.93% 4.39% 4 72%
06/17/2003 4,507.65 4,324 05 4,141.35 3,937.50 3,747.30 3,079.20 2,446.95 1,925.40
12/01/2003 4,555.70 4,376.80 4,196.75 3,995.40 3,805.95 3,134.30 2,495 85 1,966.75
06/01/2004 4,609.00 4,435.45 4,258.45 4,059.90 3,871.45 3,195.90 2,550 65 2,013.20
12/01/2004 4,662.90 4,494.90 4,321.05 4,125.45 3,938 00 3,258.70 2,606 60 2,060.70
06/01/2005 4,717.45 4,555.15 4,384.60 4,192.10 4,005 75 3,322.70 2,663.85 2,109.35
12/01/2005 4,772.65 4,616.15 4,449 05 4,259.80 4,074.65 3,388.00 2,722.30 2,159.10
06/01/2006 4,828.50 4,678.05 4,514 45 4,328.60 4,144.75 3,454.60 2,782.05 2,210.05
12/01/2006 4,885.00 4,740.70 4,580 80 4,398.50 4,216.05 3,522.45 2,843 10 2,262.20
06/01/2007 4,942.15 4,804.25 4,64815 4,469.55 4,288.55 3,591.70 2,905.55 2,315.60
12/01/2007 5,000 00 4,868 60 4,716 45 4,541.70 4,362.30 3,662.25 2,969.30 2,370.25
06/01/2008 4,933.85 4,785 80 4,615.05 4,437.35 3,734.20 3,034.50 2,426.20
12/01/2008 5,000 00 4,856 15 4,689.60 4,513.65 3,807.60 3,101.10 2,483.45
06/01/2009 4,927.55 4,765.35 4,591.30 3,882.40 3,169.15 2,542.05
12/01/2009 5,000.00 4,842.30 4,670.25 3,958.70 3,238.70 2,602.05
06/01/2010 4,920.50 4,750.60 4,036.50 3,309.80 2,663.45
12/01/2010 5,000 00 4,832.30 4,115.80 3,382.45 2,726.35
06/01/2011 4,915.45 4,196.70 3,456.70 2,790.65
12/01/2011 5,000.00 4,27915 3,532.60 2,856.55
06/01/2012 4,363.25 3,61015 2,923.95
12/01/2012 4,449 00 3,689.35 2,992.95
06/01/2013 4,536 40 3,770.35 3,063.60
12/01/2013 4,625.55 3,853.10 3,135.90
06/01/2014 4,716 45 3,937.70 3,209.90
12/01/2014 4,809.10 4,02410 3,285.65
06/01/2015 4,903 60 4,112.45 3,363.20
12/01/2015 5,000 00 4,202.70 3,442.55
06/01/2016 4,294.95 3,523.80
12/01/2016 4,389.25 3,606.95
06/01/2017 4,485 60 3,692.10
12/01/2017 4,584 05 3,779.25
06/01/2018 4,684 65 3,868.40
12/01/2018 4,787.50 3,959.70
06/01/2019 4,892.60 4,05315
Jun 2, 2003 11:25 am Prepared by JMW - Seattle -Northwest Securities (Finance 4 434 Yakima:03NEWREF) Page 16
Date
APPENDTX A
BOND ACCRETED VALUE TABLE
City of Yakima, Washington
LTGO Bonds, 2003 Series A (deferred interest)
FINAL NUMBERS
Deferred Deferred Deferred Deferred Deferred
Interest Interest Interest Interest Interest Deferred Deferred Deferred
Serial Bonds, Serial Bonds, Serial Bonds, Serial Bonds, Serial Bonds, Interest 2015 Interest 2019 Interest 2023
Series A Series A Series A Series A Series A Term Bond, Term Bond, Term Bond,
12/01/2007 12/01/2008 12/01/2009 12/01/2010 12/01/2011 Series A Series A Series A
2.34% 2.68% 2.94% 3.23% 3.44% 3.93% 4.39% 4.72%
12/01/2019
06/01/2020
12/01/2020
06/01/2021
12/01/2021
06/01/2022
12/01/2022
06/01/2023
12/01/2023
5,000.00
4,148.85
4,246.75
4,346.95
4,449.55
4,554.55
4,662.05
4,772.05
4,884.70
5,000.00
Jun 2, 2003 11:25 am Prepared by JMW - Seattle -Northwest Securities (Finance 4.434 Yakima:03NEWREF) Page 17
APPENDIX B
[ BOND PURCHASE AGREEMENT ]
Appendix B - 1
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SEATTLE -NORTHWEST
SECURITIES CORPORATION
June 3, 2003
Honorable Mayor and City Council
City of Yakima
129 North Second Street
Yakima, Washington 98901
Re: City of Yakima, Washington
$1,430,527.65 ($2,500,000 Final Maturity Amount) Limited Tax General Obligation Bonds, 2003
Series A
$4,155,000 Limited Tax General Obligation Refunding Bonds, 2003 Series B
Series A Dated: June 17, 2003
Series B Dated: June 1, 2003
Honorable Mayor and City Council:
Seattle -Northwest Securities Corporation ("Purchaser") offers to purchase from City of Yakima,
Washington ("Seller") all the above-described Series A Bonds and Series B Bonds (together the "Bonds")
on the terms and based upon the covenants, representations and warranties set forth below. Appendix A,
which is incorporated into this Bond Purchase Agreement (the "Agreement") by reference, contains a brief
description of the Bonds, including principal amounts, redemption provisions, maturities, interest rates,
purchase price, and the proposed date and place of delivery and payment (the "Closing"). Other provisions
of this Agreement are as follows:
1. Prior to the Closing, Seller will approve a Preliminary Official Statement, and will adopt a resolution
authorizing the Bonds (the "Bond Resolution") with such changes as are requested by the Seller and its
counsel. The Purchaser is authorized by Seller to use these documents and the information contained
in them in connection with the public offering of the Bonds and the final Official Statement in
connection with the sale and delivery of the Bonds.
2. Seller, to the best of its knowledge, represents and covenants to the Purchaser that:
(a) it has and will have at the Closing the power and authority to enter into and perform this
Agreement, to adopt the Bond Resolution and to deliver and sell the Bonds to the Purchaser;
(b) this Agreement and the Bonds do not and will not conflict with, or constitute or create a breach or
default under, any existing law, regulation, order or agreement to which Seller is subject;
(c) no governmental approval or authorization other than the Bond Resolution which has not been
obtained, or will not be obtained prior to Closing, is required in connection with the sale of the
Bonds to the Purchaser;
(d) the Preliminary Official Statement with corrections, if any, noted by the Seller and its counsel, as
of its date and (except as to matters corrected or added in the final Official Statement) as of the
Closing, is accurate and complete in all material respects as of its date to the knowledge and
belief of the officers and employees of the Seller, after due review;
(e) the Seller has previously provided the Purchaser with a copy of its Preliminary Official Statement
dated May 27, 2003. As of its date, the Preliminary Official Statement has been "deemed final"
by the Seller for purposes of Securities and Exchange Commission ("S.E.C.") Rule 15c2 -
12(b)(1), except for the omission of maturity amounts, interest rates, redemption dates and prices,
ratings, underwriter's discount and related terms;
1420 Fifth Avenue, Suite 4300 Seattle, WA 98101 (206) 628-2882 www.seattlenorthwestcom
Washington Oregon Idaho Utah
Honorable Mayor and City Council
City of Yakima, Washington
June 3, 2003
Page 2
(f) the Seller agrees to cooperate with the Purchaser to pe,niit the Purchaser to deliver or cause to be
delivered, within seven business days after any final agreement to purchase, offer, or sell the
securities and in sufficient time to accompany any confirmation that requests payment from any
customer of the Purchaser, copies of a final Official Statement in sufficient quantity to comply
with paragraph (b)(4) of the S.E.C. Rule 15c2-12 and the rules of the Municipal Securities
Rulemaking Board ("MSRB"). The Purchaser agrees to deliver the required number of copies of
the final Official Statement to the MSRB and to all nationally recognized municipal securities
information repositories on the business day on which the final Official Statement is available,
and in any event no later than ten business days after the date hereof;
(g) the Seller agrees to enter into a written agreement or contract, constituting an undertaking (the
"Undertaking") to provide ongoing disclosure about the Seller for the benefit of the owners of the
Bonds on or before the Closing as required by Section (b)(5)(i) of S.E.C. Rule 15c2-12 (the
"Rule"), and in the form as summarized by the Preliminary Official Statement, with such changes
as may be agreed to in writing by the Purchaser;
(h) if, at any time prior to the Closing, any event occurs as a result of which the Preliminary Official
Statement might include an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, the Seller shall promptly notify the Purchaser thereof.
3. The Purchaser shall have the right to cancel this Agreement to purchase the Bonds by notifying the
Seller of its election to do so if, after the execution of this Agreement and prior to the Closing:
(a) a decision by a court of the United States or the United States Tax Court shall be rendered, or a
ruling or a regulation (final, temporary, or proposed) by or on behalf of the Treasury Department
of the United States, the Internal Revenue Service or other governmental agency shall be issued
and in the case of any such regulation, published in the Federal Register, or legislation shall have
been introduced in, enacted by or favorably reported to either the House of Representatives or the
Senate of the United States, with respect to Federal taxation upon interest received on bonds of
the type and character of any of the Bonds which, in the reasonable judgment of the Purchaser,
materially adversely affects the marketability of the Bonds or their sale by the Purchaser, at the
contemplated public offering prices; or
(b) The United States shall have become engaged in hostilities or existing hostilities shall have
escalated or a national emergency or other national or international calamity or other event shall
have occurred, escalated, or accelerated to such an extent as, in the reasonable opinion of the
Purchaser, to have a materially adverse effect on the marketability of the Bonds or the
Purchaser's ability to enforce contracts for the sale of the Bonds; or
(c) there shall have occurred a general suspension of trading on the New York Stock Exchange; or
(d) a general banking moratorium shall have been declared by the United States, New York State or
Washington State authorities; or
(e) legislation shall hereafter be enacted, or actively considered for enactment, with an effective date
prior to the date of the delivery of the Bonds, or a decision by a court of the United States shall
hereafter be rendered, or a ruling or regulation by the S.E.C. or other governmental agency having
jurisdiction of the subject matter shall hereafter be made, the effect of which is that
Honorable Mayor and City Council
City of Yakima, Washington
June 3, 2003
Page 3
(i)
the Bonds are not exempt from the registration, qualification or other requirements of the
Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of
1934, as amended and then in effect, or
(ii) the Bond Resolution is not exempt from the registration, qualification or other requirements
of the Trust Indenture Act of 1939, as amended and as then in effect;
(f) a stop order, ruling or regulation by the S.E.C. shall hereafter be issued or made, the effect of
which is that the issuance, offering or sale of the Bonds, as contemplated herein or in the final
Official Statement, is in violation of any provision of the Securities Act of 1933, as amended and
as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the
Trust Indenture Act of 1939, as amended and as then in effect, and which, in its reasonable
judgment, adversely affects the marketability of the Bonds or the market price thereof; or
a material disruption in commercial banking or securities settlement or clearance services occurs,
which in the reasonable opinion of the Purchaser would materially adversely effect the
marketability of the Bonds or their sale by the Purchaser at the contemplated public offering
prices.
(g)
4. The Purchaser's obligations hereunder are also subject to the condition that at or prior to the Closing
Seller will deliver to the Purchaser all of the following:
(a) the Bonds, fully registered in book -entry form only in the name of Cede & Co., as bond owner
and nominee for The Depository Trust Company;
(b) the approving opinion of Bond Counsel dated the Closing date;
(c) written evidence that Standard & Poor's has issued its underlying rating of "A" and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned
a rating of "AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance
policy issued by MBIA Insurance Corporation and evidence of Seller's purchase of such
insurance including an opinion of counsel to the Insurance Provider;
(d) the following documents executed by authorized officers of the Seller: a certificate setting forth
the facts, estimates and circumstances in existence on the date of Closing which establish that it is
not expected that the proceeds of the Bonds will be used in a manner that could cause the Bonds
to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986,
as amended, and any applicable regulations thereunder;
(e) a certified copy of the Bond Resolution;
(f) designation of the Bonds as "qualified tax-exempt bonds" for banks, thrift institutions and other
financial institutions, as defined in Section 265 of the Internal Revenue Code of 1986, as
amended; and
such additional certificates, instruments or other evidence as the Purchaser may deem reasonably
necessary or desirable to evidence the due authorization, execution, authentication and delivery of
the Bonds, the truth and accuracy as of the time of the Closing of the Seller's representations and
warranties, and the conformity of the Bonds and Bond Resolution with the terms thereof as
summarized in the Official Statement, and to cover such other matters as it reasonably requests.
(g)
5. Seller will pay the cost of preparing, printing and executing the Bonds; the fees and disbursements of
Bond Counsel; bond registration and rating fees and expenses; bond insurance, if any; escrow trustee;
escrow verification; the cost of printing and distributing the Preliminary and final Official Statements;
travel and lodging expenses of Seller's employees and representatives; and other expenses of Seller.
Honorable Mayor and City Council
City of Yakima, Washington
June 3, 2003
Page 4
Purchaser will pay fees and disbursements of Purchaser's counsel, if any, the cost of preparation and
filing of blue sky and legal investment surveys where necessary, Purchaser's travel expenses, and other
expenses of Purchaser. As a convenience to Seller, Purchaser may from time to time, but only upon
the prior written direction from the Seller, make arrangements for certain items for which Seller is
responsible hereunder, such as printing of the Official Statement and travel or lodging arrangements
for Seller's representatives.
Purchaser also may advance for Seller's account when appropriate and when directed in advance in
writing by the Seller, the cost of the items for which Seller is responsible by making payments to third -
party vendors. In such cases, Seller shall pay such costs or expenses directly, upon submission of
appropriate invoices by Purchaser, or promptly reimburse Purchaser in the event Purchaser has
advanced such costs or expenses for Seller's account. It is understood that Seller shall be primarily
responsible for payment of all such items and that Purchaser may agree to advance the cost of such
items from time to time solely as an accommodation to Seller and on the condition that it shall be
reimbursed in full by Seller.
6. This Agreement is intended to benefit only the parties hereto, and Seller's representations and
warranties shall survive any investigation made by or for the purchase, delivery and payment for the
Bonds, and the termination of this Agreement. Should the Seller fail to satisfy any of the foregoing
conditions or covenants, or if the Purchaser's obligations are terminated for any reasons permitted
under this Agreement, then neither the Purchaser nor the Seller shall have any further obligations under
this Agreement, except that any expenses incurred shall be borne in accordance with Section 5.
7. The Seller further agrees that: (1) the Closing will take place June 17, 2003, (2) the Seller will
deposit bond proceeds with U.S. Bank National Association ("Escrow Trustee") on June 17, 2003 to
purchase obligations. The proceeds from the sale of the Series B Bonds will be used to refund
$3,870,000 of the City's Limited Tax General Obligation Bonds, 1994, dated February 1, 1994 which
are the bonds maturing in years 2005 through 2011 and the Term Bond maturing on December 1, 2013.
8. This Agreement may be modified or amended by an instrument in writing executed by the parties
hereto.
9. This offer expires on the date, and at the time, set forth on Appendix A.
Respectfully submitted,
Seattle -Northwest Securities Corporation
By:
Lindsay A. Sovde, Astistant Vice President
Accepted June 3, 2003
City of Yakima, Washington
APPENDIX A
City of Yakima, Washington
Limited Tax General Obligation and Refunding Bonds, 2003
Series A (New Money) and Series B (Refunding)
Description of Bonds
(a) Principal Amount. $1,430,527.65 Series A (New Money) and $4,155,000 Series B (Refunding)
$1,430,527.65 ($2,500,000 Final Maturity Amount)
Limited Tax General Obligation Bonds, 2003 Series A
(b) Purchase Price. $1,416,222.37 ($99 per $100), representing an underwriter's discount of $14,305.28 from the
dated date of June 17, 2003 to date of Closing.
$4,155,000 Limited Tax General Obligation Refunding Bonds, 2003 Series B
Purchase Price. $4,128,092.05 ($99.352396 per $100), representing an original issue premium of $6,332.05 and
an underwriter's discount of $33,240.00, plus accrued interest from the dated date of June 1, 2003 to the date of
Closing.
(c) Denominations. $5,000, or integral multiples thereof.
(d) Form. Fully registered in book -entry form only in the name of Cede & Co., as bond owner and nominee for The
Depository Trust Company.
(e) Series A Interest Payment Dates. Interest on the Bonds will be payable only at maturity and will be compounded
semiannually as of each June 1 and December 1 beginning June 17, 2003.
Series B Interest Payment Dates. June 1 and December 1, commencing December 1, 2003.
Maturity Schedule. Bonds shall mature and bear interest as follows:
(f)
$1,430,527.65 ($2,500,000 Final Maturity Amount)
Limited Tax General Obligation Bonds, 2003 Series A
Serial Bonds
Original Final Price Approximate
Due Principal Maturity per $5,000 Yield to
Dec. 1 Amount Amount at Maturity Maturity CUSIP
2007 $ 67,614.75 $ 75,000 $4,507.65 2.34% 984521ND2
2008 64,860.75 75,000 4,324.05 2.68 984521NE0
2009 124,240.50 150,000 4,141.35 2.94 984521NF7
2010 118,125.00 150,000 3,937.50 3.23 984521NG5
2011 112,419.00 150,000 3,747.30 3.44 984521NH3
2015 Term Bond
2015 $ 387,979.20 $ 630,000 $3,079.20 3.93 984521NJ9
2019 Term Bond
2019 $ 310,762.65 $ 635,000 $2,446.95 4.39 984521NK6
2023 Term Bond
2023 $ 244,525.80 $ 635,000 $1,925.40 4.72 984521NL4
(g)
$4,155,000 Limited Tax General Obligation Refunding Bonds, 2003 Series B
Due Interest Price or Due Interest Price or
Dec. 1 Amount Rate Yield CUSIP Dec. 1 Amount Rate Yield CUSIP
2003 $ 35,000 2.00% 1.00% 984521NM2 2009 $450,000 2.500% 2.50% 984521NT7
2004 60,000 2.00 1.10 984521NN0 2010 455,000 2.750 2.85 984521NU4
2005 415,000 2.00 1.25 984521NP5 2011 470,000 3.000 3.05 984521NV2
2006 420,000 2.00 1.50 984521NQ3 2012 485,000 3.000 3.10 984521NW0
2007 425,000 2.00 1.90 984521NR1 2013 500,000 3.125 3.20 984521NX8
2008 440,000 2.25 2.20 984521NS9
(Plus accrued interest from the Dated Date)
No Optional Redemption. The Bonds are not subject to redemption prior to their scheduled maturities.
(h) Mandatory Redemption. If not previously redeemed as described above, the Series A Term Bonds due on
December 1 in the years 2015, 2019 and 2023 will be called for redemption (in such manner as DTC will
determine) at a price of par In the following original principal amounts on the date of redemption, on December 1
in the years and amounts as follows:
2015 Term Bonds
2019 Term Bonds 2023 Term Bonds
Original Original Original
Principal Principal Principal
Years Amounts Years Amounts Years Amounts
2012 $101,613.60 2016 $ 83,196.30 2020 $ 65,463.60
2013 98,534.40 2017 78,302.40 2021 61,612.80
2014 95,455.20 2018 75,855.45 2022 59,687.40
2015* 92376.00 2019* 73,408.50 2023* 57,762.00
Total $387,979.20 Total $310,762.65 Total $244,525.80
* Final maturity.
(i)
Rating/Insurance. Assignment to the Bonds of an underlying rating of "A" by Standard & Poor's and that such
rating is in full force and effect on and as of Closing; evidence that the Bonds have been assigned a rating of
"AAA" by Standard & Poor's based on the Seller's purchase of a bond insurance policy issued by MBIA
Insurance Corporation and evidence of Seller's purchase of such insurance including an opinion of counsel to the
Insurance Provider.
(j) Closing Date. With definitive Bonds or a temporary Bond on or about June 17, 2003.
(k) Delivery. It is expected that the Bonds will be available for delivery at the facilities of DTC in New York, New
York, or to the Paying Agent on behalf of DTC by Fast Automated Securities Transfer.
(1) Offer Expires. 11:00 p.m., June 3, 2003.
(m)
Bond Counsel. Preston Gates & Ellis LLP
For Information Purposes Only:
True Interest Cost: 3.454125%
Net Present Value Savings*: $278,829.40
Net Present Value Savings as a
percent of Refunded Bonds*: 7.204894%
* Applicable to Series B Bonds only.
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. / 0
For Meeting of Tune 3, 2003
ITEM TITLE - 2003 LTGO Bond Sale: A RESOLUTION Authorizing the Bond Purchase / Sale
Agreement for limited tax levy general obligation (LTGO) bonds of the City (fixing the interest
rates, bond insurance and other specific terms for such bonds) and ratifying the Official
Statement.
SUBMITTED BY: Finance Department
CONTACT PERSON/TELEPHONE: Rita Anson, Finance Director; #575-6070
Timothy Jensen, Treasury Services Officer; #575-60""`
��--
SUMMARY EXPLANATION:
General Overview: On May 6, 2003, the City Council passed Ordinance No. 2003-24 authorizing
staff to take all necessary actions to sell Limited Tax General Obligation (LTGO) Bonds for the
purpose of (a) financing a portion of the SunDome Phase I Expansion Project and (b)
refinancing (known as refunding in the investment industry) the 1994 Law & Justice Center
Construction Bonds (which included some funding for the 1-82 project).
Providing bond market conditions remain favorable, we expect to sell the bond issue(s) on
Monday, June 2, 2003 and present the Resolution authorizing the bond sale agreement to
Council for consideration at the June 3, 2003 regular meeting.
continued
Resolution X Ordinance Other Contract
Mail to (name and address):
Phone
Funding Source: Debt Service Payments on Bonds will be funded primarily from: (a) 1994
Refunding Bonds - Cable Utility Tax Revenues and (b) SunDome Expansion Bonds - Business
-1-cgrZ:
APPROVED FOR SUBMITTAL: /;)
License Tax Revenues
City Manager
STAFF RECOMMENDATION: Adopt Resolution
BOARD/ COMMISSION RECOMMENDATION:
COUNCIL ACTION:
11iSN71Users\ranson\Projects\2003 Projects\2003 Bond Sale - 1994 Refunding & SunDome Expansion\06-02-03 A.Stmt - Resolution to Accept
Bond Sale - Purch Offer.doc
Page 2 of 5
Further Details:
Since receiving Council's authorization on May 6, 2003 to proceed with actions necessary to
sell the Limited Tax General Obligation (LTGO) Bonds; staff has taken the following steps:
Worked with the City's Investment Bankers and Legal Counsel to create the proposed
bond structure and to prepare a Preliminary Official Statement. The Preliminary
Official Statement (POS) discloses information regarding the City's financial position,
the local economy and demographics, the purpose for the bond sale and various details
about the terms and conditions to be established for the bond sale.
Note: A Copy of the Preliminary Official Statement is enclosed for Council's review and
ratification. The enclosed copy is the final Preliminary Official Statement and is the
same version as was distributed to the rating agency, insurance companies and
prospective investors. Passing the enclosed Resolution would authorize the City
.,��
Manager and the Finance Director to approve the final Official Statement on behalf of
the City after the bonds have been sold and the final terms are known.
• Participated in a credit review and rating interview with Standard & Poor's, a nationally
recognized rating agency. This interview actually entailed two separate conference calls
with the credit analyst; staff provided data and answered all of the analyst's questions
to her satisfaction. (Staff and the investment bankers felt that this interview process
went well and we anticipate a strong credit rating.)
Note: just prior to this document going to print, staff received notification that Standard
and Poors Rating Agency affirmed the Citv's A rating. The notification stated that the
rating committee was very impressed with our financial performance. The notification
stated that "you have strong policies in place and have consistently beat your budget
expectations every year which is evidence of your conservative budgeting process and
your ability to handle the impacts of I-747." This is very good news for our anticipated
bond sale on Monday.
s Monitored the bond market and the news media for indications of anything that might
have a potential impact on the City's anticipated bond sale.
• Worked with the County, Legal Council and Insurance Brokers to negotiate terms of
and finalize two agreements between the City and the County regarding (1) an
agreement settling both the amount and the form of a credit the County will provide to
the City to compensate the City for their proportionate share of the savings generated as
a result of the two refundings of the 1988 and 1989 bonds issued for the original
construction of the SunDome. And (2) the terms under which the City is amenable to
issuing bonds and transferring the related proceeds to the County and governing the
County's use of said proceeds. (Note: these bonds are referred to as the Series A,
SunDome Expansion bonds in the enclosed materials.)
\\tSNT\Users\ranson1Projectsi2003 Projects\2003 Bond Sate - 1994 Refunding & SunDome Expansion\06-02.03 A.Stmt - Resolution to Accept
Bond Sale - Purch Offer.doc
Created on 05/28/03 1:58 PM
INTERLOCAL AGREEMENT
FOR THE SUNDOME EXPANSION PROJECT, PHASE I
This Interlocal Agreement ("Agreement") is entered into this 12.. day of
2003, between the City of Yakima, a city duly organized and existing under and by virtue of the
laws of the state of Washington (the "City") and Yakima County, a political subdivision of and
duly organized and existing under the laws of the state of Washington (the "County").
RECITALS
WHEREAS, the City of Yakima and Yakima County entered into an interlocal agreement
(for the Agplex Modification of the Convention Center), executed on November 10, 1987 (and
amended on December 19, 1989) under which the City agreed to assist in the financing of
construction of the SunDome (together, "the Agplex Center Construction Agreements").
WHEREAS, the City has imposed a Business Licensing Fee under RCW 35.22.280 and
Ordinance No. 3060, and has dedicated a portion of that fee (along with some revenues from its
real estate excise tax) to make payments to the County to be used for debt service on the bonds
that the County had issued to finance SunDome construction.
WHEREAS, the SunDome is owned by the County and its operation is delegated to the
Central Washington Fair Association, whose Board has determined that certain modifications to
the SunDome are necessary, including increased seating capacity and the addition of
approximately 16,000 square feet of additional space that will provide for additional locker
rooms, dressing rooms and other related facilities, to be completed in three Phases (as described
further in Exhibit A), and the County intends to undertake the SunDome Expansion Project
Phase I improvements with the cooperation of the City of Yakima, the State of Washington and
the City of Union Gap.
WHEREAS, the City and County have resolved an issue relating to the Agplex Center
Construction Agreements by executing a Settlement Agreement on June 1 . , 2003. In
that Settlement Agreement, the Parties specifically contemplate that the City will, beginning in
the year that the City is to be released from its earlier obligation, use those newly available funds
for debt service on the City's SunDome Expansion Bonds issued pursuant to this Agreement.
WHEREAS, the County has asked the City of Yakima to contribute approximately $1.2
million to the County's SunDome Expansion Project Phase I, and the City of Yakima intends to
issue its SunDome Expansion Bonds for this purpose payable from revenues of the City Business
Licensing Fee and other legally available money of the City.
WHEREAS, the City and the County have the authority to enter into interlocal
agreements under chapter 39.34 RCW, chapter 67.28 RCW and chapter 35.59 RCW for joint and
cooperative action, including provisions to finance joint or cooperative undertakings, multi-
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—1—
purpose community centers, regional centers and other facilities and to provide for services to be
provided by one government to another.
WHEREAS, the City and the County have the authority, pursuant to applicable
provisions of state law, to acquire, design, construct, own, remodel, maintain, equip, re-equip,
repair, finance and operate public stadium, sports, conference and convention centers, including
related parking facilities; and these agencies propose to use one or more interlocal agreements to
make effective and efficient use of the powers and authorities granted to them to construct,
remodel, expand, own and operate convention and other tourism -related facilities such as the
SunDome to serve the City, the County and adjacent regional areas.
WHEREAS, the City and the County have each determined that the SunDome Expansion
Project will benefit and is in the best interests of their respective jurisdictions and the City
desires to participate in the financing of Phase I of this project in order to provide an increased
level of conference, sports, arts, cultural and community services to City and County residents as
well as to a wider regional community.
NOW, THEREFORE, the City and the County enter into this Agreement which outlines
the responsibilities and commitments of each Party in the SunDome Expansion Project Phase I:
A. DEFINITIONS
For the purposes of this Agreement, the terms defined in this Section shall have the
following meanings:
Agreement is this Interlocal Agreement entered into between the City and the County
under the authority of chapters 35.59 RCW, 39.34 RCW and 67.28 RCW for the SunDome
Expansion Project.
Bond means any short-term or long-term bond, note, warrant, certificate of indebtedness,
or other obligation.
Bond Proceeds means all funds received by the City as a result of the sale of the City's
SunDome Expansion Bonds after payment of all costs of issuance, including but not limited to
underwriter's discount, bond counsel fees, rating agency fees, bond insurance premium, and all
other costs or fees incurred in issuing the bonds.
Business Licensing Fees are those fees imposed, received and applied by the City
pursuant to the authority of RCW 35.22.280 and Ordinances No. 3060 & No. 2003-05 of the
City.
Ct.,is the City of Yakima, a municipal nnrpnratio f tl, tato f W t.' ,t ..-
uaaava vVl V1 aiu i1 of the state of Y 0.SiuLL1�'wu.
County is Yakima County, a political subdivision of the state of Washington.
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Expansion includes any one or more of the following: reconstructing, expanding,
remodeling, maintaining, equipping, re-equipping and repairing the SunDome as specified in
Exhibit A and undertaken by the County under this Agreement.
Parties means the City and the County.
Phase I means improvements to the SunDome as defined in Exhibit A, including an
increase of seating capacity to approximately 7,030 seats, a two-story addition on the north end
with approximately 16,000 square feet of space, and the addition of locker rooms and dressing
rooms.
Project means the expansion and improvement of the SunDome, including all three
phases, as described in Exhibit A.
SunDome is the multi-purpose arena facility, formerly referred to as the Agplex, located
in Yakima County as a tourism -related facility as defined in RCW 67.28.080, being expanded by
the County to better serve the City, the County, and the state.
SunDome Expansion Bonds means the City's Limited Tax General Obligation Bonds,
2003 Series A, issued pursuant to this Agreement for the purpose of assisting the County in
financing the SunDome Expansion Project Phase I, and payable from revenues of the City' s
Business Licensing Fee and other legally available money of the City.
B. COUNTY RESPONSIBILITIES: SUNDOME EXPANSION PROJECT
B.1. General
The SunDome is intended to directly serve the residents of the City and the County as
well as serving a broader population in the region and the state. The total cost of Phase I is
expected to be approximately $2.8 million, and the County expects this amount to be financed by
funds received by the County from the cooperating governmental entities and/or other sources
identified in Exhibit A.
To assist the County in fmancing Phase I of the Project, the City intends to issue the
SunDome Expansion Bonds, as described in Section C of this Agreement, and the Bond
Proceeds shall be transferred to the County to be applied to Phase I of the Project.
B.2. Expansion Project, Phase I
The County agrees to complete all elements of Phase I of the Expansion Project as
described in and in accordance with the timelines contained in Exhibit A, and shall not alter or
delete any element of Phase I as described in Exhibit A without prior written notice to and
consent of the City. The County shall provide the City with a reasonable opportunity to review
and comment on preliminary designs, specifications and construction schedules for the Phase I
improvements, and shall submit to the City copies of the approved design plans and construction
schedules which shall be incorporated into Exhibit A and this Agreement as if originally set forth
herein.
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The County further agrees to use the Bond Proceeds only for Phase I of the Expansion
Project, and shall not use the Bond Proceeds for any purpose not included in Exhibit A without
the prior notice to and writteri consent of the City. The County shall, upon request, provide to the
City ail records necessary to verify the use of the Bond Proceeds.
The County agrees to administer the Expansion Project, Phase I and the SunDome's
operation for the benefit of the County, the City and other cooperating governmental entities,
subject to the limitations set forth in this Agreement. The County further agrees to continue:
a. To operate, or provide for the operation of; the SunDome in a businesslike
manner and provide a level of service equivalent to or better than the services provided by
comparable public facilities in the state;
b. To make the SunDome available for use by the general public at reasonable
rates and subject to reasonable conditions established by the County, and similar to the rates and
conditions for similar public facilities. The County shall also make SunDome facilities available
for use by governmental and nonprofit entities at special rates, recognizing that such special rates
may be available only at certain specified times;
c. In the event the SunDome is damaged or destroyed, to restore the SunDome to
operational condition and place it in operation as quickly as reasonably possible, but in any event
within 3 years of the event causing the damage or destruction. Failure to do so shall result in
default of this Agreement unless the County begins making payments to the City in such
amount(s) and at such times) as are necessary to meet the City's debt service obligations on the
City's S riDo ne Expansion Bonds. iI the County subsequently restores the SunDome to
operational condition and places it in operation, the County may cease making such payments to
the City;
d. To obtain and maintain, or cause to be obtained and maintained, insurance
in amounts sufficient to protect the County and give full effect to the indemnification required
under Section E of this Agreement; and
e. To obtain and maintain, or cause to be obtained and maintained, insurance or
self-insurance in form and amounts as are consistent with the coverage of comparable facilities
and undertakings, to name the City as an additional named insured, and to provide the City with
a certificate or certificates that the following minimum requirements and coverages as to
insurance have been met;
(i) A comprehensive general liability policy with limits of at least $5
million in aggregate, naming the City, its officers, elected officials, employees and agents as
additional insureds;
(ii) Property insurance, earthquake insurance, and flood insurance (if
such earthquake insurance and/or flood insurance is commercially available at reasonable cost)
equal to the replacement value of the SunDome and its contents; and
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(iii) Builder's risk insurance (also naming the City, its officers, elected
officials, employees and agents as additional insureds) to be obtained by the general contractor
for the Project, which shall be in an amount equal at least to the replacement cost of Phase I of
the Expansion Project, and shall include earthquake insurance and flood insurance if
commercially available at reasonable cost.
All insurance policies must require at least 30 days written notice of cancellation and the insurer
must be required to give written notice to all insureds of any changes in the policy. If the
standard policy includes language to the effect that the insurer "will endeavor" to give such
notice, that language must be stricken.
B.3. County Breach
a. Failure to Meet Construction Schedule.
(i) The timelines for completion of Phase I stated in Exhibit A and
other design plans and timelines as may be approved by the County and submitted to the City
under Section B.2 of this Agreement are of the essence. If the County fails to meet these
timelines for any reason other than an event of force majeure (i.e., an event entirely beyond the
County's control) for which insurance could not be obtained at reasonable cost, the County shall
pay to the City liquidated damages for each working day that the County continues with
diligence toward completion of Phase I until Phase I is either substantially completed or
abandoned. Once substantial completion is achieved, if fmal completion is not achieved within
thirty days, then the County shall pay additional liquidated damages to the City for each and
every day that actual final completion is delayed after thirty days of the required substantial
completion date.
The provision for liquidated damages in this Section is not and shall not be construed as a
penalty, but instead relates to the detriment felt by the City due to its obligation to continue to
make payments on the SunDome Expansion Bonds at a time during which the City is not
receiving the benefits of the Expansion Project in terms of the Expansion Project's contribution
to and enhancement of the City's economic base. Furthermore, liquidated damages are separate
from and in addition to any tax or arbitrage liability that may be incurred by the City due to the
County's failure to meet construction deadlines, which (if incurred) shall be governed in
subsection (c), below.
(ii) Liquidated damages shall be calculated as follows:
LD=0.15 * C/T
Where LD = Liquidated damages per working day (rounded to nearest dollar)
C = The original principal amount of the SunDome Expansion Bonds
T = The number of days calculated from the date of issuance of the
SunDome Expansion Bonds to the date for substantial
completion of Phase I under this Section
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The total amount of liquidated damages paid by the County to the City shall not exceed the sum
of: (A) the amount of SunDome Expansion Bnnd prnrePrdc anld (R) all costs incurred
r-------------- I'• .....,, ...ate... �..�J ....0 ...va.uavu by the City
for the issuance of these bonds (and any refunding bonds), and (C) any interest paid and accreted
on the bonds (or refunding bonds) to the date of the breach, and (D) all interest payments due on
the bonds from the time of the breach until the breach has been cured, and (E) all other costs
(including arbitrage liability, if any) incurred by the City as a result of the County's failure to
meet the construction deadlines.
(iii) For the purposes of this Section B.3, the terms "substantial
completion" and "final completion" shall have the meanings ascribed these or similar terms in
the relevant rontrart(s) for the construction of Phase T f the Expansion n o
` J + � s•-ve.:vsa v: Phase .., SJ a x,3Re i r3�je1ri.
b. Other Breach.
(i) In the case of other material breach of this Agreement by the
County, the County shall (A) assume responsibility for providing the remaining debt service on
the City's SunDome Expansion Bonds by paying to the City, at least 30 days prior to each
principal or interest payment date, amounts sufficient to pay, when due, all remaining principal
of and interest on the Bonds (or refunding bonds, if any), and (B) pay all costs and damages
incurred by the City as a direct result of that material breach.
(ii) "Material breach" shall include, but not be limited to: (A) failure to
complete, or abandonment of, Phase I of the Expansion Project as described in Section B.2 and
Exhibit A, for any reason other than an event of force majeure (i.e., an event entirely beyond the
County's control) for which insurance could not be obtained at reasonable cost; and (B) ceasing
to operate the SunDome in accordance with this Agreement for more than 60 consecutive days
for any reason other than upon an event of force majeure (Le., an event entirely beyond the
County's control) for which insurance could not be obtained at reasonable cost, and (C) failure to
rebuild the SunDome if wholly or partially destroyed according to paragraph B.2.c of the
Agreement.
c. Tax -Exempt Status of SunDome Expansion Bonds; Arbitrage Liability. In
addition to any other damages specified in this Agreement (including liquidated damages if the
liquidated damages cap in Section B.3.a.ii, above, has not been met), if the County, at any time
during which any portion of the City's SunDome Expansion Bonds (or refunding bonds, if
applicable) remains outstanding, takes any action or fails to take any action:
(i) Which adversely affects the tax-exempt status of the City's
SunDome Expansion Bonds, including but not limited to the sale or lease of the SunDome or any
portion there f_, in which event the County shall pay to the City: (A) an amount sufficient
to
defease those outstanding bonds at their scheduled maturity; and (B) an amount sufficient to
satisfy any tax liability (and incidental costs and direct damages) incurred, as a result of the loss
of the tax-exempt status of the bonds, by the City or by any person who is entitled to payment or
compensation from the City for that tax liability; or
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—6—
(ii) Creating arbitrage liability for the City, including failure to meet
the construction timelines contained in Exhibit A, in which event the County agrees to pay any
resulting arbitrage liability incurred by the City.
C. CITY RESPONSIBILITIES - FINANCING ASSISTANCE FOR PHASE I
C.1. Bond Issuance; Transfer of Bond Proceeds to County.
a. The City shall issue its SunDome Expansion Bonds in an original principal
amount resulting in annual debt service payments not to exceed $150,000 and a total debt service
over life of the bonds not less than $2.3 million nor greater than $2.5 million, and shall transfer
the Bond Proceeds to the County to be used for Phase I of the SunDome Expansion Project. This
obligation shall be payable solely from the Bond Proceeds. The Parties recognize and agree that
the actual amount of Bond Proceeds will not be determined until after the bonds have been sold,
and that nothing in this Agreement shall give rise to any claim alleging that the City may have
been able to obtain a better sale price or additional Bond Proceeds.
b. The City reserves the right to determine all terms and conditions of the
SunDome Expansion Bonds, including but not limited to: the total principal amount to be
borrowed, the interest rate or rates, the debt service payment schedule, the options of redemption,
and the acquisition of bond insurance. The City's right to redeem or refund the SunDome
Expansion Bonds may be exercised at the City's option at any time consistent with the terms of
the bonds without notice to or consultation with the County. If the City issues general obligation
bonds for this purpose, the bonds themselves and any accompanying disclosure documents shall
state that they are obligations of the City, payable solely from the specified tax sources and other
legally available money of the City, and that they are not obligations of the County.
c. Although nothing in this Agreement obligates the City to issue bonds, the City
agrees to use its best efforts to market and sell these bonds at rates and conditions favorable to
both parties.
d. The Parties reserve the right to make additional payments or transfers among
themselves with respect to the SunDome, so long as such agreements and/or payments are
consistent with the terms of this Agreement.
D. NATURE OF OBLIGATIONS
The Parties agree and understand that the City's obligation to transfer funds to the County
for Phase I of the SunDome Expansion Project is solely payable out of the Bond Proceeds, and
that the City shall have no liability to fund operating costs or revenue shortfalls, or have any
other financial commitments relating to the SunDome Expansion Project Phase I.
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—7—
E. INDEMNIFICATION
E_I. . County
To the extent permitted by law, the County shall indemnify, defend and hold harmless
the City, its officers, elected officials, employees, and agents (except that the County shall not be
considered an agent of the City for the purposes of this Section) from all claims, losses, suits,
actions, legal or administrative proceedings, costs, attorneys' fees, litigation costs, expenses,
damages, penalties, fines, judgments or decrees by reason of any death, injury or disability to or
of any person or party, including employees, and/or damage to any property or business,
including loss of use (collectively "damages") caused by any negligent act, error or omission of
the County or its officials, officers, employees, agents, contractors or subcontractors
(collectively, the "County's Functionaries") arising out of the eYpansinn, fynancing_ acquisition,
design, construction, ownership, operation, or maintenance of the SunDome.
The County's obligation shall include, but shall not be limited to, defending all claims
alleging damages from any negligent action, error or omission or breach of any common law,
statutory or other delegated duty by the County, and the County's Functionaries. The City has a
direct interest in any settlement agreement that the County may obtain while defending any such
claim naming the City under this hold harmless and indemnity. Accordingly, the County will
provide timely information to the City regarding all such claims.
The County's obligation to indemnify, defend, and hold harmless shall apply except and
to the extent where caused by the sole or concurrent negligence and/or wuiful misconduct of the
City. If the claim, suit, or action for injuries, death, or damages as provided for in this Section is
caused by or results from the concurrent negligence of (i) the City; and (ii) the County or the
County's Functionaries, the indemnity provisions provided for in this Section shall be valid and
enforceable only to the extent of the negligence of the County or the County's Functionaries.
E.2. City
To the extent permitted by law, the City shall indemnify, defend and hold harmless the
County, its officers, elected officials, employees, and agents (except that the City shall not be
considered an agent of the County for the purposes of this Section) from all claims, losses, suits,
actions, legal or administrative proceedings, costs, attorneys' fees, litigation costs, expenses,
damages, penalties, fines, judgments or decrees by reason of loss caused by the City's failure to
make the payments required by Section C.
F. SUPPLEMENTAL DOCUMENTS
The Parties agree to complete and execute all supplemental documents necessary or
appropriate to fully implement the terms of this Agreement.
G. DURATION OF AGREEMENT
This Agreement shall continue in full force and effect until such time as the City's
obligation to make payments on the SunDome Expansion Bonds (and any refunding bonds)
issued to fund the transfer(s) to the County under Section C shall have ceased.
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ERROR! UNKNOWN DOCUMENT PROPERTY NAME.
—8—
EFFECTIVE DATE; FILING WITH COUNTY AUDITOR
This Interlocal Agreement shall be effective upon such execution and filing with the
Yakima County Auditor as required by the provisions of RCW 39.34.040.
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized officers and representatives as of the day indicated below.
Dated en., ` l Z , 2003.
CITY OF YAKIMA
City Manager
YAKIMA COUNTY
County;. • ministrator
ATTESTED: APPROVED AS TO FORM ONLY:
11<alt.
City Clerk
P
CITY CONTRACT No: nn2 O O 3 - (o
RESOLUTION NO: „- a.O O 3 - % q
eputy Prosecuting Attorney
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—9—
EXHIBIT A
DESCRIPTION OF SUNDOME EXPANSION PROJECT
Phase I:
A. Elements:
1. The initial element of this phase is the addition of seating that will bring total seating
capacity to at least 7,100 for a single basketball court configuration as well as revamping the
entrances to the existing locker rooms. This part of Phase I is to be completed by June 30,
2003.
2. The second element of Phase I is a 16,000 square foot two-story addition at the north end of
the DnmP The first foPr additional d two team
•floor will house ,tc: a.re locker rooms aia'.'o3. two rooms, an
elevator and stairs to the second floor, and a new ticket sales area. The second floor will
house both men's and women's restrooms and a large meeting room. Phase I is to be
completed by December 31, 2003.
B. Financing: The financing sources for Phase I are expected to include:
State of Washington $ 1,240,000
City of Union Gap 200,000
City of Yakima 1,275,000
Total $ 2,715,000
The contribution shown in this chart for the City of Yakima is an estimate only. The City
of Yakima's estimated contribution reflects current bond market conditions and expectations
and does not bind the City to contribute more than the actual Bond Proceeds, if any, as
reflected in Section C.1 of this Agreement. The City of Yakima's actual contribution is to be
determined after the issuance of bonds to reflect the actual amount of Bond Proceeds
available for Phase I. If the cost to complete Phase I is greater than the total financing
sources identified above, the County expects to address this by: soliciting additional funding
from other sources; utilizing contingency dollars included in the budget; and/or transferring
certain portions of the Expansion Project from Phase I to Phase II.
Phase II:*
This phase will include a new two story radiused glass entrance on the north/west corner of
the dome, the addition of a new storage and commissary on the north/east corner of the
dome, the removal of the existing commissary and lockers, and the addition of a concessions
storage area and a men's restroom and two women's restrooms.
Phase III:*
This phase will provide for the addition of a food court on the west side of the Dome, and a
new concession area and fenced in outdoor courtyard on the east side of the Dome.
* The inclusion of Phases 11 and I11 in this Exhibit A are for informational purposes only.
A-1
Error! Unknown document property name.
REVISED AS OF JUNE 10, 2003
COMMITMENT TO ISSUE A
FINANCIAL GUARANTY INSURANCE POLICY
Application No.: 2003-004320-001
Sale Date: June 3, 2003
Program Type: Negotiated DP
Re: $1,430,527.65 (Original Principal Value) $2,500,000 (Maturity Value) City of Yakima,
Washington, Limited Tax General Obligation and Refunding Bonds, 2003 Series A (New
Money)
(the "Obligations")
This commitment to issue a financial guaranty insurance policy (the "Commitment") dated
June 10, 2003, constitutes an agreement between CITY OF YAK MA, WASHINGTON (the
"Applicant") and MBIA Insurance Corporation (the "Insurer"), a stock insurance company
incorporated under the laws of the State of New York.
Based on an approved application dated May 9, 2003, the Insurer agrees, upon satisfaction
of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the
date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the
"Policy") for the Obligations, insuring the payment of principal of and interest on the Obligations
when due. The issuance of the Policy shall be subject to the following terms and conditions:
1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of
delivery of and payment for the Obligations, of a nonrefundable premium in the amount of
$7,000 [.27% (premium rate) of $2,500,000 (total debt service), premium rounded to the nearest
thousand]. Please Note: This is an All or None Bid with Application No. 2003-004320-002.
The premium set out in this paragraph shall be the total premium required to be paid on the
Policy issued pursuant to this Commitment.
2. The Obligations shall have received the unqualified opinion of bond counsel with
respect to the tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations or the Resolution,
Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the
Obligations or in the final official statement or other similar document, including the financial
statements included therein.
4. There shall have been no material adverse change in any information submitted to the
Insurer as a part of the application or subsequently submitted to be a part of the application to the
Insurer.
5. No event shall have occurred which would allow any underwriter or any other
purchaser of the Obligations not to be required to purchase the Obligations at closing.
6. A Statement of Insurance satisfactory to the Insurer shall be printed on the Obligations.
7. Prior to the delivery of and payment for the Obligations, none of the information or
documents submitted as a part of the application to the Insurer shall be determined to contain any
untrue or misleading statement of a material fact or fail to state a material fact required to be
stated therein or necessary in order to make the statements contained therein not misleading.
MBIA
GENERAL DOCUMENT PROVISIONS
A. Notice to the Insurer The basic legal documents must provide that any notices required to be given
by any party should also be given to the Insurer, Attn: Insured Portfolio Management.
B. Amendments. In the basic legal document, there are usually two methods of amendment. The first,
which typically does not require the consent of the bondholders, is for amendments which will cure
ambiguities, correct formal defects or add to the secunty of the financing. The second, in which
bondholder consent is a prerequisite, covers the more substantive types of amendments. For all
financings, the Insurer must be given notice of any amendments that are of the first type and the
Insurer's consent must be required for all amendments of the second type. All documents must
contain a provision which requires copies of any amendments to such documents which are
consented to by the Insurer to be sent to Standard & Poor's.
C. Supplemental Legal Document. If the basic legal document provides for a supplemental legal
document to be issued for reasons other than (1) a refunding to obtain savings; or (2) the issuance
of additional bonds pursuant to an additional bonds test, there must be a requirement that the
Insurer's consent also be obtained prior to the issuance of any additional bonds and/or execution of
such supplemental legal document.
D. Events of Default and Remedies. All documents normally contain provisions which define the
events of default and which prescribe the remedies that may be exercised upon the occurrence of an
event of default. At a minimum, events of default will be defined as follows:
1. the issuer/obligor fails to pay principal when due;
2. the issuer/obligor fails to pay interest when due;
3. the issuer/obligor fails to observe any other covenant or condition of the document and such
failure continues for 30 days and
4. the issuer/obligor declares bankruptcy.
The Insurer, acting alone, shall have the right to direct all remedies in the event of a default. The Insurer
shall be recognized as the registered owner of each bond which it insures for the purposes of exercising
all rights and pnvileges available to bondholders. For bonds which it insures, the Insurer shall have the
right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder
in accordance with applicable provisions of the governing documents. Other than the usual redemption
provisions, any acceleration of principal payments must be subject to the Insurer's prior written consent.
E. Defeasance requires the deposit of:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government
Series -- " SLGs")
3. Direct obligations of the Treasury which have been stripped by the Treasury itself, CATS,
TIGRS and similar securities
4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips
which have been stripped by request to the Federal Reserve Bank of New York in book entry
form are acceptable.
5. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, the
issue is only rated by S&P (i.e., there is no Moody's rating), then the pre -refunded bonds must
have been pre -refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated
pre -refunded municipals to satisfy this condition.
MBIA
6. Obligations issued by the following agencies which are backed by the full faith and credit of
the U.S.
a. U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
c. Federal Financing Bank
d. General Services Administration
Participation certificates
e. U.S. Maritime Administration
Guaranteed Title XI financing
f. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing
notes and bonds
The Insurer shall be provided with an opinion of counsel acceptable to the Insurer that the Obligations
have been legally defeased and that the escrow agreement establishing such defeasance operates to legally
defease the Obligations within the meaning of the Indenture and the Supplemental Indenture relating to
the Obligations. In addition, the Insurer will be entitled to receive (i) 15 business days notice of any
advance refunding of the Obligations and (ii) an accountant's report with respect to the sufficiency of the
amounts deposited in escrow to defease the Obligations.
F. Agents:
1. In transactions where there is an agent/enhancer (other than the Insurer), the trustee, tender
agent (if any), and paying agent (if any) must be commercial banks with trust powers.
2. The remarketing agent must have trust powers if they are responsible for holding moneys or
receiving bonds. As an alternative, the documents may provide that if the remarketing agent
is removed, resigns or is unable to perform its duties, the trustee must assume the
responsibilities of remarketing agent until a substitute acceptable to the Insurer is appointed.
AMBIA
8. No material adverse change affecting any security for the Obligations shall have
occurred prior to the delivery of and payment for the Obligations.
9. The Insurer's "Payments Under the Policy/Other Required Provisions" (see attached)
shall be included in the authorizing document.
10. The Applicant agrees not to use the Insurer's name in any public document including,
without limitation, a press release or presentation, announcement or forum without the Insurer's
prior consent. In the event that the Applicant is advised by counsel that it has a legal obligation
to disclose the Insurer's name in any press release, public announcement or other public
document, the Applicant shall provide the Insurer with at least three (3) business days' prior
written notice of its intent to use the Insurer's name together with a copy of the proposed use of
the Insurer's name and of any description of a transaction with the Insurer and shall obtain the
Insurer's prior consent as to the form and substance of the proposed use of the Insurer's name and
any such description.
11. This Commitment may be signed in counterpart by the parties hereto.
12. Compliance with the Insurer's General Document Provisions (see attached).
Dated this 10th day of June, 2003.
MBIA .n ural ce Corporation
By c,„
Assistant Secretary
CITY OF YAKIMA, WASHINGTON
By:
Title:
MBIA
REVISED AS OF JUNE 10, 2003
COMMITMENT TO ISSUE A
FINANCIAL GUARANTY INSURANCE POLICY
Application No.: 2003-004320-002
Sale Date: June 3, 2003
Program Type: Negotiated DP
Re: $4,155,000 City of Yakima, Washington, Limited Tax General Obligation and Refunding
Bonds, 2003 Series B (Refunding)
(the "Obligations")
This commitment to issue a financial guaranty insurance policy (the "Commitment") dated
June 10, 2003, constitutes an agreement between CITY OF YAKIMA, WASHINGTON (the
"Applicant") and MBIA Insurance Corporation (the "Insurer"), a stock insurance company
incorporated under the laws of the State of New York.
Based on an approved application dated May 9, 2003, the Insurer agrees, upon satisfaction
of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the
date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the
"Policy") for the Obligations, insuring the payment of principal of and interest on the Obligations
when due. The issuance of the Policy shall be subject to the following terms and conditions:
1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of
delivery of and payment for the Obligations, of a nonrefundable premium in the amount of
$13,000 [.27% (premium rate) of $4,889,106.25 (total debt service), premium rounded to the
nearest thousand]. Please Note: This is an All or None Bid with Application No. 2003-
004320-001. The premium set out in this paragraph shall be the total premium required to be
paid on the Policy issued pursuant to this Commitment.
2. The Obligations shall have received the unqualified opinion of bond counsel with
respect to the tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations or the Resolution,
Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the
Obligations or in the final official statement or other similar document, including the financial
statements included therein.
4. There shall have been no material adverse change in any information submitted to the
Insurer as a part of the application or subsequently submitted to be a part of the application to the
Insurer.
5. No event shall have occurred which would allow any underwriter or any other
purchaser of the Obligations not to be required to purchase the Obligations at closing.
6. A Statement of Insurance satisfactory to the Insurer shall be printed on the Obligations.
7. Prior to the delivery of and payment for the Obligations, none of the information or
documents submitted as a part of the application to the Insurer shall be determined to contain any
untrue or misleading statement of a material fact or fail to state a material fact required to be
stated therein or necessary in order to make the statements contained therein not misleading.
MBIA
8. No material adverse change affecting any security for the Obligations shall have
occurred prior to the delivery of and payment for the Obligations.
9. The Insurer's "Payments Under the Policy/Other Required Provisions" (see attached)
shall be included in the authorizing document.
10. The Applicant agrees not to use the Insurer's name in any public document including,
without limitation, a press release or presentation, announcement or forum without the Insurer's
prior consent. In the event that the Applicant is advised by counsel that it has a legal obligation
to disclose the Insurer's name in any press release, public announcement or other public
document, the Applicant shall provide the Insurer with at least three (3) business days' prior
written notice of its intent to use the Insurer's name together with a copy of the proposed use of
the Insurer's name and of any description of a transaction with the Insurer and shall obtain the
Insurer's prior consent as to the form and substance of the proposed use of the Insurer's name and
any such description.
11. This Commitment may be signed in counterpart by the parties hereto.
12. Compliance with the Insurer's General Document Provisions (see attached).
13. Compliance with the Insurer's Standard Conditions for Refundings (see attached).
Dated this 3rd day of June, 2003.
MBIA/In ur ce CorafiFm
By r /41 /
Assistant Secretary
CITY OF YAKIMA, WASHINGTON
By:
Title:
GENERAL DOCUMENT PROVISIONS
A. Notice to the Insurer The basic legal documents must provide that any notices required to be given
by any party should also be given to the Insurer, Attn: Insured Portfolio Management.
B. Amendments. In the basic legal document, there are usually two methods of amendment. The first,
which typically does not require the consent of the bondholders, is for amendments which will cure
ambiguities, correct formal defects or add to the security of the financing. The second, in which
bondholder consent is a prerequisite, covers the more substantive types of amendments. For all
financings, the Insurer must be given notice of any amendments that are of the first type and the
Insurer's consent must be required for all amendments of the second type. All documents must
contain a provision which requires copies of any amendments to such documents which are
consented to by the Insurer to be sent to Standard & Poor's.
C. Supplemental Legal Document. If the basic legal document provides for a supplemental legal
document to be issued for reasons other than (1) a refunding to obtain savings; or (2) the issuance
of additional bonds pursuant to an additional bonds test, there must be a requirement that the
Insurer's consent also be obtained prior to the issuance of any additional bonds and/or execution of
such supplemental legal document.
D. Events of Default and Remedies. All documents normally contain provisions which define the
events of default and which prescribe the remedies that may be exercised upon the occurrence of an
event of default. At a minimum, events of default will be defined as follows:
1. the issuer/obligor fails to pay principal when due;
2. the issuer/obligor fails to pay interest when due;
3. the issuer/obligor fails to observe any other covenant or condition of the document and such
failure continues for 30 days and
4. the issuer/obligor declares bankruptcy.
The Insurer, acting alone, shall have the right to direct all remedies in the event of a default. The Insurer
shall be recognized as the registered owner of each bond which it insures for the purposes of exercising
all rights and privileges available to bondholders. For bonds which it insures, the Insurer shall have the
right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder
in accordance with applicable provisions of the governing documents. Other than the usual redemption
provisions, any acceleration of principal payments must be subject to the Insurer's prior written consent.
E. Defeasance requires the deposit of:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government
Series -- " SLGs")
3. Direct obligations of the Treasury which have been stripped by the Treasury itself, CATS,
TIGRS and similar securities
4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips
which have been stripped by request to the Federal Reserve Bank of New York in book entry
form are acceptable.
5. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, the
issue is only rated by S&P (i.e., there is no Moody's rating), then the pre -refunded bonds must
have been pre -refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated
pre -refunded municipals to satisfy this condition.
MBIA
6. Obligations issued by the following agencies which are backed by the full faith and credit of
the U.S.
a. U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Fanners Home Administration (FmHA)
Certificates of beneficial ownership
c. Federal Financing Bank
d. General Services Administration
Participation certificates
e. U.S. Maritime Administration
Guaranteed Title XI financing
f. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing
notes and bonds
The Insurer shall be provided with an opinion of counsel acceptable to the Insurer that the Obligations
have been legally defeased and that the escrow agreement establishing such defeasance operates to legally
defease the Obligations within the meaning of the Indenture and the Supplemental Indenture relating to
the Obligations. In addition, the Insurer will be entitled to receive (i) 15 business days notice of any
advance refunding of the Obligations and (ii) an accountant's report with respect to the sufficiency of the
amounts deposited in escrow to defease the Obligations.
F. Agents:
1. In transactions where there is an agent/enhancer (other than the Insurer), the trustee, tender
agent (if any), and paying agent (if any) must be commercial banks with trust powers.
2. The remarketmg agent must have trust powers if they are responsible for holding moneys or
receiving bonds. As an alternative, the documents may provide that if the remarketing agent
is removed, resigns or is unable to perforin its duties, the trustee must assume the
responsibilities of remarketing agent until a substitute acceptable to the Insurer is appointed.
MBIA
STANDARD CONDITIONS FOR REFUNDINGS
A. Receipt by the Insurer of the final debt service schedule on the issue within three business
days from the sale date.
B. Receipt, satisfactory review and subsequent oral approval by the Insurer at least ten days in
advance of closing of draft copies of:
1. a verification by an independent CPA firm of the sufficiency of the escrow to timely
retire the refunded bonds;
2. the escrow securities purchase contracts of SLG subscription forms or open market
confirmations; and,
3. the escrow agreement
Final and signed copies of all the above documents to be sent via overnight mail from closing.
An independent CPA firm is defined as a licensed CPA firm acting at arms length of the
transaction on behalf of the bondholders. It may not be the underwriter, bond counsel or
financial adviser for the refunding issue. The firm must carry errors and omissions insurance.
The Insurer reserves the right to review the provider of the verification on a deal by deal
basis.
C. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond
Counsel (or Special Tax Counsel) to the effect that the refunding bonds are being issued in
compliance with state law and that the interest on the refunding bonds is tax-exempt.
D. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond
Counsel stating that the refunded bonds have been legally defeased. (This condition is only
applicable in those situations where the refunding issue is legally defeasing the refunded
issue.) Final executed copies of items C and D to be sent via overnight mail.
E. If the escrow agreement allows for the substitution of securities in the escrow account, then it
should be provided in the escrow agreement that no such substitution may occur unless there
has first been delivered to the escrow agent/trustee, (1) a CPA verification that the escrow
investments, as substituted, are sufficient to pay debt service, as it becomes due, on the
refunded bonds and (2) an opinion of nationally recognized bond counsel to the effect that the
substitution is permitted under the documents and the substitution has no adverse effect on the
tax-exempt nature of the refunding bonds. See 2 above for the definition of an independent
CPA.
F. Escrow investments must be limited to:
1. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government
Series -- "SLGS").
3. Direct obligations of the Treasury which have been stripped by the Treasury itself,
CATS, TIGRS and similar securities.
4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips
which have been stripped by request to the Federal Reserve Bank of New York in book
entry form are acceptable.
MBIA
5. Pre -refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however,
the issue is only rated by S&P (i.e., there is no Moody's rating), then the pre -refunded
bonds must have been pre -refunded with cash, direct U.S. or U.S. guaranteed obligations,
or AAA rated pre -refunded municipals to satisfy this condition.
6. Obligations issued by the following agencies which are backed by the full faith and credit
of the U.S.:
a. U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
c. Federal Financing Bank
d. General Services Administration
Participation certificates
e. U.S. Maritime Administration
Guaranteed Title XI financing
f. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing
notes and bonds
G. If a forward supply contract is being executed in conjunction with the refunding (or
subsequent to the closing of the refunding transaction), the following conditions must also be
met:
1. The Insurer must review and approve the forward supply contract at least five business
days prior to closing (or after closing, at least five business days prior to execution if not
contemplated at the time of closing).
2. The forward supply contract must provide by its terms that the securities delivered under
the forward supply are sufficient (when taken with other funds remammg in the escrow)
as to amount and timeliness to retire the refunded bonds.
3. The Insurer requires an opinion from a nationally recognized bankruptcy counsel that the
securities in escrow and payments to owners of refunded bonds will not constitute assets of
the forward supply contract supplier and will not be subject to automatic stay in the event of
bankruptcy and/or insolvency of the supplier.
4. The supplier of the securities delivered under the forward supply contract must affirm in
the contract that it has no rights to or interest in the monies or securities held in the
escrow.
5. The escrow agent must be acceptable to the Insurer. The Insurer reserves the right to
replace the escrow agent for cause.
6 See 6 above for investments permitted under the forward supply contract. Investments
must be non -callable.
MBIA
7. The supplier should have no right to substitute the onginal escrow securities. The
supplier may substitute securities previously delivered by the supplier under the forward
supply contract only if:
a. The substituted securities mature on a date that is later than the previously delivered
securities would have matured; and
b. The substituted securities mature prior to the date needed to pay principal and/or
interest on the bonds.
8. Two days before each delivery date for the forward supply securities, the escrow agent
must notify the Insurer in writing of the securities to be delivered, the maturity amount of
the securities and the maturity date.
9. The forward supply contract cannot be amended or modified without the Insurer's written
consent.