HomeMy WebLinkAbout11/17/2015 05M Limited Tax General Obligation Bond to Finance Soccer ComplexBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. S.M.
For Meeting of. November 17, 2015
ITEM TITLE: Second reading of an ordinance authorizing a Limited Tax General
Obligation Bond, not to exceed $5,000,000, to finance the acquisition
and improvements to a soccer /multi -use sports campus (First reading
November 3, 2015)
SUBMITTED BY: Cindy Epperson, Director of Finance & Budget
Tara Lewis, Financial Services Manager
SUMMARY EXPLANATION:
At their April 7, 2015 meeting, City Council entered into an agreement with SOZO Sports of Central
Washington to collaborate in the design, development and operation of a world -class Yakima Sports
Complex. The April 7 agreement only contemplated the purchase of about 42 acres, with the City providing
$4.1 million for the purchase and development. Councilman Lover, with the support of the City Council,
requested that the City and SOZO consider budgeting funds for additional adjacent property to meet the long
term needs of the sports complex. Subsequent to this action, SOZO is proposing to purchase an additional
60 acres. Council agreed to the concept, and currently there is a tentative agreement under consideration
between the parties as to how the cost will be shared. Because the price of the second acreage has not yet
been agreed upon, we set the language in the bond ordinance at "not to exceed" $5 million, which leaves up
to $900,000 available to accomplish the purchase of the 2nd 40 acres. If the purchase price is less than the
$900,000, then the City can use the remaining bond proceeds for other park capital needs.
Prior to issuing bonded debt on the City's behalf it is necessary, per section 12 of the City Charter, that the
Council approve the terms and form of the bond by Ordinance. Historically, the City has issued municipal
bonds to accomplish a project like this. However, in current market conditions bank financing is a better
option for us, and the City was able to obtain favorable debt terms. Bank financing has much lower "up
front" costs, as there is not an Official Statement to prepare, and there are no underwriting fee. Bond
Counsel is still necessary, but since there is considerably less risk and fewer disclosure requirements, the fee
will be 40% less than a traditional bond issue. Another cost usually imposed is a loan origination fee which
the bank has waived for the City. Overall, the cost of bank financing will save the City about $40,000 in
direct costs and uses much fewer staff resources.
The enclosed Bond Ordinance will authorize staff to take all necessary steps to secure bank financing in the
form of a Limited Tax General Obligation bond (i.e. councilmanic, not voted) in an amount not to exceed
$5M, for 20 years, with three interest rate resets at each 5 year mark, at an initial interest rate of 3.3% with an
annual debt service of approximately $400,000. The enclosed Memorandum details the process and the
decision points leading to the Bond Ordinance contained herein.
Resolution:
Other (Specify):
Contract:
Start Date:
Item Budgeted: Yes
Funding Source/Fiscal Impact:
Strategic Priority:
Insurance Required? No
Mail to:
Phone:
Ordinance: x
Contract Term:
End Date:
Amount: $5,000,000
Parks and Recreation Capital Fund
Improve the Built Environment
APPROVED FOR &Lj, City Manager
SUBMITTAL: 4:A"T
RECOMMENDATION:
Pass Ordinance after the second reading on November 17, 2015.
ATTACHMENTS:
Description
Upload Date
Type
D Memo re.: tund Iplroc ess
10/2(V2015
Cbmar Memo
D tund crdliinaince
10/27/2015
Ordlhnaince
D EH1111B1111A
10/2,3/2015
Oro. lhnaince
Memorandum
To: The Honorable Mayor and Members of City Council
From: Cindy Epperson, Director of Finance and Budget
Tara Lewis, Financial Services Manager
Date: 10/26/2015
Re: Yakima Sports Complex Financing
In addressing the strategic priority Built Environment, the citizens authorized a City Charter
amendment to spend an additional $750,000 per year on Parks capital improvements. At their
April 7, 2015 meeting, City Council entered into an agreement with SOZO Sports of Central
Washington to collaborate in the design, development and operation of a world -class Yakima
Sports Complex. The April 7 agreement only contemplated the purchase of about 42 acres, with
the City providing $4.1 million for the purchase and development. Subsequent to this action,
SOZO is proposing to purchase approximately an additional 60 acres. Council agreed to the
concept, and currently there is a tentative agreement under consideration between the parties as
to how the cost will be shared. Because the price of the second acreage has not been agreed
upon, we set the language in the bond ordinance at "not to exceed" $5 million, which leaves up
to $900,000 available to accomplish the purchase of the 2nd 40 acres. If the purchase price is less
than the $900,000, then the City can use the remaining bond proceeds for other park and
recreation capital projects.
In order to issue tax - exempt bonds, the IRS have a number of requirements whereby we would
have to avoid excessive private use for the life of the bond. Because there is a "private party"
(i.e. SOZO) using and benefitting from the transaction, it would have been burdensome to verify
compliance with these rules. For that reason, we chose to go with a taxable Limited Tax General
Obligation (LTGO) Bond. Debt service of $400,000 was budgeted for 2016 with the anticipation
of budgeting approximately $400,000 per year over a 20 year amortization. A taxable bond
maintains maximum flexibility for the business decisions regarding the property.
Several types of financing tools are available for Washington cities. Whenever the City needs to
finance a project, an analysis is done to determine the most effective method to use. Cost of the
financing, risk and repayment terms are key factors that affect the debt - vehicle best suited to the
City's needs.
Generally, the City can self -fund a project through reserves and /or interfund loans, issue bonds
on the market or privately, participate in a State bond issue or obtain a loan from a banking
institution. For equipment, capital leases and /or corporate financing are also used from time to
time, although these tend to be more costly.
The repayment terms anticipated in the Budget exclude interfund loans as state law requires such
loans to be fairly short in duration (recommendation of 3 years or less). Participation in a State
bond issue as was done for our recent purchases of new police cars and fire apparatus is also not
an option in this case because the State will not finance infrastructure (they require an asset they
can foreclose and sell in the event of default).
The remaining options are bond issue or bank financing. A bond issue is very expensive by
nature. The City must employ an underwriter as well as bond counsel to work through the
complex process of offering bonds for sale on the public bond market. SEC regulation drives
much of that cost. For our $5 million, the cost of underwriter and bond counsel are estimated to
be between $40,000 and $50,000. Interest rates on a public long term issue are likely to be fairly
high -- in the neighborhood of 5 %. These costs combine to make bond financing unattractive for
this sort of project where other alternatives are available to us.
Bank financing is available with a bit of a twist. The bank offers a loan for which the City issues
a single bond at a much more desirable interest rate for a short (5 year) term. At the end of
that term, the bank is allowed to reset the rate to accommodate market changes that have
occurred. The reset is based on the U.S. Treasury bill rates using a predetermined formula equal
to the Interest Rate Swap for a 5 -year term, as published by the Federal Reserve's Board of
Governor's H.15 Statistical Release plus 1.75 %. The City will be exposed to only three reset
dates over the entire life of the debt in the 20 year amortization period.
Bank financing is generally much less expensive than issuing bonds for sale. The bank treats the
financing as a loan and the City issues a single bond to be held by the bank for the duration of
the financing term. While bond counsel is still a necessary component, due to the substantially
lower risk of a bank financing, the fee for bond counsel is approximately 40% lower. The use of
an underwriter is not necessary. We estimate that the City will save about $40,000 in direct costs
as well as use fewer staff resources, as preparation of an official statement is time - consuming.
In the process we approached several banks about our financing needs. Cashmere Valley Bank
was flexible and willing to work with our Bond Counsel to revise language and terms to meet the
City's needs. The Cashmere Valley Bank proposal was attractive, both in terms of cost and risk
for several reasons. The Bank has waived their standard loan origination fee. It has waived the
bank counsel fees in that the bank is willing to rely on City's Bond Counsel for legal issues. It
also agreed not to include a "put" option in the offer, which would have given the bank the
option to discontinue financing at any of the three reset dates, rather than resetting the rate for the
next five year term. They also agreed to allow the City to pay off or "call" the bond at any time
during the term of the agreement with only 15 days written notice, with no prepayment penalty.
These factors distinguished Cashmere Valley Bank as the clear choice for this Project financing.
CITY OF YAKIMA, WASHINGTON
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
YAKIMA, WASHINGTON, AUTHORIZING THE ISSUANCE
AND SALE OF A LIMITED TAX GENERAL OBLIGATION
BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT
TO EXCEED $5,000,000 TO FINANCE COSTS RELATED TO
ACQUIRING, DESIGNING, CONSTRUCTING AND
IMPROVING A SOCCER /MULTI -USE SPORTS CAMPUS
AND OTHER PARK PROJECTS IN THE CITY; PROVIDING
THE FORM OF THE BOND; AND AUTHORIZING THE SALE
OF THE BOND TO CASHMERE VALLEY BANK.
Passed November 17, 2015
PREPARED BY:
PACIFICA LAW GROUP LLP
Seattle, Washington
CITY OF YAKIMA
ORDINANCE NO.
TABLE OF CONTENTS*
Page
Section 1.
Definitions and Interpretation of Terms ..................................... ..............................2
Section 2.
Authori zation of the Project ....................................................... ..............................5
Section 3.
Authorization of the Bond ......................................................... ..............................5
Section 4.
Registration, Exchange and Payments ....................................... ..............................6
Section5.
Form of Bond ............................................................................. ..............................7
Section6.
Execution of Bond ..................................................................... ..............................9
Section 7.
Application of Bond Proceeds .................................................. .............................10
Section 8.
Pledge of Funds and Credit; General Obligation ...................... .............................10
Section 9.
Right of Prepayment ................................................................. .............................11
Section10.
Sale of the Bond ....................................................................... ..............................1
l
Section 11.
Ongoing Disclosure; Covenants ................................................ .............................12
Section 12.
Lost, Stolen or Destroyed Bond ................................................ .............................12
Section 13.
Severability; Ratification .......................................................... .............................12
Section 14.
Effective Date of Ordinance ..................................................... .............................13
Exhibit A:
Proposal
* This Table of Contents is provided for convenience only and is not a part of this ordinance.
CITY OF YAKIMA, WASHINGTON
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
YAKIMA, WASHINGTON, AUTHORIZING THE ISSUANCE
AND SALE OF A LIMITED TAX GENERAL OBLIGATION
BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT
TO EXCEED $5,000,000 TO FINANCE COSTS RELATED TO
ACQUIRING, DESIGNING, CONSTRUCTING AND
IMPROVING A SOCCER /MULTI -USE SPORTS CAMPUS
AND OTHER PARK PROJECTS IN THE CITY; PROVIDING
THE FORM OF THE BOND; AND AUTHORIZING THE SALE
OF THE BOND TO CASHMERE VALLEY BANK.
WHEREAS, the City of Yakima, Washington (the "City "), has entered into an agreement
(the "Agreement ") with Sozo Sports of Central Washington, a non - profit corporation ( "Sozo "),
for the development, management, and operation of a premier soccer /multi -sports campus and
indoor sports facility to serve the citizens of the City and the surrounding communities
(the "Sports Complex "); and
WHEREAS, the proposed Sports Complex will provide approximately 17 outdoor fields
and an indoor soccer /sports facility, and will also provide passive recreational opportunities when
the sports fields are not in use; and
WHEREAS, the Sports Complex will also provide the City's youth and adults with
soccer and recreational opportunities while generating economic opportunity to the City and
surrounding areas; and
WHEREAS, pursuant to the Agreement, the City has agreed to acquire, own, develop,
construct and improve a portion of the outdoor soccer /sports fields and related improvements to
be used as part of the Sports Complex, which will be maintained and operated by Sozo; and
WHEREAS, the City now desires to issue a limited tax general obligation bond to pay a
portion of its costs related to the Sports Complex and other park and recreation capital projects in
the City (the "Project "); and
WHEREAS, the City has received an offer from Cashmere Valley Bank, Cashmere,
Washington (the "Bank ") set forth in Exhibit A attached hereto (the "Proposal "), to purchase a
limited tax general obligation bond of the City in the principal amount of not to exceed
$5,000,000 (the "Bond ") for the purpose of financing the Project; and
WHEREAS, it is deemed necessary and advisable that the City accept the Bank's offer
and issue the Bond as set forth herein;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YAKIMA,
WASHINGTON, DOES ORDAIN AS FOLLOWS:
Section 1. Definitions and Interpretation of Terms.
(a) Definitions. As used in this ordinance, the following words shall have the
following meanings:
Bank means Cashmere Valley Bank, Cashmere, Washington.
Bond means the Limited Tax General Obligation Bond, 2015 (Taxable) authorized to be
issued by the City pursuant to this ordinance.
Bond Counsel means Pacifica Law Group LLP, Seattle, Washington.
Bond Fund means the "Bond Redemption Fund" authorized to be created pursuant to
Section 8 of this ordinance.
Bond Register means the registration records for the Bond maintained by the Bond
Registrar.
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Bond Registrar means the Director of Finance and Budget of the City, whose duties
include registering and authenticating the Bond, maintaining the Bond Register, transferring
ownership of the Bond, and paying the principal of and interest on the Bond.
City means the City of Yakima, Washington, a municipal corporation duly organized and
existing under the laws of the State of Washington.
City Council or Council means the City Council of the City as the general legislative
authority of the City, as the same shall be duly and regularly constituted from time to time.
City Manager means the City Manager, or the successor of such office.
Director of* Finance and Budget means the Director of Finance and Budget of the City,
or the successor of such office.
Interest Rate means a rate equal to the Interest Rate Swap, plus 1.75 %. The Interest Rate
shall reset each Reset Date, and shall remain in effect until but not including the next Reset Date.
Interest Rate Swap means the most recent monthly average interest rate swap for a five-
year term, as published by the Federal Reserve's Board of Governor's H.15 Statistical Release.
Maturity Date means December 1, 2035.
Project means the project described in Section 2 of this ordinance.
Project Fund means the "Project Fund" authorized to be created pursuant to Section 7 of
this ordinance.
Proposal means the proposal letter submitted by the Bank substantially in the form
attached hereto as Exhibit A.
Sports Complex means the soccer /multi -sports campus and indoor sports facility located
in the City.
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Registered (honer means the person in whose name the Bond is registered on the Bond
Register.
Reset Date means December 1, 2020, December 1, 2025, and December 1, 2030.
Rule means the Securities and Exchange Commission's Rule 15c2 -12 under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
(b) Interpretation. In this ordinance, unless the context otherwise requires:
(1) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any
similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any
particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after,
and the term "heretofore" shall mean before, the date of this ordinance;
(2) Words of the masculine gender shall mean and include correlative words
of the feminine and neutral genders and words importing the singular number shall mean and
include the plural number and vice versa;
(3) Words importing persons shall include firms, associations, partnerships
(including limited partnerships), trusts, corporations and other legal entities, including public
bodies, as well as natural persons;
(4) Any headings preceding the text of the several articles and sections of this
ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely
for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect
its meaning, construction or effect; and
(5) All references herein to "articles," "sections" and other subdivisions or
clauses are to the corresponding articles, sections, subdivisions or clauses hereof.
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Section 2. Authorization of the Project. The Bond is being issued to finance costs
related to acquiring, developing, constructing, and improving a portion of the outdoor
soccer /sports fields and related improvements to be used as part of the Sports Complex, and
other park and recreation capital projects in the City (the "Project ").
Section 3. Authorization of the Bond. For the purpose of financing costs of the
Project and paying costs of issuance for the Bond, the City hereby authorizes the issuance and
sale of its limited tax general obligation bond in the principal amount of not to exceed
$5,000,000. The bond shall be designated the "City of Yakima, Washington, Limited Tax
General Obligation Bond, 2015 (Taxable)," or other such designation as set forth in the Bond and
approved by the Director of Finance and Budget.
The Bond shall be dated as of its date of delivery, shall be fully registered as to both
principal and interest, shall be in one denomination, and shall mature on the Maturity Date. The
Bond shall bear interest from its dated date or the most recent date to which interest has been
paid at the Interest Rate. The Interest Rate shall be adjusted on each Reset Date, and shall remain
in effect until but not including the next Reset Date. Interest on the principal amount of the Bond
shall be calculated per annum on a 30/360 basis. Principal of and interest on the Bond shall be
payable in approximately equal semiannual installments of $200,000 due December 1 and
June 1, beginning June 1, 2016, to and including the Maturity Date, pursuant to the payment
schedule provided by the Bank after each Reset Date. The final payment of principal and interest
on the Bond, whether at the Maturity Date or earlier prepayment, shall be in an amount equal to
the remaining principal and interest due on the Bond.
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Section 4. Registration, Exchange and Payments.
(a) Registrar /Bond Registrar. The Director of Finance and Budget shall act as Bond
Registrar. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the
Bond if transferred or exchanged in accordance with the provisions of the Bond and this
ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance.
(b) Registered Ownership. The City and the Bond Registrar may deem and treat the
Registered Owner of the Bond as the absolute owner for all purposes, and neither the City nor the
Bond Registrar shall be affected by any notice to the contrary. Payment of the Bond shall be
made only as described in subsection (e) below. All such payments made as described in
subsection (e) below shall be valid and shall satisfy the liability of the City upon the Bond to the
extent of the amount so paid.
(c) No Transfer or Exchange of Registered Ownership. The Bond shall not be
transferrable without the consent of the City unless (i) the Bank's corporate name is changed and
the transfer is necessary to reflect such change; or (ii) the transferee is a successor in interest of
the Bank by means of a corporate merger, an exchange of stock, or a sale of assets.
(d) Registration Covenant. The City covenants that, until the Bond has been
surrendered and canceled, it will maintain a system for recording the ownership of the Bond that
complies with the provisions of Section 149 of the Code.
(e) Place and Medium of Payment. Both principal of and interest on the Bond shall
be payable in lawful money of the United States of America. Principal and interest on the Bond
shall be payable by check, warrant, ACH transfer or by other means mutually acceptable to the
Bank and the City. Upon final payment of principal and interest of the Bond, the Registered
Owner shall surrender the Bond for cancellation at the office of the Bond Registrar in accordance
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with this Section 4 and Section 12.
Section 5. Form of Bond. The Bond shall be in substantially the following form:
UNITED STATES OF AMERICA
NO. R -1 $
STATE OF WASHINGTON
CITY OF YAKIMA
LIMITED TAX GENERAL OBLIGATION BOND, 2015 (TAXABLE)
INTEREST RATE: VARIABLE, AS DESCRIBED BELOW
MATURITY DATE: DECEMBER 1, 2035
REGISTERED OWNER: CASHMERE VALLEY BANK
PRINCIPAL AMOUNT: MILLION AND NO /100 DOLLARS
The City of Yakima, Washington, a municipal corporation organized and existing under
and by virtue of the laws of the State of Washington (the "City "), hereby acknowledges itself to
owe and for value received promises to pay to the Registered Owner identified above, on or
before the Maturity Date identified above, the Principal Amount identified above. This bond
shall bear interest at a rate equal to the Interest Rate Swap, plus 1.75% (the "Interest Rate ").
Interest Rate Swap is defined as the most recent monthly average interest rate swap for a five -
year term, as published by the Federal Reserve's Board of Governor's H.15 Statistical Release.
The Interest Rate shall be adjusted every fifth year on the Reset Date pursuant to the hereinafter
defined Bond Ordinance, and shall remain in effect until but not including the next Reset Date.
Interest on this bond shall accrue from its dated date until paid and shall be computed per annum
on the principal amount outstanding on a 30/360 basis. Principal of and accrued interest on this
bond shall be payable in approximately equal semiannual installments of $200,000 due on
December 1 and June 1, beginning June 1, 2016, to and including the Maturity Date, pursuant to
the payment schedule provided by the Bank after each Reset Date. The final payment of
principal of and interest on the Bond, whether at the Maturity Date or earlier prepayment, shall
be in an amount equal to the remaining principal and interest due on the Bond.
Both principal of and interest on this bond shall be payable in lawful money of the United
States of America. Principal and interest on this bond shall be payable by check or warrant or by
other means mutually acceptable to the Registered Owner and the City. Upon final payment of
principal and interest of this bond, the Registered Owner shall surrender this bond for
cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the
City (the "Bond Ordinance "). Capitalized terms used in this bond have the meanings given such
terms in the Bond Ordinance.
This bond is issued pursuant to the Bond Ordinance, to finance the costs of acquiring,
developing, constructing, and improving a soccer /multi -use sports complex and other park and
recreation capital projects in the City and to pay costs of issuance.
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The City may prepay this bond as provided in the Bond Ordinance.
The City has in the Bond Ordinance authorized the creation of a fund to be used for the
payment of debt service on this bond, designated as the "Bond Redemption Fund" (the "Bond
Fund "). The Bond Fund shall be drawn upon for the sole purpose of paying the principal of and
interest on this bond.
The City hereby irrevocably covenants and agrees with the owner of this bond that it will
include in its annual budget and levy taxes annually, within and as a part of the tax levy
permitted to the City without a vote of the electorate, upon all the property subject to taxation in
amounts sufficient, together with other money legally available therefor, to pay the principal of
and interest on this bond as the same shall become due. The full faith, credit and resources of the
City are hereby irrevocably pledged for the annual levy and collection of such taxes and the
prompt payment of such principal and interest. Any proceeds of this bond not expended on the
Project or costs of issuance shall be pledged to payment of this bond and deposited in the Bond
Fund for such purpose.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by or on behalf of the Bond Registrar or its duly designated agent.
This bond is issued pursuant to the Constitution and laws of the State of Washington, and
duly adopted ordinances of the City. This bond is transferable upon compliance with the
conditions set forth in the Bond Ordinance.
It is hereby certified that all acts, conditions and things required by the Constitution and
statutes of the State of Washington to exist, to have happened, been done and performed
precedent to and in the issuance of this bond exist, have happened, been done and performed and
that the issuance of this bond does not violate any constitutional, statutory or other limitation
upon the amount of bonded indebtedness that the City may incur.
IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be
executed by the manual or facsimile signature of the Mayor of the City Council and attested by
the manual or facsimile signature of the Clerk, as of this day of , 2015.
[SEAL] CITY OF YAKIMA, WASHINGTON
ATTEST:
City Clerk
LM
Mayor
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REGISTRATION CERTIFICATE
This bond is registered in the name of the Registered Owner on the books of the City, in
the office of the Director of Finance and Budget of the City (the "Bond Registrar "), as to both
principal and interest, as noted in the registration blank below. All payments of principal of and
interest on this bond shall be made by the City from the Bond Fund.
Date of Name and Address of Signature of
Registration Registered Owner Bond Registrar
, 2015 Cashmere Valley Bank
Director of Finance and
Budget
Section 6. Execution of Bond. The Bond shall be executed on behalf of the City with
the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile
signature of the Clerk.
Only such Bond as shall bear thereon a Certificate of Authentication in the form earlier
recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or
entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive
evidence that the Bond so authenticated has been duly executed, authenticated and delivered
hereunder and is entitled to the benefits of this ordinance.
In case either of the officers who shall have executed the Bond shall cease to be an officer
or officers of the City before the Bond so signed shall have been authenticated or delivered by the
Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered
and issued and upon such authentication, delivery and issuance, shall be as binding upon the City
as though those who signed the same had continued to be such officers of the City. The Bond
may also be signed and attested on behalf of the City by such persons who at the date of the
actual execution of the Bond, are the proper officers of the City, although at the original date of
such Bond any such person shall not have been such officer of the City.
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Section 7. Application of Bond Proceeds. The City shall establish a fund designated
the "Project Fund" (the "Project Fund ") into which the proceeds of the Bond shall be deposited.
Money in the Project Fund shall be used to pay the costs of the Project and costs of issuance for
the Bond. The Director of Finance and Budget may invest money in the Project Fund in legal
investments for City funds. Earnings on such investments shall accrue to the benefit of the
Project Fund. Money remaining in the Project Fund after all costs of the Project and costs of
issuance for the Bond have been paid shall be pledged to payment of the Bond and deposited in
the Bond Fund for such purpose.
Section 8. Pledge of Funds and Credit; General Obligation. The City hereby
authorizes the creation of a fund to be used for the payment of debt service on the Bond,
designated as the "Bond Redemption Fund" (the "Bond Fund "). No later than the date each
payment of principal of or interest on the Bond becomes due, the City shall transmit sufficient
funds, from the Bond Fund or from other legally available sources, to the Bond Registrar for the
payment of such principal or interest. Money in the Bond Fund may be invested in legal
investments for City funds.
The City hereby irrevocably covenants and agrees for as long as the Bond is outstanding
and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the
property within the City subject to taxation in an amount that will be sufficient, together with
other revenues and money of the City legally available for such purposes, to pay the principal of
and interest on the Bond when due.
The City hereby irrevocably pledges that the annual tax provided for herein to be levied
for the payment of such principal and interest shall be within and as a part of the tax levy
permitted to cities without a vote of the people, and that a sufficient portion of each annual levy
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to be levied and collected by the City prior to the full payment of the principal of and interest on
the Bond will be and is hereby irrevocably set aside, pledged and appropriated for the payment of
the principal of and interest on the Bond. The full faith, credit and resources of the City are
hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt
payment of the principal of and interest on the Bond when due.
Section 9. Right of Prepayment. The Bond may be prepaid, in whole or in part, on
any business day, upon at least 15 days written notice to the Bank, without prepayment penalty or
fee. Any prepayments shall be applied first to accrued and unpaid interest and then applied to
reduce the outstanding principal amount of the Bond. If the Bond is prepaid, in whole, in
accordance with this Section 9, interest shall cease to accrue on the date the Bank receives such
prepayment.
Section 10. Sale of the Bond. The Bond shall be sold to the Bank pursuant to the
terms of this ordinance and the Bank's Proposal. The City hereby accepts the Bank's Proposal,
which is attached as Exhibit A. The Director of Finance and Budget is hereby authorized to
approve the Interest Rate and the principal amount of the Bond and to agree to any other terms,
conditions and covenants that are in the best interest of the City and in accordance with the
Bank's Proposal so long as (a) the principal amount of the Bond does not exceed $5,000,000, and
(b) the initial Interest Rate for the Bond (to be effective until the first Reset Date) does not
exceed 5.00 %.
The appropriate City officials, including but not limited to the City Manager and the
Director of Finance and Budget, are hereby authorized and directed to do everything necessary
for the prompt issuance, execution and delivery of the Bond and for the proper application and
use of the proceeds thereof.
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Section 11. Ongoing Disclosure, Covenants.
(a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements
of the Rule.
(b) Covenants. So long as the Bond is outstanding, the City hereby covenants and
agrees as follows:
(1) To provide the Bank copies of the City's audited financial statements
within a reasonable time after it becomes available; and
time.
(2) financial or other information as may be reasonably requested from time to
Section 12. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or
destroyed while in the Registered Owner's possession, the Bond Registrar may at the request of
the Registered Owner execute and deliver a new Bond of like date, number and tenor to the
Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the
City and the Bond Registrar in connection therewith and upon its filing with the City written
certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof.
In the case the Bond shall be lost, stolen, or destroyed while in the Registered Owner's
possession, the Registered Owner may elect upon final payment of principal and interest of the
Bond to surrender a photocopy of the Bond for cancellation at the office of the Bond Registrar
together with written certification that such Bond was actually lost, stolen or destroyed and of its
ownership thereof.
Section 13. Severability, Ratification. If any one or more of the covenants or
agreements provided in this ordinance to be performed on the part of the City shall be declared
by any court of competent jurisdiction to be contrary to law, then such covenant or covenants,
-12- 10/27/15
agreement or agreements, shall be null and void and shall be deemed separable from the
remaining covenants and agreements of this ordinance and shall in no way affect the validity of
the other provisions of this ordinance or of the Bond. All acts taken pursuant to the authority
granted in this ordinance but prior to its effective date are hereby ratified and confirmed.
Section 14. Effective Date of Ordinance. As provided in Article VI, Section 2 of the
Yakima City Charter, this ordinance shall become effective 30 days after the date of its passage
and publication.
ADOPTED by the City Council of the City of Yakima, Washington, at a regular meeting
thereof held this 17th day of November, 2015.
ATTEST /AUTHENTICATED:
Sonya Claar Tee, City Clerk
Approved as to form:
Pacifica Law Group LLP
Passed by the City Council: 11 -17 -15
Date of Publication: 11 -20 -15
First Reading Date: 11 -3 -15
Effective Date: 12 -20 -15
CITY OF YAKIMA, WASHINGTON
Micah Cawley, Mayor
-13- 1 0/27/15
Exhibit A
Bank's Proposal
(attached)
CERTIFICATE
I, the undersigned, the Clerk of the City Council (the "City Council ") of City of Yakima,
Washington (herein called the "City "), DO HEREBY CERTIFY:
1. That the attached ordinance numbered (herein called the "Ordinance ")
is a true and correct copy of an ordinance of the City, as finally adopted at a regular meeting of
the City Council held on the 17th day of November, 2015, and duly recorded in my office.
2. That the meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
quorum of the City Council was present throughout the meeting and a legally sufficient number
of members of the City Council voted in the proper manner for the passage of said Ordinance;
that all other requirements and proceedings incident to the proper adoption of said Ordinance
have been duly fulfilled, carried out and otherwise observed, and that I am authorized to execute
this certificate.
2015.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of November,
City Clerk
10/27/15
November 3, 2015
Honorable City Council
City of Yakima
129 North 2nd Street
Yakima, WA 98901
Honorable Council Members,
Thank you for the opportunity to provide an offer to purchase the City of Yakima,
Washington Limited Tax General Obligation Bond, 2015 (the "Bond "). Cashmere
Valley Bank, Cashmere, Washington is pleased to offer to purchase the Bond under the
following terms, subject to credit approval. Capitalized terms not defined herein have the
meaning given in the authorizing ordinance of the Bond anticipated to be adopted on
November 17, 2015 (the "Bond Ordinance ").
Issuer: City of Yakima, Washington (the "City ")
2. Amount: $5,000,000
3. Form: Fully registered, singl e
obligation bond issued
private sale.
instrument, taxable limited tax general
by the City and purchased by the Bank at
4. Purpose: Proceeds will be used to acquire, design, construct, and improve a
soccer /multi -use sports campus in the City as part of the project
with SOZO Sports, and other park and recreation capital projects,
as further described in the Bond Ordinance, and to pay the costs of
issuance of the Bond.
Bond Terms:
a) Interest Rate: The outstanding principal amount of the Bond shall bear
interest at a rate equal to the Interest Rate Swap (defined below), plus
1.75 %. The Interest Rate will be recalculated on each Reset Date (defined
herein). Currently, this would equal (1.55% + 1.75 %) = 3.30 %. Interest
City of Yakima
LTGO Bond 2015 (Taxable)
11 -3 -2015
Page 2
on the principal amount of the Bond shall be calculated per annum on a
30/360 basis.
The Interest Rate Swap means the most recent monthly average interest
rate swap for a 5 -year term, as published by the Federal Reserve's Board
of Governor's H.15 Statistical Release, available here:
http: / /www.federalreserve.gov /releases /Hl5 /data htm
The Reset Date means December 1, 2020, December 1, 2025, and
December 1, 2030.
b) Terms: The Bond shall mature on December 1, 2035 (the "Maturity
Date "). Principal of and interest on the Bond shall be due in
approximately equal semiannual installments of $200,000 due June 1 and
December 1, beginning June 1, 2016, to and including the Maturity Date
or earlier prepayment. The final payment of principal of and interest on
the Bond, whether at the Maturity Date or earlier prepayment, shall be in
an amount equal to the remaining principal and interest due on the Bond.
The amortization schedule describing the payments of principal and
interest for the initial five years of the Bond will be provided by the Bank
by the closing date of the Bond. At each Reset Date, the Bank will
provide an updated amortization schedule to the City reflecting the
recalculated interest rate and the payments of principal and interest to the
next Reset Date.
C) Transferability: The Bank will hold the Bond with no intent to sell or
transfer. The Bond may be transferred as provided in the Bond Ordinance.
d) Security: The Bond is a limited tax general obligation of the City. For as
long as the Bond is outstanding, the City irrevocably pledges to include in
its budget and levy taxes annually within the constitutional and statutory
tax limitations provided by law without a vote of the electors of the City
on all of the taxable property within the City in an amount sufficient,
together with other money legally available and to be used therefor, to pay
when due the principal of and interest on the Bond. The full faith, credit
and resources of the City are pledged irrevocably for the annual levy and
collection of those taxes and the prompt payment of that principal and
interest.
6. Prepayment:
Upon 15 days written notice, the City may prepay the Bond, in whole or in
part on any business day, with no prepayment penalty. Any prepayments
City of Yakima
LTGO Bond 2015 (Taxable)
11 -3 -2015
Page 3
shall be applied first to accrued and unpaid interest and then applied to
reduce the outstanding principal amount of the Bond.
7. Fees: The Bank will not charge a loan fee for the purchase of the Bond. All
costs of issuing the Bond are the responsibility of the City.
8. Additional Terms: The Bond documents shall be in the standard forms
customarily required by the Bank for municipal funding and will include
additional terms and conditions not discussed above. The City will provide its
annual financial report to the Bank during the period the Bond is outstanding and
held by the Bank. At the date of closing the Bond, the financial condition and
credit of the City and all other features of this transaction will be as represented to
the Bank without material adverse change. In the event of adverse material
changes in the credit worthiness of the City, this offer will terminate upon notice
by the Bank. This offer is non - assignable by the City. This offer supersedes any
prior commitments, offers, or agreements written or oral, concerning this
financing and can only be modified in writing. .
9. Acceptance: This offer is not binding unless the City returns a signed copy of this
letter to the Bank prior to the close of business on November 24, 2015, at which
time this offer will expire upon notice by the Bank.
10. Closing: The Bond is anticipated to close on or about December 21, 2015. If after
acceptance, the Bond has not closed by December 31, 2015, this commitment will
expire without notice.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.
Thank you for the opportunity to work with the City and its finance team.
Xinker
AVP, Municipal Lending & Investments
CASHMERE VALLEY BANK
City of Yakima
LTGO Bond 2015 (Taxable)
11 -3 -2015
Page 4
Acknowledged and accepted this day of November, 2015
CITY OF YAKIMA, WASHINGTON
Cindy Epperson, Director of Finance and Budget
Cc: Deanna Gregory, Pacifica Law Group